UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended
Commission File
March 31, 1996
Number 0-10869
FORT WAYNE NATIONAL CORPORATION
(Exact name of registrant as specified in its charter.)
INDIANA
35-1502812
(State or other jurisdiction of
(I.R.S. Employer
incorporation or organization)
Identification No.)
110 West Berry Street
Post Office Box 110, Fort Wayne, Indiana
46801
(Address of principal executive offices)
(Zip Code)
(219) 426-0555
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant(1) has filed all
reports
required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of
1934 during the preceding 12 months, and (2) has been subject to
such filing
requirements for the past 90 days.
YES [X] NO [ ]
Indicate the number of shares outstanding of each of the issuer's
classes of
common stock, as of the latest practical date:
Class Outstanding May
6, 1996
________________________________
____________________________
Common Shares, Without Par Value 11,435,374
- 1 -
<PAGE>
FORT WAYNE NATIONAL CORPORATION AND SUBSIDIARIES
INDEX
<TABLE>
<CAPTION>
PART I FINANCIAL INFORMATION
PAGE NO.
<S> <C> <C>
Item 1. Financial Statements
Consolidated balance sheet -- March 31, 1996,
December 31, 1995 and March 31, 1995...........
3.
Consolidated statement of income -- three months
ended March 31, 1996 and 1995..................
4.
Consolidated statement of cash flows -- three
months ended March 31, 1996 and 1995...........
5.
Notes to consolidated financial statements --
March 31, 1996.................................
6.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.............. 8
- - 14.
</TABLE>
<TABLE>
<CAPTION>
PART II OTHER INFORMATION
<S> <C> <C>
Item 1. Legal Proceedings................................
15.
Item 2. Changes in Securities............................
15.
Item 3. Defaults on Senior Securities....................
15.
Item 4. Submission of Matters to a Vote of Security
Holders.........................................
15.
Item 5. Other Information................................
15.
Item 6. Exhibits and Reports on Form 8-K.................
15.
</TABLE>
SIGNATURES..................................................
16.
- 2 -
<PAGE>
<TABLE>
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
FORT WAYNE NATIONAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(Unaudited)
<CAPTION>
March 3 December 31
March 31
1996 1995
1995
___________ ___________
___________
(In thousands)
<S> <C> <C>
<C>
ASSETS
Cash and due from banks............ $ 145,190 $ 177,602
$ 107,544
Federal funds sold and
securities purchased
under agreements to resell....... 11,000 27,150
3,700
Interest-bearing deposits
with banks....................... 214 200
200
Investment securities.............. 784,073 764,560
705,462
Loans.............................. 1,265,639 1,276,567
1,224,462
Less: Unearned income........... (3,025) (3,173)
(2,901)
Allowance for possible
loan losses............. (20,641) (20,047)
(22,290)
__________ __________
__________
NET LOANS 1,241,973 1,253,347
1,199,271
Premises and equipment............. 34,900 33,664
32,797
Other assets....................... 42,079 39,584
41,739
__________ __________
__________
TOTAL ASSETS $2,259,429 $2,296,107
$2,090,713
========== ==========
==========
</TABLE>
<TABLE>
<CAPTION>
LIABILITIES AND SHAREHOLDERS' EQUITY
<S> <C> <C>
<C>
Deposits:
Noninterest-bearing.............. $ 272,642 $ 284,003
$ 238,065
Interest-bearing................. 1,514,583 1,483,527
1,387,989
__________ __________
__________
TOTAL DEPOSITS 1,787,225 1,767,530
1,626,054
Federal funds purchased
and securities sold under
agreements to repurchase......... 188,644 241,263
210,907
Notes payable - U.S. Treasury and
other borrowings................. 22,431 26,381
13,033
Dividends payable.................. 2,747 2,743
2,530
Accrued liabilities................ 18,059 16,852
16,893
Subordinated and other long-term
notes............................ 6,400 6,400
7,160
__________ __________
__________
TOTAL LIABILITIES 2,025,506 2,061,169
1,876,577
Deferred gain on sale of premises.. 1,160 1,227
1,426
Shareholders' equity:
Preferred stock, without par value:
Class A Voting - 1,000,000 shares
authorized but unissued
Class B Nonvoting - 1,000,000
shares authorized but unissued
Common stock, without par value:
Authorized shares: 20,000,000
Issued and outstanding shares -
March 31, 1996- 11,447,454;
December 31, 1995- 11,428,717;
March 31, 1995 - 11,501,535.... 19,079 19,048
19,169
Capital surplus.................... 31,704 31,502
31,680
Retained earnings.................. 175,134 170,990
160,880
Unrealized gain on securities
available-for-sale............... 6,846 12,171
981
__________ __________
__________
TOTAL SHAREHOLDERS' EQUITY 232,763 233,711
212,710
__________ __________
__________
TOTAL LIABILITIES
AND SHAREHOLDERS' EQUITY $2,259,429 $2,296,107
$2,090,713
========== ==========
==========
</TABLE>
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<PAGE>
<TABLE>
FORT WAYNE NATIONAL CORPORATION AND
SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
(Unaudited)
<CAPTION>
Three Months
Ended March 31
1996
1995
_______
_______
(In thousands,
except
per share data)
<S> <C> <C>
INTEREST INCOME
Interest and fees on loans:
Taxable......................................... $27,290
$26,489
Tax-exempt...................................... 210
358
Interest and dividends on investment securities:
Taxable......................................... 9,185
8,636
Tax-exempt...................................... 2,647
2,554
Interest on federal funds sold and securities
purchased under agreements to resell............ 494
120
Interest on deposits with banks................... 3
2
_______
_______
TOTAL INTEREST INCOME 39,829
38,159
INTEREST EXPENSE
Interest on deposits.............................. 16,873
14,795
Interest on federal funds
purchased and securities sold
under agreements to repurchase.................. 2,564
3,064
Interest on notes payable -
U.S. Treasury and other borrowings.............. 349
297
Interest on subordinated and other long-term notes 207
231
_______
_______
TOTAL INTEREST EXPENSE 19,993
18,387
_______
_______
NET INTEREST INCOME BEFORE
PROVISION FOR POSSIBLE LOAN LOSSES 19,836
19,772
Provision for possible loan losses............... 880
735
_______
_______
NET INTEREST INCOME AFTER PROVISION
FOR POSSIBLE LOAN LOSSES 18,956
19,037
NONINTEREST INCOME
Fiduciary fees.................................... 2,901
2,372
Service charges on deposit accounts............... 1,267
1,089
Other service charges............................. 602
775
Net securities gains.............................. 378
11
Other income...................................... 618
482
_______
_______
TOTAL NONINTEREST INCOME 5,766
4,729
NONINTEREST EXPENSE
Salaries and wages................................ 6,804
6,322
Employee benefits................................. 1,541
1,628
Net Occupancy..................................... 1,364
1,358
Equipment expense................................. 1,173
1,027
FDIC assessment................................... 8
946
Other expense..................................... 3,884
3,991
_______
_______
TOTAL NONINTEREST EXPENSE 14,774
15,272
_______
_______
INCOME BEFORE INCOME TAXES 9,948
8,494
Applicable income taxes........................... 3,057
2,273
_______
_______
NET INCOME $ 6,891 $
6,221
======= =======
Net income per share.............................. $ .60 $
.54
======= =======
</TABLE>
- 4 -
PAGE
<PAGE>
<TABLE>
FORT WAYNE NATIONAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
<CAPTION>
Three
Months
Ended
March 31
1996
1995
________
________
(In
thousands)
<S> <C>
<C>
OPERATING ACTIVITIES
Net income $ 6,891
$ 6,221
Adjustments to reconcile net income to
net cash provided by operating activities:
Provision for possible loan losses................. 880
735
Net accretion and amortization
of investment securities......................... 26
23
Net accretion and amortization of loans............ (6)
(1)
Provision for depreciation and amortization
of premises and equipment........................ 914
863
Deferred income taxes.............................. (434)
(91)
Amortization of deferred gain on sale of premises.. (67)
(67)
Gain on sale of investment securities
available-for-sale............................... (407)
(14)
Loss on sale of investment securities
available-for-sale............................... 29
3
Market value adjustment on investment
securities held for trading...................... 2,108
--
Net loss on sale of investment securities
held for trading................................. 199
--
Proceeds from sale of investment securities
held for trading................................. 15,242
--
Purchase of investment securities held for
trading.......................................... (35,236)
--
Loans originated for resale........................ (6,488)
(374)
Unrealized (gain)loss on loans held for sale....... 31
(31)
Proceeds from sales of loans....................... 6,365
768
Net (gain) loss on sale of loans................... (7)
(9)
Net loss on sale of premises and equipment......... 1
10
(Increase) decrease in other assets................ 1,567
(340)
Increase (decrease) in other liabilities........... 1,207
346
________
________
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES (7,185)
8,042
INVESTING ACTIVITIES
Net decrease in federal funds sold and securities
purchased under agreements to resell................ 16,150
(1,800)
Net increase in interest-bearing deposits with banks. (14)
--
Proceeds from sales of investment securities
available-for-sale.................................. 574
650
Proceeds from maturities and calls of investment
securities available-for-sale....................... 34,304
57,438
Purchases of investment securities available-for-sale (45,305)
(45,523)
Net (increase) decrease in loans..................... 10,599
(4,936)
Proceeds from disposals of premises and equipment.... 3
7
Purchase of premises and equipment................... (2,154)
(921)
________
________
NET CASH PROVIDED BY INVESTING ACTIVITIES 14,157
4,915
FINANCING ACTIVITIES
Net increase in deposits............................. 19,695
(6,288)
Net decrease in short-term borrowings................ (56,569)
(52,954)
Cash dividends paid.................................. (2,743)
(2,529)
Proceeds from exercise of stock options.............. 233
74
________
________
NET CASH USED IN FINANCING ACTIVITIES (39,384)
(61,697)
________
________
DECREASE IN CASH AND CASH EQUIVALENTS (32,412)
(48,740)
Cash and cash equivalents at beginning of period..... 177,602
156,284
________
________
CASH AND CASH EQUIVALENTS AT END OF PERIOD $145,190
$107,544
========
========
</TABLE>
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<PAGE>
FORT WAYNE NATIONAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Principals of Consolidation
The financial statements are consolidated statements of Fort
Wayne National
Corporation(the Company) and its wholly-owned subsidiaries. All
significant
intercompany accounts and transactions have been eliminated. A
description
of all significant accounting policies is included in the 1995
Annual Report
to Shareholders.
The accompanying unaudited consolidated financial statements have
been
prepared in accordance with generally accepted accounting
principals for
interim financial information and with the instructions to Form
10-Q and
Article 10 of Regulation S-X. Accordingly, they do not include
all of the
information and footnotes required by generally accepted
accounting principles
for complete financial statements. In the opinion of management,
all
adjustments (consisting of normal recurring accruals) considered
necessary for
a fair presentation have been made. Operating results for the
three-month
period ended March 31, 1996 are not necessarily indicative of the
results that
may be expected for the year ending December 31, 1996.
2. Shareholders' Equity and Per Share Data
Net income per share is based on weighted average shares
outstanding of
11,442,040 and 11,498,277 for the three months ended March 31,
1996 and
1995, respectively.
3. Pending Acquisition
On November 6, 1995 the Company entered into an Agreement and
Plan of Merger
with Valley Financial Services, Inc. (VFS). The terms of the
agreement
provide that the Company will exchange approximately $53 million
in cash, $20
million in common stock and $37 million in preferred stock for
all outstanding
Valley Financial Services, Inc. common and preferred stock.
The acquisition is expected to be accounted for under the
purchase method of
accounting. Subject to required approvals by regulators and the
shareholders
of VFS, consummation of the merger is anticipated to occur during
the second
quarter of 1996.
Total assets of Valley Financial Services, Inc. as of December
31, 1995 were
approximately $818,618,000.
4. Recently Adopted Accounting Standards
In May 1995, the Financial Accounting Standards Board issued
Statement of
Financial Accounting No. 122, "Accounting for Mortgage Servicing
Rights - An
Amendment to Statement No. 65." The Company has adopted this
statement as of
January 1, 1996. Statement 122 prohibits retroactive application
to 1995,
therefore the reported results for the three months ended March
31, 1996 are
not directly comparable to the three months ended March 31, 1995.
- 6 -
<PAGE>
FORT WAYNE NATIONAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)-
Continued
4. Recently Adopted Accounting Standards - Continued
Statement 122 requires the total cost of acquiring mortgage
loans, either
through loan origination activities or purchase transactions, to
be allocated
to the mortgage servicing rights and the loans based on their
relative fair
values. The statement requires entities to measure impairment on
a
disaggregated basis by stratifying the capitalized servicing
asset based on
one or more predominant risk characteristics of the underlying
loans.
Impairment is recognized through a valuation allowance for each
individual
stratum as necessary. The adoption of Statement 122 resulted in
a pretax gain
of $60,000 representing capitalized originated mortgage servicing
rights, net
of amortization.
In October 1995, the Financial Accounting Standards Board issued
Statement
123, "Accounting for Stock Based Compensation." As permitted by
Statement
123, the Company has elected to continue to follow Accounting
Principles Board
Opinion No. 25, "Accounting for Stock Issued to Employees" and
related
interpretations in accounting for its stock based compensation.
The Company
grants stock options for a fixed number of shares to employees
with an
exercise price equal to the fair value of shares at the date of
grant and,
accordingly, recognizes no compensation for the stock option
grants.
- 7 -
<PAGE>
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
FORT WAYNE NATIONAL CORPORATION
Management's Discussion and Analysis of Financial Condition
and
Results of Operations
Financial Condition
Total assets of the Company decreased $37 million at March 31,
1996 when
compared to December 31, 1995. Average daily assets for the
first quarter of
1996 of $2.236 billion were 7.2% above the $2.085 billion for the
first
quarter of 1995.
Loans, net of unearned discount as of March 31, 1996 were
approximately $11
million below the amount outstanding on December 31, 1995 yet $41
million over
March 31, 1995. The decrease from December 31, 1995 has occurred
primarily in
the consumer loan portfolio. Consumer loans outstanding as of
March 31, 1996,
including home equity, credit card and other consumer loans, are
$9 million
below the amount outstanding as of December 31, 1995 and $14
million below the
amount outstanding as of March 31, 1995. Installment loan volumes
are down as
the Company has been de-emphasizing its indirect lending
activities. Combined
commercial related loans outstanding, including construction and
land
development, commercial and industrial, and commercial real
estate loans were
$644 million at the end of the first quarter of 1996 as compared
to $667
million at the year end 1995 and $623 million at the end of the
first quarter
of 1995. The Company's residential mortgage loan portfolio,
however, has
shown continued growth with outstandings reaching $326 million as
of March 31,
1996 compared to $324 million at December 31, 1995 and $311
million at March
31, 1995. The $2 million increase in residential mortgage loans
outstanding
from December 31, 1995 is net of over $6 million of fixed rate
loans sold in
the secondary market during the first quarter of 1996.
Average loans outstanding reflect the trends noted above. For
the first
quarter of 1996, loans averaged $1.252 billion, a $19 million
decrease from
the fourth quarter of 1995 and a $41 million increase over the
first quarter
of 1995.
The Company's investment portfolio at March 31, 1996 is comprised
of
investment securities available-for-sale of $745 million and
investment
securities held for trading purposes of $39 million. The net
unrealized gain,
net of taxes, on securities available-for-sale was $7 million at
March 31,
1996, $12 million at December 31, 1995 and $1 million at March
31, 1995.
- 8 -
<PAGE>
Available-for-sale securities, excluding the market valuation
adjustment,
increased $11 million from December 31, 1995 as the Company's
loan demand has
not kept pace with deposit growth during the quarter. On average
for first
quarter of 1996, investments available-for-sale were $13 million
above the
same period last year.
Federal funds sold decreased by $16 million as of March 31, 1996
compared to
year-end 1995. However, average federal funds sold increased $32
million for
the three months ended March 31, 1996 from the same period in
1995.
The Company's total deposits increased $20 million at March 31,
1996 when
compared to December 31, 1995. Average total deposits for the
first quarter
of 1996 are $120 million over the same period last year. In
addition to the
overall growth in deposits, the Company has also seen a shift in
the mix of
deposits toward longer-term categories. Average interest-bearing
checking
accounts increased just $3 million compared to the first quarter
of 1995 while
savings deposits decreased by $29 million. The growth in average
deposits is
therefore attributable to the $182 million increase in time
deposits over the
same period in 1995. Included in the time deposit category is
the
AnydayEveryday account which was introduced by the Company in May
of 1995.
This account is priced to yield a return which is above the
average money
market rate. Over 70% of the increase in the time deposit
category results
from increases in the AnydayEveryday account.
Short-term borrowings, consisting of federal funds purchased and
securities
sold under agreements to repurchase, and notes payable, decreased
$57 million
at March 31, 1996 from December 31, 1995. On average, short-term
borrowings
for the first quarter of 1996 were $17 million under the same
period in 1995.
Capital Resources
The Federal Reserve Board standards classify capital into two
categories,
called Tier I and Tier II. The Company is required to maintain a
certain
amount of capital in each category based on "risk-adjusted"
assets. The
capital guidelines require a combined Tier I and Tier II ratio of
8.0% with at
least a 4.0% Tier I capital ratio. In addition, the Federal
Reserve Board
requires a minimum Tier I leverage ratio of 4.0%. Tier I
leverage ratio is
defined as Tier I capital divided by total assets less goodwill.
The
Company's risk-based capital ratios continue to exceed minimum
regulatory
requirements as shown in the following table (in thousands of
dollars).
- 9 -
<PAGE>
<TABLE>
RISK-BASED CAPITAL
<CAPTION>
MAR 31, 1996 DEC 31, 1995
MAR 31, 1995
_____________ ____________
_____________
<S> <C> <C> <C>
Tier I Capital $ 223,908 $ 219,479 $
209,495
Tier II Capital 18,256 18,261
16,233
____________ ____________
____________
Total Tier I and Tier II Capital $ 242,164 $ 237,740 $
225,728
============ ============
============
Risk-weighted Assets $ 1,460,639 $ 1,461,003 $
1,298,771
============ ============
============
Tier I Capital Ratio 15.33% 15.02%
16.13%
Tier II Capital Ratio 1.25% 1.25%
1.25%
____________ ____________
____________
Total Tier I and Tier II
Capital Ratio 16.58% 16.27%
17.38%
============ ============
============
Tier I Leverage Ratio 9.92% 9.57%
10.03%
============ ============
============
</TABLE>
Results of Operations
Net income for the first quarter of 1996 amounted to $6.9 million
or $.60 per
share, an increase of $670,000 over the first quarter of 1995.
The net interest margin, measured on a fully taxable equivalent
basis,
decreased by 27 basis points to 4.18% for the first quarter of
1996 from the
4.45% in the first quarter of 1995 as the overall level of
interest rates
declined during this period. The decrease in net interest margin
caused by
rates was offset by a $157 million increase in average earning
assets for the
first quarter of 1996 compared to the same period in 1995. As a
result, net
interest income increase by $64,000 for the three months ended
March 31, 1996
from the same period of a year ago.
The Company uses exchange traded financial futures and options as
a part of
its overall interest rate risk management. At March 31, 1996,
the Company had
633 Eurodollar contracts outstanding to hedge liability accounts
as compared
to 653 contracts at December 31, 1995 and 452 contracts at March
31, 1995.
The net increase (decrease) to net interest income from
Eurodollar futures
contracts was $158,000 and $(235,000) for the three months ended
March 31,
1996 and 1995, respectively.
- 10 -
<PAGE>
Beginning in September, 1995, U.S. Treasury note and bond futures
and options
contracts have been used to hedge against changes in specific
U.S. Treasury
Securities held in the Company's trading accounts. The market
value of these
U.S. Treasury securities was $38.9 million on March 31, 1996. On
that date,
382 U.S. Treasury note and bond futures contracts and 1,130 U.S.
Treasury
option contracts were outstanding. Net gains from trading these
financial
futures and option contracts totaled $2.2 million for the three
months ended
March 31, 1996 and the U.S. Securities hedged by these financial
futures and
options had recognized losses of $2.3 million.
The allowance for possible loan losses is established through a
provision for
possible loan losses charged against income. The allowance for
possible loan
losses is maintained at a level believed adequate by management
to absorb
estimated probable loan losses. Management's periodic evaluation
of the
adequacy of the allowance is based on the Company's past loan
loss experience,
known and inherent risks in the portfolio, adverse situations
that may affect
the borrower's ability to repay (including the timing of future
payments), the
estimated value of underlying collateral, composition of the loan
portfolio,
current economic conditions, and other relevant factors. This
evaluation is
inherently subjective as it requires material estimates including
amount and
timing of future cash flows expected to be received on impaired
loans that may
be susceptible to significant change.
The allowance for possible loan losses amounted to $20.6 million
at March 31,
1996, a slight increase from the $20.0 million at December 31,
1995 and
slightly less than the $22.9 million at March 31, 1995. This
resulted in a
ratio of the allowance to total loans outstanding at March 31,
1996 of 1.63%,
an increase over the 1.57% as of December 31, 1995 and a decrease
from the
1.82% at March 31, 1995.
The Company's nonperforming loans, including nonaccrual, past due
90 days, and
restructured loans are summarized as follows (in thousands of
dollars).
- 11 -
<PAGE>
<TABLE>
NONPERFORMING ASSET TABLE
<CAPTION>
MAR 31, 1996 DEC 31, 1995 MAR
31, 1995
_____________ ____________
_____________
<S> <C> <C> <C>
Nonaccrual Loans $ 20,454 $ 18,450 $
9,983
90 Days Past Due 1,188 1,467
1,284
Restructured -- --
8,290
____________ ____________
____________
Total Nonperforming Loans $ 21,642 $ 19,917 $
19,557
============ ============
============
Nonperforming Loans as a Percent
of Total Loans Outstanding 1.71% 1.56%
1.60%
============ ============
============
Other Real Estate 406 319
704
____________ ____________
____________
Total Nonperforming Assets $ 22,048 $ 20,236 $
20,261
============ ============
============
Nonperforming Assets as a
Percent of Total Assets .98% .88%
.97%
============ ============
============
</TABLE>
As of December 31, 1995, the Company had reported an additional
$3.2 million
of loans where management was closely monitoring the borrower's
ability to
comply with payment terms. Of this amount $332,000 has paid in
full and $2
million has been placed on nonaccrual status. Management is
still closely
monitoring the remaining loans.
Total nonperforming loans increased $1.7 million at March 31,
1996 when
compared to December 31, 1995 and $2.1 million from March 31,
1995. The $8.3
million of restructured loans at March 31, 1995 represented loans
to one
borrower. These loans demonstrated sufficient performance under
the new terms
to be classified as performing at the end of the second quarter
of 1995.
During the fourth quarter, however, the borrower voluntarily
decided to
liquidate its operations. At that time the Company placed a
total of $8.5
million in loans to this borrower on nonaccrual status. This
amount remains
in the nonaccrual category at March 31, 1996.
- 12 -
<PAGE>
The Company had net loan charge-offs of $286,000 during the first
quarter of
1996. This compares to net charge-offs of $240,000 during the
same period in
1995.
As a result of management's quarterly review of the adequacy of
the allowance
for possible loan losses, the Company provided $880,000 for
possible loan
losses, an increase of $145,000 over the amount provided in both
the fourth
quarter and first quarter of 1995.
The Company's noninterest income for the first quarter of 1996
reflected a
$1.0 or 21.9% increase from the first quarter of 1995. Fiduciary
fees
increased $529,000 or 22.3% reflecting the increased market value
of assets
under management. Service charges on deposits increased $178,000
or 16.3% as
a result of the deposit growth noted above. Other service
charges decreased
$173,000 or 22.3% due a decrease in the amount of income
generated from
referrals on annuity prospects and a decrease in data processing
fees. Other
income increased by $136,000 or 28.2% primarily as a result of a
$106,000
increase in electronic banking income.
The Company adopted Statement of Financial Accounting Standards
No. 122,
"Accounting for Mortgage Servicing Rights - An Amendment to
Statement No. 65"
effective January 1, 1996. Statement 122 requires the total cost
of acquiring
mortgage loans, either through loan origination activities or
purchase
transactions, to be allocated to the mortgage servicing rights
and the loans
based on their relative fair values. As a result of adopting
Statement 122,
the Company capitalized $61,000 in originated mortgage servicing
rights in the
three months ended March 31, 1996. Statement 122 prohibits
retroactive
application to 1995, therefore the reported results for the three
months ended
March 31, 1996 are not directly comparable to the three months
ended March
31,1995 as no amounts were capitalized during 1995. This
increase to other
income was offset however by a $62,000 unrealized loss on
mortgage loans held
for sale.
During the first quarter of 1996, the Company recognized net
securities gains
of $367,000 as compared to net securities gains of $11,000 during
the first
quarter of 1995.
Noninterest expense decreased $499,000 or approximately 3.3%
during the first
quarter of 1996 compared to the first quarter of 1995. However,
$938,000 of
this decrease is the result of a decrease in FDIC insurance
expense.
Excluding FDIC insurance expense, all other noninterest expenses
increased by
$439,000 or 3.1%. Salaries and wages increased $482,000 or 7.6%
reflecting
normal compensation increases and an increase in full-time
equivalent
employees from 961 at March 31, 1995 to 984 at March 31, 1996.
- 13 -
<PAGE>
Employee benefit expense for the first quarter of 1996 decreased
by $88,000 or
5.4% with savings realized in the pension expense and employee
health
insurance premiums. Net occupancy expense is slightly above 1995
while
equipment expense increased by $146,000 or 14.2% due to
depreciation on recent
equipment expenditures.
FDIC insurance expense for the first quarter of 1996 decreased by
$938,000 or
99.2% from the first quarter of 1995. The Federal Deposit
Insurance
Corporation insurance fund met its mandated level of 1.25% of
insured deposits
during 1995 and the insurance rate was reduced from $.23 per $100
of insured
deposits to zero for well-capitalized banks. While each of the
Company's six
subsidiary banks will continue to incur a $2,000 administrative
charge for the
year, only one of the subsidiary banks is currently required to
pay an FDIC
insurance premium.
Other expense decreased by $107,000 or 2.7%. During the first
quarter of 1995
the Company recognized a significant teller loss. Excluding this
transaction,
other expense increased at an anticipated level of approximately
3.7%.
Applicable income taxes increased $785,000. While taxable income
increased in
the first quarter of 1996 over the first quarter of 1995, the
first quarter of
1995 also included a reduction in the tax provision as a result
of a change in
estimate the calculation of the Company's overall income tax
accruals.
- 14 -
<PAGE>
FORT WAYNE NATIONAL CORPORATION AND SUBSIDIARIES
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
This item is inapplicable or is omitted pursuant to the
instructions
to Part II.
Item 2. Changes in Securities.
This item is inapplicable or is omitted pursuant to the
instructions
to Part II.
Item 3. Defaults on Senior Securities.
This item is inapplicable or is omitted pursuant to the
instructions
to Part II.
Item 4. Submission of Matters to a Vote of Security Holders.
This item is inapplicable or is omitted pursuant to the
instructions
to Part II.
Item 5. Other Information.
This item is inapplicable or is omitted pursuant to the
instructions
to Part II.
Item 6. Exhibits and Reports on Form 8-K
a.) Exhibits.
Exhibit 11 - Statement Re Computation of Earnings
Per Share.
Exhibit 27 - Financial Data Schedule.
b.) Reports on Form 8-K.
No Form 8-K was filed during the first quarter of
1996.
- 15 -
<PAGE>
FORT WAYNE NATIONAL CORPORATION AND SUBSIDIARIES
SIGNATURES
Pursuant to the requirement of the Securities Exchange Act of
1934, the
registrant has duly caused this report to be signed on its behalf
by the
undersigned, thereunto duly authorized.
FORT WAYNE NATIONAL CORPORATION
REGISTRANT
May 13, 1996 /S/ Jackson R.
Lehman
Date Jackson R. Lehman
Chairman of the
Board and
Chief Executive
Officer
May 13, 1996 /S/ Stephen R.
Gillig
Date Stephen R. Gillig
Executive Vice
President,
Chief Financial
Officer and
Secretary
- 16 -
<PAGE>
FORT WAYNE NATIONAL CORPORATION AND SUBSIDIARIES
FORM 10-Q
EXHIBIT INDEX
<TABLE>
<CAPTION>
Number
Assigned Per
Regulation
Sequential
S-K Item 601 Description
Page No.
____________ _____________________________________________
_______
<S> <C>
<C>
11. Statement RE Computation of Earnings Per
Share 18.
27. Financial Data Schedule
19.
- 17 -
<PAGE>
</TABLE>
<TABLE>
EXHIBIT 11
FORT WAYNE NATIONAL CORPORATION AND
SUBSIDIARIES
STATEMENT RE COMPUTATION OF EARNINGS PER
SHARE
(Unaudited)
<CAPTION>
Three Months Ended March
31
1996 1995
__________ __________
(In thousands, except
per share data)
<S> <C> <C>
PRIMARY
Average shares outstanding 11,442 11,498
Net effect of dilutive stock options
-- based on the treasury stock method
using average market price 66 20
__________ __________
TOTAL 11,508 11,518
========== ==========
Net income $ 6,891 $ 6,221
========== ==========
Earnings per share $ .60 $ .54
========== ==========
FULLY DILUTED
Average shares outstanding 11,442 11,498
Net effect of dilutive stock options
-- based on the treasury stock method
using the higher of the end of the
period market price or average
market price 66 20
__________ __________
TOTAL 11,508 11,518
========== ==========
Net income $ 6,891 $ 6,221
========== ==========
Earnings per share $ .60 $ .54
========== ==========
<FN>
Note - Average shares outstanding were used for earnings per
share amounts
included in the Company's financial statements since the
dilutive
effect of stock options granted were less than 3%.
</TABLE>
- 18 -
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE
FORT WAYNE NATIONAL CORPORATION AND SUBSIDIARIES CONSOLIDATED
FINANCIAL
STATEMENTS (UNAUDITED) AS OF MARCH 31, 1996 AND FOR THE THREE
MONTH PERIOD
THEN ENDED AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 145,190
<INT-BEARING-DEPOSITS> 214
<FED-FUNDS-SOLD> 11,000
<TRADING-ASSETS> 38,946
<INVESTMENTS-HELD-FOR-SALE> 745,127
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 1,262,614
<ALLOWANCE> 20,641
<TOTAL-ASSETS> 2,259,429
<DEPOSITS> 1,787,225
<SHORT-TERM> 211,075
<LIABILITIES-OTHER> 21,966
<LONG-TERM> 6,400
<COMMON> 19,079
0
0
<OTHER-SE> 213,684
<TOTAL-LIABILITIES-AND-EQUITY> 2,259,429
<INTEREST-LOAN> 27,500
<INTEREST-INVEST> 11,832
<INTEREST-OTHER> 497
<INTEREST-TOTAL> 39,829
<INTEREST-DEPOSIT> 16,873
<INTEREST-EXPENSE> 19,993
<INTEREST-INCOME-NET> 19,836
<LOAN-LOSSES> 880
<SECURITIES-GAINS> 378
<EXPENSE-OTHER> 14,774
<INCOME-PRETAX> 9,948
<INCOME-PRE-EXTRAORDINARY> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,891
<EPS-PRIMARY> .60
<EPS-DILUTED> 0
<YIELD-ACTUAL> 4.18
<LOANS-NON> 20,454
<LOANS-PAST> 1,188
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 891
<ALLOWANCE-OPEN> 20,047
<CHARGE-OFFS> 523
<RECOVERIES> 237
<ALLOWANCE-CLOSE> 20,641
<ALLOWANCE-DOMESTIC> 20,641
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 20,641
</TABLE>
