Despite lagging revenues and higher costs, Firstar Corp. chairman and chief executive officer Roger Fitzsimonds said he is determined to continue with an extensive restructuring.

The Milwaukee banking company reported lower-than-expected earnings in the fourth quarter because of a decline in commercial loan growth, a rise in expenses, and higher chargeoffs in its credit card portfolio.

The $19.9 billion-asset bank, Milwaukee's largest, recently reported per share earnings of 98 cents-a nickel shy of analysts' consensus estimates. A shortfall doesn't bode well for the struggling company, which, analysts said, has already been cut to the bone in an effort to become more profitable. As part of the restructuring that began a year ago, Firstar cut 2,500 employees, or 26% of its total work force.

Analysts said they were willing to overlook the fourth-quarter results as long as Firstar doesn't slip again before July 30, when the bank's restructuring program is expected to end.

"Between now and July we're going to finish our restructuring, and we're going to do it successfully," Mr. Fitzsimonds said tersely in a recent interview.

But analysts said the company should have anticipated the disruption of business in the fourth quarter.

"The revenues were offset by a loss of customers," said Ben Crabtree, with Dain Bosworth in Minneapolis. Mr. Crabtree said Firstar can redeem itself by meeting its goals for better profitability this year. "I view this fourth quarter as a disappointment, but no more than a pothole on the road to better numbers."

If Firstar has "another stumble," Mr. Crabtree said it will be vulnerable to a takeover - if it isn't already negotiating to sell.

One more slip-up and the vultures will be circling, he said.

Mr. Fitzsimonds, meanwhile, likes to refer to the fourth-quarter results as a "fine tuning."

He declined to comment on whether he would entertain offers for his company from competitors. "We've said our policy is one of independence," Mr. Fitzsimonds said. "We justify that policy by creating a high-quality institution."

But analysts, who have praised the cost-cutting effort, have also said they don't expect Firstar to be a long-term survivor in the industry's consolidation. For one thing, Firstar is too small to continually invest in the infrastructure necessary to make it as a multistate regional bank.

"There is a legitimate question as to whether Firstar can afford the technology to keep up with competition in its markets," Mr. Crabtree said.

Firstar would be a strategic fit for at least a half-dozen large regional players, including First Bank System Inc. of Minneapolis, which is often cited as a logical buyer.

First Bank has the fifth-biggest deposit share in Milwaukee, with less than $1 billion in deposits. By buying Firstar, First Bank would gain substantial market share in Wisconsin, Iowa, and Illinois. However, Firstar's Minneapolis bank would likely be sold before a First Bank merger in order to allay regulators' antitrust concerns, Mr. Crabtree said.

In addition to First Bank, First Chicago NBD Corp., ABN Amro North America, Norwest Corp., BankAmerica Corp., and NationsBank Corp. may all be interested in buying Firstar.

But another analyst believes the market hasn't and shouldn't overreact to Firstar's slow revenue growth.

"They've been very internally focused for a year now, and they've made some changes that have isolated customers," said William McGinnis, an analyst with Robert W. Baird & Co. in Milwaukee. "They were a little wide- eyed in believing it would go as smoothly as originally projected."

For his part, Mr. Fitzsimonds said the restructuring was continuing as planned. "We're pleased by the progress and we're pleased by the project," he said.

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