Gremlins were nowhere to be found on Halloween weekend when Cleveland's National City Corp. completed the first part of its back-office consolidation with merger partner Merchants National Corp.
As part of the move, National City transferred some 50 bank systems, including core demand deposit, installment loan, cash management, trust, and automated teller machine systems to Ohio sites.
Jon L. Gorney, National City's senior vice president of operations and data processing, said it wall went without a hitch.
"We're elated with the results."
The back-office consolidation is expected to bring savings of $11 million a year.
More than 350 staff members at the $28 billion-asset National City worked over the weekend to move the computer operations of Merchant's $3 billion-asset lead bank in Indianapolis to National City's data centers in Cleveland and Columbus, Ohio.
At the same time, the name of Merchants' lead bank was changed to National City Bank Indiana.
Mr. Gorney said the back office consolidation would provide a substantial portion of the $30 million in annual savings expected from the merger.
About two-thirds of the back-office savings will come from the elimination of 103 back office jobs, he said.
National City expects that by the end of April it will finish consolidating the operations of the other 16 community banks in Indiana that made up Merchants National, Mr. Gorney said.
Smooth handling of the mergers is being seen as one of the contributors to a dramatic turn-about in investor perceptions of National City.
When the bank holding company announced the Merchants National merger last year in the form of a stock swap, investors and analysts gave the deal a thumbs down.
Analysts argued that the acquisition, which was completed in May, would dilute National City's share earnings.
The pessimism was reflected in National City's stock price. On the day before the merger plans were announced on Oct. 29, 1991, National City's stock closed at $39.75 a share. By the end of November, the price had slid to $31.875.
Recovery for Shares
But as recently as last week, National City's stock had soared to an all-time high of $46.875. Analysts said they were more bullish about the bank for a number of reasons, including greater optimism about the merger.
Among those with a more positive attitude is Fred Cummings, a bank analyst in Cleveland with McDonald & Co. in Cleveland. After the merger, Mr. Cummings dropped his National City 1992 earnings estimate from $4.30 a share to $4.
But now, he has raised his 1992 estimate to $4.15 per share. For 1993, he has a bullish estimate of $5.15 a share.
Mr. Cummings said that the principal reason he upped his estimate was that Merchants' and National City's nonperforming assets were declining.
He added that National City stood to profit handsomely from an efficiency drive, called Vision, that promises to eliminate $70 million to $80 million of annual operating costs by the end of 1994.
Once the Merchants National consolidation is finished, Mr. Cummings said, the bank will no longer be a drag on National City's earnings.