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 Quarter Ended Commission File
June 30, 1997 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)
Registrant's telephone number, including area code (219) 426-0555
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 August 2, 1997
________________________________ ____________________________
Common Shares, Without Par Value 17,649,440
6% Cumulative Convertible Class B
Preferred Stock, Series 1 739,976
The exhibit index appears on page 16.
This report, including the cover page contains a total of 47 pages.
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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 -- June 30, 1997,
December 31, 1996 and June 30, 1996........... 3.
Consolidated statement of income -- three months
and six months ended June 30, 1997 and 1996.... 4.
Consolidated statement of cash flows -- six
months ended June 30, 1997 and 1996. .......... 5.
Notes to consolidated financial statements --
June 30, 1997.................................. 6.
Item 2. Management's Discussion and Analysis of Results
of Operations and Financial Condition............ 7 - 13.
</TABLE>
<TABLE>
<CAPTION>
PART II OTHER INFORMATION
<S> <C> <C>
Item 1. Legal Proceedings................................ 14.
Item 2. Changes in Securities............................ 14.
Item 3. Defaults on Senior Securities.................... 14.
Item 4. Submission of Matters to a Vote of Security
Holders......................................... 14.
Item 5. Other Information................................ 14.
Item 6. Exhibits and Reports on Form 8-K................. 14.
</TABLE>
SIGNATURES.................................................. 15.
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<TABLE>
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
FORT WAYNE NATIONAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(Unaudited)
<CAPTION>
June 30 Dec 31 June 30
1997 1996 1996
__________ __________ __________
(In thousands)
<S> <C> <C> <C>
ASSETS
Cash and due from banks.............. $ 166,472 $ 191,913 $ 186,834
Federal funds sold and securities
purchased under agreements to
resell............................. 126,425 56,075 86,775
Interest-bearing deposits with banks. 304 376 537
Investment securities................ 941,215 974,608 996,895
Loans................................ 1,980,795 1,875,965 1,828,460
Less: Unearned income............. (2,574) (2,220) (2,584)
Allowance for possible
loan losses............... (30,188) (30,307) (33,155)
__________ __________ __________
NET LOANS 1,948,033 1,843,438 1,792,721
Premises and equipment............... 55,302 55,234 54,637
Other assets......................... 102,898 99,653 112,157
__________ __________ __________
TOTAL ASSETS $3,340,649 $3,221,297 $3,230,556
========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
LIABILITIES AND SHAREHOLDERS' EQUITY
<S> <C> <C> <C>
Deposits:
Noninterest-bearing................ $ 415,877 $ 419,188 $ 408,737
Interest-bearing................... 2,061,447 2,002,773 2,382,954
__________ __________ __________
TOTAL DEPOSITS 2,477,324 2,421,891 2,382,954
Federal funds purchased and
securities sold under agreements
to repurchase...................... 405,194 387,357 428,552
Notes payable - U.S. Treasury and
other borrowings................... 50,507 37,628 49,256
Dividends payable.................... 3,963 3,602 3,339
Accrued liabilities.................. 21,928 19,360 22,356
Subordinated and other long-term
notes.............................. 78,463 58,341 61,318
__________ __________ __________
TOTAL LIABILITIES 3,037,379 2,928,179 2,947,775
Deferred gain on sale of premises 828 961 1,094
Shareholders' equity:
Preferred stock, without par value:
Class A Voting - 2000,000 shares
authorized but unissued
Class B Nonvoting - 2,000,000 shares
authorized:
Series 1 6% convertible issued
and outstanding: 739,976..... 39,699 36,699 36,699
Common stock, without par value:
Authorized shares: 50,000,000
Issued and outstanding shares -
June 30,1997 - 17,633,558;
December 31, 1996 - 17,560,251;
June 30,1996 - 17,879,673 ....... 19,593 19,511 19,866
Capital surplus...................... 50,284 49,367 50,124
Retained earnings.................... 189,494 179,052 173,960
Unrealized gain on securities
available-for-sale................. 6,072 7,228 738
__________ __________ __________
TOTAL SHAREHOLDERS' EQUITY 302,442 292,157 281,687
__________ __________ __________
TOTAL LIABILITIES
AND SHAREHOLDERS' EQUITY $3,340,649 $3,221,297 $3,230,556
========== ========== ==========
</TABLE>
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<TABLE>
FORT WAYNE NATIONAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
(Unaudited)
<CAPTION>
Three Months Six Months
Ended June 30 Ended June 30
________________ ________________
1997 1996 1997 1996
_______ _______ _______ _______
(In thousands, except per share data)
<S> <C> <C> <C> <C>
INTEREST INCOME
Interest and fees on loans:
Taxable................... $42,869 $31,579 $83,617 $58,869
Tax-exempt................ 223 234 472 444
Interest and dividends on
investment securities:
Taxable................. 11,940 10,328 24,204 19,513
Tax-exempt.............. 2,957 2,736 5,840 5,383
Interest on federal funds
sold and securities
purchased under agreements
to resell................. 554 395 1,195 889
Interest on deposits with
banks..................... 3 4 4 7
_______ _______ _______ _______
TOTAL INTEREST INCOME 58,546 45,276 115,332 85,105
INTEREST EXPENSE
Interest on deposits........ 22,577 18,387 44,691 35,260
Interest on federal funds
purchased and securities
sold under agreements
to repurchase............. 4,509 3,418 8,978 5,982
Interest on notes payable -
U.S. Treasury and other
borrowings................ 546 236 1,045 585
Interest on subordinated and
other long-term notes..... 1,539 485 2,489 692
_______ _______ _______ _______
TOTAL INTEREST EXPENSE 29,171 22,526 57,203 42,519
_______ _______ _______ _______
NET INTEREST INCOME
BEFORE PROVISION FOR
POSSIBLE LOAN LOSSES 29,375 22,750 58,129 42,586
Provision for possible
loan losses............... 1,170 1,005 2,240 1,885
_______ _______ _______ _______
NET INTEREST INCOME AFTER
PROVISION FOR POSSIBLE
LOAN LOSSES 28,205 21,745 55,889 40,701
NONINTEREST INCOME
Fiduciary fees.............. 3,310 2,824 6,986 5,725
Service charges on deposit
accounts.................. 1,946 1,447 3,759 2,714
Other service charges....... 1,338 801 2,427 1,403
Net securities gains........ 7 2 44 380
Other income................ 1,196 583 2,169 1,201
_______ _______ _______ _______
TOTAL NONINTEREST INCOME 7,797 5,657 15,385 11,423
NONINTEREST EXPENSE
Salaries and wages.......... 9,384 7,024 18,611 13,828
Employee benefits........... 2,195 1,830 4,480 3,371
Net Occupancy............... 2,110 1,424 4,080 2,788
Equipment expense........... 1,783 1,261 3,423 2,434
FDIC assessment............. 84 19 150 27
Amortization of goodwill
and other intangibles...... 718 278 1,436 339
Other expense............... 6,158 4,940 11,389 8,766
_______ _______ _______ _______
TOTAL NONINTEREST EXPENSE 22,379 16,776 43,569 31,550
_______ _______ _______ _______
INCOME BEFORE INCOME TAXES 13,623 10,626 27,705 20,574
Applicable income taxes..... 4,586 3,451 9,351 6,508
_______ _______ _______ _______
NET INCOME $ 9,037 $ 7,175 $18,354 $14,066
======= ======= ======= =======
Primary earnings per share.. $ .48 $ .40 $ .97 $ .80
======= ======= ======= =======
Fully diluted earnings
per share................. $ .47 $ .40 $ .95 $ .80
======= ======== ======= ========
</TABLE>
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<TABLE>
FORT WAYNE NATIONAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
Six Months
Ended June 30
1997 1996
________ ________
(In thousands)
<CAPTION>
<S> <C> <C>
OPERATING ACTIVITIES
Net income............................................. $ 18,354 $ 14,066
Adjustments to reconcile net income to net cash
provided by operating activities:
Provision for possible loan losses................. 2,240 1,885
Net accretion and amortization of investment
securities....................................... 64 129
Net accretion and amortization of loans............ (10) (12)
Provision for depreciation and amortization
of premises and equipment........................ 3,079 2,011
Deferred income taxes.............................. (165) (366)
Capitalized originated mortgage servicing rights... (34) (116)
Amortization of capitalized originated mortgage
servicing rights................................. 16 5
Amortization of goodwill and other intangibles..... 1,436 336
Amortization of deferred gain on sale of premises.. (133) (133)
Gain on sale of investment securities
available-for-sale............................... (62) (410)
Loss on sale of investment securities
available-for-sale............................... 19 30
Market value adjustment on investment securities
held for trading purposes........................ -- 2,532
Net loss on sale of investment securities held
for trading...................................... -- 199
Proceeds from sale of investment securities held
for trading...................................... -- 15,441
Purchase of investment securities held for trading. -- (54,080)
Loans originated for resale........................ (4,655) (14,520)
Proceeds from sales of loans....................... 11,075 14,048
Net loss on sale of loans.......................... 129 103
Net gain on sale of premises and equipment......... (31) (2)
Decrease in other assets........................... (3,710) (2,138)
Increase (decrease) in other liabilities........... 2,568 (118)
________ ________
NET CASH PROVIDED BY (USED IN)OPERATING ACTIVITIES 30,180 (21,110)
INVESTING ACTIVITIES
Net (increase) decrease in federal funds sold and
securities purchased under agreements to resell...... (70,350) 16,975
Net (increase) decrease in interest-bearing deposits
with banks........................................... 72 (93)
Proceeds from sales of investment securities
available-for-sale................................... 15,396 574
Proceeds from maturities of investment securities
available-for-sale................................... 72,614 74,795
Purchases of investment securities available-for-sale.. (56,582) (134,374)
Net increase in loans.................................. (113,374) (20,425)
Proceeds from disposals of premises and equipment...... 199 11
Purchase of premises and equipment..................... (3,315) (4,846)
Purchase of net assets of Valley Financial
Services, Inc., net of cash acquired................. -- (62,637)
________ ________
NET CASH USED IN INVESTING ACTIVITIES (155,340) (130,020)
FINANCING ACTIVITIES
Net increase in deposits............................... 55,433 51,792
Net increase in short-term borrowings.................. 30,716 48,156
Issuance of long-term debt............................. 35,358 15,000
Principal payment on long-term debt.................... (15,236) (515)
Issuance of preferred stock............................ -- 36,999
Issuance of common stock............................... 58 20,000
Proceeds from exercise of stock options................ 940 413
Repurchase of common stock............................. -- (5,993)
Cash dividends paid on preferred stock................. (1,110) --
Cash dividends paid on common stock.................... (6,440) (5,490)
________ ________
NET CASH PROVIDED BY FINANCING ACTIVITIES 99,719 160,362
________ ________
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (25,441) 9,232
Cash and cash equivalents at beginning of period....... 191,913 177,602
________ ________
CASH AND CASH EQUIVALENTS AT END OF PERIOD $166,472 $186,834
======== ========
</TABLE>
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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 1996 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 and
six-month periods ended June 30, 1997 are not necessarily indicative of the
results that may be expected for the year ending December 31, 1997.
2. Recently Adopted Accounting Standard
In February 1997, the Financial Accounting Standards Board issued Statement
128, "Earnings per Share," which is required to be adopted on December 31,
1997. At that time, the Company will be required to change the method
currently used to compute earnings per share and to restate all prior periods.
Under the new requirements for calculating primary earnings per share, the
dilutive effect of stock options will be excluded. The impact of Statement
128 on both primary and fully diluted earnings per share is not expected to be
material.
3. Share and Per Share Data
On April 20, 1997, the Company's shareholders approved an increase in the
number of authorized shares of stock from 22,000,000 to 54,000,000. The
authorized shares are divided into thee classes, one of which is designated
Class A Preferred Stock and consists of 2,000,000 shares without par value,
one of which is designated Class B Preferred Stock and consists of 2,000,000
shares without par value and one if which is designated Common Stock and
consists of 50,000,000 shares without par value.
On May 20, 1997, the Company's Board of Directors approved a three-for-two
common stock split. This split was paid July 15, 1997 to common shareholders
of record as of June 16, 1997. All share and per share data has been adjusted
to retroactively reflect the three-for-two common stock split.
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Item 2. Management's Discussion and Analysis of Results of Operations
and Financial Position
FORT WAYNE NATIONAL CORPORATION AND SUBSIDIARIES
Management's Discussion and Analysis of Results of Operations
and Financial Position
On June 1, 1996 the Company acquired, through merger of Valley Financial
Services, Inc. (VFS) with and into the Company, all of the issued and
outstanding stock of VFS's only banking subsidiary, Valley American Bank and
Trust Company (Valley). This acquisition has been accounted for as a purchase
for accounting purposes, and accordingly, the results of operations of Valley
have been included in the consolidated results of operations of the Company
from the date of acquisition. Therefore, the consolidated results of
operations for the three-month and six-month periods ended June 30, 1997
include the results of operations of Valley for the entire period while the
consolidated results of operations for the three-month and six-month periods
ended June 30, 1996 include the results of operations of Valley for only one
month. Also, the consolidated balance sheet as of June 30, 1997,
December 31, 1996 and June 30, 1996 and the consolidated average balances for
the three-month and six-month periods ended June 30, 1997 each include the
financial position of Valley for the entire period, while the consolidated
average balances for the three-months and six-months ended June 30, 1996
include Valley for only one month.
Results of Operations
Net income for the second quarter of 1997 amounted to $9.0 million resulting
in
primary earnings per share of $.48. This represents an increase of nearly
$1.9
million or 26.0% over the net income of $7.2 million and primary earnings per
share of $.40 for the second quarter of 1996. For the six months ended June
30,
1997, net income was $18.4 million or $.97 per share compared to $14.1 million
or $.80 per share for the same period of 1996, an increase of $4.3 million or
30.5%. The additional earnings attributable to Valley accounted for $1.1
million and $3.1 million of the increases for the three and six months ended
June 30, 1997, respectively, over the same periods of 1996.
Net interest income measured on a fully taxable equivalent basis (fte) for the
three months ended June 30, 1997 was $31.1 million, an increase of $647,000 or
2.1% over the three months ended March 31, 1997 and $6.7 million or 27.7% over
the three months ended June 30, 1996. For the six months ended June 30, 1997,
the net interest income (fte) was $61.5 million, an increase of $15.8 million
or
34.6% over the same period of 1996. These increases in net interest income
were
due primarily to an increased yield on loans and lower deposit costs.
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Due to the improved rate environment, the net interest margin (fte) for
both the second quarter and the six months ended June 30, 1997 was 4.29%, an
increase of 11 basis points over the 4.18% achieved for both the second
quarter
and the six months ended June 30, 1996.
The Company uses exchange traded financial futures contracts as a part of its
overall interest rate risk management. At June 30, 1997, the Company had 740
Eurodollar contracts outstanding to hedge liability accounts as compared to
704
contracts at December 31, 1996 and 608 contracts at June 30, 1996. The net
decrease to net interest income from Eurodollar futures contracts was $241,000
and $201,000 for the six months ended June 30, 1997 and 1996, respectively.
As a result of management's quarterly review of the adequacy of the allowance
for possible loan losses, the Company provided $1,170,000 for possible loan
losses during the second quarter of 1997, a slight increase from the
$1,070,000
provided in the first quarter of 1997 and the $1,005,000 provided in the
second
quarter of 1996. These amounts include provisions at Valley totaling $150,000
for the second and first quarters of 1997 and $50,000 for the second quarter
1996.
The Company's noninterest income for the second quarter of 1997 reflected a
$2.1
million or 37.8% increase from the second quarter of 1996 with Valley
accounting
for $1.1 million of this increase. Noninterest income for the six months
ended
June 30, 1997 increased by nearly $4.0 million or 34.7% from the same period
of
a year ago with the increase at Valley amounting to $2.5 million. The
following
discussion of the various components of noninterest income excludes amounts
related to Valley.
Fiduciary fees increased by $161,000 or 6.0% and $486,000 or 8.7% for the
three
months and six months ended June 30, 1997, respectively, compared to the same
periods in 1996 as assets under management continue to increase. Service
charges on deposits increased by $118,000 or 9.3% and $148,000 or 5.8% for the
three months and six months ended June 30, 1997, respectively, compared to the
same periods in 1996 reflecting deposit growth and increased collection of
non-sufficient funds and overdraft charges. Other service charges increased
by $309,000 or 44.0% and $484,000 or 37.1% for the three months and six months
ended June 30, 1997, respectively, compared to the same periods in 1996 with
substantially all of the increase due to increased credit life insurance
income and increased premium income from the Company's wholly-owned life
insurance subsidiary. Other income increased by $496,000 or 91.2% and
$713,000
or 61.4% for the three months and six months ended June 30, 1997,
respectively,
compared to the same periods in 1996 due to increased electronic banking fee
income. However, these increases were partially offset by increased
electronic banking expenses of $243,000 and $262,000, from the second quarter
of respectively.
The Company's noninterest expense for the second quarter of 1997 reflected a
$5.6 million or 33.4% increase from the second quarter of 1996 with Valley
accounting for $4.3 million of this increase. Noninterest income for the six
months ended June 30, 1997 increased by $12.0 million or 38.1% from the same
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period of a year ago with the increase at Valley amounting to $10.2 million.
Exclusive of Valley, noninterest expense increased by 8.8% and 4.4% for the
quarter-to-date and year-to-date ended June 30, 1997 compared to the same
periods of a year ago.
Salaries and wages for the second quarter of 1997 were $2.4 million above the
second quarter of 1996 with $1.8 million attributable to Valley. For the
year-to-date period ended June 30, 1997, salaries and wages were $4.8 million
above the same period in 1996 with $4.3 million attributable to Valley.
Therefore, excluding Valley, salaries and wages increased by $514,000 or 8.0%
for the second quarter of 1997 from the second quarter of 1996 and by
$515,000 or 3.9% for the first six months of 1997 from the first six months of
1996 . Employee benefits expense for the three months ended June 30, 1997
increased by $365,000 or 19.9% over the three months ended June 30, 1996.
However, with employee benefits at Valley increasing by $441,000 between
these periods, employee benefits exclusive of Valley reflected a $76,000
decrease. The Company received updated actuarial estimates on one of the
Company's benefit plans during the second quarter of 1997 and, as a result,
reduced the accruals and related expense for this plan. For the six months
ended June 30, 1997 this expense category was $1.1 million or 32.9% above
the same period of 1996. Excluding the $1.0 million increase for Valley,
employee benefits expense increased just $72,000 for the year-to-date
period ended June 30, 1997 from the same period in 1996.
Net occupancy expense increased by $140,000 for the second quarter of 1997
from
the first quarter of 1997 and, excluding Valley's net occupancy expense of
$568,000 and $191,000 for the second quarters of 1997 and 1996, respectively,
increased by $309,000 or 25% for the second quarter of 1997 over the same
quarter of 1996. The second quarter to second quarter variance reflects
increases in rental expense at the Company's main office headquarters. For
the six months ended June 30, 1997, net occupancy expense, excluding the
$941,000 net increase attributable to Valley, increased by $351,000 or 13.5%
from the same period of 1996.
Equipment expenses continue to grow due to increased equipment depreciation.
The Company has spent approximately $3.3 million for the purchase of premises
and equipment during the first six months of 1997 after spending $8.2 million
during calendar 1996. Substantially all of these expenditures relate to the
purchase of hardware and software for the Company's wide area computer network
and the new loan/teller/platform system.
Amortization of goodwill and other intangibles remained constant at $718,000
for
each of the first two quarters of 1997 as compared to $278,000 and $58,000 for
the second and first quarters of 1996, respectively. The increases from 1996
are
the result of the amortization of goodwill and other intangibles recorded in
connection with the acquisition of Valley.
FDIC insurance expense for the second quarter of 1997 increased by $18,000
from
the first quarter of 1997 and $65,000 from the second quarter of 1996.
Through
June 30, 1997, FDIC insurance expense is $123,000 over the same year-to-date
period in 1996. These increases are the result of the recent increase in the
insurance premium rate and deposit growth.
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Other expense of $5.3 million for the three months ended March 31, 1997
represents a $1.5 million increase over the $3.8 million for the same period
of
1996. However, Valley contributed $1.3 million to the 1997 total and
therefore,
excluding Valley, this category increased by 3.4%.
The effective tax rate for the second quarter of 1997 of 33.7% was comparable
to the first quarter of 1997 and up from 32.5% for the second quarter of 1996.
The increase in the effective rate in 1997 is attributable to the increase in
the amortization of goodwill and other intangibles which is not deductible for
tax purposes.
Financial Condition
Total assets of the Company increased by $119 million at June 30, 1997 from
December 31, 1996 and by $110 million from June 30, 1996. Average daily
assets
for the second quarter of 1997 of $3.181 billion were 24.9% above the $2.548
billion for the second quarter of 1996. For the first six months of 1997,
average daily assets were $3.147 billion compared to $2.392 billion for the
same
period in 1996. Total average assets of Valley included in these figures were
$878 million for the first six months of 1997 and $144 million for the first
six
months of 1996.
The Company continues to experience loan growth. Loans, net of unearned
discount as of June 30, 1997 were $104.5 million above the amount outstanding
on December 31, 1996, including an increase of $61.6 million in commercial and
industrial loans and $24.3 million in residential mortgage loans. The overall
loan growth was achieved despite the sale of the Company's mobile home loan
portfolio which totaled $6.9 million and the sale of $11.1 million in fixed
rate mortgage loans. Loans, net of unearned discount as of June 30, 1997 were
$152.3 million above June 30, 1996 with commercial and industrial loans
increasing by $56.1 million or 9.4%, residential mortgage loans increasing by
$48.0 million or 10.3%, commercial mortgage loans increasing by $12.1 million
or 3.3%, and construction and land development loans increasing by $3.7
million or 8.8%.
Average loans outstanding for the second quarter of 1997 were $1.926 billion,
an
increase of $56.0 million from the fourth quarter of 1996 and $476.1 million
over the second quarter of 1996. Average loans outstanding at Valley amounted
to $553.1 million and $175.5 million for the second quarters of 1997 and 1996,
respectively and thus accounted for $377.6 of the increase in average loans
outstanding for the second quarter of 1997 over the second of 1996. For the
six
months ended June 30, 1997, loans outstanding averaged $1.899 billion compared
to $1.351 billion for the same period of 1996 with the inclusion of Valley
accounting for $458.8 million or 96.4% of this increase.
The Company's investment portfolio at both June 30, 1997 and December 31, 1996
was comprised entirely of investment securities available-for-sale while at
June
30, 1996 the portfolio included $57.2 million of investment securities held
for
trading purposes with the remainder of the portfolio available-for-sale. The
net unrealized gain, net of taxes, on securities available-for-sale was $6.1
million at June 30, 1997, $7.2 million at December 31, 1996 and $.7 million at
June 30, 1996.
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Available-for-sale securities, excluding the market valuation adjustment,
decreased $35.7 million from December 31, 1996 as the result of the increased
loan demand noted above. On average for first six months of 1997, investments
available-for-sale were $183.1 million above the same period last year.
Average
investments available-for-sale increased by $151.8 million due to the
inclusion
of Valley and therefore, without Valley's averages, would have reflected an
increase of $31.3 million.
Federal funds sold increased by $70.3 million as of June 30, 1997 compared to
year-end 1996 and $39.7 million at June 30, 1996. Average federal funds sold
decreased $7.7 million for the six months ended June 30, 1997 from the same
period in 1996.
The allowance for possible loan losses, which is established through a
provision
for possible loan losses charged against income, is maintained at a level
believed adequate by management to absorb estimated probable loan losses. The
allowance for possible loan losses amounted to $30.2 million at June 30, 1997,
$30.3 million at December 31, 1996 and $33.2 million at June 30, 1996.
These
balances resulted in a ratio of the allowance to total loans outstanding of
1.53% at June 30, 1997, 1.62% at December 31, 1996 and 1.82% at June 30, 1996.
The Company's nonaccrual loans, accruing loans past due 90 days or more,
restructured loans and other real estate are summarized as follows (dollars in
thousands).
<TABLE>
NONPERFORMING ASSET TABLE
<CAPTION>
JUNE 30, 1997 DEC 31, 1996 JUNE 30, 1996
_____________ ____________ _____________
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Nonaccrual Loans $ 11,319 $ 7,717 $ 19,442
90 Days Past Due 1,514 1,804 1,837
Restructured 1,732 2,534 1,617
____________ ____________ ____________
Total Nonperforming Loans $ 14,565 $ 12,055 $ 22,896
Other Real Estate 2,021 1,736 1,749
____________ ____________ ____________
Total Nonperforming Assets $ 16,586 $ 13,791 $ 24,645
============ ============ ============
Nonperforming Loans as a
Percent of Total Loans
Outstanding .74% .64% 1.25%
============ ============ ============
Nonperforming Assets as a
Percent of Total Assets .50% .43% .76%
============ ============ ============
</TABLE>
- 11 -
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<PAGE>
In addition to loans classified as nonperforming at December 31, 1996,
the Company had reported an additional $14.9 million of loans as of that date
where management was closely monitoring the borrower's ability to comply with
payment terms. Through June 30, 1997 this amount has been reduced by
$1,030,000 representing pay downs or pay-offs of these loans. Management
continues to closely monitor the remaining loans.
Total nonperforming loans increased by $2.5 million at June 30, 1997 when
compared to December 31, 1996 due primarily to an increase in nonaccrual
loans.
However, total nonperforming loans have decreased by $8.3 million from June
30,
1996. The ratio of nonperforming loans to total loans outstanding stands at
.74% at June 30, 1997 compared to .64% at December 31, 1996 and 1.25% at
June 30, 1996.
Net charge-offs for the first six months of 1997 were $2.4 million. This
compares to net charge-offs of $5.5 million for all of 1996 and $557,000 for
the first six months of 1996.
The Company's total deposits increased $55.4 million at June 30, 1997 when
compared to December 31, 1996 and $94.4 million when compared to June 30,
1996.
Average total deposits for the first six months of 1997 are $526.8 million
over
the same period last year. Valley contributed $489.6 million to this increase.
Excluding average deposits outstanding at Valley, average interest-bearing
checking accounts decreased by $40.2 million or 21.3% and average savings and
money market accounts decreased by $45.6 million or 16.5%, while average time
deposits increased by $125.5 million or 12.0%. Over 84% of the increase in
the
time deposit category is from increases in the Company's very popular
AnydayEveryday product. An additional $28.7 million of the increase is the
result of a program which sweeps balances from interest-bearing transactional
accounts to non-transactional accounts. This new sweep product is also the
reason for the decrease in average interest-bearing checking accounts.
Short-term borrowings, consisting of federal funds purchased and securities
sold
under agreements to repurchase, and notes payable, increased $30.7 million at
June 30, 1997 from December 31, 1996 yet were $22.1 million below the amount
outstanding at June 30, 1997. On average, short-term borrowings for the first
six months of 1997 were $121.7 million above the same period in 1996, of which
$111.9 was attributable to the increase in average short-term borrowings at
Valley.
Subordinated and other long-term notes increased by $20.1 million from
December
31, 1996 to June 30, 1997. This increase is the net of $35.4 million of
additional borrowings and $15.2 million in normal scheduled principal
reductions. The additional borrowings are comprised of $4.0 million in
borrowings from the Federal Home Loan Bank to fund loan growth, $1.4 million
of
non-recourse debt issued in support of direct financing leases and $30.0
million in 9.85% capital securities as described below.
Capital Resources
Quantitative measures to ensure capital adequacy require the Company and its
subsidiary banks to maintain minimum ratios of 4% for Tier I risk-based
capital,
8% for total risk-based capital and 4% for Tier I leverage. To be considered
well capitalized under the regulatory framework for prompt corrective action
the
ratios are 6%, 10% and 5%, respectively. Management believes, as of June 30,
1997, that the Company meets all capital adequacy requirements to which it is
subject. In addition, each subsidiary bank had regulatory capital ratios in
excess of the levels established for well capitalized institutions.
- 12 -
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<PAGE>
On April 17, 1997, the Company completed a private placement of $30 million of
9.85% capital securities due April 15, 2027. The securities were issued by
the
Company's recently formed subsidiary, Fort Wayne Capital Trust I, a statutory
business trust formed under the laws of the State of Delaware. Proceeds of
the
issue were invested by Fort Wayne Capital Trust I in Junior Subordinated
Debentures issued by the Company. The issuance of these securities, which
qualify as Tier 1 capital for purposes of risk-based capital calculations,
accounts for the increase in the risk-based capital ratios at June 30, 1997 as
compared to prior periods.
The following is a summary of the Company's capital ratios (dollars in
thousands).
<TABLE>
RISK-BASED CAPITAL
<CAPTION>
JUNE 30, 1997 DEC 31, 1996 JUNE 30, 1996
_____________ ____________ _____________
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Tier I Capital $ 274,484 $ 231,818 $ 226,409
Tier II Capital 26,362 24,831 24,314
____________ ____________ ____________
Total Tier I and
Tier II Capital $ 300,846 $ 256,649 $ 250,723
============ ============ ============
Risk-weighted Assets $ 2,105,138 $ 1,981,147 $ 1,936,474
============ ============ ============
Tier I Capital Ratio 13.04% 11.70% 11.69%
Tier II Capital Ratio 1.25% 1.25% 1.26%
____________ ____________ ____________
Total Tier I and
Tier II Capital Ratio 14.29% 12.95% 12.95%
============ ============ ============
Tier I Leverage Ratio 8.35% 7.32% 7.13%
============ ============ ============
</TABLE>
- 13 -
PAGE
<PAGE>
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.
An annual meeting of the shareholders of the Company was held on
April 22, 1997. At the meeting, in addition to the election of
directors and the ratification of the appointment of the Company's
external auditors, two matters were voted upon by shareholders. The
first matter was the proposal to amend the Company's Articles of
Incorporation to increase the total number of authorized shares of
stock from 22,000,000 to 54,000,000 shares. The number of
affirmative
votes cast with respect to this proposal was 7,498,876. The number
of
negative votes cast with respect to this proposal was 1,615,449.
The second matter was a proposal to approve an amendment to the
Company's 1994 Stock Incentive Plan to increase the number of shares
of Common Stock of the Company available to the Plan to 1,350,000.
The
number of affirmative votes cast with respect to this proposal was
7,111,977. The number of negative votes cast with respect to this
proposal was 881,608.
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 3a - Amended and Restated Articles of Incorporation of
Fort Wayne National Corporation.
Exhibit 11 - Statement Re Computation of Earnings Per Share.
Exhibit 27 - Financial Data Schedule.
b.) Reports on Form 8-K
The Company filed a Current Report on Form 8-K on April 30, 1997
to announce the completion on April 17, 1997, of a $30 million
private placement of 9.85% capital securities due April 15, 2027.
- 14 -
PAGE
<PAGE>
FORT WAYNE NATIONAL CORPORATION
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
August 14, 1997 /s/ M. James Johnston
Date M. James Johnston
Chairman of the Board and
Chief Executive Officer
August 14, 1997 /s/ Karen M. Kasper
Date Karen M. Kasper
Senior Vice President,
Chief Financial Officer and Treasurer
- 15 -
PAGE
<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>
3a. Amended and Restated Articles of Incorporation
of Fort Wayne National Corporation. 17.
11. Statement RE Computation of Earnings Per Share. 46.
27. Financial Data Schedule. 47.
- 16 -
</TABLE>
EXHIBIT 3a
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
FORT WAYNE NATIONAL CORPORATION
(July 1997 Edition)
Incorporated under the provisions The Indiana Business Corporation Law
(hereinafter referred to as the "Act").
ARTICLE I
Name
The name of the Corporation is Fort Wayne National Corporation.
ARTICLE II
Purposes and Powers
Section 2.01. Purposes. The purposes for which the Corporation is
formed are to transact any and all lawful business for which corporations may
be incorporated under the Act.
Section 2.02. Powers. Subject to all limitations or restrictions
imposed by the Act or by these Amended Articles of Incorporation and in
furtherance of but not in addition to, the purposes set forth in Section 2.01
above, the Corporation shall have and may exercise all powers specified in the
Act and all other powers not denied to corporations incorporated under the
Act, and in carrying out its purposes the Corporation may act alone or may
enter into any partnership, joint venture, syndicate, arrangement for the
sharing of profits or union of interests, or any other arrangement with any
person, corporation, association or other entity carrying on or engaged in, or
about to carry on or engage in, any business or transaction which this
Corporation is authorized to carry on or engage in.
ARTICLE III
Period of Existence
The period during which the Corporation shall continue is perpetual.
ARTICLE IV
Resident Agent and Principal Office
- 17 -
PAGE
<PAGE>
Section 4.01. Resident Agent. The name and address of the
Corporation's Resident Agent for service of process is Stephen R. Gillig,
110 West Berry Street, Fort Wayne, Indiana 46802.
Section 4.02. Principal Office. The post office address of the
principal office of the Corporation is 110 West Berry Street, Fort Wayne,
Indiana 46802.
ARTICLE V
Authorized Shares
Section 5.01. Number of Shares. The total number of shares which the
Corporation is to have authority to issue is 54,000,000 consisting of
54,000,000 shares without par value.
Section 5.02. Designation of Classes. The authorized shares are
divided into three classes, one of which is designated Class A Preferred Stock
and consists of 2,000,000 shares without par value, one of which is designated
Class B Preferred Stock and consists of 2,000,000 shares without par value,
and one of which is designated Common Stock and consists of 50,000,000 shares
without par value.
Section 5.03. Terms of Shares.
Subdivision A. Voting Rights.
Subsection 5.03.1. Common Stock.
(a) The holders of Common Stock shall have the right, voting in
common with the holders of Class A Preferred Stock and not by class, to
vote upon each question or matter submitted generally to the holders of
shares of the Corporation in respect of which, under and pursuant to the
provisions of The Indiana Business Corporation Law or these Articles of
Incorporation, voting by class is not required.
(b) The holders of Common Stock shall also have the right, voting
separately by class, to vote upon each question or matter in respect of
which, under and pursuant to the provisions of The Indiana Business
Corporation Law or these Articles of Incorporation, they are entitled to
vote by class, including the right to elect all of the Directors of the
Corporation except Class A Preferred Directors and Class B Preferred
Directors elected as provided in this Article V. The Directors whom the
holders of Common Stock are entitled to elect are designated common
Directors.
(c) Whenever the holders of shares of Common Stock have the
right to vote, they shall be entitled to cast one (1) vote for each duly
authorized, issued and outstanding share of Common Stock standing in
their names on the books of the Corporation.
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PAGE
<PAGE>
Subsection 5.03.2. Class A Preferred Stock.
(a) The holders of Class A Preferred Stock shall have the right,
voting in common with the holders of Common Stock and not separately by
class, to vote upon each question or matter submitted generally to the
holders of shares of the Corporation in respect of which, under and
pursuant to the provisions of The Indiana Business Corporation Law or
these Articles of Incorporation, voting by class is not required.
(b) The holders of Class A Preferred Stock shall also have the
right, voting separately by class and without regard to series, to vote
upon each question or matter in respect of which, under and pursuant to
the provisions of The Indiana Business Corporation Law or these Articles
of Incorporation, they are entitled to vote by class.
(c) The holders of Class A Preferred Stock shall also have the
right, voting separately by class and without regard to series, to elect
that number of additional members of the Board of Directors as equals
the number of classes of Common Directors if the Corporation shall fail
to pay the fixed minimum or other dividend payable with respect to any
series of those shares (whether or not such dividend is cumulative) in
an aggregate amount equivalent to full dividends (determined as if
cumulative) with respect to such series for six quarters. Such limited
voting rights may be exercised at the next meeting of shareholders at
which Directors are to be elected and which takes place more than ninety
days following such failure to pay dividends as aforesaid (other than a
separate meeting of the holders of another class of shares) and at each
succeeding meeting of shareholders at which Directors are to be elected
(other than a separate meeting of the holders of another class of
shares) until payment of all dividends on Class A Preferred Stock which
are in arrears (determined as if cumulative) has been made or provided
for, at which time the right to vote for election of Directors conferred
upon the holders of Class A Preferred Stock shall cease, the terms of
the Class A Preferred Directors shall end and they shall cease to serve.
Such limited voting rights shall not limit or restrict the right of the
Corporation from time to time to increase or decrease the number of
Directors (other than Class A Preferred Directors) which the Corporation
shall have. The Directors elected pursuant to this provision are
designated Class A Preferred Directors.
Before any meeting at which the holders of Class A Preferred Stock
shall be entitled to vote in the election of Class A Preferred
Directors, the number of Directors shall be deemed to have been
increased by the same number as there are number of classes of Common
Directors so as to provide that number of additional places for the
Class A Preferred Directorships to be filled by the votes of the holders
of Class A Preferred Stock, and the Corporation's Bylaws shall be deemed
to have been amended accordingly in the same manner and to the same
extent as if the Directors of the Corporation had unanimously,
expressly, and specifically authorized that increase in the number of
Directors at a meeting thereof duly called and held for that purpose.
When the terms of the Class A Preferred Directors shall have ended, the
number of Directors shall be deemed to have been decreased by the number
- 19 -
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<PAGE>
of Class A Preferred Directors in order to eliminate the additional
places for the Class A Preferred Directors and the Corporation's Bylaws
shall be deemed to have been amended accordingly, in the same manner as
provided above.
(d) So long as any share of Class A Preferred Stock of any series
shall be outstanding, the Corporation shall not, without the affirmative
votes of the holders of at least two-thirds (2/3) of the aggregate
number of shares of Class A Preferred Stock of all series then
outstanding, voting separately by class and without regard to series (i)
change or repeal any of the voting rights or any of the relative rights,
preferences, qualifications, limitations and restrictions of the holders
of any shares of the Class A Preferred Stock then outstanding so as to
affect that stock adversely with respect to any other class of capital
stock then outstanding or (ii) authorize or create any class of stock
ranking, as to voting rights or as to relative rights, preferences,
qualifications, limitations and restrictions, prior to the Class A
Preferred Stock of any series then outstanding.
In addition, the Corporation shall not change or repeal any of the
voting rights or any of the relative rights, preferences,
qualifications, limitations and restrictions of the holders of any
series of Class A Preferred Stock then outstanding so as to adversely
affect that series with respect to the voting rights or the relative
rights, preferences, qualifications, limitations and restrictions of the
holders of any other series of Class A Preferred Stock then outstanding
without the affirmative votes of the holders of at least two-thirds
(2/3) of the shares of the series of Class A Preferred Stock being
adversely affected, voting separately by series.
(e) Whenever the holders of shares of Class A Preferred Stock
have the right to vote, they shall be entitled to cast one (1) vote for
each duly authorized, issued and outstanding share of Class A Preferred
Stock standing in their names on the books of the Corporation.
Subsection 5.03.3. Class B Preferred Stock.
(a) Unless any statute of the State of Indiana shall
affirmatively provide to the contrary and except to the extent otherwise
provided in this Subsection 5.03.3 and in Sections 7.05 and 7.06, the
holders of shares of the Class B Preferred Stock shall have no voting
rights and such holders shall not be entitled to receive notice of any
meeting at which they are not entitled to vote.
(b) The holders of Class B Preferred Stock shall have the right,
voting separately by class and without regard to series, to elect that
number of additional members of the Board of Directors as equals the
number of classes of Common Directors if the Corporation shall fail to
pay the fixed, minimum or other dividend payable with respect to any
series of such shares (whether or not such dividend is cumulative) in an
aggregate amount equivalent to full dividends (determined as if
- 20 -
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<PAGE>
cumulative) with respect to such series for six quarters. Such limited
voting rights may be exercised at the next meeting of shareholders at
which Directors are to be elected and which takes place more than ninety
days following such failure to pay dividends as aforesaid (other than a
separate meeting of the holders of another class of shares) and at each
succeeding meeting of shareholders at which Directors are to be elected
(other than a separate meeting of the holders of another class of shares)
until payment of all dividends on Class B Preferred Stock which are in
arrears (determined as if cumulative) has been made or provided for, at
which time the right to vote for election of Directors conferred upon the
holders of Class B Preferred Stock shall cease, the terms of the Class B
Preferred Directors shall end and they shall cease to serve. Such
limited voting rights shall not limit or restrict the right of the
Corporation from time to time to increase or decrease the number of
Directors (other than Class B Preferred Directors) which the Corporation
shall have. The Directors elected pursuant to this provision are
designated Class B Preferred Directors.
Before any meeting at which the holders of Class B Preferred Stock
shall be entitled to vote in the election of Class B Preferred
Directors, the number of Directors shall be deemed to have been
increased by the same number as there are number of classes of Common
Directors so as to provide that number of additional places for the
Class B Preferred Directorships to be filled by the votes of the holders
of Class B Preferred Stock, and the Corporation's Bylaws shall be deemed
to have been amended accordingly, in the same manner and to the same
extent as if the Directors of the Corporation had unanimously,
expressly, and specifically authorized that increase in the number of
Directors at a meeting thereof duly called and held for that purpose.
When the terms of the Class B Preferred Directors shall have ended, the
number of Directors shall be deemed to have been decreased by the number
of Class B Preferred Directors in order to eliminate the additional
places for the Class B Preferred Directors and the Corporation's Bylaws
shall be deemed to have been amended accordingly, in the same manner as
provided above.
(c) So long as any share of Class B Preferred Stock of any series
shall be outstanding, the Corporation shall not, without the affirmative
votes of the holders of at least two-thirds (2/3) of the aggregate
number of shares of Class B Preferred Stock of all series then
outstanding, voting separately by class and without regard to series,
(i) change or repeal any of the voting rights or any of the relative
rights, preferences, qualifications, limitations and restrictions of the
holders of any shares of the Class B Preferred Stock then outstanding so
as to affect that stock adversely with respect to any other class of
capital stock then outstanding or (ii) authorize any class of stock
ranking, as to voting rights or as to relative rights, preferences,
qualifications, limitations and restrictions, prior to the Class B
Preferred Stock of any series then outstanding.
In addition, the Corporation shall not change or repeal any of the
voting rights or any of the relative rights, preferences,
qualifications, limitations and restrictions of the holders of any
- 21 -
<PAGE>
series of Class B Preferred Stock then outstanding so as to adversely
affect that series with respect to the voting rights or the relative
rights, preferences, qualifications, limitations and restrictions of the
holders of any other series of Class B Preferred Stock then outstanding
without the affirmative votes of the holders of at least two-thirds (2/3)
of the shares of the series of Class C Preferred Stock being adversely
affected, voting separately by series.
(d) Whenever the holders of shares of Class B Preferred Stock
have the right to vote they shall be entitled to cast one (1) vote for
each duly authorized. issued and outstanding share of Class B Preferred
Stock standing in their names on the books of the Corporation.
Subsection 5.03.4. Voting Requirements for Removal of Directors and
Filling Certain Vacancies. Notwithstanding the provisions of Subsections
5.03.1, 5.03.2 and 5.03.3. the voting requirements with respect to the removal
of Directors, and filling vacancies under certain circumstances, are as set
forth in Sections 7.05 and 7.06 of Article VII hereof.
Subdivision B. Relative Rights, Preferences, Qualifications,
Limitations and Restrictions (other than Voting Rights).
Subsection 5.03.5. Common Stock.
(a) All shares of Common Stock are alike in all respects and are
not issuable in series.
(b) So long as any share of Class A Preferred Stock or Class B
Preferred Stock remains outstanding, no dividend shall be paid or
declared, and no distribution made or declared, on any Common Stock,
other than a dividend or distribution payable or made in Common Stock,
and no share of Common Stock shall be acquired for a consideration by
the Corporation or by any subsidiary of the Corporation, unless (i) all
dividends accrued on outstanding Class A Preferred Stock and Class B
Preferred Stock of all series to the most recently preceding respective
date or dates for the payment of dividends thereon shall have been paid
or set apart for payment and (ii) all prior sinking fund requirements
and requirements of other similar funds with respect to all series of
Class A Preferred Stock and Class B Preferred Stock shall have been
complied with. Subject to the foregoing, and not otherwise, such
dividends (payable in cash, property, shares of any class and series or
otherwise) as may be determined by the Board of Directors may be
declared and paid on Common Stock from time to time out of funds legally
available for the payment thereof.
(c) Subject to any prior rights of the holders of Class A
Preferred Stock and Class B Preferred Stock, in the event of any
voluntary or involuntary liquidation, dissolution, or winding up of the
Corporation, the holders of Common Stock shall be entitled to share
ratably in the assets of the Corporation available for distribution to
shareholders. Neither the consolidation nor the merger of the
- 22 -
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<PAGE>
Corporation with or into any other corporation or corporations, nor a
reorganization of the Corporation alone, nor the sale or transfer by the
Corporation of all or any part of its assets, shall be deemed to be a
liquidation, dissolution or winding up of the Corporation for the purpose
of this Subsection.
Subsection 5.03.6. Class A Preferred Stock and Class B Preferred
Stock. Class A Preferred Stock and Class B Preferred Stock may each be
issued from time to time in series, each of which series has the voting
rights and relative rights, preferences, qualifications, limitations and
restrictions of the class to which it belongs and those others given it
pursuant to this Subsection. Each share of a series of any class shall
be equal in all respects to every other share of the same class and
series, subject to such limitations as may be prescribed by law, the
Board of Directors is hereby expressly vested with the authority to fix
the relative rights, preferences, qualifications, limitations and
restrictions (other than voting rights) for each class, by resolution or
resolutions of the Board of Directors adopted before the issuance of any
share of any series of that class, to establish and designate series of
that class and to fix the number of shares and relative rights,
preferences, qualifications, limitations and restrictions (other than
voting rights) of each series, by resolution or resolutions of the Board
of Directors adopted before the issuance of any share of that series.
Without limiting the foregoing authority, the Board of Directors may
establish, designate and fix the following with respect to each series
of each class:
(a) The distinctive serial designation of the shares of the
series, which shall distinguish those shares from the shares of all
other series;
(b) The number of shares included in the series, which may be
increased or decreased from time to time unless otherwise provided by
the Board of Directors in creating the series;
(c) The dividend rate or rates or the method of determining the
dividend rate or rates for the shares of the series, the date or dates
upon which the dividends on the shares of the series shall be payable
and the relationship or priority of such dividends to those payable on
Common Stock, on other series of the same class of Preferred Stock, and
on series of other classes of Preferred Stock; whether dividends on the
shares of the series shall be cumulative and, in the case of shares of
any series having cumulative dividends rights, the date or dates or
method of determining the date or dates from which dividends on the
shares of such series shall be cumulative; and whether dividends on the
shares of the series shall be payable in cash, property, shares of any
class and series or otherwise;
(d) The amount or amounts which shall be paid out of the assets
of the Corporation to the holders of the shares of the series upon any
voluntary or involuntary liquidation, dissolution or winding up of the
Corporation, and the relative priorities, if any, to be accorded such
payments;
- 23 -
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<PAGE>
(e) The rights and obligations, if any, of the Corporation to
purchase shares of the series or to redeem them and the prices and the
other terms and conditions of any such purchase or redemption;
(f) The terms and conditions of any share purchase plan or
sinking fund or similar fund providing for the purchase or redemption of
shares of the series;
(g) Whether the shares of the series are convertible and, if they
are, the period or periods within which and the terms and conditions,
including the price or prices or the rate or rates of conversion and the
terms and conditions of any adjustments thereof, upon which the shares
of the series shall be convertible at the option of the holder into
shares of Common Stock or any other class of Preferred Stock or any
other series of the same class of Preferred Stock; and
(h) All other relative rights, preferences, limitations,
qualifications or restrictions, if any, applicable to the shares of the
series not inconsistent herewith or with applicable law.
Class A Preferred Stock and Class B Preferred Stock shall rank
prior to Common Stock with respect to payment of dividends and with
respect to distribution of the assets of the Corporation in the event of
the voluntary or involuntary liquidation, dissolution or winding up of
the Corporation. Neither the consolidation nor the merger of the
Corporation with or into any other corporation or corporations, nor a
reorganization of the Corporation alone, nor the sale or transfer by the
Corporation of all or any part of its assets, shall be deemed to be a
liquidation, dissolution or winding up of the Corporation for the
purpose of this Subsection.
Subdivision C. Class B Preferred Stock, Series 1.
Subsection 5.03.7. Designation and Other Terms of 6% Cumulative
Convertible Class B Preferred Stock, Series 1.
(a) Designation and Rank.
(I) The designation of this series of Class B Preferred
Stock is the 6% Cumulative Convertible Class B Preferred Stock,
Series 1 (hereinafter referred to as the "Series 1 Stock"), and
the number of shares constituting such series shall be 740,000.
Series 1 Stock shall be without value but shall have a stated
value of fifty dollars per share ($50.00).
(ii) The Series 1 Stock shall, with respect to dividend
rights, rights upon liquidation, winding up or dissolution, and
redemption rights, rank (A) junior to any other class or series of
Class A Preferred Stock or Class B Preferred Stock hereafter duly
established by the Board of Directors of the Corporation, the terms
of which shall specifically provide that such series shall rank
- 24 -
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<PAGE>
prior to the Series 1 Stock as to the payment of dividends and
distribution of assets upon liquidation (the "Senior Preferred
Stock") (B) pari passu with any other class of series of Class A
Preferred Stock or Class B preferred Stock hereafter duly
established by the Board of Directors of the Corporation, the
terms of which shall specifically provide that such class or
series shall rank pari passu with the Series 1 Stock as to the
payment of dividends and distribution of assets upon liquidation
(the "Parity Preferred Stock") and (C) prior to any other class or
series of capital stock of or other equity interests in the
Corporation, including, without limitation, the Common Stock of
the Corporation, whether now existing or hereafter created (all of
such classes or series of capital stock and other equity interests
of the Corporation, including, without limitation, the Common
Stock of the Corporation are collectively referred to herein as
the "Junior Securities").
(b) Dividend Rights.
(I) The holders of shares of Series 1 Stock shall be
entitled to receive, when and as declared by the Board of
Directors, out of funds legally available therefor, cash
dividends, accruing from the date of initial issuance (the "Issue
Date"), at the annual rate of 6.00% per annum, and no more,
computed on the stated value of $50.00 for each share. Dividends
shall be payable, when and as declared by the Board of Directors,
quarterly on April 1, July 1, October 1, and January 1 of each year
(each quarterly period ending on any such date being hereinafter
referred to as a "dividend period"), commencing July 1, 1996. Each
dividend will be payable to holders of record as they appear on the
stock books of the Corporation on such record dates as shall be
fixed by the Board of Directors of the Corporation. Dividends
payable on the Series 1 Stock (A) for any period other than a full
dividend period shall be computed based upon the actual number of
days elapsed up to but not including the dividend payment date
divided by 365, and (B) for each full dividend period shall be
computed by dividing the annual dividend rate by four.
(ii) Holders of shares of the Series 1 Stock shall not be
entitled to any dividend, whether payable in cash, property or
stock, in excess of full cumulative dividends on such shares. No
interest or sum of money in lieu of interest shall be payable in
respect of any dividend payment or payments which may be in
arrears.
(iii) Unless full cumulative dividends on all
outstanding shares of the Series 1 Stock shall have been paid or
declared and set aside for payment for all past dividend periods,
no dividend (other than a dividend in Common Stock or in any
Junior Securities) shall be declared upon the Junior Securities,
nor shall any Junior Securities be redeemed, purchased or
otherwise acquired for any consideration (or any moneys be paid to
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or made available for a sinking fund for the redemption of any
shares of any such Junior Securities) by the Corporation except for
any redemption, purchase or acquisition relating to a conversion of
or exchange for such Junior Securities.
(c) Liquidation Preferences.
(I) In the event of any liquidation, dissolution or winding
up of the affairs of the Corporation, whether voluntary or
involuntary, the holders of Series 1 Stock shall be entitled to
receive out of the assets of the Corporation available for
distribution to shareholders an amount equal to $50.00 per share
plus an amount equal to any accrued and unpaid dividends thereon
to and including the date of such distribution, and no more,
before any distribution shall be made to the holders of any Junior
Securities. After payment of such liquidating distributions, the
holders of shares of Series 1 Stock shall not be entitled to any
further participation in any distribution of assets by the
Corporation.
(ii) In the event the assets of the Corporation available
for distribution to shareholders upon any liquidation, dissolution
or winding up of the affairs of the Corporation, whether voluntary
or involuntary, shall be insufficient to pay in full the amounts
payable with respect to the Series 1 Stock and any other Parity
Preferred Stock, the holders of Series 1 Stock and the holders of
such Parity Preferred Stock shall share ratably in any
distribution of assets of the Corporation in proportion to the
full respective amounts to which they are entitled.
(iii) The merger or consolidation of the Corporation
into or with any other corporation, the merger or consolidation of
any other corporation into or with the Corporation or the sale of
the assets of the Corporation substantially as an entirety shall
not be deemed a liquidation, dissolution or winding up of the
affairs of the Corporation within the meaning of this subsection
(c).
(d) Redemption.
(I) Subject to obtaining the prior approval of the Board of
Governors of the Federal Reserve System, if necessary, the
Corporation, at its option, may redeem any or all shares of Series
1 Stock, at any time or from time to time, on or after April 1,
2002 at a redemption price of $50.00 per share, plus an amount
equal to accrued and unpaid dividends thereon to but not including
the date of redemption (the "Redemption Price").
(ii) If less than all the outstanding shares of Series 1
Stock are to be redeemed, the shares to be redeemed shall be
selected pro rata as nearly as practicable.
(iii) Notice of any redemption shall be given by first
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class mail, postage prepaid, mailed not less than 30 nor more than
60 days prior to the date fixed for redemption to the holders of
record of the shares of Series 1 Stock to be redeemed, at their
respective addresses appearing on the books of the Corporation.
Notice so mailed shall be conclusively presumed to have been duly
given whether or not actually received. Such notice shall state
(A) the date fixed for redemption; (B) the Redemption Price; (C)
that the holder has the right to convert such shares into Common
Stock until the close of business on the tenth day preceding the
redemption date; (D) the then effective Conversion Ratio (as
defined in section (e) below) and the place where certificates for
such shares may be surrendered for conversion; (E) the number of
shares of Series 1 Stock to be redeemed and if less than all the
shares held by such holder are to be redeemed, the number of such
shares to be so redeemed from such holder; (F) the place where
certificates for such shares are to be surrendered for payment of
the Redemption Price; and (G) that after such date fixed for
redemption the shares to be redeemed shall not accrue dividends.
If such notice is mailed as aforesaid, and if on or before the date
fixed for redemption funds sufficient to redeem the shares called
for redemption are set aside by the Corporation in trust for the
account of the holders of the shares to be redeemed, notwithstanding
the fact that any certificate for shares called for redemption shall
not have been surrendered for cancellation, on and after the
redemption date the shares represented thereby so called for
redemption shall be deemed to be no longer outstanding, dividends
thereon shall cease to accrue and all rights of the holders of
such shares as shareholders of the Corporation shall cease (except
the right to receive the Redemption Price, without interest, upon
surrender of the certificate representing such shares). Upon
surrender in accordance with the aforesaid notice of the
certificate for any shares so redeemed (duly endorsed or
accompanied by appropriate instruments of transfer, if so required
by the Corporation in such notice), the holders of record of such
shares shall be entitled to receive the Redemption Price, without
interest. Notwithstanding the foregoing, however, as and to the
extent that the Corporation is required or permitted under the
abandoned property laws of any jurisdiction to escheat any
redemption funds held in trust for the benefit of any holder, the
Corporation shall be absolved of any further obligation or
liability to such holder to the full extent provided by any such
law. In case fewer than all the shares represented by any such
certificate are redeemed, a new certificate shall be issued
representing the unredeemed shares without cost to the holder
thereof.
(iv) At the option of the Corporation, if notice of
redemption is mailed as aforesaid, and if prior to the date fixed
for redemption funds sufficient to pay in full the Redemption
Price are deposited in trust, for the account of the holders of
the shares to be redeemed, with a bank or trust company named in
such notice doing business in the State of Indiana or the Borough
of Manhattan, The City of New York, State of New York, and having
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capital and surplus of at least $50 million (which bank or trust
company also may be the transfer agent and/or paying agent for the
Series 1 Stock) notwithstanding the fact that any certificate(s) for
shares called for redemption shall not have been surrendered for
cancellation, on and after such date of deposit the shares
represented thereby so called for redemption shall be deemed to be
no longer outstanding, and all rights of the holders of such shares
as shareholders of the Corporation shall cease, except the right of
the holders thereof to convert such shares in accordance with the
provisions of section (e) below at any time prior to the close of
business on the tenth day preceding the redemption date and the
right of the holders thereof to receive out of the funds so
deposited in trust the Redemption Price, without interest, upon
surrender of the certificate(s) representing such shares. Any
funds so deposited with such bank or trust company in respect of
shares of Series 1 Stock converted before the close of business on
the tenth day preceding the redemption date shall be returned to the
Corporation upon such conversion. Unless otherwise required by law,
any funds so deposited with such bank or trust company which shall
remain unclaimed by the holders of shares called for redemption at
the end of two years after the redemption date shall be repaid to
the Corporation, on demand, and thereafter the holder of any such
shares shall look only to the Corporation for the payment, without
interest, of the Redemption Price. Notwithstanding the foregoing,
however, as and to the extent that the Corporation is required or
permitted under the abandoned property laws of any jurisdiction to
escheat any redemption funds held in trust for the benefit of any
holder, the Corporation shall be absolved of any further
obligation or liability to such holder to the full extent provided
by any such laws.
(v) Any provision of this section (d) to the contrary
notwithstanding, in the event that any dividends payable on the
Series 1 Stock shall be in arrears and until all such dividends in
arrears shall have been paid or declared and set apart for payment
the Corporation shall not redeem any shares of Series 1 Stock
unless all outstanding shares of Series 1 Stock are simultaneously
redeemed and shall not purchase or otherwise acquire any shares of
Series 1 Stock except in accordance with a purchase or exchange
offer made on the same terms to all holders of record of Series 1
Stock for the purchase of all outstanding shares thereof.
(e) Conversion Rights. The holders of shares of Series 1 Stock
shall have the right, at their option, to convert such shares into
shares of Common Stock on the following terms and conditions:
(I) Each Share of Series 1 Stock shall be convertible at
any time into fully paid and nonassessable shares of Common Stock
at a conversion ratio (the "Conversion Ratio") equal to $50
divided by 120% of the average of the per share closing prices of
a share of Common Stock as reported on the Nasdaq Stock Market's
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National Market as reported in the Wall Street Journal (Midwest
Edition)during the twenty (20) trading day period preceding the
fifth (5th) calendar day preceding the Issue Date. The Conversion
Ratio shall be subject to adjustment from time to time as
hereinafter provided. No payment or adjustment shall be made on
account of any accrued an unpaid dividends on shares of Series 1
Stock surrendered for conversion prior to the record date for the
determination of shareholders entitled to such dividends or on
account of any dividends on the shares of Common Stock issued upon
such conversion subsequent to the record date for the determination
of shareholders entitled to such dividends. If any shares of Series
1 Stock shall be called for redemption, the right to convert the
shares designated for redemption shall terminate at the close of
business on the tenth day preceding the date fixed for redemption
unless default is made in the payment of the Redemption Price. In
the event of default in the payment of the Redemption Price, the
right to convert the shares designated for redemption shall
terminate
at the close of business on the business day immediately preceding
the date that such default is cured.
(ii) In order to convert shares of Series 1 Stock into
Common Stock, the holder thereof shall surrender the certificates
therefor, duly endorsed if the Corporation shall so require, or
accompanied by appropriate instruments of transfer satisfactory to
the Corporation, at the office of the transfer agent for the
Series 1 Stock, or at such other office as may be designated by
the Corporation, together with written notice that such holder
irrevocably elects to convert such shares. Such notice shall also
state the name and address in which such holder wishes the
certificate for the shares of Common Stock issuable upon
conversion to be issued. As soon as practicable after receipt of
the certificates representing the shares of Series 1 Stock to be
converted and the notice of election to convert the same, the
Corporation shall issue and deliver at said office a certificate
for the number of whole shares of Common Stock issuable upon
conversion of the shares of Series 1 Stock surrendered for
conversion, together with a cash payment in lieu of any fraction
of a share, as hereinafter provided, to the person entitled to
receive the same. If more than one stock certificate for Series 1
Stock shall be surrendered for conversion at one time by the same
holder, the number of full shares of Common Stock issuable upon
conversion thereof shall be computed on the basis of the aggregate
number of shares represented by all the certificates so
surrendered. Shares of Series 1 Stock shall be deemed to have
been converted immediately prior to the close of business on the
date such shares are surrendered for conversion and notice of
election to convert the same is received by the Corporation in
accordance with the foregoing provision, and the person entitled
to receive the Common Stock issuable upon such conversion shall be
deemed for all purposes as the record holder of such Common Stock
as of such date.
(iii) In the case of any share of Series 1 Stock which is
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converted after any record date with respect to the payment of a
dividend on the Series 1 Stock and on or prior to the date on
which such dividend is payable by the Corporation (the "Dividend
Due Date"), the dividend due on such Dividend Due Date shall be
payable on such Dividend Due Date to the holder of record of such
shares as of such preceding record date notwithstanding such
conversion. Shares of Series 1 Stock surrendered for conversion
during the period from the close of business on any record date
with respect to the payment of a dividend on the Series 1 Stock next
preceding any Dividend Due Date to the opening of business on such
Dividend Due Date shall (except in the case of shares of Series 1
Stock which have been called for redemption on a redemption date
within such period) be accompanied by payment of an amount equal to
the dividend payable on such Dividend Due Date on the shares of
Series 1 Stock being surrendered for conversion. The dividend with
respect to a share of Series 1 Stock called for redemption on a
redemption date during the period from the close of business on
any record date with respect to the payment of a dividend on the
Series 1 Stock next preceding any Dividend Due Date to the opening
of business on such Dividend Due Date shall be payable on such
Dividend Due Date to the holder of record of such share on such
dividend record date, notwithstanding the conversion of such share
of Series 1 Stock after such record date and prior to such
Dividend Due Date, and the holder converting such share of Series
1 Stock called for redemption need not include a payment of such
dividend amount upon surrender of such share of Series 1 Stock for
conversion. Except as provided in this subsection (iii), no
payment or adjustment shall be made upon any conversion on account
of any dividends accrued on shares of Series 1 Stock surrendered
for conversion or on account of any dividends on the shares of
Common Stock issued upon conversion.
(iv) No fractional shares of Common Stock shall be issued
upon conversion of any shares of Series 1 Stock. If the
conversion of any shares of Series 1 Stock results in a fractional
share of Common Stock, the Corporation shall pay cash in lieu
thereof in an amount equal to such fraction multiplied by the
Current Market Price of the Common Stock (as defined below), on
the date on which the shares of Series 1 Stock were duly
surrendered for conversion, or if such date is not a trading date,
on the next succeeding trading date.
(v) The Conversion Ratio shall be adjusted from time to
time after the Issue Date, as follows:
(A) In case the Corporation shall pay or make a
dividend or other distribution on shares of Common Stock in
Common Stock, the Conversion Ratio in effect at the opening
of business on the date following the date fixed for the
determination of shareholders entitled to receive such
dividend or other distribution shall be increased by
dividing such Conversion Ratio by a fraction of which the
numerator shall be the number of shares of Common Stock
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outstanding at the close of business on the date fixed for such
determination and the denominator shall be the sum of such
number of shares and the total number of shares constituting
such dividend or other distribution, such increase to become
effective immediately after the opening of business on the
day following the date fixed for such determination.
(B) In case the Corporation shall issue additional
rights or warrants to all holders of its Common Stock
entitling them to subscribe for or purchase shares of Common
Stock at a price per share less than the Current Market
Price of the Common Stock on the date fixed for the
determination of shareholders entitled to receive such
rights or warrants (other than pursuant to a dividend
reinvestment plan), the Conversion Ratio in effect at the
opening of business on the day following the date fixed for
such determination shall be increased by dividing such
Conversion Ratio by a fraction of which the numerator shall
be the number of shares of Common Stock outstanding at the
close of business on the date fixed for such determination
plus the number of shares of Common Stock which the
aggregate of the offering price of the total number of
shares of Common Stock so offered for subscription or
purchase would purchase at the Current Market Price of the
Common Stock and the denominator shall be the number of
shares of Common Stock outstanding at the close of business
on the date fixed for such determination plus the number of
shares of Common Stock so offered for subscription or
purchase, such increase to become effective immediately
after the opening of business on the day following the date
fixed for such determination.
(C) In case outstanding shares of Common Stock shall
be subdivided into a greater number of shares of Common
Stock, the Conversion Ratio in effect at the opening of
business on the day following the day upon which such
subdivision becomes effective shall be proportionately
increased, and, conversely, in case outstanding shares of
Common Stock shall be combined into a smaller number of
shares of Common Stock, the Conversion Ratio in effect at
the opening of business on the day following the day upon
which such combination becomes effective shall be
proportionately reduced, such reduction or increase, as the
case may be, to become effective immediately after the
opening of business on the day following the day upon which
such subdivision or combination becomes effective.
(D) In case the Corporation shall, by dividend or
otherwise, distribute to all holders of its Common Stock
evidences of its indebtedness or assets (including
securities, but excluding (1) any rights or warrants
referred to in clause (B) above, (2) any dividend or
distribution paid in cash out of the retained earnings of
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the Corporation, and (3) any dividend or distribution referred
to in clause (A) above), the Conversion Ratio shall be adjusted
so that the same shall equal the ratio determined by
multiplying the Conversion Ratio in effect immediately prior to
the close of business on the date fixed for the determination
of shareholders entitled to receive such distribution by a
fraction of which the numerator shall be the Current Market
Price of the Common Stock on the date fixed for such
determination less the then fair market value (as determined
by the Board of Directors, whose determination shall be
conclusive and shall be described in a statement filed with
the transfer agent for the Series 1 Stock) of the portion of
the evidences of indebtedness or assets so distributed
applicable to one share of Common Stock and the denominator
shall be the Current Market Price of the Common Stock, such
adjustment to become effective immediately prior to the
opening of business on the day following the date fixed for
the determination of shareholders entitled to receive such
distribution.
(E) For the purposes of this section (e), the
reclassification of Common Stock into securities including
securities other than Common Stock (other than any
reclassification upon a consolidation or merger to which
subsection (vi) below applies) shall be deemed to involve
(1) a distribution of such securities other than Common
Stock to all holders of Common Stock (and the effective date
of such reclassification shall be deemed to be "the date
fixed for the determination of shareholders entitled to
receive such distribution" and the "date fixed for such
determination" within the meaning of clause (D) above), and
(2) a subdivision or combination, as the case may be, of the
number of shares of Common Stock outstanding immediately
prior to such reclassification into the number of Common
Stock outstanding immediately thereafter (and the effective
date of such reclassification shall be deemed to be "the day
upon which such subdivision became effective" or "the day
upon which such combination becomes effective" as the case
may be, and "the day upon which such subdivision or
combination becomes effective" within the meaning of clause
(C) above).
(F) For the purposes of this section (e), (other than
subsection (e)(I)), the Current Market Price of the Common
Stock on any day shall be deemed to be the average of the
daily closing prices for the 30 consecutive trading days
commencing 45 trading days before the day in question. The
closing price for each day shall be the reported last sale
price or, in case no such reported sale takes place on such
day, the average of the reported closing bid and asking
prices, in either case on the Nasdaq Stock Market's National
Market ("Nasdaq") or, if the Common Stock is no longer
quoted for trading on such system, on the principal national
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securities exchange on which the Common Stock is then listed
or admitted to trading or, if the Common Stock is not quoted
on Nasdaq or listed or admitted to trading on any national
securities exchange, the average of the closing bid and
asked prices in the over-the-counter market as furnished by
any New York Stock Exchange member firm selected from time
to time by the Board of Directors for that purpose.
(G) Notwithstanding the foregoing, no adjustment in
the Conversion Ratio for the Series 1 Stock shall be
required unless such adjustment would require an increase or
decrease of at least 1% in such ratio; provided, however,
that any adjustments which are not required to be made shall
be carried forward and taken into account in any subsequent
adjustment. All calculations under this section (e) shall
be made to the nearest cent or to the nearest one-ten
thousandth of a share (0.0001), as the case may be.
(vi) Whenever the Conversion Ratio shall be adjusted as
herein provided (A) the Corporation shall forthwith make available
at the office of the transfer agent for the Series 1 Stock a
statement describing in reasonable detail the adjustment, the
facts requiring such adjustment and the method of calculation
used; and (B) the Corporation shall cause to be mailed by first
class mail, postage prepaid, as soon as practicable to each holder
of record of shares of Series 1 Stock a notice stating that the
Conversion Ratio has been adjusted and setting forth the adjusted
Conversion Ratio.
(vii) In the event of any consolidation of the Corporation
with or merger of the Corporation into any other corporation
(other than a merger in which the Corporation is the surviving
corporation) or a sale, lease or conveyance of the assets of the
Corporation as an entirety or substantially as an entirety, or any
statutory exchange of securities with another corporation, the
holder of each share of Series 1 Stock shall have the right, after
such consolidation, merger, sale or exchange to convert such share
into the number and kind of shares of stock or other securities
and the amount and kind of property which such holder would have
been entitled to receive upon such consolidation, merger, sale or
exchange of the number of shares of Common Stock that would have
been issued to such holder had such shares of Series 1 Stock been
converted immediately prior to such consolidation, merger or sale.
The provisions of this subsection (vii) shall similarly apply to
successive consolidations, mergers, sales or exchanges.
(viii) The Corporation shall pay any taxes that may be
payable in respect of the issuance of shares of Common Stock upon
conversion of shares of Series 1 Stock, but the Corporation shall
not be required to pay any taxes which may be payable in respect
of any transfer involved in the issuance of shares of Common Stock
in the name other than that in which the shares of Series 1 Stock
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so converted are registered, and the Corporation shall not be
required to issue or deliver any such shares unless and until the
person requesting such issuance shall have paid to the Corporation
the amount of any such taxes, or shall have established to the
satisfaction of the Corporation that such taxes have been paid.
(ix) The Corporation may (but shall not be required to) make
such increases and reductions in the Conversion Ratio, in addition
to those required by clauses (A) through (D) of subsection (v)
above, as it considers to be advisable in order that any event
treated for federal income tax purposes as a dividend of stock or
stock rights shall not be taxable to the recipients.
(x) The Corporation shall at all times reserve and keep
available out of its authorized but unissued Common Stock the full
number of shares of Common Stock issuable upon the conversion of
all shares of Series 1 Stock then outstanding.
(xi) In the event that:
(A) the Corporation shall declare a dividend or any
other distribution on its Common Stock, payable otherwise
than in cash out of retained earnings; or
(B) the Corporation shall authorize the granting to
the holders of its Common Stock of rights to subscribe for
or purchase any shares of capital stock of any class or of
any other rights; or
(C) any capital reorganization of the Corporation,
reclassification of the capital stock of the Corporation,
consolidation or merger of the Corporation with or into
another corporation (other than a merger in which the
Corporation is the surviving corporation), or sale, lease or
conveyance of the assets of the Corporation as an entirety
or substantially as an entirety to another corporation
occurs; or
(D) the voluntary or involuntary dissolution,
liquidation or winding up of the Corporation occurs, the
Corporation shall cause to be mailed to the holders of
record of Series 1 Stock at least 15 days prior to the
applicable date hereinafter specified a notice stating (x) the
date on which a record is to be taken for the purpose of such
dividend, distribution of rights or, if a record is not to
be taken, the date as of which the holders of Common Stock
of record to be entitled to such dividend, distribution or
rights are to be determined, or (y) the date on which such
reorganization, reclassification, consolidation, merger,
sale, lease, conveyance, dissolution, liquidation or winding
up is expected to take place, and the date, if any is to be
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fixed, as of which holders of Common Stock of record shall be
entitled to exchange their shares of Common Stock for
securities or other property deliverable upon such
reorganization, reclassification, consolidation, merger,
sale, lease, conveyance, dissolution, liquidation or winding
up. Failure to give such notice, or any defect therein,
shall not affect the legality or validity of such dividend,
distribution, reorganization, reclassification,
consolidation, merger, sale, lease, conveyance, dissolution,
liquidation or winding up.
(f) Voting Rights. Other than as required by applicable law or
as expressly provided in subsection 5.03.3 of the Corporation's Amended
Articles of Incorporation, the holders of Series 1 Stock shall not have
any voting rights.
(g) Reacquired Shares. Shares of Series 1 Stock converted,
redeemed, or otherwise purchased or acquired by the Corporation shall be
restored to the status of authorized but unissued shares of Class B
Preferred Stock without designation as to series and may thereafter be
issued, but not as Series 1 Stock.
(h) No Sinking Fund. Shares of Series 1 Stock are not subject to
the operation of a sinking fund or other obligation of the Corporation
to redeem or retire the Series 1 Stock.
Section 5.04. Repeal or Amendment of Voting Rights. Notwithstanding
any other provision of these Articles of Incorporation or the Bylaws of the
Corporation (and notwithstanding that a lesser percentage may be specified by
law), none of the provisions of Subsection 5.03.2(d), Subsection 5.03.3(c) or
this Section 5.04 may be repealed or amended in any respect unless such action
is approved by the affirmative vote of the holders of not less than two-thirds
(2/3) of the shares of each class of stock outstanding whose rights would be
adversely affected by the repeal or amendment, voting separately by class.
ARTICLE VI
Stated Capital
The stated capital of the Corporation at the time of filing these
amended articles is at least One Thousand Dollars ($1,000.00).
ARTICLE VII
Directors
Section 7.01. Number of Directors. The Board of Directors is composed
of twenty-one (21) members. The number of Directors may be fixed from time to
time by the Bylaws of the Corporation at any number not more than thirty-one
(31) nor less than nine (9); provided, however, that (a) there shall not be
more than twenty five (25) Directors elected by the holders of shares of
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Common Stock (the "Common Directors") and (b) subject to such rights as the
holders of shares of any class of stock other than Common Stock may have under
these Articles of incorporation or applicable law (I) no reduction in the
number
of Directors shall shorten the term of any incumbent Director and reductions
may
be made only as the terms of incumbent Directors expire and (ii) the number of
Common Directors may be changed only by the favorable votes of at least one
more than two-thirds (2/3) of the entire number of Common Directors (which
number shall be determined as if there were no vacancy in Common Directorships
even if one or more vacancies exist). In the absence of a Bylaw fixing the
number of Directors, the number shall, subject to the provisos of the
preceding
sentence, be nine (9).
Section 7.02. Classes of Directors. Subject to such rights as the
holders of shares of any class of stock other than Common Stock may have under
these Articles of Incorporation or applicable law: Whenever the Board of
Directors consists of nine (9) or more members, the Bylaws of the Corporation
may provide that the Directors be divided into three classes whose terms of
office shall expire at different times, but no term shall continue longer than
three years. The number of members in each class shall be one-third (1/3) of
the total number of members, except that if the total number is not divisible
by three, one class (as designated by two-thirds (2/3) of the entire number of
Common Directors) shall have one more or one fewer number of Common Director
members than the other classes. When the classes are created and also
whenever the number of Common Directors is increased, two-thirds (2/3) of the
entire number of Common Directors are authorized, subject to the provisions of
the second sentence of this Section 7.02, to assign the additional Common
Director member or members to such class or classes as they deem appropriate
and to fill the vacancy or vacancies in each class to which an additional
Common Director member or members are assigned for the term of that class.
Whenever the number of Directors is decreased, but to no fewer than nine (9),
two-thirds (2/3) of the entire number of Common Directors are authorized,
subject to the provisions of the second sentence of this Section 7.02, to
remove the discontinued number from such class or classes as it deems
appropriate. Whenever the Board of Directors is divided into more than one
class, the Board of Directors may be declassified only by the favorable votes
of at least one more than two-thirds (2/3) of the entire number of Common
Directors and only if there is no incumbent Director who was elected by the
holders of shares of any class of stock other than Common Stock or who has
filled the vacancy in such a Directorship. Whenever holders of shares of any
class of stock other than Common Stock elect directors to the classified
Board, those holders shall also determine the assignment of their Directors to
the classes of the Board. For the purposes of this Section 7.02, two-thirds
(2/3) of the entire number of Common Directors shall be determined as if there
were no vacancy in Common Directorships even if one or more vacancies exist.
Section 7.03. Names and Post Office Addresses of the Directors. The
names and post office addresses of the present Board of Directors of the
Corporation are:
Number and
Name Street or P. O. Box City State Zip Code
Walter S. Ainsworth P. O. Box 638 Roanoke IN 46783
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Willis E. Alt, Jr. P. O. Box 1447 Warsaw IN 46580
Robert A. Anker P. O. Box 7844 Fort Wayne IN 46801-7844
Stanley C. Craft P. O. Box 10452 Fort Wayne IN 46852-0452
Richard B. Doner 11510 Brigadoon Court Fort Wayne IN 46804
Jon F. Fuller 430 West Cook Road Fort Wayne IN 46825
Thomas C. Griffith 2931 Fox Chase Run Fort Wayne IN 46825
Michael C. Haggarty P. O. Box 229 Auburn IN 46706
M. James Johnston P. O. Box 110 Fort Wayne IN 46801
Joanne B. Lantz 800 Hamilton Lake Lane Hamilton IN 46742
150H
Jackson R. Lehman P. O. Box 110 Fort Wayne IN 46801
Mike McClelland P. O. Box 868 Fort Wayne IN 46801
Richard C. Menge 4415 Brixworth Court Fort Wayne IN 46835
Patrick G. Michaels P. O. Box 2263 Fort Wayne IN 46801
Patricia R. Miller 2208 Production Road Fort Wayne IN 46808
Dennis J. Schwartz P. O. Box 328 South Bend IN 46624-0328
Paul E. Shaffer 11132 Carnoustie Lane Fort Wayne IN 46804
Thomas M. Shoaff 111 E. Wayne Street, Fort Wayne IN 46802
Suite 800
Jeff H. Towles, M.D. 1313 Production Road, Fort Wayne IN 46808
Mail Stop 3-28
Don A. Wolf 11718 Autumn Tree Dr. Fort Wayne IN 46845
Section 7.04. Qualifications of Directors. Directors need not be
shareholders.
Section 7.05. Removal of Directors. Any one or more Directors may be
removed from office at any time, but only for cause and only by the votes of
the
holders of at least two-thirds (2/3) of the outstanding shares of that class
of
stock entitled to vote for the class or classes of Directors of which the
Director or Directors sought to be removed are members, at a meeting of
shareholders of that class or classes called expressly for that purpose,
- 37 -
PAGE
<PAGE>
notice of which meeting shall be accompanied by a proxy statement complying
with the proxy statement rules and regulations of the Securities and Exchange
Commission, whether or not a proxy statement is otherwise required. Except as
may otherwise be provided by law, cause for removal shall exist only if the
Director whose removal is sought (a) has been convicted of a felony by a court
of competent jurisdiction. or (b) has been adjudged by a court of competent
jurisdiction to be liable for negligence or misconduct in a matter of
substantial importance to the Corporation, or (c) has been assessed a civil
money penalty or ordered to make a payment to the Corporation or any of its
subsidiaries in an administrative proceeding or action instituted by a bank,
bank holding company or other appropriate regulatory agency, or (d) has been
found liable for conduct for which he has been administratively or judicially
denied indemnity under any indemnification provision of the Corporation or any
of its subsidiaries, and there is no longer a right of direct appeal with
respect to any such cause for removal.
Section 7.06. Filling Vacancies. Any vacancy in a Directorship
resulting
from death, disability, resignation, retirement, disqualification, removal
from
office or for any other cause shall be filled by the favorable votes of at
least
two-thirds (2/3) of the remaining Directors who were elected by the holders of
the same class of stock as the Director no longer serving and each of the
Directors so chosen shall hold office for the unexpired term of the vacancy
being filled by him. However, if no Director or Directors remain in office
with power to fill the resulting vacancies, they shall be filled by the votes
of the holders of at least two-thirds (2/3) of the shares of that class of
shareholders having the right to elect Directors to the vacancies being
filled.
Section 7.07. Repeal or Amendment of this Article. Notwithstanding any
other provision of these Articles of Incorporation or the Bylaws of the
Corporation (and notwithstanding that a lesser percentage may be specified by
law), none of the provisions of this Article VII (including this Section 7.07)
may be repealed or amended in any respect unless such action is approved by
the
affirmative vote of the holders of not less, than two-thirds (2/3) of the
shares
of each class of stock outstanding whose rights would be adversely affected by
the repeal or amendment, voting separately by class.
ARTICLE VIII
Names and Addresses of President and
Secretary of Corporation
The names and post office addresses of the President and Secretary of the
Corporation are:
Number and
Name Street or P. O. Box City State Zip Code
M. James Johnston, 110 West Berry Street Fort Wayne IN 46802
President
Stephen R. Gillig, 110 West Berry Street Fort Wayne IN 46802
Secretary
- 38 -
PAGE
<PAGE>
ARTICLE IX
Provisions for Regulation of Business
and Conduct of Affairs of Corporation
Section 9.01. Subject to satisfaction of the voting requirements of any
provision of these Articles of Incorporation which requires the votes of the
holders of more than a majority of the shares of any class or series of
outstanding capital stock of the Corporation for the authorization of any
amendment or repeal of any part of these Articles of Incorporation, the
Corporation reserves the right to amend or repeal any provision contained in
these Articles of Incorporation in the manner now or hereafter prescribed by
the
provisions of The Indiana Business Corporation Law or any other pertinent
enactment of the General Assembly of the State of Indiana, and all rights and
powers conferred hereby on stockholders, directors and/or officers are subject
to this reserve power.
Section 9.02. No contract or other transaction between the Corporation
and
one or more of its directors or officers or any other corporation, firm,
association or entity in which one or more of its directors or officers is a
director or officer or is financially interested shall be void or voidable or
in
any other way affected because of such relationship or interest or because
such
director or directors or officer or officers are present at the meeting of the
Board of Directors or a committee thereof which authorizes, approves or
ratifies
such contract or transaction or because his or their votes are counted for
such
purpose, if:
9.02.1. The fact of such relationship or interest is disclosed or
known to the Board of Directors or committee thereof which authorizes,
approves or ratifies the contract or transaction by a vote or consent
sufficient for the purpose without counting the votes or consents of such
interested directors; or
9.02.2. The fact of such relationship or interest is disclosed or
known to the shareholders entitled to vote and they authorize, approve or
ratify such contract or transaction by vote or written consent; or
9.02.3. The contract or transaction is fair and reasonable to the
Corporation.
Common or interested directors may be counted in determining the presence
of a quorum at a meeting of the Board of Directors or a committee thereof
which
authorizes, approves or ratifies such contract or transaction.
No director or officer shall be liable to the Corporation or any of its
shareholders by reason of the authorization, approval or ratification of any
such contract or transaction if such contract or transaction be not void or
voidable under the foregoing standards.
Section 9.03. The shares of stock of the corporation may be sold for
such
consideration as may be fixed from time to time by the Board of Directors of
the
Corporation.
- 39 -
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<PAGE>
Section 9.04. Meetings of the shareholders may be held (1) at the
principal office of the Corporation in the State of Indiana or (2) at such
other place either within or without the State of Indiana as shall from time
to
time either (a) be determined by the Board of Directors or the President of
the
Corporation and be designated in the notice or waiver of notice of the meeting
or (b) be consented to by all of the shareholders of the Corporation in
written
waivers of notice of such meeting or (3) at such place as all shareholders
attend for the purpose of holding a meeting.
Section 9.05. The Board of Directors of the Corporation may, without
limitation on its other powers to declare dividends and to authorize the
Corporation to acquire its own shares, declare dividends payable from, and
authorize the Corporation to acquire its own shares to the extent of, the
Corporation's unreserved and unrestricted capital surplus available therefor.
ARTICLE X
Certain Business Transactions
Section 10.01. General. In addition to the requirements, if any, of the
provisions of any class or series of capital stock which may be outstanding,
and
whether or not a vote of shareholders is otherwise required, the affirmative
vote of the holders of not less than two-thirds (2/3) of the Common Stock,
voting separately by class, shall be required for the approval or
authorization
of any Business Transaction with a Related Person, or any Business Transaction
in which a Related Person has an interest (except proportionately as a
shareholder of the Corporation); provided, however, that the two-thirds (2/3)
voting requirement shall not be applicable if (1) Continuing Directors at the
time shall constitute at least one-third (1/3) of the entire Board of
Directors
of the Corporation and shall have expressly approved the Business Transaction
by at least a two-thirds (2/3) vote of the Continuing Directors at a duly
called and validly held meeting at which at least three-fourths (3/4) of the
Continuing Directors shall have been present at the discussion and vote on the
approval, or (2) all of the following conditions shall have been satisfied:
(A) (I) the Business Transaction is a merger or consolidation, or
sale of substantially all of the assets, of the Corporation, (ii) the
aggregate amount of cash and fair market value of the property,
securities or other consideration to be received per share by holders of
Common Stock of the Corporation (other than that Related Person) in
connection with the Business Transaction has a present value, determined
as of the date of consummation of the Business Transaction, at least
equal to the higher of (x) that Related Person's Highest Purchase Price
and (y) the Fair Market Value Per Share of Common Stock of the
Corporation and (iii) if more than one type of consideration is received,
there is paid or distributed in respect of each share of Common Stock of
the Corporation the same proportion of each type of consideration;
(B) after that Related Person has become the Beneficial Owner of
not less than fifteen percent (15%) of the Voting Stock and before the
consummation of the Business Transaction, that Related Person shall not
- 40 -
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<PAGE>
have become the Beneficial owner of any additional share of Voting Stock
or securities convertible into Voting Stock, except (I) as a part of the
transaction which resulted in that Related Person's becoming the
Beneficial Owner of not less than ten percent (10%) of the Voting Stock
or (ii) as a result of a pro rata stock dividend or stock split; and
(c) before the consummation of the Business Transaction that
Related Person shall not have. directly or indirectly, (I) received the
benefit (except proportionately as a shareholder of the Corporation) of
any loan, advance, guarantee, pledge or other financial assistance or tax
credit or other tax advantage provided by the Corporation or any of its
subsidiaries, or (ii) caused any material change in the Corporation's
business or equity capital structure including, without limitation, the
issuance of shares of capital stock of the Corporation to any third
party.
A proxy statement describing the proposed Business Transaction and
complying with the requirements of the Securities Exchange Act of 1934 and the
rules and regulations thereunder (or with the provisions of any act, rules and
regulations in effect in lieu thereof) shall be mailed to all holders of
Common
Stock at least thirty (30) days before the date of the shareholder meeting at
which the Business) Transaction is to be voted upon, whether or not such
statement is otherwise required. The proxy statement shall contain at the
front thereof, in a prominent place (A) any recommendations as to the
advisability or inadvisability of the Business Transaction which the Directors
may choose to state: and (B) if required by the vote of a majority of the
Continuing Directors, the opinion of a national investment banking firm as to
the fairness of the terms of the Business Transaction. from the point of view
of the holders (other than that Related Person) of Common Stock of the
Corporation (such investment banking firm to be engaged solely on behalf of
those holders of Common Stock, to be paid a reasonable fee for its services by
the Corporation upon receipt of such opinion, to be a reputable investment
banking firm which has not previously been associated with any Related Person
and to be selected by a majority of the Directors).
Section 10.02. Definitions. For the purpose of this Article X:
(1) The term "Business Transaction" means (a) any merger or
consolidation involving the Corporation or a subsidiary of the
Corporation, (b) any sale, lease, exchange, transfer or other disposition
(in one transaction or a series of transactions) including, without
limitation, a mortgage or any other security device, of substantially all
or of any Substantial Part of the assets either of the Corporation or of
a subsidiary of the Corporation. (c) the issuance, sale, exchange,
transfer or other disposition by the Corporation or a subsidiary of the
Corporation of any securities of the Corporation or any subsidiary of the
Corporation, (d) any recapitalization or reclassification of the
securities of the Corporation (including, without limitation, any reverse
stock split) or other transaction that would have the effect of
increasing the voting power or control of a Related Person, (e) any
partial or complete liquidation, spinoff, splitoff, splitup or
dissolution of the Corporation, and (f) any agreement, contract or other
arrangement providing for any of the transactions described in this
definition of Business Transaction.
- 41 -
PAGE
<PAGE>
(2) The term "Related Person" means and includes (a) any
individual, corporation, partnership, group, association or other person
or entity which, together with its Affiliates and Associates is the
Beneficial Owner of not less than ten percent (10%) of the Voting Stock
or was the Beneficial owner of not less than ten percent (10%) of the
Voting Stock (x) at the time the definitive agreement providing for the
Business Transaction (including any amendment thereof) was entered into,
(y) at the time a resolution approving the Business Transaction was
adopted by the Board of Directors of the Corporation) or (z) as of the
record date for the determination of shareholders entitled to notice of
and to vote on, or consent to, the Business Transaction, and (b) any
Affiliate or Associate of any such individual, corporation, partnership,
group, association or other person or entity; provided, however, and
notwithstanding anything in the foregoing to the contrary the term
"Related Person" shall not include the Corporation, a wholly-owned
subsidiary of the Corporation, any employee stock ownership or
other employee benefit plan of the Corporation or of any wholly-owned
subsidiary of the Corporation, or any trustee of, or fiduciary with
respect to, any such plan when acting in that capacity.
(3) The term "Beneficial Owner" shall be defined by reference to
Rule 13d-3 under the Securities Exchange Act of 1934, as in effect on
January 15, 1985; provided, however, that any individual, corporation,
partnership, group, association or other person or entity which has the
right to acquire any Voting Stock at any time in the future, whether such
right is contingent or absolute, pursuant to any agreement, arrangement
or understanding or upon exercise of any conversion right, warrant,
option or otherwise, shall be deemed the Beneficial Owner of that Voting
Stock.
(4) The term "Highest Purchase Price" means the highest amount of
consideration paid by the Related Person for a share of Common Stock of
the Corporation (including any brokerage commissions, transfer taxes and
soliciting dealers' fees) in the transaction which resulted in that
Related Person's becoming the Beneficial Owner of not less than ten
percent (10%) of the Voting Stock or at any time while that Related
Person was a Related Person: provided; however, that the amount so
determined shall be appropriately adjusted to reflect the occurrence of
any reclassification, recapitalization, stock split, reverse stock split
or other readjustment in the number of outstanding shares of Common Stock
of the Corporation, or the payment of a stock dividend thereon, occurring
between (I) the last date upon which that Related Person paid the amount
so determined for a share of Common Stock of the corporation and (ii) the
effective date of the merger or consolidation or the date of distribution
to shareholders of the Corporation of the proceeds from the sale of
substantially all of the assets of the Corporation referred to in
paragraph (A) of Section 10.01 of this Article X.
(5) The term "Fair Market Value Per Share of Common Stock of the
Corporation" means the average of the daily mean (mid point) between bid
and asked, or high and low, prices of Common Stock of the Corporation
during the last five (5) days on which trading in Common Stock has
occurred immediately before the date on which the Business Transaction is
approved by the Directors of the Corporation or, if there is no such
approval, then the date of the mailing of the Proxy Statement to
shareholders under Section 10.01.
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<PAGE>
(6) The term "Substantial Part" means any of the following,
determined as of the date referred to in clause (5) of this Section
10.02:
(a) If the assets constituting the substantial Part are owned
by the Corporation itself:
Either
(I) Twenty percent (20%) of those shares owned by the
Corporation of stock of any corporate subsidiary of the
Corporation which are entitled to be voted generally in the
election of the directors of that subsidiary, or twenty percent
(20%) of the voting power owned by the Corporation in any other
entity which is a subsidiary of the Corporation:
or
(ii) If the Corporation itself is also engaged in carrying
on a business, twenty percent (20%) of the fair market value of
all of the assets of the Corporation other than those described
in Clause (a)(I) of this definition;
(b) If the assets constituting the Substantial Part are "owned
by a subsidiary of the Corporation:
Either
(I) Twenty percent (20%) of those shares owned by the
subsidiary of stock of any corporation which are entitled to be
voted generally in the election of directors of that
corporation, or twenty percent (20%) of the voting power owned
by the subsidiary in any other entity;
or
(ii) Twenty percent (20%) of the fair market value of all
of the assets of the subsidiary other than those described in
Clause (b)(I) of this definition.
(7) In the event of a merger in which the Corporation is the
surviving corporation, for the purpose of paragraph (A) of Section 10.01
the phrase "property, securities or other consideration to be received"
shall include, without limitation, Common Stock of the Corporation
retained by its shareholders (other than that Related Person).
(8) The term "Voting Stock" means all outstanding shares of capital
stock of the Corporation entitled to vote generally in the election of
directors, considered for the purpose of this Article X as one class;
provided, however, that if the Corporation has shares of Voting Stock
entitled to more or less than one vote for any such share, each reference
in this Article X to a proportion of shares of Voting Stock shall be
deemed to refer to that proportion of the votes entitled to be cast in
respect of those shares.
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<PAGE>
(9) The term "Continuing Director" means a Director of any class
entitled to be elected by holders of shares of Common Stock who (A) is
not the Related Person specified in Section 10.01 with respect to the
Business Transaction under consideration, and (B) either was a member of
the Board of Directors of the Corporation before that Related Person
became a Related Person or who subsequently became a Director of the
Corporation and whose election, or nomination for election by the
Corporation's Common Stock holders, was approved by a vote of at least
three-fourths (3/4) of the Continuing Directors then on the Board.
(10) The term "Affiliate," used to indicate a relationship to a
specified person, means a person that directly, or indirectly through one
or more intermediaries, controls, or is controlled by, or is under common
control with, such specified person. "Control" means the possession,
directly or indirectly, of the power to direct or cause the direction of
the management and policies of a person through the ownership of voting
power, by contract or otherwise.
(11) The term "Associate," used to indicate a relationship with a
specified person, means (A) any corporation, partnership or other
organization of which that specified person is an officer or partner or
is, directly or indirectly, the Beneficial Owner of ten percent (10%) or
more of any class of equity securities, (B) any trust or other estate in
which that specified person has a substantial beneficial interest or as
to which that specified person serves as trustee or in a similar
fiduciary capacity, (C)any relative or spouse of that specified person,
or any relative of that spouse, who has the same home as that specified
person or who is a director or officer of the Corporation or any of its
parents or subsidiaries and (D)any person who is a director or officer of
that specified person or any of its parents or subsidiaries (other than
the Corporation or any wholly-owned subsidiary of the Corporation).
(12) The term "subsidiary" means and includes not only a
corporation, but also any other entity, in which the Corporation directly
or indirectly holds more than one-half (1/2) of the voting power.
Section 10.03. Determination of Certain Matters by Continuing
Directors.
For the purpose of this Article X, if the Continuing Directors constitute at
least one-third (1/3) of the entire Board of Directors of the Corporation,
then
two-thirds (2/3) of the Continuing Directors shall have the power to make a
good
faith determination, on the basis of information then known to them of: (I)
the
number of shares of Voting Stock of which any person is the Beneficial Owner,
(ii) whether a person is an Affiliate or Associate of another, (iii) whether a
person has an agreement, arrangement or understanding with another as to the
matters referred to in the definition of Beneficial Owner, (iv) whether the
assets subject to any Business Transaction constitute a Substantial Part, (v)
whether any Business Transaction is one in which a Related Person has an
interest (except proportionately as a shareholder of the Corporation), (vi)
whether a Related Person has, directly or indirectly, received any of the
benefits or caused any of the changes referred to in paragraph of Section
10.01
of this Article X, and (vii) other matters with respect to which a
determination is required under this Article X.
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<PAGE>
Section 10.04. No Relief from Fiduciary or Other Obligations or
Restrictions. Nothing contained in this Article X shall be construed to
relieve
any Related Person from any fiduciary obligation or other obligation or
restriction imposed by law.
Section 10.05. Repeal or Amendment of this Article. Notwithstanding any
other provision of these Articles of Incorporation or the Bylaws of the
Corporation (and notwithstanding that a lesser percentage may be specified by
law), none of the provisions of this Article X (including this Section 10.05)
may be repealed or amended in any respect unless such action is approved by
the
affirmative vote of the holders of not less than two-thirds (2/3) of the
Common
Stock, voting separately by class.
- 45 -
<PAGE>
<TABLE>
EXHIBIT 11
FORT WAYNE NATIONAL CORPORATION AND SUBSIDIARIES
STATEMENT RE COMPUTATION OF EARNINGS PER SHARE
(Unaudited)
<CAPTION>
Three Months Six Months
Ended June 30 Ended June 30
________________ ________________
1997 1996 1997 1996
_______ _______ _______ _______
(In thousands, except per share data)
<S> <C> <C> <C> <C>
PRIMARY
Average shares outstanding........... 17,610 17,378 17,590 17,271
Net effect of dilutive stock
options -- based on the treasury
stock method using average market
price.............................. 249 92 223 86
_______ _______ _______ _______
TOTAL 17,859 17,470 17,813 17,357
======= ======= ======= =======
Net income........................... $ 9,037 $ 7,175 $18,354 $14,066
Preferred stock dividends............ 555 185 1,110 185
_______ _______ _______ _______
Net income applicable to common stock. $ 8,482 $ 6,990 $17,244 $13,881
======= ======= ======= =======
Earnings per common and common share
equivalents......................... $ .48 $ .40 $ .97 $ .80
======= ======= ======= =======
FULLY DILUTED
Average shares outstanding............ 17,610 17,378 17,590 17,271
Net effect of conversion o preferred
stock................................ 1,494 492 1,494 246
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............................... 290 99 290 99
_______ _______ _______ _______
TOTAL 19,394 17,969 19,374 17,616
======= ======= ======= =======
Net income............................ $ 9,037 $ 7,175 $18,354 $14,066
======= ======= ======= =======
Earnings per common and common share
equivalents......................... $ .47 $ .40 $ .95 $ .80
======= ======= ======= =======
</TABLE>
- 46 -
<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 JUNE 30, 1997 AND FOR THE THREE AND SIX MONTH
PERIODS THEN ENDED AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 166,472
<INT-BEARING-DEPOSITS> 304
<FED-FUNDS-SOLD> 126,425
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 941,215
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 1,978,221
<ALLOWANCE> 30,188
<TOTAL-ASSETS> 3,340,649
<DEPOSITS> 2,477,324
<SHORT-TERM> 455,701
<LIABILITIES-OTHER> 26,719
<LONG-TERM> 78,463
<COMMON> 19,593
0
36,999
<OTHER-SE> 245,850
<TOTAL-LIABILITIES-AND-EQUITY> 3,340,649
<INTEREST-LOAN> 84,089
<INTEREST-INVEST> 30,044
<INTEREST-OTHER> 1,199
<INTEREST-TOTAL> 115,332
<INTEREST-DEPOSIT> 44,691
<INTEREST-EXPENSE> 57,203
<INTEREST-INCOME-NET> 58,129
<LOAN-LOSSES> 2,240
<SECURITIES-GAINS> 44
<EXPENSE-OTHER> 43,569
<INCOME-PRETAX> 27,705
<INCOME-PRE-EXTRAORDINARY> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 18,354
<EPS-PRIMARY> .97
<EPS-DILUTED> .95
<YIELD-ACTUAL> 4.29
<LOANS-NON> 11,319
<LOANS-PAST> 1,514
<LOANS-TROUBLED> 1,732
<LOANS-PROBLEM> 13,846
<ALLOWANCE-OPEN> 30,307
<CHARGE-OFFS> 2,877
<RECOVERIES> 458
<ALLOWANCE-CLOSE> 30,188
<ALLOWANCE-DOMESTIC> 30,188
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 30,188
</TABLE>
