Megabanks aren't the only ones wrestling with tough post-merger challenges.

National City Bancshares, a $1.8 billion-asset company based in Evansville, Ind., announced a major restructuring Thursday, amid criticisms from analysts that it is growing too quickly.

The company, which has agreed to nine mergers in six months, is trying to cut costs by trimming its work force and consolidating its charters.

"Treating deals as a major line of business is proving to be more time- consuming and expensive than they thought," wrote Brocker Vandervliet, a bank analyst at Keefe, Bruyette & Woods Inc., New York, in a report on the bank this week.

The bank, which will have added $1 billion of assets through acquisitions this year, says it has growntoo large to maintain a hands-off approach to its subsidiaries. It expects assets to increase 38% by yearend, to $2.2 billion.

"The old structure worked very well in the formative stages, but now it's time to change," said Michael F. Elliott, National City's chairman and chief executive officer.

Under the restructuring, National City plans to cut its 23 bank charters down to 14, standardize its products, and centralize its data processing systems.

A number of banks have taken similar steps to ease growing pains. For example, Old National Bancorp, with $5.9 billion of assets, announced late last month that it will merge its 21 banks into one charter by yearend. Old National projected savings from the move at $8 million a year.

National City said it also plans to trim its work force, though Mr. Elliott refused to say how many of the 734 employees will lose their jobs.

The company plans to take $3.7 million in charges during the second half to cover contract termination expenses, severance pay, consulting fees, and other restructuring costs. For comparison, net income in the second half of 1997 totaled $8.8 million.

National City said the restructuring moves will shave $3.6 million in annual expenses by eliminating overlaps in document processing, product development, advertising, and personnel. And it expects a more profitable uniform product line to boost revenue by $1.5 million a year, Mr. Elliott said.

Investors had no reaction to the restructuring announcement. Shares of National City stock were trading at $36.187 late Thursday, unchanged from Wednesday's close. However, the stock is at a 52-week low, down from its Nov. 18 high of $49.525.

Bank analysts said the time is right for a restructuring.

"Something like this is required for all aggressive acquirers," said Jeffrey L. Davis, an analyst with NatCity Investments, a subsidiary of Cleveland's National City Corp., which is not affiliated with National City Banschares. "They've got to get the back room into shape."

Keefe Bruyette's Mr. Vandervliet said National City has taken on "a significant degree of integrational risk" by attempting eight deals in six months. While National City has successfully integrated acquisitions in the past, the company has never been tested by so many deals so close together, he said.

Mr. Vandervliet said the restructuring plan is a step in the right direction, particularly in light of the company's depressed second-quarter earnings. Acquisition expenses reduced National City's earnings to 42 cents per share for the quarter-7 cents below Mr. Vandervliet's estimate.

Last month National City completed its purchase of $84 million-asset Illinois One Bancorp, Shawneetown, Ill., and it has eight similar deals pending in Illinois, Indiana, and Kentucky.

Though costly, Mr. Elliot said, the acquisitions are designed to pay off for shareholders over time.

"We're going to spend some money, but we have long-term returns in mind."

Should the company stumble, said Mr. Elliott-who with other National City managers controls 30% of National City's shares-he would not be opposed to selling it for the right price.

"Any super community bank that is not looking upstream as well as downstream is not doing a good job for shareholders," he said.

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