National Bank of Washington, the city's third-largest commercial banking company, has announced plans to form a bank holding company and the selection of a new president.

Chairman Luther Hodges Jr., the former Deputy Secretary of Commerce who recently was installed as NBW chief executive after government probes into questionable loan practices at the bank, said a holding company would permit an expansion of services in line with a goal to become "among the most aggressive and service-oriented banks in the greater Washington area."

He announced that a Ohio bank executive, C. James Nelson, will become president of NBW, the majority stockholder of which is the United Mine Workers union. Currently, Nelson is executive vice president of Huntington National Bank, a Columbus, Ohio, institution with assets of $2.8 billion. Also, he is vice president of Huntington Bancshares, the holding company for 16 Ohio banks, and president of Scioto Life Insurance Co.

Frederick Henschel, who has been NBW president in recent months, will be in charge of administering formation of the proposed holding company and will become its president. In addition, he will be executive vice president for administation at NBW.

"It is no secret that in the not-too-distant future interstate banking will become a reality," Hodges stated. "When that time comes, our actual presence will not have to be tied to the physical boundaries of D.C."

A holding-company form of corporate structure would permit NBW to expand into bank-related businesses while a relaxation of government rules that forbid interstate branching may offer D.C. banks the opportunity to open branches in the suburbs even as Maryland and Virginia banks open offices in the District.

Nelson formerly was associated with North Carolina National Bank, in Charlotte, which Hodges headed before an unsuccessful U.S. Senate campaign and the subsequent Carter administration appointment. Nelson held a number of executive positions at the North Carolina bank from 1965 to 1978, when he moved to Ohio.

At Huntington National, Nelson was in charge of commercial loan administration, consumer loan administration, corporate banking and international operations. His appointment appears to meet one requirement of government bank regulators when their probe was completed last year -- that NBW add to its senior management an experienced loan officer and that credit processes be improved.