National Processing Inc., the distressed credit card processor, has landed a five-year contract renewal with Target Stores, a division of Dayton Hudson Corp. of Minneapolis.

The deal is a bright spot for the Louisville, Ky.-based processor, a National City Corp. subsidiary that specializes in large national accounts.

Its stock was hit hard in recent months after it lost Bentonville, Ark.- based Wal-Mart's business, and it suffered sudden executive-level departures.

The Target contract "is good news for NPC," said Marc Abbey, principal, First Annapolis Consulting, Linthicum, Md. "There was an overreaction to the loss of Wal-Mart, which was large volume but small revenue."

He said National Processing, No. 2 in merchant volume, has historically had a specialty in processing for "multi-lane" retailers, or department stores, and was highly successful in that niche.

"We lost Wal-Mart based on price," said Thomas A. Richlovsky, senior vice president of National City Corp. The Target contract "adds some volume, but the volume of Wal-Mart is larger than any other retailer in the country," Mr. Richlovsky noted. "We are pleased we got the contract," he said, and added that Target will benefit from a lower transaction price.

Mr. Richlovsky said the contract will add 63 stores, including Dayton Hudson and Marshall Field stores.

National City recently an-nounced a buyback of shares that would increase its control of NPC to 89% from 85%.

"The shares represent an excellent value, given what we believe are the long-term prospects of the company," Mr. Richlovsky said.

"The sentiment is that its stock is undervalued," Mr. Abbey said. At midday Friday, National Processing shares were unchanged from Thursday's close at $9.

In related news, National Processing said shareholders reelected four directors and named Robert G. Siefers chairman. He is executive vice president and chief financial officer of National City Corp., and has been a director since 1996.

Mr. Siefers will replace William R. Robertson, who is retiring as president of National City Corp. in June or July, the company said. Mr. Robertson will continue as a director.

In addition to Mr. Siefers, James R. Bell, Preston B. Heller, and Aureliano Gonzalez-Baz were reelected to two-year terms. u

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