NATIONAL CITY BANCSHARES INC, DEF 14A, 1998-04-22

NATIONAL CITY BANCSHARES INC
DEF 14A, 1998-04-22
STATE COMMERCIAL BANKS

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<PAGE> 1
SCHEDULE 14A
(RULE 14a-101)

INFORMATION REQUIRED IN PROXY STATEMENT

SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )

Filed by the registrant [X]

Filed by a party other than the registrant [ ]

Check the appropriate box:

[ ] Preliminary proxy statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive proxy statement

[ ] Definitive additional materials

[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12

NATIONAL CITY BANCSHARES, INC.
- -------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)

NATIONAL CITY BANCSHARES, INC.
- -------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of filing fee (Check the appropriate box):

[X] No fee required.

[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.

(1) Title of each class of securities to which transaction applies:

- --------------------------------------------------------------------------------

(2) Aggregate number of securities to which transaction applies:

- --------------------------------------------------------------------------------

(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing
fee is calculated and state how it was determined):

- --------------------------------------------------------------------------------

(4) Proposed maximum aggregate value of transaction:

- --------------------------------------------------------------------------------

(5) Total fee paid:

- --------------------------------------------------------------------------------

[ ] Fee paid previously with preliminary materials.

- --------------------------------------------------------------------------------

[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.

(1) Amount previously paid:

- --------------------------------------------------------------------------------

(2) Form, schedule or registration statement no.:

- --------------------------------------------------------------------------------

(3) Filing party:

- --------------------------------------------------------------------------------

(4) Date filed:

- --------------------------------------------------------------------------------

<PAGE> 2
NATIONAL CITY BANCSHARES, INC.
227 MAIN STREET
EVANSVILLE, INDIANA 47708

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

TO BE HELD MAY 20, 1998

TO THE HOLDERS OF SHARES OF COMMON STOCK:

NOTICE IS HEREBY GIVEN that the Annual Meeting of the Shareholders of NATIONAL
CITY BANCSHARES, INC. (the "Corporation") will be held in the Casino Aztar
Hotel, Mezzanine Meeting Rooms, 421 N.W. Riverside Drive, Evansville, Indiana,
on Wednesday, May 20, 1998, at 9:30 a.m., C.D.T., for the purpose of considering
and voting upon the following matters:

1. The election of three directors in Class III, each to serve a term expiring
at the 2001 Annual Meeting of Shareholders.

2. To consider and act upon a proposal to amend and restate the Articles of
Incorporation to do the following:

A. Increase the number of the Corporation's authorized common shares from
20,000,000 to 29,000,000;

B. Authorize 1,000,000 preferred shares;

C. Eliminate cumulative voting in elections of directors;

D. Provide for removal of directors only for cause and only by the vote of
shareholders representing 66 2/3% of votes entitled to be cast;

E. Fix the maximum number of directors at 15;

F. Provide for a shareholders' meeting to be held upon the demand of
holders of shares representing 80% of votes entitled to be cast;

G. Adopt the Indiana Business Corporation Law's ("IBCL") Control Provisions
allowing redemption, in certain cases, of an acquiror's control shares;

H. Clarify that shareholders' voting rights with respect to certain
business combinations extend to sales transactions and other
distributions of the Corporation's assets;

I. Clarify the Corporation's statement of purposes;

J. Restate the Corporation's Articles in accordance with the IBCL to update
corporate information, eliminate unnecessary and redundant material, and
state certain default provisions of the IBCL.

3. Whatever other business that may be brought before the meeting or any
adjournment thereof. The Board of Directors at present knows of no other
business to be presented by or on behalf of the Corporation.

<PAGE> 3

Shareholders of record at the close of business on March 23, 1998, are the only
shareholders entitled to notice of and to vote at the meeting.

By Order of the Board of Directors,

STEPHEN C. BYELICK, JR., Secretary

April 22, 1998

IMPORTANT

WHETHER YOU EXPECT TO ATTEND THE MEETING OR NOT, PLEASE MARK, SIGN, DATE, AND
RETURN THE ACCOMPANYING PROXY CARD IN THE ENCLOSED SELF-ADDRESSED ENVELOPE AS
PROMPTLY AS POSSIBLE. NO POSTAGE IS REQUIRED.

<PAGE> 4
NATIONAL CITY BANCSHARES, INC.
EVANSVILLE, INDIANA

PROXY STATEMENT

GENERAL INFORMATION

This Proxy Statement is furnished in connection with the solicitation by the
Board of Directors of National City Bancshares, Inc. (the "Corporation") of
Proxies to be voted at the Annual Meeting of Shareholders to be held on
Wednesday, May 20, 1998, in accordance with the foregoing notice.

The Corporation is a bank holding company with thirteen financial institutions,
a leasing company, and a property management company, all of which are
wholly-owned subsidiaries.

The solicitation of Proxies on the enclosed form is made on behalf of the Board
of Directors of the Corporation. All cost associated with the solicitation will
be borne by the Corporation. The Corporation does not intend to solicit Proxies
other than by use of the mails, but certain officers and employees of the
Corporation or its subsidiaries, without additional compensation, may use their
personal efforts by telephone or otherwise, to obtain Proxies. The Proxy
materials are first being mailed to shareholders on or about April 22, 1998.

Any shareholder executing a Proxy has the right to revoke it by the execution of
a subsequently dated Proxy, by written notice delivered to the Secretary of the
Corporation prior to the exercise of the Proxy or in person by voting at the
meeting. The shares will be voted in accordance with the direction of the
shareholder as specified on the Proxy. In the absence of instructions, the Proxy
will be voted "FOR" the election of the three persons listed in this Proxy
Statement; and "FOR" each of the proposals to amend and restate the Articles of
Incorporation listed as Item 2 (A-J).

VOTING SECURITIES

Only shareholders of record at the close of business on March 23, 1998, will be
eligible to vote at the Annual Meeting or any adjournment thereof. As of March
23, 1998, the Corporation had outstanding 10,751,557 shares of common stock,
without par value. On all matters including the election of directors, each
shareholder will have one vote for each share held. In electing directors, each
shareholder has the right to cumulate the shareholder's votes. Cumulative voting
permits a shareholder to multiply the number of shares held by the number of
directors to be elected and to cast those votes for one candidate or spread
those votes among several candidates. Unless the shareholder specifies
otherwise, the persons named in the enclosed Proxy will allocate votes in their
discretion among the nominees for director for whom they are authorized to vote.

A quorum will be present if the holders of one-third of the outstanding shares
of common stock are present at the meeting, in person, or by Proxy. Directors
will be elected by a plurality of the votes cast by the shares entitled to vote
in the election at the meeting. Approval of each of the proposals to amend and
restate the Articles of Incorporation listed as Item 2 (A-J) requires the
affirmative vote of a majority of the shares entitled to be voted at the
meeting.

A Proxy may indicate that all or a portion of the shares represented by such
Proxy are not being voted with respect to a specific proposal. This could occur,
for example, when a broker is not permitted to vote shares held in street name
on certain proposals in the absence of instructions from the beneficial owner.
Shares that are not voted with respect to a specific proposal will be considered
as not present and entitled to vote on such proposals, even though such shares
will be considered present for purposes of determining a quorum and voting on
other proposals. Abstentions on a specific proposal will be considered as
present, but not as voting in favor of such proposal. The non-voting of shares
or abstentions will not affect the election of directors because the election
does not require the affirmative vote of a specified percentage of outstanding
shares. The non-voting of shares or abstentions with respect to the proposals to
amend and restate the Articles of Incorporation listed as Item 2 (A-J) will have
the practical effect of voting against them since the affirmative vote of a
majority of the Corporation's outstanding common shares is required for adoption
of the proposals.

<PAGE> 5

SECURITY OWNERSHIP OF MANAGEMENT

The following table sets forth the number of shares of common stock of the
Corporation beneficially owned by the directors, the Named Executive Officers
listed in "Compensation of Executive Officers," and all directors and executive
officers as a group as of March 23, 1998.

<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
AMOUNT AND NATURE OF PERCENT OF
NAME OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP (1) CLASS
- ----------------------------------------------------------------------------------------------
<S> <C> <C>
Janice L. Beesley 60,622(2) *
Benjamin W. Bloodworth 18,934(3) *
Michael F. Elliott 338,125(4) 3.13%
Susanne R. Emge 24,376(5) *
Donald G. Harris 11,989 *
H. Ray Hoops 845 *
Robert A. Keil 56,880(6) *
John D. Lippert 71,797(7) *
Harold A. Mann 48,469(8) *
Ronald G. Reherman 9,026(9) *
Laurence R. Steenberg 29,402(10) *
Richard F. Welp 3,686(11) *

All Directors and Executive
Officers as a Group (12 persons) 607,114(12) 5.57%
- ----------------------------------------------------------------------------------------------
</TABLE>

* Represents less than one percent.

(1) The nature of beneficial ownership, unless otherwise noted, represents sole
voting and investment power.

(2) Includes 56,212 shares with shared voting and investment power with spouse;
and 4,410 shares that may be purchased pursuant to options exercisable
within 60 days.

(3) All shares with sole voting and investment power by spouse.

(4) Includes 251,807 shares with sole voting and investment power; 16,680
shares with shared voting and investment power with spouse; and 20,636
shares with sole voting and investment power by spouse; 3,248 shares held
by a trust with shared voting and investment power; and 45,754 shares that
may be purchased pursuant to options exercisable within 60 days.

(5) Includes 2,012 shares with sole voting and investment power; 14,763 shares
with shared voting and investment power with spouse; and 7,601 shares with
sole voting and investment power by spouse.

(6) Includes 11,126 shares with shared voting and investment powers with
spouse; and 45,754 shares that may be purchased pursuant to options
exercisable within 60 days.

(7) Includes 15,695 shares with sole voting and investment power; 8,274 shares
with sole voting and investment power by spouse; and 47,828 shares that may
be purchased pursuant to options exercisable within 60 days.

(8) Includes 1,137 shares with sole voting and investment power; 2,131 shares
with shared voting and investment power with spouse; and 45,201 shares that
may be purchased pursuant to options exercisable within 60 days.

(9) Includes 3,372 shares with sole voting and investment power; and 5,654
shares with shared voting and investment power with spouse.

(10) All shares are held in trust for a limited partnership of which Mr.
Steenberg is a general partner with sole voting and investment power.

(11) Includes 1,492 shares with sole voting and investment power; 2,194 shares
with shared voting and investment power with spouse.

(12) Includes 143,746 shares that may be purchased pursuant to options
exercisable within 60 days.

<PAGE> 6

ITEM 1. ELECTION OF DIRECTORS AND
INFORMATION WITH RESPECT TO DIRECTORS AND OFFICERS

The following information is provided with respect to each nominee for director
and each present continuing director whose term of office extends beyond the
meeting.

Each of the nominees below currently serves as a director of the Corporation.
The Board of Directors has no reason to believe that any of the nominees will be
unable to serve if elected. If any nominee is unable to serve, the shares
represented by all valid Proxies will be voted for the election of such other
person as the Board may recommend.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE FOLLOWING NOMINEES:

<TABLE>
<CAPTION>
DIRECTOR OF
NAME AND PRINCIPAL OCCUPATION CORPORATION
(PAST FIVE YEARS) AGE SINCE
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>

CLASS III

The following are nominees for directorship in Class III of the Board of
Directors, whose terms shall expire at the Annual Meeting of Shareholders in
2001.

Dr. H. Ray Hoops 58 1996
President, University of Southern Indiana (1994 to Present);
Director, The National City Bank of Evansville (1993 to 1996);
Director, NCBE Leasing Corp. (1994 to Present); and
Vice Chancellor for Academic Affairs, University of Mississippi,
(1988-1994)

John D. Lippert 64 1985
Chairman of the Board and Chief Executive Officer of
the Corporation (1993 to December 1997);
Chairman of the Board, The National City Bank of
Evansville (1994 to 1996);
Chairman of the Board and Chief Executive Officer,
The National City Bank of Evansville (1993 to 1994);
Chairman of the Board, President, and Chief Executive Officer
of the Corporation and The National City Bank of Evansville
(1992 to 1993); Director, The National City Bank of Evansville
(1981 to 1996)

Ronald G. Reherman 61 1985
Chairman of the Board, President and Chief Executive Officer, SIGCORP, Inc.
(Gas and Electric Public Utility Holding Company) (1996 to Present); Chairman
of the Board, Southern Indiana Gas and Electric Company (SIGECO) (Public
Utility) (1992 to Present); President and Chief Executive Officer, SIGECO
(1990 to September 1997); and Director, The National City Bank of Evansville
(1985 to 1995)

</TABLE>

<PAGE> 7

CLASS I

(Continuing Directors with Term to Expire 1999)

Janice L. Beesley 44 1995
Chairman and Chief Executive Officer,
Alliance Bank (July 1997 to Present);
President and Chief Executive Officer,
United Federal Savings Bank (1992 to June 1997);
President, UniFed, Inc.
Director, First Federal Savings Bank of Leitchfield
(March 1997 to Present); and President and Chief Executive
Officer, United Financial Bancorp, Inc. (1992 to 1995)

Michael F. Elliott 46 1994
Chairman of the Board and Chief Executive Officer
(January 1, 1998 to Present), Vice Chairman of the Corporation (June 1997 to
December 1997), Executive Vice President of the Corporation (1993 to June
1997); Chairman of the Board (1996 to Present), President (1994 to 1996), and
Chief Executive Officer (1994 to Present), The National City Bank of
Evansville; Director and Vice President, Twenty-One Southeast Third
Corporation (1996 to Present); Director, United Federal Savings Bank (1995 to
1996); Chairman of the Board (1989 to 1996) and Chief Executive Officer (1989
to 1994), The State Bank of Washington; and Chairman of the Board (1990 to
1993) and President and Chief Executive Officer (1988 to 1993), Sure Financial
Corporation

Donald G. Harris 65 1986
President and Treasurer, Harris Development Corp.
(1994 to Present);
Retired President, Mead Johnson Nutritional Group;
President, Mead Johnson Nutritional Group (1989 to 1993); and
Director, The National City Bank of Evansville (1986 to 1995)

Richard F. Welp 56 1998
Southwest Region Manager, Countrymark Cooperative, Inc.;
and Director, First Bank of Huntingburg
</TABLE>

<PAGE> 8

CLASS II

(Continuing Directors with Term to Expire 2000)

Susanne R. Emge 56 1985
Executive Director, St. Mary's Medical Center
Foundation of Evansville, Inc. (February 1997 to Present);
Senior Vice President - Community Relations and Trust
Manager, The National City Bank of Evansville
(1996 to February 1997);
Vice President for Corporate and Community Services,
Deaconess Hospital, Inc. (1990 to 1995);
Treasurer, Emge Realty Company, Inc.; and
Director, The National City Bank of Evansville (1979 to 1995)

Robert A. Keil 54 1993
President (1993 to Present) and Assistant Secretary and
Assistant Treasurer (1985 to 1993) of the Corporation; Director and President,
Twenty-One Southeast Third Corporation (1996 to Present); and Executive Vice
President, The National City Bank of Evansville and the Corporation (1991 to
1993)

Laurence R. Steenberg 59 1985
President, BST Incorporated (Oil Production);
President, Lot Resources (1996 to Present); Director, Rudolph Construction
Company (1996 to Present); Part Owner, World Connection Services, LLC,
(Internet services provider) (1994 to Present); Manager, World Connection
Services, LLC, (Internet services provider) (1994 to December 1997); Assistant
Professor of Management, University of Evansville (1989 to May 1997); and
Director, The National City Bank of Evansville (1983 to 1995)

</TABLE>

Unless otherwise indicated, each of the nominees and directors has had the same
position or another executive position with the same employer during the past
five years.

<PAGE> 9

COMMITTEES OF THE BOARD OF DIRECTORS

The Corporation has standing Compensation and Audit Committees, but does not
have a nominating committee.

In addition to the regular monthly meetings of the Board of Directors, some of
the directors also serve on one or more of the various Board committees. During
1997 the Board of Directors met twelve times. Each of the directors attended at
least 75% of the aggregate number of meetings of the Board and Committees on
which the director served.

The duties of the Compensation Committee are explained later under "Compensation
of Executive Officers."

The Audit Committee approves and reviews the internal audit programs of the
Corporation and its subsidiaries. The Audit Committee reviews the results of the
independent accountant's audit and reports to the Board of Directors. During
1997 the Audit Committee met five times and was comprised of five outside
directors and the members were as follows:

Ronald G. Reherman, Chairperson
Susanne R. Emge (since February 1997); Donald G. Harris;
H. Ray Hoops; and Laurence R. Steenberg

The Corporation's nominating function is performed by the Board of Directors.
Shareholders who wish to nominate persons for election as directors must comply
with the advance notice and eligibility requirements contained in Article III,
Section 9 of the Corporation's Bylaws, a copy of which is available on request.
Such request and any nominations should be addressed to the Secretary, National
City Bancshares, Inc., 227 Main Street, P. O. Box 868, Evansville, Indiana,
47705-0868.

Directors of the Corporation, other than those who also serve as a corporate or
subsidiary employee, received for their services an annual retainer of $8,000
plus $200 for each Board of Directors' meeting attended and $150 for each
committee meeting attended. Directors who serve as corporate or subsidiary
employees receive no separate compensation for Board service.

<PAGE> 10

COMPENSATION OF EXECUTIVE OFFICERS

The following table sets forth the compensation for the Chief Executive Officer
of the Corporation and the Corporation's four next most highly compensated
executive officers for the year ended December 31, 1997, hereinafter the "Named
Executive Officers."

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
Long-Term
Compensation
Annual Compensation Awards
------------------- ------------------

Securities
Underlying Options All Other
Name and Principal Position Year Salary Bonus (1) # Shares (2) Compensation
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
John D. Lippert* 1997 $312,600 $ -- -- $ 76,051 (3,4)
Chairman of the Board 1996 275,000 -- -- 128,042 (3,4,5)
and Chief Executive Officer 1995 230,000 -- 66,150 68,969 (3,4)

Michael F. Elliott* 1997 215,929 34,650 21,000 18,397 (3)
Vice-Chairman 1996 165,000 31,500 11,025 22,500 (3)
1995 150,000 23,965 34,729 22,500 (3)

Robert A. Keil 1997 169,800 30,450 15,750 18,397 (3)
President 1996 145,000 26,880 11,025 22,500 (3)
1995 128,000 19,220 34,729 22,083 (3)

Benjamin W. Bloodworth* 1997 156,500 26,250 -- 256,698 (3,6)
Executive Vice-President 1996 125,000 23,100 -- 22,215 (3)
1995 110,000 17,394 46,305 19,109 (3)

Harold A. Mann 1997 90,000 17,850 -- 12,401 (3)
Secretary and Treasurer 1996 85,000 16,800 -- 15,270 (3)
1995 80,000 -- 46,305 12,000 (3)
</TABLE>

* Mr. Lippert retired as Chairman of the Board and Chief Executive Officer on
December 31, 1997.
Mr. Elliott assumed Mr. Lippert's duties on January 1, 1998.
Mr. Bloodworth retired as Executive Vice President on December 31, 1997.

(1) Amounts shown represent amounts paid under the Management Incentive
Compensation Plan.

(2) Options granted have been adjusted for stock dividends and the two-for-one
stock split issued in April 1996.

(3) Amounts shown represent amounts contributed to the profit sharing plan
provided for all employees who complete one year of service.

(4) Includes a supplemental retirement contribution of $57,654, $51,547, and
$46,469, for 1997, 1996, and 1995, respectively.

(5) Includes $53,995 income realized from the exercise of non-qualified stock
options.

(6) Includes $234,301 income realized from the exercise of non-qualified stock
options.

7
<PAGE> 11

1997 STOCK OPTION GRANT TABLE

The following table sets forth the stock options granted to the Named Executive
Officers during 1997 under the Corporation's Incentive Stock Option Plan.

<TABLE>
<CAPTION>
Individual Grants
- ------------------------------------------------------------------------------------------------

Number of % of Total
Securities Options
Underlying Granted to Exercise
Options Employees Price (2) Expiration Grant Date
Name Granted (1) in 1997 Per Share Date Present Value (3)
---- ------------ ----------- --------- ---- -----------------
<S> <C> <C> <C> <C> <C>
Michael F. Elliott 21,000 19% $41.90 10/22/2007 $309,120

Robert A. Keil 15,750 14% $41.90 10/22/2007 $231,840
</TABLE>

(1) Options granted in 1997 were both incentive stock options and non-qualified
stock options exercisable one year after the date of grant. These options
become immediately exercisable in the event of a change in control of the
Corporation. These options were granted for a term of 10 years, subject to
earlier termination in certain events related to termination of employment.
The number of options and exercise prices in the table have been adjusted
for stock dividends.

(2) Exercise price is the fair market value on the date of grant, adjusted for
stock dividends.

(3) These values were established using the Black Scholes stock option valuation
model, modified to include dividends. Assumptions used to calculate the
Grant Date Present Value for options granted during 1997 were as follows:

(a) Expected Volatility - the variance in the percent change in stock price
during the 20-month period immediately preceding each grant, which was
21.50%.

(b) Risk Free Rate - the average monthly rate for 10-year U.S.Treasury
obligations during the month of grant as published in the Wall Street
Journal, which was 5.86%.

(c) Dividend Yield - the yield calculated by dividing the annualized
dividend rate of the Corporation's stock in the amount of $0.72 per
share by the fair market value of the stock on the date of grant, which
resulted in an assumed dividend yield of 1.71%.

(d) Time of Exercise - the maximum exercise period for each grant at the
time of the grant, which was 10 years.

<PAGE> 12

1997 STOCK OPTION EXERCISES AND YEAR-END VALUE TABLE

The following table sets forth the number and value of all unexercised stock
options held by the Named Executive Officers at year end.

<TABLE>
<CAPTION>
Value ($) of
Number (#) of Unexercised
Unexercised "in-the-money"
Options - Options -
12/31/97 12/31/97 (2)
------------- -------------
Shares Acquired Value Exercisable/ Exercisable/
Name on Exercise Realized ($)(1) Unexercisable Unexercisable
---- ----------- --------------- ------------- -------------
<S> <C> <C> <C> <C>
John D. Lippert 1,500 $41,085 33,639/ $862,504/
23,153 $593,643

Benjamin W. Bloodworth 25,674 $309,500 3,912/ $100,304/
15,435 $395,753

Michael F. Elliott 0 0 45,754/ $1,101,360/
21,000 $59,850

Robert A. Keil 0 0 45,754/ $1,101,360/
15,750 $44,887

Harold A. Mann 1,050 $23,026 29,766/ $763,200/
15,435 $395,753

</TABLE>

(1) Value is calculated based on closing market price of the Corporation's
common stock at exercise date, less the exercise price.

(2) Value is calculated based on the closing market price of the common stock
on December 31, 1997, less the option exercise price.

<PAGE> 13

COMPENSATION PLANS

Pension Plan

The following table shows the estimated annual pension benefit payable to a
covered participant at normal retirement age (age 60) under the qualified
defined benefit pension plan covering the Corporation and all subsidiaries,
based on remuneration that is covered under the plan and years of service.

PENSION PLAN TABLE
<TABLE>
<CAPTION>
YEARS OF SERVICE
---------------------------------------------------------------------------------------

REMUNERATION 15 20 25 30 35 40
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$125,000 $ 37,500 $ 50,000 $ 62,500 $ 75,000 $ 87,500 $ 100,000
150,000 45,000 60,000 75,000 90,000 105,000 120,000
175,000 52,500 70,000 87,500 105,000 122,500 140,000
200,000 60,000 80,000 100,000 120,000 140,000 160,000
225,000 67,500 90,000 112,500 135,000 157,500 180,000
250,000 75,000 100,000 125,000 150,000 175,000 200,000
300,000 90,000 120,000 150,000 180,000 210,000 240,000
350,000 105,000 140,000 175,000 210,000 245,000 280,000
</TABLE>

(The benefits shown above may be limited by law.)

Covered compensation for John D. Lippert, Michael F. Elliott, and Robert A.
Keil, as of the end of the last calendar year, was limited by law and totaled
$160,000 each; and their years of service were eighteen years, three years, and
thirty-two years, respectively. Years of service for Benjamin W. Bloodworth and
Harold A. Mann were seventeen years and forty years, respectively.

Each employee who had completed one year of eligible service was an eligible
participant under the plan. The plan generally provided for a prospective
benefit calculated as follows: 2% of the average annual salary of the five
highest consecutive years within the last ten calendar years of credited service
for each year of credited service up to 40 years' maximum. "Average annual
salary" includes salary, bonus, and other amounts paid in cash to an eligible
participant. The plan provided for early retirement at age 55 with reduced
benefits or normal retirement with full benefits starting at age 60. The normal
form of pension payment is in the form of a life annuity. For a married
participant, the normal payment is in the form of a qualified joint and survivor
annuity benefit. Participants may elect to receive their accrued retirement
benefit in a single lump sum. The annual pension benefit is not subject to any
deduction for social security.

The plan was curtailed effective December 31, 1997. Employees who participated
in the plan became fully vested at December 31, 1997.

Profit Sharing Plan

The Corporation maintains a savings and profit sharing plan ("Profit Sharing
Plan") for substantially all full-time employees who have completed one year of
service. Employees may voluntarily contribute to the plan. The Corporation's
contributions to the plan, which is subject to the discretion of the Board of
Directors, cannot exceed 7% of the Corporation's net income before income taxes.

<PAGE> 14

Supplemental Retirement Benefit Agreement

During 1994 a supplemental retirement benefit agreement was signed between John
D. Lippert and The National City Bank of Evansville. The annual retirement
benefit of the Corporation's Chairman, John D. Lippert, was affected by recent
limitations imposed by the Internal Revenue Service. To compensate for this,
upon recommendation of the Corporation's Compensation Committee, the Board of
Directors of The National City Bank of Evansville established a supplemental
retirement plan for Chairman Lippert. This plan was moved to the Corporation
during 1995. The plan calls for annual payments to Chairman Lippert of $25,000
upon his retirement from the Corporation, but not sooner than his sixty-fifth
birthday.

Management Incentive Compensation Plan

The full Board of Directors approved the Management Incentive Compensation Plan
("Incentive Plan") for implementation in 1994. The purpose of the Incentive Plan
is to help improve overall Corporate performance by providing executives with
variable award opportunities in return for outstanding measured performance. The
Incentive Plan provides incentive opportunities based on the achievement of a
combination of corporate, subsidiary, and individual executive goals. Specific
measurable performance goals are established at the beginning of each year and
approved by the Compensation Committee. At the end of the year, actual
performance relative to the predetermined goals determines earned incentive
awards. The Corporation must exceed a threshold net income percentage before any
incentive payments are provided.

Incentive Stock Option Plan

On October 18, 1995, the Board of Directors adopted the Corporation's Incentive
Stock Option Plan (the "Option Plan"), which the shareholders approved on April
16, 1996. The Option Plan authorizes the Compensation Committee to award
incentive and non-qualified stock options to key employees of the Corporation
and its subsidiaries. The total number of shares of common stock reserved for
issuance under the Option Plan is currently 554,523 shares, subject to
antidilution adjustments. The Option Plan will terminate no later than October
18, 2005. At December 31, 1997, options to purchase an aggregate of 451,361
shares had been granted and were outstanding under the Option Plan.

REPORT OF THE COMPENSATION COMMITTEE

Compensation Committee Structure and Philosophy

During 1997 the Compensation Committee consisted of five outside Directors:

Laurence R. Steenberg, Chairperson
Susanne R. Emge (since February 1997); Donald G. Harris;
H. Ray Hoops; and Ronald G. Reherman

The Committee met six times during the year, among other things, to establish
the compensation of the Corporation's executive officers.
The executive compensation program of the Corporation has been designed to

- Support a pay-for-performance policy that awards executive officers for
corporate performance;

- Motivate key senior officers to achieve strategic goals;

- Provide compensation opportunities which are comparable to those offered
by other comparable companies, thus allowing the Corporation to compete
for and retain talented executives who are critical to the Corporation's
long-term success.

Generally, compensation takes several forms, including base salary, cash bonuses
awarded in connection with the Incentive Plan, stock options granted in
connection with the Option Plan, and contributions to the Profit Sharing Plan.

<PAGE> 15

Base Salary

The Compensation Committee increased the base salary of the Named Executive
Officers during 1997 an average of 19%. During 1997 the Compensation Committee
retained McGladrey & Pullen, LLP, Certified Public Accountants and Consultants,
to evaluate the compensation and benefits paid to the Corporation's executive
officers and its subsidiaries' executive officers. The evaluation included a
comparison of compensation paid by the Corporation with compensation paid by
comparable regional financial institutions as published in established
compensation surveys. Based on (i) this evaluation, (ii) the Committee's
assessment of the Corporation's performance relative to its peers, and (iii) and
the executive officers' performance, the Compensation Committee elected to raise
base salaries for executive officers, including the Named Executive Officers.

Incentive Compensation

During 1996 the Corporation exceeded its net income target, and many executive
officers satisfied their personal performance goals of asset quality, expense
control, and growth of the Corporation; thus the Committee approved cash bonuses
under the Incentive Plan in 1997. Further, based on the purpose of the Option
Plan (encourage a proprietary interest through stock ownership), past
performance of the recipient, and the ability of the recipient to effect the
future of the Corporation, the Committee awarded incentive stock options,
including awards to Mr. Elliott and Mr. Keil.

CEO Compensation

John D. Lippert's base salary for 1997 was determined by the Compensation
Committee in accordance with the procedures described above; accordingly, his
salary for 1997 was increased 14% to $312,600. Mr. Lippert did not participate
in the Incentive Plan. Mr. Lippert received an additional $76,051 in
compensation as set forth in "Compensation of Executive Officers -- Summary
Compensation Table" pursuant to the Profit Sharing Plan and the Supplemental
Retirement Plan the Corporation entered with Mr. Lippert in 1994.

Michael F. Elliott became Chairman and Chief Executive Officer of the
Corporation effective January 1, 1998. He will receive compensation in such
capacity for 1998 in accordance with the procedures and standards described
above. During 1997 Mr. Elliott received the compensation described above and as
set forth in "Compensation of Executive Officers -- Summary Compensation Table".

Compensation Committee Interlocks and Insider Participation in Compensation
Decisions

No member of the Compensation Committee is involved in a relationship requiring
disclosure as an interlocking executive officer/director or under Item 404 of
Regulation S-K or as a former officer or employee of the Corporation.

This report on compensation is submitted by the Compensation Committee:

Laurence R. Steenberg, Chairperson
Susanne R. Emge (since February 1997); Donald G. Harris;
H. Ray Hoops; and Ronald G. Reherman

<PAGE> 16

COMPARATIVE STOCK PERFORMANCE

The following is a line graph comparing the cumulative total shareholder return
among National City Bancshares, Inc. (NCBE); the Center for Research in
Securities Prices (CRSP), at the University of Chicago, Total Return Index for
Nasdaq Bank Stocks (NASDAQ BANKS); and the CRSP Total Return Index for The
Nasdaq Stock Market, U.S. Companies only, (NASDAQ STOCK MARKET). It assumes that
$100 is invested December 31, 1992, and all dividends are reinvested. Fiscal
year ending December 31 data is used. The shareholder return shown on the graph
is not necessarily indicative of future performance.

1992 1993 1994 1995 1996 1997

<S> <C> <C> <C> <C> <C> <C>
NCBE 100.00 128.56 164.59 181.19 239.23 391.35

NASDAQ BANKS 100.00 114.04 113.63 169.23 223.70 377.44

NASDAQ STOCK MARKET 100.00 114.79 112.21 158.68 195.19 239.63

</TABLE>

TRANSACTIONS WITH MANAGEMENT

Directors and officers (of the Corporation and its subsidiaries) and their
associates were customers of, and have had transactions with, the subsidiary
banks in the ordinary course of business during 1997. These transactions
consisted of extensions of credit by the subsidiaries in the ordinary course of
business and were made on substantially the same terms, including interest rates
and collateral, as those prevailing at the time for comparable transactions with
other persons. In the opinion of the management of the subsidiaries, those
transactions do not involve more than a normal risk of being collectible or
present other unfavorable features. The subsidiaries expect to have, in the
future, financial transactions in the ordinary course of its business with
directors, officers, and their associates on the same terms, including interest
rates and collateral on loans, as those prevailing at the time on comparable
transactions with others.

SECTION 16 (A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), requires the Corporation's executive officers and directors, and persons
who own more than 10% of a registered class of the Corporation's equity
securities, to file reports of ownership and changes in ownership with the
Securities and Exchange Commission. Executive officers, directors, and greater
than 10% shareholders are required by SEC regulation to furnish the Corporation
with copies of all Section 16(a) forms they file.

Based solely on review of the copies of such forms furnished to the Corporation,
or written representations that no Forms 5 were required, the Corporation
believes that during 1997 all Section 16(a) filing requirements applicable to
its executive officers, directors, and greater than 10% beneficial owners were
complied with, except that one report covering one transaction was filed late by
Harold A. Mann.

<PAGE> 17

ITEM 2 (A-J). PROPOSED RESTATEMENT OF
THE ARTICLES OF INCORPORATION

On March 18, 1998, the Board of Directors of the Corporation unanimously
approved certain amendments to the Corporation's Articles of Incorporation and
directed that proposed Restated Articles of Incorporation incorporating the
amendments be submitted to shareholders for consideration at the Annual Meeting.
The shareholders of the Corporation are being asked to approve each of the
proposed amendments under Item 2(A-J) (the "Proposed Amendments") separately.
The adoption of each is not contingent upon the approval of the other Proposed
Amendments.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ADOPTION OF EACH OF THE PROPOSED
AMENDMENTS. See "ADVANTAGES AND DISADVANTAGES OF THE PROPOSED AMENDMENTS" at
page 18 below for further discussion of factors that should be considered by
shareholders in voting with respect to the Proposed Amendments.

Approval of a majority of the Corporation's outstanding common shares is
required for adoption of each Proposed Amendment. Each of the Proposed
Amendments that is adopted will become effective upon the requisite filing under
the Indiana Business Corporation Law ("IBCL"). Abstentions from voting on the
amendment and broker non-votes (i.e. shares held by brokers or nominees that are
represented at a meeting but with respect to which the broker or nominee is not
empowered to vote on a particular proposal) will have the practical effect of
voting against the amendment since the affirmative vote of a majority of the
Corporation's outstanding common shares is required for adoption of each
Proposed Amendment. If not otherwise specified, properly executed proxies will
be voted "FOR" each of the Proposed Amendments.

Certain of the Proposed Amendments would have the effect of reducing the
likelihood that the Corporation would be subject to a change of control or
delaying such a change of control. The Proposed Amendments are not in response
to any change of control activity of which management of the Corporation is
aware. Because certain of the Proposed Amendments would make it significantly
more difficult to change the control of the Corporation's Board, to the extent
that management might be deemed to benefit from the increased protections, the
Board might be viewed as having a conflict of interest in recommending such
Proposed Amendments to the shareholders for approval.

The following summary of the Proposed Amendments is qualified in its entirety by
reference to the text of such amendments. The existing Articles of Incorporation
of the Corporation are attached as Exhibit A to this Proxy Statement (the
"current Articles"). The proposed Restated Articles of Incorporation, which
contain the Proposed Amendments (the sections of which relate to each Proposed
Amendment A-J as set forth parenthetically below), are attached as Exhibit B to
this Proxy Statement (the "proposed Articles").

PROPOSED AMENDMENT 2(A): INCREASE THE NUMBER OF THE CORPORATION'S AUTHORIZED
COMMON SHARES FROM 20,000,000 TO 29,000,000

The Board of Directors has recommended amendment of the Articles of
Incorporation to increase the number of authorized common shares from 20,000,000
common shares, without par value (current Article V), to 29,000,000 common
shares, without par value (proposed Article V).

Historically, the Corporation has issued shares primarily as the result of stock
splits and dividends, through its dividend reinvestment plan, and in acquisition
transactions. During 1997 the Corporation declared and paid a 5% common share
dividend. Over 47,000 common shares were issued through the dividend
reinvestment plan. Also during 1997, the Corporation issued 1,169,994 common
shares in acquisition transactions. The Corporation has entered definitive
agreements under which it could issue up to an additional 2,755,555 common
shares. As of March 23, 1998, there were 10,751,557 common shares issued and
outstanding.

<PAGE> 18

The proposed increase in the number of common shares would insure that shares
will be available, if needed, for issuance in connection with share splits and
share dividends, for the dividend reinvestment plan, for acquisitions, and for
other corporate purposes. The Board believes that the availability of the
additional shares for such purposes without delay or the necessity for a special
shareholders' meeting would be beneficial to the Corporation. The Corporation
does not have any immediate plans, arrangements, commitments, or understandings
with respect to the issuance of any of the additional common shares that would
be authorized by this Proposed Amendment, other than for issuances in accordance
with prior practices for the purposes described above. No further action or
authorization by the Corporation's shareholders would be necessary prior to the
issuance of the additional common shares unless required by applicable law or
regulatory agencies or by the rules of any market on which the Corporation's
securities may then be listed.

The holders of any of the additional common shares issued in the future would
have the same rights and privileges as the holders of common shares currently
authorized and outstanding. Those rights do not include preemptive rights with
respect to the future issuance of any additional shares.

The authorization of additional common shares pursuant to this proposal will
have no dilutive effect upon the proportionate voting power of the present
shareholders of the Company. However, to the extent that shares are subsequently
issued to persons other than the present shareholders and/or in proportions
other than the proportion that presently exists, such issuance could have a
substantial dilutive effect on present shareholders.

As stated above, the Corporation does not have any immediate plans,
arrangements, commitments, or understandings with respect to the issuance of any
of the additional common shares that would be authorized by this Proposed
Amendment, other than for issuances in accordance with prior practices for the
purposes described above. However, the increased authorized shares could be used
to make a takeover attempt more difficult, such as by using the shares to make a
counter-offer for the shares of the bidder or by selling shares to dilute the
voting power of the bidder. As of this date, the Corporation is unaware of any
effort to accumulate the Corporation's shares or to obtain control of the
Corporation by means of a merger, tender offer, solicitation in opposition to
management or otherwise.

PROPOSED AMENDMENT 2(B): AUTHORIZE 1,000,000 PREFERRED SHARES

The Board also has recommended the authorization of 1,000,000 preferred shares,
without par value (proposed Article V). The Corporation currently has none.
Under the proposed Articles, the Board would have the right to establish the
rights and preferences of multiple series of preferred shares and to issue them
without further shareholder approval. Such series would have the voting rights
(which may be limited or unlimited), dividend or distribution rights, rights to
priority in relation to common shares or other series of preferred shares,
redemption or conversion prices, liquidation preferences, and sinking fund
provisions as determined by the Board.

The Board has recommended the authorization of preferred shares in order to
increase the Corporation's financial flexibility. The Board believes that the
complexity of modern business and financing and acquisition transactions
requires greater flexibility in the Corporation's capital structure than now
exists. The preferred shares would be available for issuance from time to time
as determined by the Board for any proper corporate purpose. Such purposes might
include, without limitation, issuance in public or private sales for cash as a
means of obtaining additional capital for use in the Corporation's business and
operations and issuance as part or all of the consideration required to be paid
by the Corporation for acquisitions of other businesses or properties. No
further action or authorization by the Corporation's shareholders would be
necessary prior to the issuance of the preferred shares unless required by
applicable law or regulatory agencies or by the rules of any market on which the
Corporation's securities may then be listed. The Corporation does not have any
immediate plans, agreements, understandings, or arrangements that would result
in the issuance of any preferred shares.

It is not possible to state the precise effect of the amendment upon the rights
of holders of common shares until the Board determines the respective
preferences, limitations, and relative rights of the holders of any future
series of preferred shares. However, such effects may include a dilution of the
voting power of common shares to the extent that such preferred shares have
voting rights, and may result in holders of preferred shares with preferences
and other rights superior to those of holders of common shares.

<PAGE> 19

This Proposed Amendment may be viewed as having the effect of discouraging an
unsolicited attempt by another person or entity to acquire control of the
Corporation. Issuance of authorized preferred shares can be implemented, and has
been implemented by some companies in recent years, with voting or conversion
privileges intended to make acquisition of the company more difficult or more
costly. Such an issuance could be used to discourage or limit the shareholders'
participation in certain types of transaction that might be proposed (such as a
tender offer), whether or not such transactions were favored by the majority of
the shareholders. The shares could also be used in connection with the adoption
of a shareholder rights plan, which adoption would require no further
shareholder approval. A shareholder rights plan may provide that in the event of
certain business combinations, shareholders of the Corporation would receive the
right to purchase additional shares of the Corporation at a discount from the
market value. A potential acquiror may not be granted such rights and would face
dilution of voting power and devaluation of its shareholdings. Such a plan, or
the ability of the Corporation to adopt such a plan may, therefore, be viewed as
having possible anti-takeover effects. The Board has no present intention of
adopting a shareholders' rights plan. Further, as stated above, the Board is
unaware of any effort to accumulate the Corporation's shares or to obtain
control of the Corporation by means of a merger, tender offer, solicitation in
opposition to management, or otherwise.

PROPOSED AMENDMENT 2(C): ELIMINATE CUMULATIVE VOTING IN ELECTIONS OF DIRECTORS

The Board also has recommended that the Articles be amended to eliminate
cumulative voting for the election of directors. Under the current Articles,
each shareholder has a number of votes equal to the number of shares such
shareholder is entitled to vote multiplied by the number of directors to be
elected at the meeting (current Article IX). The shareholder may allocate such
votes to or among one or more nominees for director. The candidates receiving
the highest number of votes are elected. Cumulative voting may allow a
shareholder or group representing a small minority of votes cast to cause the
election of one or more nominees. Under the proposed Articles, cumulative voting
would be eliminated (proposed Article V). The availability of cumulative voting
may be deemed to create a vulnerability to takeover attempts, and its removal to
make such attempts more difficult. The Corporation is not aware of any attempt
by a shareholder or group to elect a director by using cumulative voting. The
Board has recommended the removal of cumulative voting because the Board
believes that the system of electing directors whereby those directors are
elected who receive a plurality of votes cast by shareholders as a whole will
best ensure that the Board will act for the benefit of all shareholders.

PROPOSED AMENDMENT 2(D): PROVIDE FOR REMOVAL OF DIRECTORS ONLY FOR CAUSE AND
ONLY BY THE VOTE OF SHAREHOLDERS REPRESENTING 66 2/3% OF VOTES ENTITLED TO BE
CAST

The Board has recommended that the Articles be amended to provide that directors
of the Corporation may be removed from office only for good cause, only at a
meeting called for that purpose, by the affirmative vote of holders of
outstanding shares representing at least 66-2/3% of votes entitled to be cast at
an election of directors (proposed Article VII). "Good cause" means personal
dishonesty, incompetence, willful misconduct, breach of fiduciary duty involving
personal profit, intentional failure to perform stated duties, or willful
violation of any law, rule, regulation (other than traffic violations or similar
offenses).

The current Articles do not address the removal of directors. Under the IBCL,
absent a provision in the Articles, directors may be removed by shareholders or
directors with or without cause. A director may be removed by shareholders only
at a meeting called for that purpose. If cumulative voting is authorized, a
director may not be removed if the number of votes sufficient to elect the
director under cumulative voting is voted against removal. If cumulative voting
is not authorized, a director may be removed if the number of votes cast for
removal exceeds the number cast against.

Accordingly, one effect of this Proposed Amendment would be to make it more
difficult for the holders of the shares of the Corporation to remove incumbent
directors by increasing the vote required for removal and by imposing the
requirement of good cause for removal. This Proposed Amendment would, therefore,
allow a director to oppose the actions of certain shareholders without fear of
his or her removal based on such opposition unless such opposition would itself
be good cause for removal. Also, in conjunction with the classified Board, the
proposed change would make it more difficult for someone who acquires voting
shares of the Corporation immediately to remove incumbent directors until their
terms expire over the course of three years.

<PAGE> 20

PROPOSED AMENDMENT 2(E): FIX THE MAXIMUM NUMBER OF DIRECTORS AT 15

The Board also has recommended that the maximum number of directors be fixed at
15 (proposed Article VII). The current Articles do not limit the number of the
Corporation's directors (current Article VII). Ten directors currently serve the
Corporation. Imposing a limit on the number of directors in the Articles would
prevent a potential acquiror of the Corporation from expanding the number of
directors to undermine the influence of current directors. In conjunction with
the classified board and the proposed requirement of cause for removal of
directors, the limitation on the number of directors would make more difficult
any reduction in the influence of the current directors, whether in a takeover
attempt or otherwise.

PROPOSED AMENDMENT 2(F): PROVIDE FOR A SHAREHOLDERS' MEETING TO BE HELD UPON THE
DEMAND OF HOLDERS OF SHARES REPRESENTING 80% OF VOTES ENTITLED TO BE CAST

The Board has recommended that the current Articles be amended to require a
shareholder who desires a special shareholder meeting to be called to provide a
written demand from the holders of shares representing at least 80% of votes
entitled to be cast on the issue proposed to be considered at the meeting (so
long as the Corporation has at least 50 shareholders) (proposed Article IX). The
current Articles do not provide for shareholders to call special meetings. Under
these circumstances, the default provisions of the IBCL provide that the demand
for a special meeting must be made by the holders of all votes entitled to be
cast; however, the Corporation has opted out of that default provision by a
provision of the Corporation's By-laws (which are subject to change by
unilateral Board action) that allows a special meeting to be called on the
request the holders of 25% of all shares outstanding and entitled to be cast.
The proposed Articles would supersede the By-laws with respect to this
provision. Accordingly, the increase in the number of holders of shares required
to call a meeting would make it more difficult to call a special meeting of
shareholders and, therefore, would mean that proposals for shareholder action
desired by shareholders could be delayed until the next annual meeting of
shareholders. The Proposed Amendments would help assure that the Board, if
confronted with a surprise proposal from a third party that had acquired a
significant block of the Corporation's shares, would have additional time to
review any proposal and to consider appropriate alternatives.

PROPOSED AMENDMENT 2(G): ADOPT THE IBCL'S CONTROL PROVISIONS ALLOWING
REDEMPTION, IN CERTAIN CASES, OF AN ACQUIROR'S CONTROL SHARES

The Board has recommended that the current Articles be amended to allow the
Corporation to redeem an acquiror's "control shares" if the acquiror failed to
file a statutory notice regarding its acquisition when the Control Share
provisions of the IBCL (the "Control Provisions") apply to the Corporation. The
current Articles do not address the Control Provisions. The Control Provisions
apply by default so long as the Corporation qualifies under the Control
Provisions as an "issuing public corporation". When applicable, the Control
Provisions, among other things, give uninterested shareholders the right to vote
to decide whether an acquiror's "control shares" will be given voting power. The
proposed Articles would take advantage of an optional provision of the Control
Provisions, which allows the Corporation to redeem an acquiror's shares if the
acquiror fails to provide notice under the Control Provisions (proposed Article
X). The Board believes such notice should be given as provided by the Control
Provisions and desires to implement the Control Provisions' incentive for such
notice.

PROPOSED AMENDMENT 2(H): CLARIFY THAT SHAREHOLDERS' VOTING RIGHTS WITH RESPECT
TO CERTAIN BUSINESS COMBINATIONS EXTEND TO SALES TRANSACTIONS AND OTHER
DISTRIBUTIONS OF THE CORPORATION'S ASSETS

The Corporation's current Articles require the affirmative vote of the holders
of 80% of the issued and outstanding voting shares in order to approve certain
change in control transactions, unless such transactions have been approved in
advance by the Board (current Article IX). The proposed Articles would retain
these provisions, while clarifying that the latter provision includes, along
with mergers and consolidations, any sale, lease, exchange, or other
distribution of all or substantially all of the Corporation's assets (proposed
Article VIII).

<PAGE> 21

PROPOSED AMENDMENT 2(I): CLARIFY THE CORPORATION'S STATEMENT OF PURPOSES

The Board of Directors has recommended the amendment of the Articles to simplify
and clarify the statement of the Corporation's purposes. The statement of
purposes in the proposed Articles (proposed Article II) makes clear that the
Corporation has the power to engage in business as a holding company for
financial institutions and other financial intermediaries and to engage in all
activities for which corporations may be incorporated under the IBCL. Such a
broad statement of purposes has become common in recent years and allows the
Corporation the full measure of authority available to it under the IBCL.

PROPOSED AMENDMENT 2(J): RESTATE THE CORPORATION'S ARTICLES OF INCORPORATION IN
ACCORDANCE WITH THE IBCL TO UPDATE CORPORATE INFORMATION, ELIMINATE UNNECESSARY
AND REDUNDANT MATERIAL, AND STATE CERTAIN DEFAULT PROVISIONS OF THE IBCL

The proposed Articles are a full restatement of the current Articles.
Accordingly, the proposed Articles update, expand upon, and clarify various
provisions in a manner appropriate for a growing, publicly held corporation.
Shareholders are referred to the copy of the current Articles (Exhibit A) and
the proposed Articles (Exhibit B) attached to this Proxy Statement, and the
proposed changes are summarized below.

Outdated references to the Indiana General Corporation Act are replaced in the
proposed Articles by references to the IBCL. The Corporation's resident agent is
updated to reflect the fact that Stephen C. Byelick, Jr. has assumed this role
(proposed Article IV). Provisions no longer required in restated articles have
been removed, including requirements prior to doing business (current Article
VI), names and post office addresses of incorporators (current Article VII), and
the incorporator (current Article VIII). Provisions of the current Articles that
merely restate or summarize IBCL default provisions or which are redundant have
been removed, including provisions relating to the Corporation's capital
structure (current Article IX), directors' reliance on books of the Corporation
(current Article IX), and indemnification (Article IX). The proposed Articles
also set forth already applicable default provisions of the IBCL that provide
that meetings of shareholders and directors may be held as may be provided for
in the Corporation's By-laws from time to time (proposed Article IX), that the
Board and shareholders may act without a meeting if action is taken by all
members or shareholders by written consent (proposed Article IX), and that
shareholders shall not have personal liability for the debts or actions of the
Corporation (proposed Article IX).

Current Articles I (name) and III (period of existence) would remain unchanged.

ADVANTAGES AND DISADVANTAGES OF THE PROPOSED AMENDMENTS

As discussed above, the Board has recommended the Proposed Amendments for a
variety of reasons. Proposed Amendments A and B, for example, would provide the
Corporation with additional flexibility in issuing shares and structuring
acquisition transactions. The Proposed Amendments, individually and in
combination, may also have the effect of making more difficult a change in
control of the Corporation, including a change in control favored by a majority
of the Corporation's shareholders. The Proposed Amendments supplement provisions
of the current Articles (which are retained in the proposed Articles) that make
more difficult a change in control. As discussed above, the current Articles
provide for a classified Board and require the affirmative vote of the holders
of 80% of the issued and outstanding voting shares in order to approve certain
change in control transactions.

Public companies are potentially subject to attempts by various individuals and
entities to acquire significant minority positions in the company with the
intent either of obtaining actual control of the company by electing their own
slate of directors, or of achieving some other goal, such as the repurchase of
their shares by the company at a premium. Public companies also are potentially
subject to inadequately priced or coercive bids for control through majority
shares ownership. Accordingly, the Board recommends the Proposed Amendments, in
part, to discourage such activities.

<PAGE> 22

The Proposed Amendments (particularly Proposed Amendments A-H) have both
advantages and disadvantages to the Corporation's shareholders. The Proposed
Amendments do not prevent the purchase of all or a majority of the equity
securities of the Corporation, whether pursuant to open-market purchase,
negotiated purchases from large shareholders or an unsolicited bid for all or
part of the securities of the Corporation. Rather, the Board believes that the
Proposed Amendments would discourage disruptive tactics and encourage persons
who may seek to acquire control of the Corporation to initiate such an
acquisition through negotiations with the Board. The Board believes that it will
therefore be in better position to protect the interests of all of the
shareholders and that the shareholders will have a more meaningful opportunity
to evaluate any such action.

Although the Proposed Amendments are intended to encourage persons seeking to
acquire control of the Corporation to initiate such an acquisition through
arm's-length negotiations with the Board, the overall effect of the Proposed
Amendments may be to deter certain mergers, tender offers and other takeover
attempts (which could deprive shareholders of certain opportunities to sell
their shares at a temporarily higher market price), the assumption of control by
a holder of a larger block of common shares, the removal of incumbent management
or changes in the composition of the Board, one or more of which some or a
majority of the holders of the Corporation's voting shares may deem to be in
their best interests. However, the Board feels that the benefits of seeking to
protect the ability of the Corporation to negotiate effectively, through
directors who have previously been elected by the shareholders as a whole and
are familiar with the Corporation, outweigh any disadvantages of discouraging
such unsolicited proposals. The Proposed Amendments are not in response to any
specific efforts of which the Corporation is aware to accumulate common shares
or obtain control of the Corporation. The Board is recommending the adoption of
the Proposed Amendments in order to further continuity and stability in the
leadership and policies of the Corporation and to discourage certain types of
tactics that could involve actual or threatened changes of control that are not
in the best interests of the shareholders. Because of the time associated with
obtaining shareholder approval, the Board believes it is inadvisable to defer
consideration of the Proposed Amendments until a takeover threat is pending.
Once a specific threat exists, the time required to adopt the Proposed
Amendments may render their adoption impractical prior to the completion of the
takeover. Further, the absence of a specific threat permits the shareholders to
consider the merits of the Proposed Amendments outside the pressured atmosphere
of a takeover threat. For these reasons, the Corporation believes it is prudent
to consider the Proposed Amendments at this time.

The Board has no knowledge of any problem in the past or at the present time
with the Board's continuity or stability. In addition, the Board does not
currently contemplate recommending the adoption of any further amendments to the
Articles or any other action designed to affect the ability of third parties to
take over or change control of the Corporation. However, the Board believes that
adopting the Proposed Amendments is prudent, advantageous and in the best
interests of the shareholders because the Proposed Amendments will give the
Board more time to fulfill its responsibilities to the shareholders and will
provide greater assurance of continuity and stability in the composition and
policies of the Board. The Board also believes such advantages outweigh any
disadvantage relating to discouraging potential acquirors from attempting to
obtain control of the Corporation.

ITEM 3. OTHER MATTERS

The Board of Directors of the Corporation is not aware of any other matters that
may come before the meeting. However, the enclosed Proxy will confer
discretionary authority with respect to matters which are not known to the Board
of Directors at the time of printing hereof and which may properly come before
the meeting. A COPY OF THE CORPORATION'S 1997 REPORT FILED WITH THE SECURITIES
AND EXCHANGE COMMISSION, ON FORM 10-K, WILL BE AVAILABLE WITHOUT CHARGE TO
SHAREHOLDERS UPON REQUEST WITHOUT CHARGE (EXCEPT FOR EXHIBITS, IF REQUESTED, FOR
WHICH A REASONABLE FEE WILL BE CHARGED). ADDRESS ALL REQUESTS, IN WRITING, FOR
THIS DOCUMENT TO STEPHEN C. BYELICK, JR., SECRETARY, NATIONAL CITY BANCSHARES,
INC., 227 MAIN STREET, P. O. BOX 868, EVANSVILLE, INDIANA 47705-0868.

<PAGE> 23

INDEPENDENT PUBLIC ACCOUNTANTS

McGladrey & Pullen, LLP, Certified Public Accountants and Consultants served as
independent accountants to audit the financial statements of the Corporation and
its subsidiaries for the year 1997. McGladrey & Pullen, LLP, has audited the
books and records of the Corporation and its subsidiaries since 1993. A
representative of McGladrey & Pullen, LLP, is expected to be present at the
Annual Meeting and will have the opportunity to make a statement if desired and
to respond to appropriate questions from shareholders.

SHAREHOLDER PROPOSALS

Any proposals to be considered for inclusion in the Proxy material to be
provided to shareholders of the Corporation for its next annual meeting to be
held in 1999 must be received by the Corporation no later than December 21,
1998.

INCORPORATION BY REFERENCE

To the extent this Proxy Statement has or will be specifically incorporated by
reference into any filing by the Corporation under the Securities Act of 1933,
as amended, or the Securities Exchange Act of 1934, as amended, the sections of
this Proxy Statement entitled "Report of the Compensation Committee" and
"Comparative Stock Performance" shall not be deemed to be so incorporated unless
specifically otherwise provided in any such filing.

By Order of the Board of Directors,

STEPHEN C. BYELICK, JR.
Secretary

April 22, 1998

20
<PAGE> 24
EXHIBIT "A"

CURRENT ARTICLES OF INCORPORATION AS AMENDED

ARTICLES OF INCORPORATION

NATIONAL CITY BANCSHARES, INC.

The undersigned incorporator or incorporators, desiring to form a
corporation (hereinafter referred to as the "Corporation") pursuant to the
provisions of the Indiana General Corporation Act as amended (hereinafter
referred to as the "Act"), execute the following Articles of Incorporation:

ARTICLE I

Name

The name of the Corporation is National City Bancshares, Inc.

ARTICLE II

Purposes

The purposes for which the Corporation is formed are:

To engage in any lawful act or activity for which corporations may be
formed under the Indiana General Corporation Act and The Bank Holding Company
Act of 1956, as amended, and to possess all other rights and powers authorized
by the laws of the State of Indiana, and the laws of the United States of
America applicable to bank holding companies and the regulations of the Board of
Governors of the Federal Reserve System.

ARTICLE III

Period of Existence

The period during which the Corporation shall continue is perpetual.

ARTICLE IV

Resident Agent and Principal Office

Section 1. Resident Agent.

The name and address of the Corporation's Resident Agent for service of
process is Mr. Harold A. Mann, 227 Main Street, Evansville, Indiana 47708.

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Section 2. Principal Office.

The post office address of the principal office of the Corporation is
227 Main Street, Evansville, Indiana 47708.

ARTICLE V

Authorized Shares

Section 1. Number of Shares:

The total number of shares which the Corporation is to have authority
to issue is 20,000,000, all of which the Corporation designates as without par
value.

Section 2. Terms of Shares:

Shares of the corporation may be redeemed by the corporation at the
direction of a vote of a majority of the Board of Directors meeting at a
regularly or specially called meeting for said purpose.

Furthermore, the corporation, through its Board of Directors, shall
have the power to purchase, hold, sell, and transfer the shares of its own
capital stock provided that it does not use its funds or property for the
purchase of its own shares of capital stock when such use will cause any
impairment of its capital, except when otherwise permitted by law, and provided
further that shares of its own capital stock belonging to it are not voted upon
directly, or indirectly.

ARTICLE VI

Requirements Prior To Doing Business

The Corporation will not commence business until consideration of the
value of at least $1,000 (one thousand dollars) has been received for the
issuance of shares.

ARTICLE VII

Directors

Section 1. Number of Directors:

The initial Board of Directors is composed of 14 members. The number of
directors may be from time to time fixed by the By-Laws of the Corporation at
any number. In the absence of a By-Law fixing the number of directors, the
number shall be fourteen (14).

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Section 2. Names and Post Office Addresses of the Directors:

The names and post office addresses of the initial Board of Directors
of the Corporation are:

<TABLE>
<CAPTION>
Name Number and Street or Building City State Zip Code
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Gilbert E. Betulius Denzer Road, R.R. 13 Evansville IN 47712
Donald B. Cox 4029 Fairfax Road Evansville IN 47710
Wilfred O. Doerner 960 St. Michael Court Evansville IN 47715
Victor R. Gallagher 431 S. Rotherwood Avenue Evansville IN 47714
C. Mark Hubbard 3400 Robin Place Evansville IN 47712
Edgar P. Hughes Riverside 1, Apt. 505, 101 Court Street Evansville IN 47708
R. Eugene Johnson 6840 Arcadian Highway Evansville IN 47715
Edwin F. Karges, Jr. 1106 Harrelton Court Evansville IN 47715
John D. Lippert 3636 Elmridge Drive Evansville IN 47711
John Lee Newman 717 S. Boeke Road Evansville IN 47714
Laurence R. Steenberg 5688 Cliftmore Drive Newburgh IN 47630
C. Wayne Worthington 3023 Oak Hill Road Evansville IN 47711
George A. Wright 6001 Lincoln Avenue Evansville IN 47715
Mrs. N. Keith Emge 7108 E. Chestnut Street Evansville IN 47715
</TABLE>

Section 3. Qualification of Directors:

Directors of this corporation who serve as directors of any subsidiary
banking corporation may hold shares in this corporation as qualifying shares
entitling such directors to serve in the capacity as a director of such
subsidiary banking corporation.

ARTICLE VIII

Incorporator

The name and post office address of the incorporator of the
Corporation is Mr. Harold A. Mann, 227 Main Street, Evansville, Indiana 47708.

ARTICLE IX

Provisions for Regulation of Business
and Conduct of Affairs of Corporation

Section 1. Capital Structure.

The Board of Directors of the corporation is hereby authorized to fix
and determine and to vary the amount of working capital of the corporation, to
determine whether any and, if any, what part of its surplus, however created or
arising, shall be used or disposed of or declared in dividends or paid to
shareholders, and, without action by the Shareholders, to use and apply such
surplus or any part thereof at any time or from time to time in the purchase or
acquisition of shares of any class, voting trust certificates for shares, bonds,
debentures, notes script, warrants, obligations, evidences of indebtedness of
the corporation or other securities of the corporation, to such extent or amount
and in such manner and upon such terms as the Board of Directors of the
corporation shall deem expedient to the extent not prohibited by law.

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Section 2. Reliance on Books of the Corporation.

Each officer, director or member of any committee designated by the
Board of Directors of the corporation shall, in the performance of his duties,
be fully protected in relying in good faith upon the books of account or reports
made to the corporation by any of its officers or employees or by an independent
public accountant or by an appraiser selected with reasonable care by the Board
of Directors of the corporation or by any such committee or in relying in good
faith upon other records of the corporation.

Section 3. Indemnification.

The corporation shall have the power to indemnify its present and past
directors, officers, employees, or agents, and such other persons as it shall
have the powers to indemnify, to the full extent permitted under, and subject to
the limitations of, Title 23 of the Indiana General Corporation Act.

The corporation may upon the affirmative vote of a majority of its
Board of Directors, purchase insurance for the purpose of indemnifying its
directors, officers, employees and agents to the extent that such
indemnification is allowed in the statute mentioned above.

Any indemnification as above provided (unless ordered by a court) shall
be made by the corporation only as authorized in the specific case upon a
determination that indemnification is proper in the circumstances because it
meets the standard set out in the statute above mentioned. Such determination
shall be made (a) by the Board of Directors, by a majority vote of a quorum
consisting of directors who are not parties to such action, suit or proceeding;
or (b) if such a quorum is not obtainable, or even if obtainable, if majority
vote of disinterested directors so directs, by independent legal counsel in a
written opinion stating that such director, officer, employee or agent has met
such standards of conduct, or (c) by a majority vote of a quorum of the
shareholders of the corporation consisting of shareholders who are not parties
to such action, suit or proceeding.

Section 4. Voting Rights.

Each shareholder shall be entitled to one vote for each share of stock
standing in his name of the books of the corporation.

Each shareholder shall have the right to cumulate such voting power as
he possesses when electing directors, and to give one candidate as many votes as
the number of directors to be elected multiplied by the number of his votes
equals, or to distribute his votes on the same principle among two or more
candidates, as he sees fit.

Section 5. Classes of Directors.

The Bylaws of the Corporation may provide, that the Directors shall be
divided into two (2) or more classes whose terms of office shall expire at
different times, but no term shall continue longer than three (3) years.

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Section 6. Voting Rights on Business Combinations.

Any merger, consolidation, or acquisition of this Corporation by
another corporation without this Corporation's Board of Directors' approval,
shall require the affirmative approval of the holders of eighty percent (80%) of
the issued and outstanding common shares of stock of the Corporation and eighty
percent (80%) of the issued and outstanding preferred shares or other class of
shares, regardless of limitations or restrictions on the voting power thereof,
entitled to vote at a meeting duly called for such purpose. Irrespective of any
other provisions of these Articles, this Section 6 may be amended at any regular
meeting or at a Special Meeting called for that purpose by the affirmative vote
of the holders of receipt of shares entitling them to exercise eighty percent
(80%) of the voting power on such proposal.

ARTICLE X

Except as otherwise restricted in Article IX, these Articles may be
amended at any regular meeting or at a special meeting called for that purpose
by the affirmative vote of the holders of record of shares entitling them to
exercise a majority of the voting power on such proposal.

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EXHIBIT "B"

PROPOSED ARTICLES OF INCORPORATION

This Exhibit B is a full restatement of the Corporation's Articles of
Incorporation, which includes all amendments proposed in Item 2 (A-J). If fewer
than all of the amendments proposed in Item 2 (A-J) are adopted by the
Corporation's shareholders, appropriate modifications will be made to the
Restated Articles of Incorporation prior to their filing and effectiveness.

RESTATED ARTICLES OF INCORPORATION
OF
NATIONAL CITY BANCSHARES, INC.

National City Bancshares, Inc. (hereinafter referred to as the
"Corporation"), desiring to amend and restate its Articles of Incorporation
effective as of the date Articles of Restatement are submitted to the Indiana
Secretary of State for approval, pursuant to the provisions of the Indiana
Business Corporation Law (hereinafter referred to as the "Corporation Law"),
submits the following Restated Articles of Incorporation:

ARTICLE I
Name

The name of the Corporation is National City Bancshares, Inc.

ARTICLE II
Purposes and Powers

Section 1. Purposes of the Corporation.

The purposes for which the Corporation is formed are to (a) engage
in business as a holding company for financial institutions and other financial
intermediaries, and (b) engage in any lawful act or activity for which
corporations may now or hereafter be incorporated under the Corporation Law.

Section 2. Powers of the Corporation.

The Corporation shall have all powers now or hereafter authorized
by or vested in corporations pursuant to the provisions of the Corporation Law.

ARTICLE III
Period of Existence

The period during which the Corporation shall continue is
perpetual.

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ARTICLE IV
Resident Agent and Principal Office

Section 1. Resident Agent.

The name and address of the Corporation's Resident Agent for
service of process at the time of the adoption of these Restated Articles of
Incorporation is Mr. Stephen C. Byelick, Jr., 227 Main Street, Evansville,
Indiana 47708.

Section 2. Principal Office.

The post office address of the principal office of the Corporation
at the time of the adoption of these Restated Articles of Incorporation is P. O.
Box 868, Evansville, Indiana 47705-0868.

ARTICLE V
Authorized Shares

Section 1. Number of Shares.

The total number of shares that the Corporation has authority to
issue is 30,000,000, consisting of 29,000,000 Common Shares ("Common Shares"),
and 1,000,000 Preferred Shares ("Preferred Shares"). The Common Shares and
Preferred Shares have no par or stated value, except that, solely for the
purpose of any statute or regulation of any jurisdiction imposing any tax or fee
based upon the capitalization of the Corporation, each of the Corporation's
shares shall be deemed to have a stated value of $1.00 per share.

Section 2. General Terms of All Shares.

(a) The Corporation shall have the power to acquire (by purchase,
redemption, or otherwise), hold, own, pledge, sell, transfer, assign, reissue,
cancel, or otherwise dispose of shares of the Corporation in the manner and to
the extent now or hereafter permitted by the Corporation Law (but such power
shall not imply an obligation on the part of the owner or holder of any share to
sell or otherwise transfer such share to the Corporation), including the power
to purchase, redeem, or otherwise acquire the Corporation's own shares, directly
or indirectly, and without pro rata treatment of the owners or holders of any
class or series of shares, unless, after giving effect thereto, the Corporation
would not be able to pay its debts as they become due in the usual course of
business or the Corporation's total assets would be less than its total
liabilities (and without regard to any amounts that would be needed, if the
Corporation were to be dissolved at the time of the purchase, redemption, or
other acquisition, to satisfy the preferential rights upon dissolution of
shareholders whose preferential rights are superior to those of the holders of
the shares of the Corporation being purchased, redeemed, or otherwise acquired,
unless otherwise expressly provided with respect to a series of Preferred Shares
in the provisions of these Restated Articles of Incorporation adopted by the
Board of Directors pursuant to Section 5 of this Article describing the terms of
such series). Shares of the Corporation purchased, redeemed, or otherwise
acquired by it shall constitute authorized but unissued shares, unless prior to
any such purchase, redemption, or other acquisition, or within thirty (30) days
thereafter, the Board of Directors adopts a resolution providing that such
shares constitute authorized and issued but not outstanding shares.

(b) The Board of Directors of the Corporation may dispose of,
issue, and sell shares in accordance with, and in such amounts as may be
permitted by, the Corporation Law and the provisions of these Restated Articles
of Incorporation and for such consideration, at such price or prices, at such
time or times and upon such terms and conditions (including the privilege of
selectively repurchasing the same) as the Board of Directors of the Corporation
shall determine, without the authorization or approval by any shareholders of
the Corporation. Shares may be disposed of, issued, and sold to such persons,
firms, or corporations as the Board of Directors may determine, without any
preemptive or other right on the part of the owners or holders of other shares
of the Corporation of any class or kind to acquire such shares by reason of
their ownership of such other shares.

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(c) The Corporation shall have the power to declare and pay
dividends or other distributions upon the issued and outstanding shares of the
Corporation, subject to the limitation that a dividend or other distribution may
not be made if, after giving it effect, the Corporation would not be able to pay
its debts as they become due in the usual course of business or the
Corporation's total assets would be less than its total liabilities (and without
regard to any amounts that would be needed, if the Corporation were to be
dissolved at the time of the dividend or other distribution, to satisfy the
preferential rights upon dissolution of shareholders whose preferential rights
are superior to those of the holders of shares receiving the dividend or other
distribution, unless otherwise expressly provided with respect to a series of
Preferred Shares in the provisions of these Restated Articles of Incorporation
adopted by the Board of Directors pursuant to Section 5 of this Article
describing the terms of such series). Except as otherwise provided in Section 4
of this Article, the Corporation shall have the power to issue shares of one
class or series as a share dividend or other distribution in respect of that
class or series or one or more other classes or series.

Section 3. Voting Rights of Shares.

(a) Except as otherwise provided by the Corporation Law and
subject to such shareholder disclosure and recognition procedures (which may
include voting prohibition sanctions) as the Corporation may by action of its
Board of Directors establish, Common Shares have unlimited voting rights. Common
Shares shall not have cumulative voting rights.

(b) Preferred Shares shall, when validly issued by the
Corporation, entitle the record holder thereof to vote as and on such matters,
but only as and on such matters, as the holders thereof are entitled to vote
under the Corporation Law or under the provisions of these Restated Articles of
Incorporation adopted by the Board of Directors pursuant to Section 5 of this
Article describing the terms of the Preferred Shares or a series thereof (which
provisions may provide for special, conditional, limited, or unlimited voting
rights, including multiple or fractional votes per share, or for no right to
vote, except to the extent required by the Corporation Law) and subject to such
shareholder disclosure and recognition procedures (which may include voting
prohibition sanctions) as the Corporation may by action of the Board of
Directors establish.

Section 4. Other Terms of Common Shares.

Common Shares shall be equal in every respect insofar as their
relationship to the Corporation is concerned, but such equality of rights shall
not imply equality of treatment as to redemption or other acquisition of shares
by the Corporation. Subject to the rights of the holders of any outstanding
Preferred Shares issued under Section 5 of this Article, the holders of Common
Shares shall be entitled to share ratably in such dividends or other
distributions (other than purchases, redemptions, or other acquisitions of
shares by the Corporation), if any, as are declared and paid from time to time
on the Common Shares at the discretion of the Board of Directors. In the event
of any liquidation, dissolution, or winding up of the Corporation, either
voluntary or involuntary, after payment shall have been made to the holders of
the Preferred Shares of the full amount to which they shall be entitled under
this Article, the holders of Common Shares shall be entitled, to the exclusion
of the holders of the Preferred Shares of any and all series, to share, ratably
according to the number of shares of Common Shares held by them, in all
remaining assets of the Corporation available for distribution to its
shareholders.

Section 5. Other Terms of Preferred Shares.

(a) Preferred Shares may be issued from time to time in one or
more series, each such series to have such distinctive designation and such
preferences, limitations, and relative voting and other rights as shall be set
forth in these Restated Articles of Incorporation. Subject to the requirements
of the Corporation Law and subject to all other provisions of these Restated
Articles of Incorporation, the Board of Directors of the Corporation may create
one or more series of Preferred Shares and may determine the preferences,
limitations, and relative voting and other rights of one or more series of
Preferred Shares before the issuance of any shares of that series by the
adoption of an amendment to these Restated Articles of Incorporation that
specifies the terms of the series of Preferred Shares. All shares of a series of
Preferred

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Shares must have preferences, limitations, and relative voting and other rights
identical with those of other shares of the same series and, if the description
of the series set forth in these Restated Articles of Incorporation so provides,
no series of Preferred Shares need have preferences, limitations, or relative
voting or other rights identical with those of any other series of Preferred
Shares.

Before issuing any shares of a series of Preferred Shares, the
Board of Directors shall adopt an amendment to these Restated Articles of
Incorporation, which shall be effective without any shareholder approval or
other action, that sets forth the preferences, limitations, and relative voting
and other rights of the series, and authority is hereby expressly vested in the
Board of Directors, by such amendment:

(1) To fix the distinctive designation of such series and the
number of shares which shall constitute such series, which number may be
increased or decreased (but not below the number of shares thereof then
outstanding) from time to time by action of the Board of Directors;

(2) To fix the voting rights of such series, which may consist of
special, conditional, limited, or unlimited voting rights, including
multiple or fractional votes per share, or no right to vote (except to
the extent required by the Corporation Law);

(3) To fix the dividend or distribution rights of such series and
the manner of calculating the amount and time for payment of dividends or
distributions, including, but not limited to:

(A) the dividend rate, if any, of such series;

(B) any limitations, restrictions, or conditions on the
payment of dividends or other distributions, including whether
dividends or other distributions shall be noncumulative or
cumulative or partially cumulative and, if so, from which date or
dates;

(C) the relative rights of priority, if any, of payment of
dividends or other distributions on shares of that series in
relation to Common Shares and shares of any other series of
Preferred Shares; and

(D) the form of dividends or other distributions, which may
be payable at the option of the Corporation, the shareholder, or
another person (and in such case to prescribe the terms and
conditions of exercising such option), or upon the occurrence of a
designated event in cash, indebtedness, shares or other securities
or other property, or in any combination thereof,

and to make provisions, in the case of dividends or other distributions
payable in shares or other securities, for adjustment of the dividend or
distribution rate in such events as the Board of Directors shall
determine;

(4) To fix the price or prices at which, and the terms and
conditions on which, the shares of such series may be redeemed or
converted, which may be

(A) at the option of the Corporation, the shareholder, or
another person or upon the occurrence of a designated event;

(B) for cash, indebtedness, securities, or other property or
any combination thereof; and

(C) in a designated amount or in an amount determined in
accordance with a designated formula or by reference to extrinsic
data or events;

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(5) To fix the amount or amounts payable upon the shares of such
series in the event of any liquidation, dissolution, or winding up of the
Corporation and the relative rights of priority, if any, of payment upon
shares of such series in relation to Common Shares and shares of any
other series of special shares; and to determine whether or not any such
preferential rights upon dissolution need be considered in determining
whether or not the Corporation may make dividends, repurchases, or other
distributions;

(6) To determine whether or not the shares of such series shall be
entitled to the benefit of a sinking fund to be applied to the purchase
or redemption of such series and, if so entitled, the amount of such fund
and the manner of its application;

(7) To determine whether or not the issuance of any additional
shares of such series or of any other series in addition to such series
shall be subject to restrictions in addition to restrictions, if any, on
the issuance of additional shares imposed in the provisions of these
Restated Articles of Incorporation fixing the terms of any outstanding
series of Preferred Shares theretofore issued pursuant to this Section
and, if subject to additional restrictions, the extent of such additional
restrictions; and

(8) Generally to fix the other preferences or rights, and any
qualifications, limitations, or restrictions of such preferences or
rights, of such series to the full extent permitted by the Corporation
Law; provided, however, that no such preferences, rights, qualifications,
limitations, or restrictions shall be in conflict with these Restated
Articles of Incorporation or any amendment hereof.

(b) Preferred Shares of any series that have been redeemed
(whether through the operation of a sinking fund or otherwise) or purchased by
the Corporation, or which, if convertible, have been converted into shares of
the Corporation of any other class or series, may be reissued as a part of such
series or of any other series of Preferred Shares, subject to such limitations
(if any) as may be fixed by the Board of Directors with respect to such series
of Preferred Shares in accordance with subsection (a) of this Section.

ARTICLE VI
Reserved

ARTICLE VII
Directors

Section 1. Number.

The Board of Directors at the time of adoption of these Restated
Articles of Incorporation is composed of ten (10) members, which number may be
changed from time to time by amendment to the By-Laws, but which in no event
shall exceed fifteen (15). Whenever the By-Laws provide that the number of
Directors shall be three (3) or more, the By-Laws may also provide for
staggering the terms of the members of the Board of Directors by dividing the
total number of Directors into three (3) groups (with each group containing
one-third (1/3) of the total, as near as may be) whose terms of office expire at
different times.

Section 2. Qualifications.

Directors need not be shareholders of the Corporation or residents
of this or any other state in the United States. Directors of the Corporation
who serve as directors of any subsidiary banking corporation may hold shares in
the Corporation as qualifying shares entitling such directors to serve in the
capacity as a director of such subsidiary banking corporation.

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Section 3. Vacancies.

Vacancies occurring in the Board of Directors shall be filled in
the manner provided in the By-Laws or, if the By-Laws do not provide for the
filling of vacancies, in the manner provided by the Corporation Law. The By-Laws
may also provide that in certain circumstances specified therein, vacancies
occurring in the Board of Directors may be filled by vote of the shareholders at
a special meeting called for that purpose or at the next annual meeting of
shareholders.

Section 4. Removal of Directors.

Any or all of the members of the Board of Directors may be
removed, for good cause, only at a meeting of the shareholders called expressly
for that purpose, by the affirmative vote of the holders of outstanding shares
representing at least sixty-six and two-thirds percent (66-2/3%) of all the
votes then entitled to be cast at an election of Directors. Directors may not be
removed in the absence of good cause, which "good cause" shall mean personal
dishonesty, incompetence, willful misconduct, breach of fiduciary duty involving
personal profit, intentional failure to perform stated duties, or willful
violation of any law, rule, regulation (other than traffic violations or similar
offenses).

Section 5. Election of Directors by Holders of Preferred Shares.

The holders of one (1) or more series of Preferred Shares may be
entitled to elect all or a specified number of Directors, but only to the extent
and subject to limitations as may be set forth in the provisions of these
Restated Articles of Incorporation adopted by the Board of Directors pursuant to
Section 5 of Article V hereof describing the terms of the series of Preferred
Shares.

ARTICLE VIII
Voting Rights Regarding Business Combinations

Section 1. Shareholder Vote Required.

The affirmative vote of the holders of not less than eighty
percent (80%) of the outstanding voting shares of the Corporation shall be
required for the approval or authorization of any (a) merger or consolidation of
the corporation with or into any other corporation, or (b) sale, lease,
exchange, or other disposition of all or substantially all of the assets of the
Corporation to any other corporation, person, or other entity; provided,
however, that such eighty percent (80%) voting requirement shall not be
applicable if the Board of Directors of the Corporation shall have approved such
a transaction described in (a) or (b) above by a resolution adopted by a
majority of such Board of Directors.

Section 2. Amendment.

Notwithstanding any other provision of the Restated Articles of
Incorporation, this Article may be amended only at a meeting of the shareholders
(called pursuant to Article IX, Section 1 or 2) by the affirmative vote of the
holders of shares entitling them to exercise eighty percent (80%) of the voting
power with respect to the transactions set forth in Section 1 of this Article.

ARTICLE IX
Provisions for Regulation of Business
and Conduct of Affairs of Corporation

Section 1. Meetings of Shareholders.

Meetings of the shareholders of the Corporation shall be held at
such time and at such place, either within or without the State of Indiana, as
may be stated in or fixed in accordance with the By-Laws of the Corporation and
specified in the respective notices or waivers of notice of any such meetings.

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Section 2. Special Meetings of Shareholders.

Special meetings of the shareholders, for any purpose or purposes,
unless otherwise prescribed by the Corporation Law, may be called at any time by
the Board of Directors or the officers authorized to do so by the By-Laws and
shall be called by the Board of Directors if the Secretary of the Corporation
receives one (1) or more written, dated, and signed demands for a special
meeting, describing in reasonable detail the purpose or purposes for which it is
to be held, from the holders of shares representing at least twenty-five percent
(25%) of all the votes entitled to be cast on any issue proposed to be
considered at the proposed special meeting; provided, however, that any such
demand(s) delivered to the Secretary at any time at which the Corporation has
more than 50 shareholders must be properly delivered by the holders of shares
representing at least eighty percent (80%) of all the votes entitled to be cast
on any issue proposed to be considered at the proposed special meeting. If the
Secretary receives one (1) or more proper written demands for a special meeting
of shareholders, the Board of Directors may set a record date for determining
shareholders entitled to make such demand.

Section 3. Meetings of Directors.

Meetings of the Board of Directors of the Corporation shall be
held at such place, either within or without the State of Indiana, as may be
authorized by the By-Laws and specified in the respective notices or waivers of
notice of any such meetings or otherwise specified by the Board of Directors.
Unless the By-Laws provide otherwise, (a) regular meetings of the Board of
Directors may be held without notice of the date, time, place, or purpose of the
meeting and (b) the notice for a special meeting need not describe the purpose
or purposes of the special meeting.

Section 4. Action without Meeting.

Any action required or permitted to be taken at any meeting of the
Board of Directors or shareholders, or of any committee of such Board, may be
taken without a meeting, if the action is taken by all members of the Board or
all shareholders entitled to vote on the action, or by all members of such
committee, as the case may be. The action must be evidenced by one (1) or more
written consents describing the action taken, signed by each Director, or all
the shareholders entitled to vote on the action, or by each member of such
committee, as the case may be, and, in the case of action by the Board of
Directors or a committee thereof, included in the minutes or filed with the
corporate records reflecting the action taken or, in the case of action by the
shareholders, delivered to the Corporation for inclusion in the minutes or
filing with the corporate records. Action taken under this Section is effective
when the last Director, shareholder, or committee member, as the case may be,
signs the consent, unless the consent specifies a different prior or subsequent
effective date, in which case the action is effective on or as of the specified
date. Such consent shall have the same effect as a unanimous vote of all members
of the Board, or all shareholders, or all members of the committee, as the case
may be, and may be described as such in any document.

Section 5. Nonliability of Shareholders.

Shareholders of the Corporation are not personally liable for the
acts or debts of the Corporation, nor is private property of shareholders
subject to the payment of corporate debts.

ARTICLE X
Miscellaneous Provisions

Section 1. Amendment or Repeal.

Except as otherwise expressly provided in these Restated Articles
of Incorporation the Corporation shall be deemed, for all purposes, to have
reserved the right to amend, alter, change, or repeal any provision contained in
these Restated Articles of Incorporation to the extent and in the manner now or
hereafter permitted or prescribed by statute, and all rights herein conferred
upon shareholders are granted subject to such reservation.

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<PAGE> 36

Section 2. Redemption of Shares Acquired in Control Share Acquisitions.

If and whenever the provisions of IC 23-1-42 apply to the
Corporation, it is authorized to redeem its securities pursuant to IC
23-1-42-10.

Section 3. Captions.

The captions of the Articles and Sections of these Restated
Articles of Incorporation have been inserted for convenience of reference only
and do not in any way define, limit, construe, or describe the scope or intent
of any Article or Section hereof.

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<PAGE> 37
PROXY

NATIONAL CITY BANCSHARES, INC.
227 Main Street, P. O. Box 868 THIS PROXY IS SOLICITED ON BEHALF OF THE
Evansville, IN 47705-0868 BOARD OF DIRECTORS.
The undersigned hereby appoints Waller S.
Clements, Ole J. Olsen, Jr., Esq., and
David L. Woll, Esq., Proxies, each with
the power to appoint his or her
substitute, and hereby authorizes them to
represent and to vote as below, all the
shares of Common Stock of National City
Bancshares, Inc. held of record by the
undersigned on March 23, 1998, at the
Annual Meeting of Shareholders to be held
on May 20, 1998, or any adjournment
thereof.

1. ELECTION OF DIRECTORS - CLASS III (term to expire 2001)

FOR all nominees listed below WITHHOLD AUTHORITY
(except as marked to the contrary below) [ ] to vote for all nominees
listed below [ ]

INSTRUCTIONS: To withhold authority to vote for any individual nominee,
strike a line through the nominee's name in the list below. To distribute
your votes on a cumulative basis, write the number of votes you wish to cast
for each nominee below that nominee's name.

Dr. H. Ray Hoops John D. Lippert Ronald G. Reherman

2. PROPOSAL TO AMEND AND RESTATE THE ARTICLES OF INCORPORATION to do the
following:

A. Increase the number of the Corporation's authorized common shares from
20,000,000 to 29,000,000;