INDIANA UNITED BANCORP, S-2, 1997-11-19

INDIANA UNITED BANCORP
S-2, 1997-11-19
STATE COMMERCIAL BANKS

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As filed with the Securities and Exchange Commission on November ___, 1997
Registration No. 333-____________
Registration No. 333-____________-01

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

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

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

FORM S-2
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933

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

INDIANA UNITED BANCORP IUB CAPITAL TRUST
----------------------
(Exact name of registrant as specified in its charter)

INDIANA DELAWARE
(State or other jurisdiction
of incorporation or organization)

35-1562245 REQUESTED
(I.R.S. Employer
Identification Number)
------- ----------

201 N. BROADWAY, GREENSBURG, INDIANA 47240
(812) 663-0157
--------------
(Address, including zip code, and telephone number,
including area code, of registrant's and
co-registrant's principal executive offices)

MR. ROBERT E. HOPTRY
CHAIRMAN OF THE BOARD, PRESIDENT AND CHIEF EXECUTIVE OFFICER
INDIANA UNITED BANCORP
201 N. BROADWAY, GREENSBURG, INDIANA 47240
(812) 663-0157
(Name, address, including zip code, and telephone number,
including area code, of agent for service)

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

Please send copies of all communications to:

Ivan M. Diamond, Esq. David W. Harper, Esq. James L. Nouss, Jr., Esq.
Greenebaum Doll & McDonald 2450 Meidinger Tower Bryan Cave LLP
3300 National City Tower Louisville, KY 40202 One Metropolitan Square
101 S. Fifth Street 211 N. Broadway
Louisville, Kentucky 40202 Suite 3600
St. Louis, MO 63102

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC:
AS SOON AS PRACTICABLE AFTER THE REGISTRATION STATEMENT BECOMES EFFECTIVE.

If any of the securities being registered on this Form are being offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box: / /

If the registrant elects to deliver its latest annual report to security
holders, or a complete and legible facsimile thereof, pursuant to Item 11(a)(1)
of this form, check the following box: / /

If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /

If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box: / /

<PAGE>

CALCULATION OF REGISTRATION FEE

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- ---------------------------------------------------------------------------------------------------------------------------------
AMOUNT TO BE PROPOSED MAXIMUM
TITLE OF EACH CLASS OF REGISTERED PROPOSED MAXIMUM OFFERING AGGREGATE OFFERING PRICE AMOUNT OF
SECURITIES TO BE REGISTERED (1) PRICE PER UNIT (1) REGISTRATION FEE
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<S> <C> <C> <C> <C>
Preferred Securities of IUB Capital
Trust (2) 2,127,500(2) $10.00 $21,275,000(2) $6,447
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Subordinated Debentures of Indiana
United Bancorp (3) (3)(4)
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Guarantee of Indiana United
Bancorp with respect to the
Preferred Securities (4) (4)
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</TABLE>

(1) Estimated solely for the purpose of calculating the registration fee
payable pursuant to Rule 457 of the Securities Act.

(2) Includes 277,500 Preferred Securities that may be sold by IUB Capital Trust
to the Underwriter to cover over-allotments.

(3) The Subordinated Debentures will be purchased by IUB Capital Trust with the
proceeds of the sale of the Preferred Securities. Such securities may
later be distributed for no additional consideration to the holders of the
Preferred Securities of IUB Capital Trust upon its dissolution and the
distribution of its assets.

(4) This registration statement is deemed to cover the Subordinated Debentures
of Indiana United Bancorp, the rights of holders of Subordinated Debentures
of Indiana United Bancorp under the Indenture, and the rights of holders of
the Preferred Securities under the Trust Agreement, the Guarantee and the
Expense Agreement entered into by Indiana United Bancorp. No separate
consideration will be received for the Guarantee. Pursuant to Rule 457(n)
under the Securities Act, no separate registration fee is payable for the
Guarantee.

THE REGISTRANT AND THE CO-REGISTRANT HEREBY AMEND THIS REGISTRATION
STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE
DATE UNTIL THE REGISTRANT AND THE CO-REGISTRANT SHALL FILE A FURTHER
AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL
THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE SECURITIES
ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON
SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION 8(a), MAY DETERMINE.
<PAGE>
SUBJECT TO COMPLETION, DATED NOVEMBER 19, 1997
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>
PROSPECTUS

1,850,000 PREFERRED SECURITIES

IUB CAPITAL TRUST

% CUMULATIVE TRUST PREFERRED SECURITIES
(LIQUIDATION AMOUNT $10 PER PREFERRED SECURITY)
GUARANTEED, AS DESCRIBED HEREIN, BY

INDIANA UNITED BANCORP
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$18,500,000 % SUBORDINATED DEBENTURES OF

INDIANA UNITED BANCORP
----------------

The % Cumulative Trust Preferred Securities (the "Preferred Securities")
offered hereby represent preferred undivided beneficial interests in the assets
of IUB Capital Trust, a statutory business trust created under the laws of the
State of Delaware ("IUB Trust"). Indiana United Bancorp, an Indiana corporation
(the "Company"), will own all the common securities (the "Common Securities"
and, together with the Preferred Securities, the "Trust Securities")
representing undivided beneficial interests in the assets of IUB Trust.

(CONTINUED ON NEXT PAGE)

Application has been made to have the Preferred Securities approved for
quotation on the Nasdaq National Market under the symbol "IUBCP."
------------------------

SEE "RISK FACTORS" COMMENCING ON PAGE 15 FOR INFORMATION THAT SHOULD BE
CONSIDERED BY PROSPECTIVE INVESTORS.
---------------------
THE SECURITIES OFFERED BY THIS PROSPECTUS ARE NOT SAVINGS OR DEPOSIT ACCOUNTS,
ARE NOT OBLIGATIONS OF OR GUARANTEED BY ANY BANKING OR NON-BANKING AFFILIATE
OF THE COMPANY (EXCEPT TO THE EXTENT THAT PREFERRED SECURITIES ARE
GUARANTEED BY THE COMPANY AS DESCRIBED HEREIN), ARE NOT INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENT AGENCY
AND INVOLVE INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF
PRINCIPAL.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

<TABLE>
<CAPTION>
UNDERWRITING PROCEEDS TO IUB
PRICE TO PUBLIC COMMISSION(1) TRUST(2)(3)
<S> <C> <C> <C>
Per Preferred Security................................... $10.00 (2) $10.00
Total(3)................................................. $18,500,000 (2) $18,500,000
</TABLE>

(1) IUB Trust and the Company have each agreed to indemnify the Underwriter
against certain liabilities, including liabilities under the Securities Act
of 1933, as amended. See "Underwriting."
(2) In view of the fact that the proceeds of the sale of the Preferred
Securities will be invested in the Subordinated Debentures (as defined
herein), the Company has agreed to pay the Underwriter as compensation for
its arranging the investment therein of such proceeds $ per Preferred
Security, or $ in the aggregate, ($ if the over-allotment option
is exercised in full). See "Underwriting." The Company has also agreed to
pay the expenses of the offering, estimated to be $ .
(3) IUB Trust has granted the Underwriter an option exercisable within 30 days
from the date of this Prospectus to purchase up to 277,500 additional
Preferred Securities on the same terms and conditions set forth above to
cover over-allotments, if any. If all such additional Preferred Securities
are purchased, the total Price to Public and Proceeds to IUB Trust will be
$21,275,000. See "Underwriting."
------------------------------

THE PREFERRED SECURITIES ARE OFFERED BY THE UNDERWRITER SUBJECT TO RECEIPT
AND ACCEPTANCE BY IT, PRIOR SALE AND THE UNDERWRITER'S RIGHT TO REJECT ANY ORDER
IN WHOLE OR IN PART AND TO WITHDRAW, CANCEL OR MODIFY THE OFFER WITHOUT NOTICE.
IT IS EXPECTED THAT DELIVERY OF THE PREFERRED SECURITIES WILL BE MADE ON OR
ABOUT , 1997.
<PAGE>
STIFEL, NICOLAUS & COMPANY
INCORPORATED

, 1997
<PAGE>
(CONTINUED FROM PREVIOUS PAGE)

State Street Bank and Trust Company is the Property Trustee (as defined
herein) of IUB Trust. IUB Trust exists for the purpose of issuing the Trust
Securities and investing the proceeds thereof in an equivalent amount of %
Subordinated Debentures (the "Subordinated Debentures") of the Company. The
Subordinated Debentures will mature on December 31, 2027, which date may be (i)
shortened to a date not earlier than December 31, 2002, or (ii) extended to a
date not later than December 31, 2036, in each case if certain conditions are
met (including, in the case of shortening the Stated Maturity (as defined
herein), the Company having received prior approval of the Board of Governors of
the Federal Reserve System ("Federal Reserve") to do so if then required under
applicable capital guidelines or policies of the Federal Reserve). The Preferred
Securities will have a preference under certain circumstances with respect to
cash distributions and amounts payable on liquidation, redemption or otherwise
over the Common Securities. See "Description of the Preferred
Securities--Subordination of Common Securities."

The holders of the Preferred Securities are entitled to receive preferential
cumulative cash distributions, at the annual rate of % of the liquidation
amount of $10 per Preferred Security (the "Liquidation Amount"), accruing from
, 1997, the date of original issuance, and payable quarterly in
arrears on the last day of March, June, September and December of each year,
commencing December 31, 1997 (the "Distributions"). The Company has the right,
so long as no Debenture Event of Default (as defined herein) has occurred and is
continuing, to defer payment of interest on the Subordinated Debentures at any
time or from time to time for a period not to exceed 20 consecutive quarters
with respect to each deferral period (each, an "Extension Period"); provided
that no Extension Period may extend beyond the Stated Maturity of the
Subordinated Debentures. Upon the termination of any such Extension Period and
the payment of all amounts then due, the Company may elect to begin a new
Extension Period subject to the requirements set forth herein. If interest
payments on the Subordinated Debentures are so deferred, Distributions on the
Preferred Securities will also be deferred, and the Company will not be
permitted, subject to certain exceptions described herein, to declare or pay any
cash distributions with respect to its capital stock or debt securities that
rank PARI PASSU with or junior to the Subordinated Debentures. WHILE THE COMPANY
INTENDS TO TAKE THE POSITION THAT THE SUBORDINATED DEBENTURES WILL NOT BE DEEMED
TO BE ISSUED WITH ORIGINAL ISSUE DISCOUNT ("OID"), INTEREST ON THE SUBORDINATED
DEBENTURES DURING AN EXTENSION PERIOD WILL CONTINUE TO ACCRUE (AND THE AMOUNT OF
DISTRIBUTIONS TO WHICH THE HOLDERS OF THE PREFERRED SECURITIES ARE ENTITLED WILL
ACCUMULATE) AT THE RATE OF % PER ANNUM, COMPOUNDED QUARTERLY, AND THE HOLDERS
OF THE PREFERRED SECURITIES WILL BE REQUIRED TO INCLUDE INTEREST INCOME AS OID
IN THEIR GROSS INCOME FOR UNITED STATES FEDERAL INCOME TAX PURPOSES IN ADVANCE
OF RECEIPT OF THE CASH DISTRIBUTIONS WITH RESPECT TO SUCH DEFERRED INTEREST
PAYMENTS. A HOLDER OF PREFERRED SECURITIES THAT DISPOSES OF ITS PREFERRED
SECURITIES BETWEEN RECORD DATES FOR PAYMENTS OF DISTRIBUTIONS (AND CONSEQUENTLY
DOES NOT RECEIVE A DISTRIBUTION FROM IUB TRUST FOR THE PERIOD PRIOR TO SUCH
DISPOSITION) WILL NEVERTHELESS BE REQUIRED TO INCLUDE ACCRUED BUT UNPAID
INTEREST OR OID, IF ANY, ON THE SUBORDINATED DEBENTURES THROUGH THE DATE OF
DISPOSITION IN INCOME AS ORDINARY INCOME AND TO ADD THE AMOUNT OF ANY ACCRUED
OID TO ITS ADJUSTED TAX BASIS IN ITS PRO RATA SHARE OF THE UNDERLYING
SUBORDINATED DEBENTURES DEEMED DISPOSED OF. See "Description of the Subordinated
Debentures--Option to Extend Interest Payment Period," "Certain Federal Income
Tax Consequences--Potential Extension of Interest Payment Period and Original
Issue Discount" and "--Disposition of the Preferred Securities."

The Company and IUB Trust believe that, taken together, the obligations of
the Company under the Guarantee, the Trust Agreement, the Subordinated
Debentures, the Indenture and the Expense Agreement (each as defined herein)
provide, in the aggregate, a full, irrevocable and unconditional guarantee, on a
subordinated basis, of all of the obligations of IUB Trust under the Preferred
Securities. See "Relationship Among the Preferred Securities, the Subordinated
Debentures and the Guarantee--Full and Unconditional Guarantee." The Guarantee
of the Company guarantees the payment of Distributions

(CONTINUED ON NEXT PAGE)

2
<PAGE>
(CONTINUED FROM PREVIOUS PAGE)

and payments on liquidation or redemption of the Preferred Securities, but only
in each case to the extent of funds held by IUB Trust, as described herein. See
"Description of the Guarantee--General." If the Company does not make interest
payments on the Subordinated Debentures held by IUB Trust, IUB Trust will have
insufficient funds to pay Distributions on the Preferred Securities. The
Guarantee does not cover payments of Distributions when IUB Trust does not have
sufficient funds to pay such Distributions. In such event, a holder of Preferred
Securities may institute a legal proceeding directly against the Company
pursuant to the terms of the Indenture to enforce payments of amounts equal to
such Distributions to such holder. See "Description of the Subordinated
Debentures--Enforcement of Certain Rights by Holders of the Preferred
Securities." The obligations of the Company under the Guarantee and the
Preferred Securities are subordinate and junior in right of payment to all
Senior Debt, Subordinated Debt and Additional Senior Obligations (each as
defined herein) of the Company. The Subordinated Debentures are unsecured
obligations of the Company and are subordinated to all Senior Debt, Subordinated
Debt and Additional Senior Obligations of the Company.

The Preferred Securities are subject to mandatory redemption, in whole or in
part, upon repayment of the Subordinated Debentures at maturity or their earlier
redemption. Subject to Federal Reserve approval, if then required under
applicable capital guidelines or policies of the Federal Reserve, the
Subordinated Debentures are redeemable prior to maturity at the option of the
Company (i) on or after December 31, 2002, in whole at any time or in part from
time to time, or (ii) at any time, in whole (but not in part), within 180 days
following the occurrence of a Tax Event, a Capital Treatment Event or an
Investment Company Event (each as defined herein), in each case at a redemption
price equal to the accrued and unpaid interest on the Subordinated Debentures so
redeemed to the date fixed for redemption, plus 100% of the principal amount
thereof. See "Description of the Preferred Securities--Redemption."

The Company has the right at any time to dissolve, wind-up or terminate IUB
Trust subject to the Company having received prior approval of the Federal
Reserve to do so if then required under applicable capital guidelines or
policies of the Federal Reserve. In the event of the voluntary or involuntary
dissolution, winding up or termination of IUB Trust, after satisfaction of
liabilities to creditors of IUB Trust as required by applicable law, the holders
of the Preferred Securities will be entitled to receive a Liquidation Amount of
$10 per Preferred Security, plus accumulated and unpaid Distributions thereon to
the date of payment, which may be in the form of a Subordinated Debenture having
an aggregate principal amount equal to the Liquidation Amount of such Preferred
Securities (and carrying with it accumulated interest in an amount equal to the
accumulated and unpaid Distributions then due on such Preferred Securities),
subject to certain exceptions. See "Description of the Preferred
Securities--Redemption" and "--Liquidation Distribution upon Termination."

The information concerning P.T.C. Bancorp, an Indiana corporation ("PTC"),
contained in this Prospectus, including financial information, has been derived
from or is based upon publicly available documents and records on file with the
Securities and Exchange Commission (the "Commission") and other public sources.
The Company and the Underwriter assume no responsibility for the accuracy or
completeness of the information concerning PTC contained in such documents and
records or for any failure by PTC to disclose events that may have occurred or
may affect the significance or accuracy of any such information but that are
unknown to the Company or the Underwriter.
------------------------

The Company will provide quarterly reports containing unaudited financial
statements to the holders of Preferred Securities if such reports are furnished
to the holders of the Company's common stock, and annual reports containing
financial statements audited by the Company's independent auditors. The Company
will also furnish annual reports on Form 10-K and quarterly reports on Form 10-Q
free of charge to holders of Preferred Securities who so request in writing
addressed to the Treasurer and Chief Financial Officer of the Company.

3
<PAGE>
------------------------

CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN, OR OTHERWISE AFFECT THE PRICE OF THE PREFERRED
SECURITIES. SUCH TRANSACTIONS MAY INCLUDE OVER-ALLOTMENT, STABILIZING
TRANSACTIONS, THE PURCHASE OF PREFERRED SECURITIES TO COVER SHORT POSITIONS AND
THE IMPOSITION OF PENALTY BIDS. FOR A DESCRIPTION OF SUCH ACTIVITIES, SEE
"UNDER-

WRITING." SUCH STABILIZING TRANSACTIONS, IF COMMENCED, MAY BE DISCONTINUED AT
ANY TIME.
------------------------

FORWARD-LOOKING STATEMENTS

Certain statements in this Prospectus or in certain documents incorporated
by reference herein, including without limitation statements under the headings
"Risk Factors," "Company Management's Discussion and Analysis of Financial
Condition and Results of Operations," "PTC Management's Discussion and Analysis
of Financial Condition and Results of Operations" and "Business of the Company,"
constitute "forward-looking statements" within the meaning of Section 27A of the
Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Such
forward-looking statements involve known and unknown risks, uncertainties and
other factors that may cause actual results, performance or achievements of the
Company or PTC to differ materially from any future results, performance or
achievements expressed or implied by such forward-looking statements.

Such factors include, among other things, the following: the factors set
forth in the section entitled "Risk Factors;" general and local economic
conditions; legislative and regulatory initiatives; monetary and fiscal policies
of the federal government; deposit flows; the cost of funds; general market
rates of interest; interest rates on competing investments; demand for loan
products; demand for financial services; changes in accounting policies or
guidelines; and changes in the quality or composition of the Company's loan and
investment portfolios. The Company does not undertake and specifically disclaims
any obligation to update any forward-looking statements to reflect the
occurrence of anticipated or unanticipated events or circumstances after the
date of such statements.

4
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[Map indicating locations of banking offices of the Company and PTC]

5
<PAGE>
PROSPECTUS SUMMARY

THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED
INFORMATION APPEARING ELSEWHERE (OR INCORPORATED BY REFERENCE) IN THIS
PROSPECTUS. UNLESS OTHERWISE INDICATED, THE INFORMATION IN THIS PROSPECTUS
ASSUMES THAT THE UNDERWRITER'S OVER-ALLOTMENT OPTION WILL NOT BE EXERCISED.
PROSPECTIVE INVESTORS SHOULD CAREFULLY CONSIDER THE INFORMATION SET FORTH UNDER
THE HEADING "RISK FACTORS."

THE COMPANY

GENERAL

Indiana United Bancorp (the "Company") is a bank and thrift holding company
headquartered in Greensburg, Indiana. Through its subsidiaries, Union Bank and
Trust Company of Indiana, a commercial bank organized under the laws of Indiana
("Union Bank"), and Regional Federal Savings Bank, a Federal savings bank
("Regional Bank"), the Company operates twelve offices in four eastern and
southern Indiana counties. (Union Bank and Regional Bank are sometimes
individually referred to herein as a "Bank" and collectively as the "Banks.")
Both subsidiaries offer a broad range of loan and deposit services to consumer,
agricultural and commercial customers. Union Bank also offers a full line of
personal and business trust services and property and casualty insurance
services. The principal executive office of the Company is located at 201 N.
Broadway, Greensburg, Indiana 47240 and its telephone number is (812) 663-0157.

During the past five years the Company has focused on improving its net
interest margin by reducing its cost of funds and reallocating its assets.
Pursuit of this objective included divestiture of three Regional Bank branches
in 1994. Since 1993, total loans as a percentage of total assets have increased
from 57% to 70%, with the greatest percentage of growth concentrated in higher
yielding consumer loans. As a result, the Company's net interest margin since
1993 has increased from 3.52% to 4.13% per annum.

FINANCIAL SUMMARY

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

(1) Adjusted for 10% stock dividend in 1994.

(2) Ratios for the nine-month periods are annualized.

OPERATING PHILOSOPHY

The Company operates in predominately rural and suburban markets and
embraces a community banking philosophy that emphasizes personal service and
convenience, community involvement, local decision-making authority, quick
responses to loan requests, and customized services.

The Company endeavors to provide its branch managers, lending officers,
tellers and deposit service personnel with the authority to act promptly in
service of its customers within the scope of Company

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policies. This highly responsive service attitude is enhanced by an efficient
corporate support staff and an investment in technology.

The Company believes the benefits of this operating philosophy contribute to
its success while providing improved operating efficiencies, sound internal
controls and high credit underwriting standards.

BUSINESS STRATEGY

The most fundamental and constant element of the Company's business strategy
has been to originate and maintain asset quality exceeding state and national
peer quality averages. The Company believes that maintaining high asset quality
is critical to creating long-term shareholder value and the Company has a
history of maintaining asset quality that has consistently placed it among peer
leaders.

The Company holds either first or second market share positions as measured
by total deposits in two of the three markets it serves and intends to pursue
growth strategies that result in meaningful market share positions in other
rural or suburban communities. Such a strategy emphasizes growth by acquisition
over de novo expansion. The Company is seeking to identify potential
acquisitions in markets that offer opportunities to benefit from its community
banking philosophy and that will likely result in meaningful market share. In
conformity with this strategy, the Company has entered into an agreement to
acquire PTC, a bank holding company headquartered in Brookville, Indiana with
total assets of $300 million. PTC is also community focused, serving rural
communities with populations of 10,000 or less in markets contiguous to the
Company's existing locations. The transaction is regarded by both companies as a
merger of equals and will integrate management and directors of both
organizations. See "--Recent Developments."

The Company also believes many larger banking companies operating in, or
contiguous to, Indiana will begin an accelerated program of branch divestitures.
The Company further believes many of these branch locations will be in
communities which are compatible with its growth strategies. In such event, the
Company intends to bid competitively in seeking to expand through branch
acquisitions.

OWNERSHIP

As of November 1, 1997, the directors and executive officers of the Company
and their immediate families owned approximately 26% of the Company's stock.
Immediately after the PTC Merger, the directors and executive officers of the
Company and their immediate families are expected to own approximately 32% of
the Company's stock.

RECENT DEVELOPMENTS

The Company is a party to an Agreement and Plan of Merger with PTC dated as
of October 8, 1997 (the "Merger Agreement") pursuant to which PTC would merge
with and into the Company, PTC's commercial bank subsidiary, People's Trust
Company, Brookville, Indiana, a commercial bank organized under the laws of
Indiana ("People's Trust"), would become a wholly owned subsidiary of the
Company, and each outstanding share of PTC at the effective time of the merger
would be converted into the right to receive 1.075 shares of common stock of the
Company (the "PTC Merger"). The Company expects to issue in the aggregate up to
1,136,417 shares of common stock in the PTC Merger. The PTC Merger is expected
to be completed in the first quarter of 1998.

At September 30, 1997, PTC had total assets of $302.7 million, total
deposits of $275.7 million and total shareholders' equity of $23.7 million. PTC
had net income of $2.7 million for the nine months ended September 30, 1997,
compared to net income of $2.4 million for the nine months ended September 30,
1996. See "PTC Selected Financial Data" and "PTC Management's Discussion and
Analysis of Financial Condition and Results of Operations." People's Trust
engages in a general full-service commercial and

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consumer banking business. People's Trust conducts its banking business through
17 offices located in the Indiana counties of Dearborn, Franklin, Jefferson,
Ripley, Rush, Fayette, Decatur, Switzerland and Wayne.

PTC is subject to the informational reporting requirements of the Exchange
Act. Information about PTC may be obtained from the Public Reference Section of
the Commission or accessed through electronic means, including the Commission's
home page on the Internet (http://www.sec.gov), in the same manner that
information about the Company may be obtained. See "Available Information."

The PTC Merger is expected to qualify as a "pooling of interests" for
accounting and financial reporting purposes. See "Summary of Pro Forma
Consolidated Financial Data," "Pro Forma Selected Financial Data" and "Index to
Consolidated Financial Statements and Pro Forma Consolidated Financial
Statements." The PTC Merger is intended to be a tax free reorganization so that
no gain or loss would be recognized by the Company or PTC, and no gain or loss
would be recognized by shareholders of PTC except in respect of cash received
for fractional shares or pursuant to the exercise of statutory dissenters'
rights. The PTC Merger is subject to various conditions, including requisite
shareholder and regulatory approvals. Accordingly, no assurance can be given
that the PTC Merger will be consummated. If the PTC Merger is not consummated,
the anticipated significant increase in the Company's capital base due to the
PTC Merger will not be realized. Consequently, due to regulatory capital
requirements, the Company's ability to utilize a portion of the offering
proceeds for future acquisitions and other growth would be adversely affected if
the PTC Merger is not consummated.

Following the PTC Merger, pursuant to the Merger Agreement, the Board of
Directors of the Company will consist of ten members, five of which will have
been designated by the Company and five of which will have been designated by
PTC. The Merger Agreement also provides that the Company's Chairman of the
Board, President and Chief Executive Officer, Robert E. Hoptry, will continue to
be the Company's Chairman of the Board and Chief Executive Officer and that
PTC's President and Chief Executive Officer, James L. Saner, will be President
and Chief Operating Officer of the Company following the PTC Merger.

IUB TRUST

IUB Trust is a statutory business trust formed under Delaware law pursuant
to (i) a trust agreement, dated as of November 14, 1997, executed by the
Company, as depositor, and the trustees of IUB Trust (together with the Property
Trustee, the "Trustees"), and (ii) a certificate of trust filed with the
Secretary of State of the State of Delaware with an effective date of November
14, 1997. The initial trust agreement will be amended and restated in its
entirety (as so amended and restated, the "Trust Agreement") substantially in
the form filed as an exhibit to the Registration Statement of which this
Prospectus forms a part. The Trust Agreement will be qualified as an indenture
under the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act").
Upon issuance of the Preferred Securities, the purchasers thereof will own all
of the Preferred Securities. The Company will acquire all of the Common
Securities which will represent an aggregate liquidation amount equal to at
least 3% of the total capital of IUB Trust. The Common Securities will rank PARI
PASSU, and payments will be made thereon pro rata, with the Preferred
Securities, except that upon the occurrence and during the continuance of an
Event of Default (as defined herein) under the Trust Agreement resulting from a
Debenture Event of Default, the rights of the Company as holder of the Common
Securities to payment in respect of Distributions and payments upon liquidation,
redemption or otherwise will be subordinated to the rights of the holders of the
Preferred Securities. See "Description of the Preferred
Securities--Subordination of the Common Securities." IUB Trust exists for the
exclusive purposes of (i) issuing the Trust Securities representing undivided
beneficial interests in the assets of IUB Trust, (ii) investing the gross
proceeds of the Trust Securities in the Subordinated Debentures issued by the
Company, and (iii) engaging in only those other activities necessary, advisable,
or incidental thereto. The Subordinated Debentures and payments thereunder will
be the only assets of IUB Trust and payments under the Subordinated Debentures
will be the only revenue of IUB Trust. IUB Trust has a term of 55 years, but may
terminate earlier as provided in the Trust Agreement. The principal

8
<PAGE>
executive office of IUB Trust is 201 North Broadway, Greensburg, Indiana 47240,
and its telephone number is (812) 663-0157.

The number of Trustees will, pursuant to the Trust Agreement, initially be
five. Three of the Trustees (the "Administrative Trustees") will be persons who
are employees or officers of, or who are affiliated with, the Company. The
fourth trustee will be a financial institution that is unaffiliated with the
Company, which trustee will serve as institutional trustee under the Trust
Agreement and as indenture trustee for the purposes of compliance with the
provisions of the Trust Indenture Act (the "Property Trustee"). State Street
Bank and Trust Company, a state chartered trust company organized under the laws
of the Commonwealth of Massachusetts, will be the Property Trustee until removed
or replaced by the holder of the Common Securities. For purposes of compliance
with the provisions of the Trust Indenture Act, State Street Bank and Trust
Company will also act as trustee (the "Guarantee Trustee") under the Guarantee
and as Debenture Trustee (as defined herein) under the Indenture. The fifth
trustee will be an entity that maintains its principal place of business in the
State of Delaware (the "Delaware Trustee"). Wilmington Trust Company, a Delaware
chartered trust company, will act as Delaware Trustee.

The Property Trustee will hold title to the Subordinated Debentures for the
benefit of the holders of the Trust Securities and in such capacity will have
the power to exercise all rights, powers and privileges under the Indenture. The
Property Trustee will also maintain exclusive control of a segregated non-
interest-bearing bank account (the "Property Account") to hold all payments made
in respect of the Subordinated Debentures for the benefit of the holders of the
Trust Securities. The Property Trustee will make payments of Distributions and
payments on liquidation, redemption and otherwise to the holders of the Trust
Securities out of funds from the Property Account. The Guarantee Trustee will
hold the Guarantee for the benefit of the holders of the Preferred Securities.
The Company, as the holder of all the Common Securities, will have the right to
appoint, remove or replace any Trustee and to increase or decrease the number of
Trustees. The Company will pay all fees and expenses related to IUB Trust and
the offering of the Trust Securities.

The rights of the holders of the Preferred Securities, including economic
rights, rights to information and voting rights, are set forth in the Trust
Agreement, the Delaware Business Trust Act (the "Trust Act") and the Trust
Indenture Act. See "Description of the Preferred Securities."

9
<PAGE>
THE OFFERING

<TABLE>
<S> <C>
Securities Offered.................. 1,850,000 Preferred Securities having a Liquidation
Amount of $10 per Preferred Security. The Preferred
Securities represent preferred undivided beneficial
interests in the assets of IUB Trust, which will
consist solely of the Subordinated Debentures and
payments thereunder. IUB Trust has granted the
Underwriter an option, exercisable within 30 days
after the date of this Prospectus, to purchase up to
an additional 277,500 Preferred Securities at the
initial offering price, solely to cover
over-allotments, if any.

Distributions....................... The Distributions payable on each Preferred Security
will be fixed at a rate per annum of % of the
Liquidation Amount of $10 per Preferred Security,
will be cumulative, will accrue from , 1997,
the date of original issuance of the Preferred
Securities, and will be payable quarterly in arrears,
on March 31, June 30, September 30 and December 31 of
each year, commencing December 31, 1997. See
"Description of the Preferred
Securities--Distributions--Payment of Distributions."

Option to Extend Interest Payment
Period............................ The Company has the right, at any time, so long as no
Debenture Event of Default has occurred and is
continuing, to defer payments of interest on the
Subordinated Debentures for a period not exceeding 20
consecutive quarters; provided, that no Extension
Period may extend beyond the Stated Maturity of the
Subordinated Debentures. As a consequence of the
extension by the Company of the interest payment
period, quarterly Distributions on the Preferred
Securities will be deferred (though such
Distributions would continue to accrue with interest
thereon compounded quarterly, since interest will
continue to accrue and compound on the Subordinated
Debentures) during any such Extension Period. During
an Extension Period, the Company will be prohibited,
subject to certain exceptions described herein, from
declaring or paying any cash distributions with
respect to its capital stock or debt securities that
rank PARI PASSU with or junior to the Subordinated
Debentures. Upon the termination of any Extension
Period and the payment of all amounts then due, the
Company may commence a new Extension Period, subject
to the foregoing requirements. See "Description of
the Preferred Securities-- Distributions--Extension
Period" and "Description of the Subordinated
Debentures--Option to Extend Interest Payment
Period." Should an Extension Period occur, the
holders of Preferred Securities will be required to
accrue interest income in their gross income for
United States Federal income tax purposes in advance
of receipt of the cash distributions with respect to
such deferred interest payments.
</TABLE>

10
<PAGE>

<TABLE>
<S> <C>
See "Certain Federal Income Tax
Consequences--Potential Extension of Interest Payment
Period and Original Issue Discount."

Optional Redemption................. The Preferred Securities are subject to mandatory
redemption, in whole or in part, upon repayment of
the Subordinated Debentures at maturity or their
earlier redemption. Subject to Federal Reserve
approval, if then required under applicable capital
guidelines or policies of the Federal Reserve, the
Subordinated Debentures are redeemable prior to
maturity at the option of the Company (i) on or after
December 31, 2002, in whole at any time or in part
from time to time, or (ii) at any time, in whole (but
not in part), within 180 days following the
occurrence of a Tax Event, a Capital Treatment Event
or an Investment Company Event, in each case at the
redemption price equal to 100% of the principal
amount of the Subordinated Debentures, together with
any accrued but unpaid interest to the date fixed for
redemption. See "Description of the Subordinated
Debentures--Redemption or Exchange."

Distribution of Subordinated
Debentures........................ The Company has the right at any time to terminate
the Preferred Securities and cause the Subordinated
Debentures to be distributed to the holders of the
Preferred Securities in liquidation of IUB Trust,
subject to the Company having received prior approval
of the Federal Reserve to do so if then required
under applicable capital guidelines or policies of
the Federal Reserve. See "Description of the
Preferred Securities--Redemption" and "--Liquidation
Distribution upon Termination."

Guarantee........................... The Company has guaranteed the payment of
Distributions and payments on liquidation or
redemption of the Preferred Securities, but only in
each case to the extent of funds held by IUB Trust,
as described herein. The Company and IUB Trust
believe that, taken together, the obligations of the
Company under the Guarantee, the Trust Agreement, the
Subordinated Debentures, the Indenture and the
Expense Agreement provide, in the aggregate, a full,
irrevocable and unconditional guarantee, on a
subordinated basis, of all of the obligations of IUB
Trust under the Preferred Securities. The obligations
of the Company under the Guarantee and the Preferred
Securities are subordinate and junior in right of
payment to all Senior Debt, Subordinated Debt and
Additional Senior Obligations of the Company. If the
Company does not make principal or interest payments
on the Subordinated Debentures, IUB Trust will not
have sufficient funds to make distributions on the
Preferred Securities; in which event, the Guarantee
will not apply to such Distributions until IUB Trust
has sufficient funds available therefor. See
"Description of the Guarantee."
</TABLE>

11
<PAGE>

<TABLE>
<S> <C>
Voting Rights....................... The holders of the Preferred Securities will have no
voting rights except in limited circumstances. See
"Description of the Preferred Securities--Voting
Rights; Amendment of Trust Agreement."

Use of Proceeds..................... The proceeds from the sale of the Preferred
Securities offered hereby will be used by IUB Trust
to purchase the Subordinated Debentures issued by the
Company. The net proceeds to be received by the
Company from the sale of the Subordinated Debentures
to IUB Trust will be used for financing growth, which
may include branch acquisitions, the establishment of
de novo branches and/or acquisitions of other
financial institutions, and for general corporate
purposes. Pending any such use, the net proceeds will
be invested in short-to-medium term investment grade
financial instruments. See "Use of Proceeds."

Nasdaq National Market Symbol....... Application has been made to have the Preferred
Securities approved for quotation on the Nasdaq
National Market under the symbol "IUBCP."
</TABLE>

12
<PAGE>
SUMMARY CONSOLIDATED FINANCIAL DATA

The consolidated financial data below summarizes historical consolidated
financial information of the Company for the periods indicated and should be
read in conjunction with the financial statements and other information included
elsewhere in this Prospectus and in the Company's annual report on Form 10-K for
the year ended December 31, 1996, which is incorporated by reference in this
Prospectus. The unaudited consolidated financial data below for the interim
periods indicated has been derived from the Company's quarterly report on Form
10-Q for the nine-month period ended September 30, 1997, which is incorporated
by reference in this Prospectus, and should be read in conjunction with the
unaudited financial statements and other information for such interim periods
included elsewhere in this Prospectus or incorporated herein by reference. See
"Company Selected Financial Data," "Company Management's Discussion and Analysis
of Financial Condition and Results of Operations," "Incorporation of Certain
Documents by Reference" and "Index to Consolidated Financial Statements and Pro
Forma Consolidated Financial Statements." All adjustments considered necessary
for a fair presentation have, in the opinion of management, been included in the
unaudited interim data. Interim results for the nine months ended September 30,
1997 are not necessarily indicative of results that may be expected for future
periods, including the year ending December 31, 1997.
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30, YEARS ENDED DECEMBER 31,
---------------------- ----------------------------------
1997 1996 1996 1995 1994
---------- ---------- ---------- ---------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
SELECTED RESULTS OF OPERATIONS:
Interest income................................................... $ 19,398 $ 17,692 $ 23,967 $ 22,835 $ 22,202
Interest expense.................................................. 9,639 8,868 12,006 11,852 10,901
---------- ---------- ---------- ---------- ----------
Net interest income............................................... 9,759 8,824 11,961 10,983 11,301
Provision for loan losses......................................... 183 90 150 30 115
---------- ---------- ---------- ---------- ----------
Net interest income after provision for loan losses............... 9,576 8,734 11,811 10,953 11,186
Non-interest income............................................... 1,370 1,093 1,502 1,456 2,588
Non-interest expense.............................................. 6,201 6,608 8,619 8,229 9,040
---------- ---------- ---------- ---------- ----------
Income before income tax expense and cumulative effect of change
in accounting method............................................ 4,745 3,219 4,694 4,180 4,734
Income tax expense................................................ 1,877 1,420 2,001 1,651 1,864
---------- ---------- ---------- ---------- ----------
Income before cumulative effect of change in accounting method.... 2,868 1,799 2,693 2,529 2,870
Cumulative effect of change in accounting method.................. -- -- -- -- --
---------- ---------- ---------- ---------- ----------
Net income........................................................ $ 2,868 $ 1,799 $ 2,693 $ 2,529 $ 2,870
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
PER SHARE DATA:(1)
Earnings per common share......................................... $ 2.29 $ 1.40 $ 2.11 $ 1.91 $ 2.17
Cash dividends declared........................................... 0.74 0.61 0.83 0.69 0.60
Book value........................................................ 24.05 21.38 22.18 20.98 17.49
Dividend payout ratio(2).......................................... 32.28% 42.42% 39.29% 36.12% 25.15%
SELECTED BALANCE SHEET DATA:(3)
Assets............................................................ $ 342,051 $ 321,397 $ 328,346 $ 313,067 $ 306,047
Securities........................................................ 71,422 85,042 81,187 80,651 91,954
Loans............................................................. 244,237 215,028 219,483 201,355 194,736
Allowance for loan losses......................................... 2,670 2,823 2,506 2,754 2,784
Deposits.......................................................... 285,760 271,031 276,402 262,346 261,371
Long-term debt.................................................... 4,625 5,500 5,000 6,000 7,500
Preferred stock................................................... -- -- -- 2,000 2,400
Total shareholders' equity........................................ 30,084 26,738 27,749 28,245 24,282
PERFORMANCE RATIOS:(4)
Return on average equity.......................................... 13.39% 8.82% 9.89% 9.73% 12.18%
Return on average assets.......................................... 1.14 0.77 0.85 0.82 0.86
Net interest margin (fully taxable equivalent).................... 4.13 3.98 4.00 3.77 3.57
ASSET QUALITY RATIOS:
Allowance for loan losses to loans(3)............................. 1.09% 1.31% 1.14% 1.37% 1.43%
Non-performing loans to total loans(3)............................ 0.09 0.68 0.57 0.80 0.59
Net loan losses to average loans.................................. 0.01 0.01 0.19 0.03 0.01
CAPITAL RATIOS:
Average equity to average assets.................................. 8.55% 8.82% 8.69% 8.70% 7.39%
Tier 1 risk-based capital ratio(3)................................ 13.46 13.94 13.81 15.32 15.86
Total risk-based capital ratio(3)................................. 14.68 15.18 15.05 16.57 17.11
Leverage ratio(3)................................................. 8.58 8.29 8.31 8.84 8.69
RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED STOCK
DIVIDENDS:(5)
Including interest on deposits.................................... 1.49x 1.35x 1.38x 1.33x 1.40x
Excluding interest on deposits.................................... 6.88 4.36 4.74 3.23 4.26

1993 1992
---------- ----------

SELECTED RESULTS OF OPERATIONS:
Interest income................................................... $ 24,226 $ 28,029
Interest expense.................................................. 12,345 15,545
---------- ----------
Net interest income............................................... 11,881 12,484
Provision for loan losses......................................... 357 686
---------- ----------
Net interest income after provision for loan losses............... 11,524 11,798
Non-interest income............................................... 1,628 1,572
Non-interest expense.............................................. 9,243 8,834
---------- ----------
Income before income tax expense and cumulative effect of change
in accounting method............................................ 3,909 4,536
Income tax expense................................................ 1,437 1,674
---------- ----------
Income before cumulative effect of change in accounting method.... 2,472 2,862
Cumulative effect of change in accounting method.................. 450 --
---------- ----------
Net income........................................................ $ 2,922 $ 2,862
---------- ----------
---------- ----------
PER SHARE DATA:(1)
Earnings per common share......................................... $ 2.19 $ 2.14
Cash dividends declared........................................... 0.51 0.42
Book value........................................................ 17.99 16.27
Dividend payout ratio(2).......................................... 21.16% 17.89%
SELECTED BALANCE SHEET DATA:(3)
Assets............................................................ $ 355,992 $ 368,924
Securities........................................................ 125,081 131,372
Loans............................................................. 205,508 204,000
Allowance for loan losses......................................... 2,682 2,686
Deposits.......................................................... 310,063 323,777
Long-term debt.................................................... 9,375 10,645
Preferred stock................................................... 2,700 3,000
Total shareholders' equity........................................ 25,203 23,347
PERFORMANCE RATIOS:(4)
Return on average equity.......................................... 12.61% 13.88%
Return on average assets.......................................... 0.81 0.79
Net interest margin (fully taxable equivalent).................... 3.52 3.66
ASSET QUALITY RATIOS:
Allowance for loan losses to loans(3)............................. 1.31% 1.32%
Non-performing loans to total loans(3)............................ 0.60 1.38
Net loan losses to average loans.................................. 0.18 0.49
CAPITAL RATIOS:
Average equity to average assets.................................. 6.83% 6.11%
Tier 1 risk-based capital ratio(3)................................ 12.87 12.09
Total risk-based capital ratio(3)................................. 14.12 13.34
Leverage ratio(3)................................................. 7.01 6.25
RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED STOCK
DIVIDENDS:(5)
Including interest on deposits.................................... 1.29x 1.27x
Excluding interest on deposits.................................... 3.90 4.12
</TABLE>

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

(1) Per share data has been restated to give retroactive effect to a 10% stock
dividend in 1994.
(2) For all periods except for the nine months ended September 30, 1997, common
stock cash dividends as a percentage of net income adjusted for preferred
stock dividends. All preferred stock of the Company was redeemed in late
1996.
(3) At period end.
(4) Performance ratios for the nine month periods are annualized.
(5) Earnings consist of income before income tax expense plus interest expense.
Fixed charges consist of interest expense. The portion of rent expense
deemed to be interest has been excluded since it is not material in any of
the periods presented. Preferred stock dividends represent the pretax
earnings required to cover preferred stock dividends.

13
<PAGE>
SUMMARY OF PRO FORMA CONSOLIDATED FINANCIAL DATA

The following table sets forth certain unaudited pro forma condensed
combined financial data for the Company giving effect to the PTC Merger, which
will be accounted for as a pooling of interests, as if it had occurred as of the
beginning of the periods indicated herein, after giving effect to the pro forma
adjustments described in the notes to the Company and PTC Unaudited Pro Forma
Consolidated Financial Statements. This information should be read in
conjunction with the historical consolidated financial statements of the Company
and PTC, including the respective notes thereto, which are included elsewhere in
this Prospectus, and in conjunction with the consolidated historical financial
data for the Company and PTC and the other pro forma financial information,
including the notes thereto, appearing elsewhere in this Prospectus. See "Index
to Consolidated Financial Statements and Pro Forma Consolidated Financial
Statements," "Company Selected Financial Data," "PTC Selected Financial Data"
and "Pro Forma Selected Financial Data." The unaudited pro forma condensed
combined financial data are not necessarily indicative of the results that
actually would have occurred had the PTC Merger occurred as of the beginning of
the periods indicated herein, or that may be obtained in the future.
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30, 1997 YEAR ENDED DECEMBER 31, 1996
------------------------------------- -------------------------------------
<S> <C> <C> <C> <C> <C> <C>
COMPANY PTC PRO FORMA(1) COMPANY PTC PRO FORMA(1)
----------- --------- ------------- ----------- --------- -------------

<CAPTION>
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C>
SELECTED RESULTS OF OPERATIONS:
Interest income.......................... $ 19,398 $ 17,234 $ 36,632 $ 23,967 $ 21,319 $ 45,286
Interest expense......................... 9,639 8,679 18,318 12,006 10,897 22,903
----------- --------- ------------- ----------- --------- -------------
Net interest income...................... 9,759 8,555 18,314 11,961 10,422 22,383
Provision for loan losses................ 183 610 793 150 828 978
----------- --------- ------------- ----------- --------- -------------
Net interest income after provision for
loan losses............................ 9,576 7,945 17,521 11,811 9,594 21,405
Non-interest income...................... 1,370 1,860 3,230 1,502 2,349 3,851
Non-interest expense..................... 6,201 5,918 12,119 8,619 7,104 15,723
----------- --------- ------------- ----------- --------- -------------
Income before income tax expense......... 4,745 3,887 8,632 4,694 4,839 9,533
Income tax expense....................... 1,877 1,185 3,062 2,001 1,563 3,564
----------- --------- ------------- ----------- --------- -------------
Net income............................... $ 2,868 $ 2,702 $ 5,570 $ 2,693 $ 3,276 $ 5,969
----------- --------- ------------- ----------- --------- -------------
----------- --------- ------------- ----------- --------- -------------
PER COMMON SHARE DATA:
Earnings per common share................ $ 2.29 $ 2.64 $ 2.33 $ 2.11 $ 3.17 $ 2.49
Cash dividends........................... 0.74 0.60 0.74 0.83 0.66 0.83
Book value............................... 24.05 23.13 22.55 22.18 21.14 20.77
Dividend payout ratio.................... 32.28% 22.58% 31.72% 39.29% 20.72% 33.35%
SELECTED BALANCE SHEET DATA:
Total assets............................. $ 342,051 $ 302,734 $ 644,785 $ 328,346 $ 296,576 $ 624,922
Securities............................... 71,422 53,893 125,315 81,187 63,594 144,781
Loans.................................... 244,237 220,653 464,890 219,483 196,963 416,446
Allowance for loan losses................ 2,670 1,969 4,639 2,506 2,000 4,506
Deposits................................. 285,760 275,679 561,439 276,402 271,127 547,529
Long-term debt........................... 4,625 250 4,875 5,000 500 5,500
Total shareholders' equity............... 30,084 23,740 53,824 27,749 21,653 49,402
PERFORMANCE RATIOS:(2)
Return on average equity................. 13.39% 15.97% 14.54% 9.89% 16.05% 12.56%
Return on average assets................. 1.14 1.23 1.19 0.85 1.21 1.02
Net interest margin (fully taxable
equivalent)............................ 4.13 4.46 4.30 4.00 4.39 4.18
ASSET QUALITY RATIOS:
Allowance for loan losses to loans....... 1.09% 0.89% 1.00% 1.14% 1.02% 1.08%
Non-performing loans to total loans...... 0.09 1.09 0.56 0.57 0.93 0.74
Net loan losses to average loans......... 0.01 0.41 0.15 0.19 0.30 0.24
CAPITAL RATIOS:
Average equity to average assets......... 8.55% 7.71% 8.16% 8.69% 7.55% 8.17%
Tier 1 risk-based capital ratio.......... 13.46 10.73 12.15 13.81 10.54 12.22
Total risk-based capital ratio........... 14.68 11.70 13.24 15.05 11.60 13.38
Leverage ratio........................... 8.58 7.26 7.96 8.31 6.73 7.57
</TABLE>

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

(1) Pro forma income statement data assumes the acquisition of PTC occurred on
January 1, 1996. Pro forma balance sheet data assumes the acquisition of PTC
occurred at the end of the period presented.

(2) Interim period annualized.

14
<PAGE>
RISK FACTORS

PROSPECTIVE INVESTORS SHOULD CAREFULLY CONSIDER, TOGETHER WITH THE OTHER
INFORMATION CONTAINED AND INCORPORATED BY REFERENCE IN THIS PROSPECTUS, THE
FOLLOWING RISK FACTORS IN EVALUATING THE COMPANY AND ITS BUSINESS AND IUB TRUST
BEFORE PURCHASING THE PREFERRED SECURITIES OFFERED HEREBY. CERTAIN STATEMENTS IN
THIS SECTION CONSTITUTE "FORWARD-LOOKING STATEMENTS" WITHIN THE MEANING OF
SECTION 27A OF THE SECURITIES ACT AND SECTION 21E OF THE EXCHANGE ACT. SUCH
FORWARD-LOOKING STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND
OTHER FACTORS THAT MAY CAUSE ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS OF THE
COMPANY OR PTC TO DIFFER MATERIALLY FROM ANY FUTURE RESULTS, PERFORMANCE OR
ACHIEVEMENTS EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS.

RISK FACTORS RELATING TO THE PREFERRED SECURITIES

RANKING OF SUBORDINATED OBLIGATIONS UNDER THE GUARANTEE AND THE SUBORDINATED
DEBENTURES

The obligations of the Company under the Guarantee issued for the benefit of
the holders of Preferred Securities and under the Subordinated Debentures are
unsecured and rank subordinate and junior in right of payment to all Senior
Debt, Subordinated Debt and Additional Senior Obligations of the Company,
whether now existing or hereafter incurred. At September 30, 1997, the aggregate
outstanding Senior Debt, Subordinated Debt and Additional Senior Obligations of
the Company was approximately $4.6 million. Because the Company is a holding
company, the right of the Company to participate in any distribution of assets
of any Subsidiary Bank (as defined herein) upon such Subsidiary Bank's
liquidation or reorganization or otherwise (and thus the ability of the holders
of the Preferred Securities to benefit indirectly from such distribution) is
subject to the prior claims of creditors of that Subsidiary Bank, except to the
extent that the Company may itself be recognized as a creditor of that
Subsidiary Bank. The Subordinated Debentures, therefore, will be effectively
subordinated to all existing and future liabilities of the Subsidiary Banks and
the holders of the Subordinated Debentures and the Preferred Securities should
look only to the assets of the Company for payments on the Subordinated
Debentures. Neither the Indenture, the Guarantee nor the Trust Agreement places
any limitation on the amount of secured or unsecured debt, including Senior
Debt, Subordinated Debt and Additional Senior Obligations, that may be incurred
by the Company. See "Description of the Subordinated Debentures--Subordination"
and "Description of the Guarantee--Status of the Guarantee."

The ability of IUB Trust to pay amounts due on the Preferred Securities is
dependent solely upon the Company making payments on the Subordinated Debentures
as and when required.

OPTION TO EXTEND INTEREST PAYMENT PERIOD; TAX CONSEQUENCES; MARKET PRICE
CONSEQUENCES

The Company has the right under the Indenture, so long as no Debenture Event
of Default has occurred and is continuing, to defer the payment of interest on
the Subordinated Debentures at any time or from time to time for a period not
exceeding 20 consecutive quarters with respect to each Extension Period;
PROVIDED that no Extension Period may extend beyond the Stated Maturity of the
Subordinated Debentures. As a consequence of any such deferral, quarterly
Distributions on the Preferred Securities by IUB Trust will be deferred (and the
amount of Distributions to which holders of the Preferred Securities are
entitled will accumulate additional Distributions thereon at the rate of %
per annum, compounded quarterly from the relevant payment date for such
Distributions) during any such Extension Period. During any such Extension
Period, the Company may not (i) declare or pay any dividends or distributions
on, or redeem, purchase, acquire, or make a liquidation payment with respect to,
any of the Company's capital stock, (ii) make any payment of principal, interest
or premium, if any, on or repay, repurchase or redeem any debt securities of the
Company that rank PARI PASSU with or junior in interest to the Subordinated
Debentures or make any guarantee payments with respect to any guarantee by the
Company of the debt securities of any subsidiary of the Company if such
guarantee ranks PARI PASSU with or junior in interest to the Subordinated
Debentures (other than payments under the Guarantee), or (iii) redeem, purchase
or acquire less than all of the Subordinated Debentures or any of the Preferred
Securities. Prior to the

15
<PAGE>
termination of any such Extension Period, the Company may further defer the
payment of interest; provided that no Extension Period may exceed 20 consecutive
quarters or extend beyond the Stated Maturity of the Subordinated Debentures.
Upon the termination of any Extension Period and the payment of all interest
then accrued and unpaid (together with interest thereon at the annual rate of
% compounded quarterly, to the extent permitted by applicable law), the
Company may elect to begin a new Extension Period, subject to the above
requirements. Subject to the foregoing, there is no limitation on the number of
times that the Company may elect to begin an Extension Period. See "Description
of the Preferred Securities--Distributions--Extension Period" and "Description
of the Subordinated Debentures--Option to Extend Interest Payment Period."

Should an Extension Period occur, each holder of Preferred Securities will
be required to accrue and recognize income (in the form of original issue
discount) in respect of its pro rata share of the interest accruing on the
Subordinated Debentures held by IUB Trust for United States Federal income tax
purposes. As a result, a holder of Preferred Securities must include such income
in gross income for United States Federal income tax purposes in advance of the
receipt of cash and will not receive the cash related to such income from IUB
Trust if the holder disposes of the Preferred Securities prior to the record
date for the payment of the related Distributions. See "Certain Federal Income
Tax Consequences-- Potential Extension of Interest Payment Period and Original
Issue Discount."

The Company has no current intention of exercising its right to defer
payments of interest by extending the interest payment period on the
Subordinated Debentures. Should the Company elect, however, to exercise such
right in the future, the market price of the Preferred Securities is likely to
be adversely affected. A holder that disposes of its Preferred Securities during
an Extension Period, therefore, might not receive the same return on its
investment as a holder that continues to hold its Preferred Securities. In
addition, as a result of the existence of the Company's right to defer interest
payments, the market price of the Preferred Securities may be more volatile than
the market prices of other securities on which original issue discount accrues
that are not subject to such optional deferrals.

TAX EVENT, CAPITAL TREATMENT EVENT OR INVESTMENT COMPANY EVENT; REDEMPTION

The Company has the right to redeem the Subordinated Debentures in whole
(but not in part) within 180 days following the occurrence of a Tax Event, a
Capital Treatment Event or an Investment Company Event (whether occurring before
or after December 31, 2002), and, therefore, cause a mandatory redemption of the
Preferred Securities. The exercise of such right is subject to the Company
having received prior approval of the Federal Reserve to do so if then required
under applicable capital guidelines or policies of the Federal Reserve.

"Tax Event" means the receipt by IUB Trust of an opinion of counsel,
rendered by a law firm having a recognized tax and securities practice, to the
effect that, as a result of any amendment to, or change (including any announced
prospective change) in the laws (or any regulations thereunder) of the United
States or any political subdivision or taxing authority thereof or therein, or
as a result of any official administrative pronouncement or judicial decision
interpreting or applying such laws or regulations, which amendment or change is
effective or such pronouncement or decision is announced on or after the date of
issuance of the Preferred Securities under the Trust Agreement, there is more
than an insubstantial risk that (i) IUB Trust is, or will be within 90 days of
the date of such opinion, subject to United States Federal income tax with
respect to income received or accrued on the Subordinated Debentures, (ii)
interest payable by the Company on the Subordinated Debentures is not, or,
within 90 days of such opinion, will not be, deductible by the Company, in whole
or in part, for United States Federal income tax purposes, or (iii) IUB Trust
is, or will be within 90 days of the date of the opinion, subject to more than a
de minimis amount of other taxes, duties or other governmental charges. The
Company must request and receive an opinion with regard to such matters within a
reasonable period of time after it becomes aware of the possible occurrence of
any of the events described in clauses (i) through (iii) above.

16
<PAGE>
"Capital Treatment Event" means the receipt by IUB Trust of an opinion of
counsel, rendered by a law firm having a recognized banking law practice, to the
effect that, as a result of any amendment to or any change (including any
announced prospective change) in the laws (or any regulations thereunder) of the
United States or any political subdivision thereof or therein, or as a result of
any official administrative pronouncement or judicial decision interpreting or
applying such laws or regulations, which amendment or change is effective or
such proposed change, pronouncement or decision is announced on or after the
date of issuance of the Preferred Securities under the Trust Agreement, there is
more than an insubstantial risk of impairment of the Company's ability to treat
the aggregate Liquidation Amount of the Preferred Securities (or any substantial
portion thereof) as "Tier 1 capital" (or the then equivalent thereof) for
purposes of the capital adequacy guidelines of the Federal Reserve, as then in
effect and applicable to the Company, provided, however, that the inability of
the Company to treat all or any portion of the Liquidation Amount of the
Preferred Securities as Tier 1 capital shall not constitute the basis for a
Capital Treatment Event if such inability results from the Company having
cumulative preferred capital in excess of the amount which may qualify for
treatment as Tier 1 capital under applicable capital adequacy guidelines of the
Federal Reserve.

"Investment Company Event" means the receipt by IUB Trust of an opinion of
counsel, rendered by a law firm having a recognized tax and securities law
practice, to the effect that, as a result of the occurrence of a change in law
or regulation or a change in interpretation or application of law or regulation
by any legislative body, court, governmental agency or regulatory authority, IUB
Trust is or will be considered an "investment company" that is required to be
registered under the Investment Company Act of 1940, as amended (the "Investment
Company Act"), which change becomes effective on or after the date of original
issuance of the Preferred Securities. See "--Possible Tax Law Changes" for a
discussion of certain legislative proposals that, if adopted, could give rise to
a Tax Event, which may permit the Company to cause a redemption of the Preferred
Securities prior to December 31, 2002.

SHORTENING OR EXTENSION OF STATED MATURITY OF THE SUBORDINATED DEBENTURES

The Company has the right, at any time, to shorten the maturity of the
Subordinated Debentures to a date not earlier than December 31, 2002. The
exercise of such right is subject to the Company having received prior approval
of the Federal Reserve if then required under applicable capital guidelines or
policies of the Federal Reserve. The Company also has the right to extend the
maturity of the Subordinated Debentures (whether or not IUB Trust is terminated
and the Subordinated Debentures are distributed to the holders of the Preferred
Securities) to a date no later than December 31, 2036, the 39th anniversary of
the initial issuance of the Preferred Securities. Such right may only be
exercised, however, if at the time such election is made and at the time of such
extension (i) the Company is not in bankruptcy, otherwise insolvent or in
liquidation, (ii) the Company is not in default in the payment of any interest
or principal on the Subordinated Debentures, (iii) IUB Trust is not in arrears
on payments of Distributions on the Preferred Securities and no deferred
Distributions are accumulated, and (iv) the Company has a Senior Debt rating of
investment grade. See "Description of the Subordinated Debentures--General."

RIGHTS UNDER THE GUARANTEE

The Guarantee guarantees to the holders of the Preferred Securities, to the
extent not paid by IUB Trust, (i) any accrued and unpaid Distributions required
to be paid on the Preferred Securities, to the extent that IUB Trust has funds
available therefor at such time, (ii) the Redemption Price (as defined herein)
with respect to any Preferred Securities called for redemption, to the extent
that IUB Trust has funds available therefor at such time, and (iii) upon a
voluntary or involuntary dissolution, winding-up or liquidation of IUB Trust
(other than in connection with the distribution of Subordinated Debentures to
the holders of the Preferred Securities or a redemption of all of the Preferred
Securities), the lesser of (a) the amount of the Liquidation Distribution (as
defined herein), to the extent IUB Trust has funds available therefor at such
time, and (b) the amount of assets of IUB Trust remaining available for
distribution to the

17
<PAGE>
holders of the Preferred Securities in liquidation of IUB Trust. The holders of
not less than a majority in Liquidation Amount of the Preferred Securities have
the right to direct the time, method and place of conducting any proceeding for
any remedy available to the Guarantee Trustee in respect of the Guarantee or to
direct the exercise of any trust power conferred upon the Guarantee Trustee
under the Guarantee. Any holder of Preferred Securities may institute a legal
proceeding directly against the Company to enforce its rights under the
Guarantee without first instituting a legal proceeding against IUB Trust, the
Guarantee Trustee or any other Person (as defined in the Guarantee). If the
Company were to default on its obligation to pay amounts payable under the
Subordinated Debentures, IUB Trust would lack funds for the payment of
Distributions or amounts payable on redemption of the Preferred Securities or
otherwise, and, in such event, the holders of the Preferred Securities would not
be able to rely upon the Guarantee for such amounts. In the event, however, that
a Debenture Event of Default has occurred and is continuing and such event is
attributable to the failure of the Company to pay interest on or principal of
the Subordinated Debentures on the payment date on which such payment is due and
payable, then a holder of Preferred Securities may institute a legal proceeding
directly against the Company for enforcement of payment to such holder of the
principal of or interest on such Subordinated Debentures having a principal
amount equal to the aggregate Liquidation Amount of the Preferred Securities of
such holder (a "Direct Action"). The exercise by the Company of its right, as
described herein, to defer the payment of interest on the Subordinated
Debentures does not constitute a Debenture Event of Default. In connection with
such Direct Action, the Company will have a right of set-off under the Indenture
to the extent of any payment made by the Company to such holder of Preferred
Securities in the Direct Action. Except as described herein, holders of
Preferred Securities will not be able to exercise directly any other remedy
available to the holders of the Subordinated Debentures or assert directly any
other rights in respect of the Subordinated Debentures. See "Description of the
Subordinated Debentures--Debenture Events of Default," "--Enforcement of Certain
Rights by Holders of Preferred Securities," and "Description of the Guarantee."
The Trust Agreement provides that each holder of the Preferred Securities by
acceptance thereof agrees to the provisions of the Guarantee and the Indenture.

NO VOTING RIGHTS EXCEPT IN LIMITED CIRCUMSTANCES

Holders of Preferred Securities will have no voting rights except in limited
circumstances relating only to the modification of the Preferred Securities and
the exercise of the rights of IUB Trust as holder of the Subordinated Debentures
and the Guarantee. Holders of Preferred Securities will not be entitled to vote
to appoint, remove or replace the Property Trustee or the Delaware Trustee, as
such voting rights are vested exclusively in the holder of the Common Securities
(except upon the occurrence of certain events described herein). The Property
Trustee, the Administrative Trustees and the Company may amend the Trust
Agreement without the consent of holders of Preferred Securities to ensure that
IUB Trust will be classified for United States Federal income tax purposes as a
grantor trust even if such action adversely affects the interests of such
holders. See "Description of the Preferred Securities--Removal of IUB Trust
Trustees," and "--Voting Rights; Amendment of Trust Agreement."

POSSIBLE TAX LAW CHANGES

Certain legislative proposals were made in 1996 and 1997 which were designed
to eliminate the ability of issuers of certain instruments to deduct interest
paid on those instruments. These proposals were not, however, incorporated into
the legislation recently enacted as the Taxpayer Relief Act of 1997.
Nevertheless, there can be no assurance that other legislation enacted after the
date hereof will not otherwise adversely affect the ability of the Company to
deduct the interest payable on the Subordinated Debentures, and such legislation
could be retroactive in effect. Consequently, there can be no assurance that a
Tax Event will not occur. A Tax Event would permit the Company, upon approval of
the Federal Reserve if then required under applicable capital guidelines or
policies of the Federal Reserve, to cause a redemption of the Preferred
Securities before, as well as after, December 31, 2002. See "Description of the
Preferred Securities--Redemption--Tax Event Redemption, Capital Treatment Event
Redemption or Investment

18
<PAGE>
Company Event Redemption" and "Description of the Subordinate
Debentures--Redemption or Exchange" and "Certain Federal Income Tax
Consequences--Effect of Recent Changes in Tax Laws."

REDEMPTION; EXCHANGE OF PREFERRED SECURITIES FOR SUBORDINATED DEBENTURES

The Company has the right at any time to dissolve, wind-up or terminate IUB
Trust and cause the Subordinated Debentures to be distributed to the holders of
the Preferred Securities in exchange therefor in liquidation of IUB Trust. The
exercise of such right is subject to the Company having received prior approval
of the Federal Reserve if then required under applicable capital guidelines or
policies of the Federal Reserve. The Company will have the right, in certain
circumstances, to redeem the Subordinated Debentures in whole or in part, in
lieu of a distribution of the Subordinated Debentures by IUB Trust, in which
event IUB Trust will redeem the Trust Securities on a pro rata basis to the same
extent as the Subordinated Debentures are redeemed by the Company. Any such
distribution or redemption prior to the Stated Maturity will be subject to prior
approval of the Federal Reserve if then required under applicable capital
guidelines or policies of the Federal Reserve. See "Description of the Preferred
Securities-- Redemption--Tax Event Redemption, Capital Treatment Event
Redemption or Investment Company Event Redemption."

Under current United States Federal income tax law, a distribution of
Subordinated Debentures upon the dissolution of IUB Trust would not be a taxable
event to the holders of the Preferred Securities. If, however, IUB Trust were to
be recharacterized as an association taxable as a corporation at the time of the
dissolution of IUB Trust, the distribution of the Subordinated Debentures would
likely constitute a taxable event to IUB Trust and the holders of the Preferred
Securities. Moreover, a dissolution of IUB Trust in which holders of the
Preferred Securities receive cash will be a taxable event to such holders. See
"Certain Federal Income Tax Consequences--Receipt of Subordinated Debentures or
Cash Upon Liquidation of IUB Trust."

There can be no assurance as to the market prices for the Preferred
Securities or the Subordinated Debentures that may be distributed in exchange
for Preferred Securities upon a dissolution or liquidation of IUB Trust. The
Preferred Securities or the Subordinated Debentures, may trade at a discount to
the price that the investor paid to purchase the Preferred Securities offered
hereby. Because holders of Preferred Securities may receive Subordinated
Debentures, prospective purchasers of Preferred Securities are also making an
investment decision with regard to the Subordinated Debentures and should
carefully review all the information regarding the Subordinated Debentures
contained herein.

If the Subordinated Debentures are distributed to the holders of the
Preferred Securities upon the liquidation of IUB Trust, the Company will use its
best efforts to list the Subordinated Debentures on the Nasdaq National Market
or such stock exchanges, if any, on which the Preferred Securities are then
listed.

TRADING PRICE; ABSENCE OF PRIOR PUBLIC MARKET FOR THE PREFERRED SECURITIES

The Preferred Securities may trade at prices that do not fully reflect the
value of accrued but unpaid interest with respect to the underlying Subordinated
Debentures. A holder of Preferred Securities that disposes of its Preferred
Securities between record dates for payments of Distributions (and consequently
does not receive a Distribution from IUB Trust for the period prior to such
disposition) will nevertheless be required to include accrued but unpaid
interest on the Subordinated Debentures through the date of disposition in
income as ordinary income and to add such amount to its adjusted tax basis in
its pro rata share of the underlying Subordinated Debentures deemed disposed of.
Such holder will recognize a capital loss to the extent the selling price (which
may not fully reflect the value of accrued but unpaid interest) is less than its
adjusted tax basis (which will include all accrued but unpaid interest). Subject
to certain limited exceptions, capital losses cannot be applied to offset
ordinary income for United States Federal income tax purposes. See "Certain
Federal Income Tax Consequences--Disposition of Preferred Securities."

19
<PAGE>
There is no current public market for the Preferred Securities. Although
application has been made to approve the Preferred Securities for quotation on
the Nasdaq National Market, there can be no assurance that an active public
market will develop for the Preferred Securities or that, if such market
develops, the market price will equal or exceed the public offering price set
forth on the cover page of this Prospectus. The public offering price for the
Preferred Securities has been determined through negotiations between the
Company and the Underwriter (as defined herein). Prices for the Preferred
Securities will be determined in the marketplace and may be influenced by many
factors, including prevailing interest rates, the liquidity of the market for
the Preferred Securities, investor perceptions of the Company and general
industry and economic conditions.

PREFERRED SECURITIES ARE NOT INSURED

The Preferred Securities are not insured by the Bank Insurance Fund (the
"BIF") or the Savings Association Insurance Fund (the "SAIF") of the Federal
Deposit Insurance Corporation (the "FDIC") or by any other governmental agency.

RISK FACTORS RELATING TO THE COMPANY

NO ASSURANCE OF PTC MERGER

The PTC Merger is subject to various conditions, including requisite
shareholder and regulatory approvals. Accordingly, no assurance can be given
that the PTC Merger will be consummated. If the PTC Merger is not consummated,
the anticipated significant increase in the Company's capital base due to the
PTC Merger will not be realized. Consequently, due to regulatory capital
requirements, the Company's ability to utilize a portion of the offering
proceeds for future acquisitions and other growth would be adversely affected if
the PTC Merger is not consummated.

NO ASSURANCE OF SUCCESSFUL INTEGRATION OF PTC

Based on September 30, 1997 financial information, the PTC Merger would
increase the assets of the Company by approximately 89% to $645 million. See
"Business of the Company--Recent Developments." The Company's ability to
integrate the business and operations of PTC into its operations following the
PTC Merger without adversely affecting the level of profitability of the Company
cannot be assured.

STATUS OF THE COMPANY AS A BANK HOLDING COMPANY

The Company is a legal entity separate and distinct from the Banks, although
the principal source of the Company's cash revenues is dividends from the Banks.
The ability of the Company to pay the interest on, and principal of, the
Subordinated Debentures will be significantly dependent on the ability of the
Banks to pay dividends to the Company and the ability of the Company to realize
a return on its investments in amounts sufficient to service the Company's debt
obligations. Payment of dividends by the Banks is restricted by various legal
and regulatory limitations.

The right of the Company to participate in the assets of any subsidiary upon
the latter's liquidation, reorganization or otherwise (and thus the ability of
the holders of Preferred Securities to benefit indirectly from any such
distribution) will be subject to the claims of the subsidiaries' creditors,
which will take priority except to the extent that the Company may itself be a
creditor with a recognized claim. As of September 30, 1997, the Company had
indebtedness of $4.6 million at the Company level and, through its subsidiaries,
indebtedness and other liabilities of approximately $307.3 million.

The Banks are also subject to restrictions under Federal law that limit the
transfer of funds by them to the Company, whether in the form of loans,
extensions of credit, investments, asset purchases or otherwise. Such transfers
by the Banks to the Company or any nonbank subsidiary of the Company are limited
in amount to 10% of such Bank's capital and surplus and, with respect to the
Company and all its nonbank subsidiaries, to an aggregate of 20% of such Bank's
capital and surplus. Furthermore, such loans and

20
<PAGE>
extensions of credit are required to be secured in specified amounts. Federal
law also prohibits the Banks from purchasing "low-quality" assets from
affiliates.

GROWTH STRATEGY

The Company intends to pursue a growth strategy that includes acquisitions
of commercial banks in non-urban areas. There are risks associated with the
Company's acquisition strategy that could adversely affect net income. These
risks include, among others, inaccurately assessing the asset quality of a
particular institution or branch being acquired, encountering greater than
anticipated costs of incorporating acquired businesses or branches into the
Company, and being unable to deploy profitably funds acquired in an acquisition.
There can be no assurances that the Company will be successful in implementing,
or will have the necessary regulatory capital or acquisition opportunities to
implement, its growth strategy. Moreover, the Company anticipates that it will
be in substantial competition with other financial institutions for potential
acquisition candidates and branches.

ADEQUACY OF ALLOWANCE FOR LOAN LOSSES

The risk of loan losses varies with, among other things, general economic
conditions, the type of loan being made, the creditworthiness of the borrower
over the term of the loan and, in the case of a collateralized loan, the value
of the collateral for the loan. Management maintains an allowance for loan
losses based upon, among other things, historical experience, an evaluation of
economic conditions and regular review of delinquencies and loan portfolio
quality. Based upon such factors, management makes various assumptions and
judgments about the ultimate collectibility of the loan portfolio and provides
an allowance for loan losses based upon a percentage of the aggregate balance of
outstanding loans and specific loans for which ultimate collectibility is
considered questionable. If management's assumptions and judgments prove to be
incorrect and the allowance for loan losses is inadequate to absorb future
credit losses, or if the bank regulatory authorities require any Bank to
increase the allowance for loan losses, such Bank's earnings (and consequently
the Company's earnings) could be significantly and adversely affected. Because
certain lending activities involve greater risks, the percentage applied to
specific loan types may vary.

The Company actively manages its nonperforming loans in an effort to
minimize credit losses and monitors its asset quality to maintain an adequate
allowance for loan losses. Although management believes that its allowance for
loan allowances is adequate, there can be no assurance that the allowance will
prove sufficient to cover future credit losses. Further, although management
uses the best information available to make determinations with respect to the
allowance for loan losses, future adjustments may be necessary if economic
conditions differ substantially from the assumptions used or if adverse
developments arise with respect to the Company's nonperforming or performing
loans. Material additions to the Company's allowance for loan losses would
result in a decrease in the Company's net income, possibly its capital, and
could result in the inability to pay dividends, among other adverse
consequences.

EFFECT OF INTEREST RATE FLUCTUATIONS AND ECONOMIC CONDITIONS

The Company's consolidated results of operations depend to a large extent on
the level of its net interest income, which is the difference between interest
income from interest-earning assets (such as loans and investments) and interest
expense on interest-bearing liabilities (such as deposits and borrowings). If
interest-rate fluctuations cause its cost of funds to increase faster than the
yield on its interest-earning assets, net interest income will be reduced. The
Company measures its interest-rate risks monthly using static gap analyses. The
differences between an institution's interest-rate sensitive assets and its
interest-rate sensitive liabilities at a point in time is its gap position. A
negative gap indicates that cumulative interest-rate sensitive liabilities
exceed cumulative interest-rate sensitive assets for that period. A positive gap
indicates that cumulative interest-rate assets exceed interest-rate sensitive
liabilities for that period.

Fluctuations in interest rates are not predictable or controllable. The
Company endeavors to structure its asset and liability management strategies to
mitigate the impact on net interest income of changes in

21
<PAGE>
market interest rates. However, there can be no assurance that the Company will
be able to manage interest rate risk so as to avoid significant adverse effects
in net interest income. At September 30, 1997, the Company had a one year
cumulative negative gap of 8.9%. This negative one year gap position may have a
negative impact on earnings in an increasing interest rate environment. While
the Company uses various monitors of interest-rate risk, it is unable to predict
future fluctuations in interest rates or the specific impact thereof.

COMPETITION

Banking institutions operate in a highly competitive environment. The
Company and the Banks compete with other bank or thrift holding companies,
commercial banks, credit unions, savings institutions, finance companies,
mortgage companies, mutual funds, and other financial institutions, many of
which have substantially greater financial resources than the Company. Certain
of these competitors offer products and services that are not offered by the
Company and certain competitors are not subject to the same extensive laws and
regulations as the Company. Federal and state legislation and/or regulations
also affect the Company's competitiveness in the financial services business. It
is impossible to predict the competitive impact on the Company of certain
Federal and state legislation and/or regulations relating to the banking
industry and interstate banking.

ECONOMIC CONDITIONS AND MONETARY POLICY

The operating results of the Company will depend to a great extent upon the
rate differentials that result from the difference between the income it
receives from its loans, securities and other interest-earning assets and the
interest expense it pays on its deposits and other interest-bearing liabilities.
These rate differentials are highly sensitive to many factors beyond the control
of the Company, including general economic conditions and the policies of
various governmental and regulatory authorities, in particular the Federal
Reserve.

Like other depository institutions, the Company is affected by the monetary
policies implemented by the Federal Reserve. A primary instrument of monetary
policy employed by the Federal Reserve is the restriction of the expansion of
the money supply through open market operations, including the purchase and sale
of government securities and the adjustment of reserve requirements. These
actions may at times result in significant fluctuations in interest rates, which
could have adverse effects on the operations of the Company. In particular, the
Company's ability to make loans and attract deposits, as well as public demand
for loans, could be adversely affected.

LOCAL ECONOMIC CONDITIONS

The success of the Company is dependent to a certain extent upon the general
economic conditions in the geographic markets served by the Banks. Although the
Company expects that economic conditions will be favorable in these markets, no
assurance can be given that favorable economic conditions will prevail. Adverse
changes in economic conditions in the geographic markets that the Banks serve
could result in lower lending activity, impair the Bank's ability to collect
existing loans, or otherwise have a negative effect on the operating results and
financial condition of the Company.

GOVERNMENT REGULATION

The Company and the Banks each are subject to extensive state and Federal
governmental supervision, regulation and control. Future legislation and
government policy could adversely affect the banking industry and the operations
of the Company and the Bank. See "Business of the Company -- Regulation and
Supervision of the Company," "-- Regulation and Supervision of the Subsidiary
Banks" and "--Legislation."

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<PAGE>
USE OF PROCEEDS

IUB Trust will use the gross proceeds received from the sale of the
Preferred Securities to purchase Subordinated Debentures from the Company. The
Company will receive approximately $17.5 million ($20.1 million if the
Underwriter's over-allotment option is exercised in full) from the sale of the
Subordinated Debentures to IUB Trust. Approximately $9.8 million, or 53% of the
aggregate amount of the Preferred Securities offered hereby, are expected to
qualify as Tier 1 capital or core capital with respect to the Company under the
risk-based capital guidelines established by the Federal Reserve. Under such
guidelines, capital received from the proceeds of the sale of the Preferred
Securities cannot constitute more than 25% of the total Tier 1 capital of the
Company (the "25% Capital Limitation"). Consequently the amount of Preferred
Securities in excess of the 25% Capital Limitation (approximately $8.7 million
or 47% of the aggregate amount of the Preferred Securities) will constitute Tier
2 capital, or supplementary capital, of the Company. Subsequent to the PTC
Merger, approximately $17.1 million, or 92% of the aggregate amount of the
Preferred Securities, are expected to qualify as Tier 1 capital and $1.4
million, or 8 % of the aggregate amount of the Preferred Securities, will
constitute Tier 2 capital. The net proceeds to be received by the Company from
the sale of the Subordinated Debentures will be used for financing growth, which
may include branch acquisitions, the establishment of de novo branches and/or
acquisitions of other financial institutions. Other than the PTC Merger, the
Company does not have any specific plans, arrangements, agreements or
understandings with any other person for any acquisitions at the current time.
In addition, a portion of the proceeds may be used for general corporate
purposes, including investments in or advances to Union Bank and/or Regional
Bank and/or, following the completion of the PTC Merger, People's Trust. Pending
any such use, the net proceeds may be invested in short-to-medium-term
obligations. The precise amounts and timing of the application of proceeds will
depend upon the funding requirements of the Company and its subsidiaries and the
availability of other funds.

MARKET FOR THE PREFERRED SECURITIES

Application has been made to have the Preferred Securities approved for
quotation on the Nasdaq National Market under the symbol "IUBCP." Although the
Underwriter has informed the Company that it presently intends to make a market
in the Preferred Securities, there can be no assurance that an active and liquid
trading market will develop or, if developed, that such a market will continue.
The offering price and distribution rate have been determined by negotiations
among representatives of the Company and the Underwriter, and the offering price
of the Preferred Securities may not be indicative of the market price following
the offering. See "Underwriting."

ACCOUNTING TREATMENT

IUB Trust will be treated, for financial reporting purposes, as a subsidiary
of the Company and, accordingly, the accounts of IUB Trust will be included in
the consolidated financial statements of the Company. The Preferred Securities
will be presented as a separate category of long-term debt in the consolidated
balance sheet of the Company under the caption "Guaranteed preferred beneficial
interests in the Company's Subordinated Debentures," and appropriate disclosures
about the Preferred Securities, the Guarantee and the Subordinated Debentures
will be included in the notes to consolidated financial statements. The Company
will record Distributions payable on the Preferred Securities as interest
expense in its consolidated statements of income for financial reporting
purposes.

All future reports of the Company filed under the Exchange Act while the
Preferred Securities are outstanding will (a) present the Trust Securities
issued by IUB Trust on the balance sheet as a separate category of long-term
debt item entitled "Guaranteed preferred beneficial interests in the Company's
Subordinated Debentures," (b) include in a footnote to the financial statements
disclosure that the sole assets of IUB Trust are the Subordinated Debentures
(including the outstanding principal amount, interest rate and maturity date of
such Subordinated Debentures), and (c) include in a footnote to the financial
statements disclosure that the Company owns all of the Common Securities of IUB
Trust, the sole assets of IUB Trust are the Subordinated Debentures, and the
back-up obligations, in the aggregate, constitute a full and unconditional
guarantee by the Company of the obligations of IUB Trust under the Preferred
Securities.

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<PAGE>
CAPITALIZATION

The following table sets forth the unaudited historical consolidated
capitalization of the Company as of September 30, 1997, the unaudited pro forma
consolidated capitalization of the Company as of September 30, 1997, as if the
PTC Merger had taken place as of that date, and such historical consolidated and
pro forma capitalization as adjusted in each case to give effect to the
consummation of the Offering (assuming the Underwriter's over-allotment option
is not exercised). The following data should be read in conjunction with the
financial information included in this Prospectus or incorporated herein by
reference. See "Company Selected Financial Data," "PTC Selected Financial Data,"
"Pro Forma Selected Financial Data," "Incorporation of Certain Documents by
Reference" and "Index to Consolidated Financial Statements and Pro Forma
Consolidated Financial Statements."

<TABLE>
<CAPTION>
PRO FORMA CONSOLIDATED
SEPTEMBER 30, 1997 SEPTEMBER 30, 1997
---------------------- ----------------------
ACTUAL AS ADJUSTED ACTUAL AS ADJUSTED
--------- ----------- --------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
LONG-TERM DEBT:
Notes payable.................................................. $ 4,625 $ 4,625 $ 4,875 $ 4,875
Guaranteed preferred beneficial interests in the Company's
Subordinated Debentures(1)................................... 18,500 18,500
--------- ----------- --------- -----------
Total long-term debt....................................... 4,625 23,125 4,875 23,375
--------- ----------- --------- -----------
SHAREHOLDERS' EQUITY:
Preferred stock, 400,000 shares authorized, none issued and
outstanding
Common stock, $1.00 par value, 3,000,000 shares authorized,
1,250,897 shares issued, actual; 2,387,314 issued, pro forma
combined..................................................... 1,251 1,251 2,387 2,387
Paid-in capital................................................ 10,677 10,677 21,006 21,006
Retained earnings.............................................. 17,669 17,669 29,778 29,778
Net unrealized gains on investment securities available for
sale......................................................... 487 487 653 653
--------- ----------- --------- -----------
Total shareholders' equity................................. 30,084 30,084 53,824 53,824
--------- ----------- --------- -----------
Total capitalization....................................... $ 34,709 $ 53,209 $ 58,699 $ 77,199
--------- ----------- --------- -----------
--------- ----------- --------- -----------
CAPITAL RATIOS:
Shareholders' equity to total assets........................... 8.80% 8.36% 8.35% 8.11%
Leverage ratio(2)(3)........................................... 8.58 11.44 7.96 10.62
Risk-based capital ratios(3)(4)................................
Tier 1 capital to risk-weighted assets....................... 13.46 17.95 12.15 13.09
Total risk-based capital to risk-weighted assets............. 14.68 23.12 13.24 17.61
</TABLE>

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

(1) In connection with the issuance of the preferred beneficial interest in the
Company's Subordinated Debentures, the Company estimates it will incur
expenses of $1,040,000 (including Underwriter's compensation of $740,000).
The Subordinated Debentures will mature on December 31, 2027, which date may
be, if certain conditions are met, (a) shortened to a date not earlier than
December 31, 2002, or (b) extended to a date not later than December 31,
2036.

(2) The leverage ratio is Tier 1 capital divided by adjusted total assets after
deducting intangible assets.

(3) The capital ratios, as adjusted, are computed including the total estimated
proceeds from the sale of the Preferred Securities, in a manner consistent
with Federal Reserve guidelines.

(4) Federal Reserve guidelines for calculation of Tier 1 capital to
risk-weighted assets limit the amount of cumulative preferred stock which
can be included in Tier 1 capital to 25% of total Tier 1 capital.
Approximately $9.8 million (or $17.1 million following the PTC Merger) of
the aggregate amount of the Preferred Securities offered hereby will be
included as Tier 1 capital for the Company.

24
<PAGE>
COMPANY SELECTED FINANCIAL DATA

The following table sets forth on a consolidated basis certain selected
financial data of the Company and is based on the consolidated financial
statements of the Company, including the notes thereto, included elsewhere in
this Prospectus, and should be read in conjunction therewith. See "Index to
Consolidated Financial Statements and Pro Forma Consolidated Financial
Statements." Interim unaudited data for the nine months ended September 30, 1997
and 1996 reflect, in the opinion of management of the Company, all adjustments
(consisting only of normal recurring adjustments) necessary for a fair
presentation of such data. Results for the nine months ended September 30, 1997
are not necessarily indicative of results that may be expected for any other
interim period or for the entire year.
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30, YEARS ENDED DECEMBER 31,
---------------------- ----------------------------------------------
1997 1996 1996 1995 1994 1993
---------- ---------- ---------- ---------- ---------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
SELECTED RESULTS OF OPERATIONS:
Interest income....................................... $ 19,398 $ 17,692 $ 23,967 $ 22,835 $ 22,202 $ 24,226
Interest expense...................................... 9,639 8,868 12,006 11,852 10,901 12,345
---------- ---------- ---------- ---------- ---------- ----------
Net interest income................................... 9,759 8,824 11,961 10,983 11,301 11,881
Provision for loan losses............................. 183 90 150 30 115 357
---------- ---------- ---------- ---------- ---------- ----------
Net interest income after provision for loan losses... 9,576 8,734 11,811 10,953 11,186 11,524
Non-interest income................................... 1,370 1,093 1,502 1,456 2,588 1,628
Non-interest expense.................................. 6,201 6,608 8,619 8,229 9,040 9,243
---------- ---------- ---------- ---------- ---------- ----------
Income before income tax expense and cumulative effect
of change in accounting method...................... 4,745 3,219 4,694 4,180 4,734 3,909
Income tax expense.................................... 1,877 1,420 2,001 1,651 1,864 1,437
---------- ---------- ---------- ---------- ---------- ----------
Income before cumulative effect of change in
accounting method................................... 2,868 1,799 2,693 2,529 2,870 2,472
Cumulative effect of change in accounting method...... -- -- -- -- -- 450
---------- ---------- ---------- ---------- ---------- ----------
Net income............................................ $ 2,868 $ 1,799 $ 2,693 $ 2,529 $ 2,870 $ 2,922
---------- ---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ---------- ----------
PER SHARE DATA:(1)
Earnings per common share............................. $ 2.29 $ 1.40 $ 2.11 $ 1.91 $ 2.17 $ 2.19
Cash dividends declared............................... 0.74 0.61 0.83 0.69 0.60 0.51
Book value............................................ 24.05 21.38 22.18 20.98 17.49 17.99
Dividend payout ratio(2).............................. 32.28% 42.42% 39.29% 36.12% 25.15% 21.16%
SELECTED BALANCE SHEET DATA:(3)
Assets................................................ $ 342,051 $ 321,397 $ 328,346 $ 313,067 $ 306,047 $ 355,992
Securities............................................ 71,422 85,042 81,187 80,651 91,954 125,081
Loans................................................. 244,237 215,028 219,483 201,355 194,736 205,508
Allowance for loan losses............................. 2,670 2,823 2,506 2,754 2,784 2,682
Deposits.............................................. 285,760 271,031 276,402 262,346 261,371 310,063
Long-term debt........................................ 4,625 5,500 5,000 6,000 7,500 9,375
Preferred stock....................................... -- -- -- 2,000 2,400 2,700
Total shareholders' equity............................ 30,084 26,738 27,749 28,245 24,282 25,203
PERFORMANCE RATIOS:(4)
Return on average equity.............................. 13.39% 8.82% 9.89% 9.73% 12.18% 12.61%
Return on average assets.............................. 1.14 0.77 0.85 0.82 0.86 0.81
Net interest margin (fully taxable equivalent)........ 4.13 3.98 4.00 3.77 3.57 3.52
ASSET QUALITY RATIOS:
Allowance for loan losses to loans(3)................. 1.09% 1.31% 1.14% 1.37% 1.43% 1.31%
Non-performing loans to total loans(3)................ 0.09 0.68 0.57 0.80 0.59 0.60
Net loan losses to average loans...................... 0.01 0.01 0.19 0.03 0.01 0.18
CAPITAL RATIOS:
Average equity to average assets...................... 8.55% 8.82% 8.69% 8.70% 7.39% 6.83%
Tier 1 risk-based capital ratio(3).................... 13.46 13.94 13.81 15.32 15.86 12.87
Total risk-based capital ratio(3)..................... 14.68 15.18 15.05 16.57 17.11 14.12
Leverage ratio........................................ 8.58 8.29 8.31 8.84 8.69 7.01
RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND
PREFERRED STOCK DIVIDENDS:(5)
Including interest on deposits........................ 1.49x 1.35x 1.38x 1.33x 1.40x 1.29x
Excluding interest on deposits........................ 6.88 4.36 4.74 3.23 4.26 3.90

1992
----------

<S> <C>

SELECTED RESULTS OF OPERATIONS:
Interest income....................................... $ 28,029
Interest expense...................................... 15,545
----------
Net interest income................................... 12,484
Provision for loan losses............................. 686
----------
Net interest income after provision for loan losses... 11,798
Non-interest income................................... 1,572
Non-interest expense.................................. 8,834
----------
Income before income tax expense and cumulative effect
of change in accounting method...................... 4,536
Income tax expense.................................... 1,674
----------
Income before cumulative effect of change in
accounting method................................... 2,862
Cumulative effect of change in accounting method...... --
----------
Net income............................................ $ 2,862
----------
----------
PER SHARE DATA:(1)
Earnings per common share............................. $ 2.14
Cash dividends declared............................... 0.42
Book value............................................ 16.27
Dividend payout ratio(2).............................. 17.89%
SELECTED BALANCE SHEET DATA:(3)
Assets................................................ $ 368,924
Securities............................................ 131,372
Loans................................................. 204,000
Allowance for loan losses............................. 2,686
Deposits.............................................. 323,777
Long-term debt........................................ 10,645
Preferred stock....................................... 3,000
Total shareholders' equity............................ 23,347
PERFORMANCE RATIOS:(4)
Return on average equity.............................. 13.88%
Return on average assets.............................. 0.79
Net interest margin (fully taxable equivalent)........ 3.66
ASSET QUALITY RATIOS:
Allowance for loan losses to loans(3)................. 1.32%
Non-performing loans to total loans(3)................ 1.38
Net loan losses to average loans...................... 0.49
CAPITAL RATIOS:
Average equity to average assets...................... 6.11%
Tier 1 risk-based capital ratio(3).................... 12.09
Total risk-based capital ratio(3)..................... 13.34
Leverage ratio........................................ 6.25
RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND
PREFERRED STOCK DIVIDENDS:(5)
Including interest on deposits........................ 1.27x
Excluding interest on deposits........................ 4.18
</TABLE>

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

(1) Per share data has been restated to give retroactive effect to a 10% stock
dividend in 1994.

(2) For all periods except for the nine months ended September 30, 1997, common
stock cash dividends as a percentage of net income adjusted for preferred
stock dividends. All preferred stock of the Company was redeemed in late
1996.

(3) At period end.

(4) Performance ratios for the nine-month periods are annualized.

(5) Earnings consist of income before income tax expense plus interest expense.
Fixed charges consist of interest expense. The portion of rent expense
deemed to be interest has been excluded since it is not material in any of
the periods presented. Preferred stock dividends represent the pretax
earnings required to cover preferred stock dividends.

25
<PAGE>
PTC SELECTED FINANCIAL DATA

The following table sets forth on a consolidated basis certain selected
financial data of PTC and is based on the consolidated financial statements of
PTC, including the notes thereto, included elsewhere in this Prospectus, and
should be read in conjunction therewith. See "Index to Consolidated Financial
Statements and Pro Forma Consolidated Financial Statements." Interim unaudited
data for the nine months ended September 30, 1997 and 1996 reflect, in the
opinion of management of PTC, all adjustments (consisting only of normal
recurring adjustments) necessary for a fair presentation of such data. Results
for the nine months ended September 30, 1997 are not necessarily indicative of
results that may be expected for any other interim period or for the entire
year.

<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30, YEARS ENDED DECEMBER 31,
-------------------- -----------------------------------------------------
1997 1996 1996 1995 1994 1993 1992
--------- --------- --------- --------- --------- --------- ---------
(UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
SELECTED RESULTS OF OPERATIONS:
Interest income.......................... $ 17,234 $ 15,804 $ 21,319 $ 19,420 $ 15,938 $ 13,750 $ 12,461
Interest expense......................... 8,679 8,121 10,897 9,835 7,255 6,216 6,104
--------- --------- --------- --------- --------- --------- ---------
Net interest income...................... 8,555 7,683 10,422 9,585 8,683 7,534 6,357
Provision for loan losses................ 610 616 828 740 450 560 505
--------- --------- --------- --------- --------- --------- ---------
Net interest income after provision for
loan losses............................ 7,945 7,067 9,594 8,845 8,233 6,974 5,852
Non-interest income...................... 1,860 1,762 2,349 1,902 1,876 1,847 1,230
Non-interest expense..................... 5,918 5,272 7,103 6,639 6,629 5,627 4,521
--------- --------- --------- --------- --------- --------- ---------
Income before income tax expense and
cumulative effect of change in
accounting method...................... 3,887 3,557 4,840 4,107 3,480 3,194 2,561
Income tax expense....................... 1,185 1,166 1,564 1,200 1,079 1,025 793
--------- --------- --------- --------- --------- --------- ---------
Income before cumulative effect of change
in accounting method................... 2,702 2,391 3,276 2,907 2,401 2,169 1,768
Cumulative effect of change in accounting
method................................. -- -- -- -- -- 186 --
--------- --------- --------- --------- --------- --------- ---------
Net income............................... $ 2,702 $ 2,391 $ 3,276 $ 2,907 $ 2,401 $ 2,355 $ 1,768
--------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- ---------
PER SHARE DATA:(1)
Earnings per common share................ $ 2.64 $ 2.31 $ 3.17 $ 2.86 $ 2.51 $ 2.57 $ 1.93
Cash dividends declared.................. 0.60 0.48 0.66 0.53 0.41 0.35 0.32
Book value............................... 23.13 20.22 21.14 18.91 15.52 14.37 12.08
Dividend payout ratio.................... 22.58 20.49 20.72% 18.66% 16.33% 13.71% 16.83%

SELECTED BALANCE SHEET DATA:(2)
Assets................................... $ 302,734 $ 272,776 $ 296,576 $ 264,712 $ 241,577 $ 198,669 $ 191,486
Securities............................... 53,893 65,092 63,594 57,927 55,925 44,152 39,005
Loans.................................... 220,653 188,770 196,963 173,179 159,096 134,778 119,330
Allowance for loan losses................ 1,969 2,155 2,000 1,722 1,601 1,359 1,026
Deposits................................. 275,679 248,642 271,127 241,734 222,299 181,437 175,905
Long-term debt........................... 250 608 500 1,000 1,408 2,200 2,200
Total shareholders' equity............... 23,740 20,753 21,653 19,218 15,767 13,155 11,058

PERFORMANCE RATIOS:(3)
Return on average equity................. 15.97% 15.84% 16.05% 16.48% 16.78% 19.53% 17.27%
Return on average assets................. 1.23 1.19 1.21 1.18 1.07 1.27 1.20
Net interest margin (fully taxable
equivalent)............................ 4.46 4.38 4.39 4.37 4.37 4.58 4.88

ASSET QUALITY RATIOS:
Allowance for loan losses to loans(2).... 0.84% 1.14% 1.02% 0.99% 1.01% 1.00% 0.86%
Non-performing loans to total loans(2)... 1.09 1.25 0.93 0.84 0.19 0.50 0.58
Net loan losses to average loans......... 0.41 0.13 0.30 0.36 0.14 0.19 0.31

CAPITAL RATIOS:
Average equity to average assets......... 7.71% 7.54% 7.55% 7.14% 6.37% 6.51% 6.97%
Tier 1 risk-based capital ratio(2)....... 10.73 10.78 10.54 10.19 (4) 9.76 (4)
Total risk-based capital ratio(2)........ 11.70 12.00 11.60 11.21 (4) 10.90 (4)
Leverage ratio........................... 7.26 7.05 6.73 6.55 (4) 5.87 (4)
</TABLE>

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

(1) Per share data has been restated to give retroactive effect for stock
dividends and splits.

(2) At period end.

(3) Performance ratios for the nine-month periods are annualized.

(4) Information not readily available.

26
<PAGE>
PRO FORMA SELECTED FINANCIAL DATA

The following table sets forth certain unaudited pro forma condensed
combined financial data for the Company giving effect to the PTC Merger, which
will be accounted for as a pooling of interests, as if it had occurred as of the
beginning of the periods indicated herein, after giving effect to the pro forma
adjustments described in the notes to the Company and PTC Unaudited Pro Forma
Consolidated Financial Statements. This information should be read in
conjunction with the historical consolidated financial statements of the Company
and PTC, including the respective notes thereto, which are included elsewhere in
this Prospectus, and in conjunction with the consolidated historical financial
data for the Company and PTC and the other pro forma financial information,
including the notes thereto, appearing elsewhere in this Prospectus. See "Index
to Consolidated Financial Statements and Pro Forma Consolidated Financial
Statements," "Company Selected Financial Data" and "PTC Selected Financial
Data." The unaudited pro forma condensed combined financial data are not
necessarily indicative of the results that actually would have occurred had the
PTC Merger occurred as of the beginning of the periods indicated herein, or that
may be obtained in the future.
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30, 1997 YEAR ENDED DECEMBER 31, 1996
------------------------------- ---------------------------------
<S> <C> <C> <C> <C> <C> <C>
PRO PRO
COMPANY PTC FORMA(1) COMPANY PTC FORMA(1)
--------- --------- --------- --------- --------- -----------

<CAPTION>
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C>
SELECTED RESULTS OF OPERATIONS:
Interest income.................................. $ 19,398 $ 17,234 $ 36,632 $ 23,967 $ 21,319 $ 45,286
Interest expense................................. 9,639 8,679 18,318 12,006 10,897 22,903
--------- --------- --------- --------- --------- -----------
Net interest income.............................. 9,759 8,555 18,314 11,961 10,422 22,383
Provision for loan losses........................ 183 610 793 150 828 978
--------- --------- --------- --------- --------- -----------
Net interest income after provision for loan
losses......................................... 9,576 7,945 17,521 11,811 9,594 21,405
Non-interest income.............................. 1,370 1,860 3,230 1,502 2,349 3,851
Non-interest expense............................. 6,201 5,918 12,119 8,619 7,104 15,723
--------- --------- --------- --------- --------- -----------
Income before income tax expense................. 4,745 3,887 8,632 4,694 4,839 9,533
Income tax expense............................... 1,877 1,185 3,062 2,001 1,563 3,564
--------- --------- --------- --------- --------- -----------
Net income....................................... $ 2,868 $ 2,702 $ 5,570 $ 2,693 $ 3,276 $ 5,969
--------- --------- --------- --------- --------- -----------
--------- --------- --------- --------- --------- -----------
PER SHARE DATA:(2)
Earnings per common share........................ $ 2.29 $ 2.64 $ 2.33 $ 2.11 $ 3.17 $ 2.49
Cash dividends declared.......................... 0.74 0.60 0.74 0.83 0.66 0.83
Book value....................................... 24.05 23.13 22.55 22.18 21.14 20.77
Dividend payout ratio(3)......................... 32.28% 22.58% 31.72% 39.29% 20.72% 33.35%
SELECTED BALANCE SHEET DATA:(4)
Assets........................................... $ 342,051 $ 302,734 $ 644,785 $ 328,346 $ 296,576 $ 624,922
Securities....................................... 71,422 53,893 125,315 81,187 63,594 144,781
Loans............................................ 244,237 220,653 464,890 219,483 196,963 416,446
Allowance for loan losses........................ 2,670 1,969 4,639 2,506 2,000 4,506
Deposits......................................... 285,760 275,679 561,439 276,402 271,127 547,529
Long-term debt................................... 4,625 250 4,875 5,000 500 5,500
Shareholders' equity............................. 30,084 23,740 53,824 27,749 21,653 49,402
PERFORMANCE RATIOS:(5)
Return on average equity......................... 13.39% 15.97% 14.54% 9.89% 16.05% 12.56%
Return on average assets......................... 1.14 1.23 1.19 0.85 1.21 1.02
Net interest margin (fully taxable equivalent)... 4.13 4.46 4.30 4.00 4.39 4.18
ASSET QUALITY RATIOS:
Allowance for loan losses to loans(4)............ 1.09% 0.89% 1.00% 1.14% 1.02% 1.08%
Non-performing loans to total loans(4)........... 0.09 1.09 0.39 0.57 0.93 0.72
Net loan losses to average loans................. 0.01 0.41 0.15 0.19 0.30 0.24
CAPITAL RATIOS:
Average equity to average assets................. 8.55% 7.71% 8.16% 8.69% 7.55% 8.17%
Tier 1 risk-based capital ratio(4)............... 13.46 10.73 12.15 13.81 10.54 12.22
Total risk-based capital ratio(4)................ 14.68 11.70 13.24 15.05 11.60 13.38
Leverage ratio................................... 8.58 7.26 7.96 8.31 6.73 7.57
RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND
PREFERRED STOCK DIVIDENDS:(6)
Including interest on deposits................... 1.49x 1.44x 1.47x 1.38x 1.45x 1.41x
Excluding interest on deposits................... 6.88 187.12 12.51 4.74 65.78 7.58
</TABLE>

- ------------------------------
(1) Pro forma income statement data assumes the acquisition of PTC occurred on
January 1, 1996. Pro forma balance sheet data assumes the acquisition of PTC
occurred at the end of the period presented.

(2) Per share data has been restated to give retroactive effect to PTC's 10%
stock dividend in 1996.

(3) For the year ended December 31, 1996, common stock cash dividends as a
percentage of net income adjusted for preferred stock dividends. All
preferred stock of the Company was redeemed in late 1996.

(4) At period end.

(5) Performance ratios for the nine-month period are annualized.

(6) Earnings consist of income before income tax expense plus interest expense.
Fixed charges consist of interest expense. The portion of rent expense
deemed to be interest has been excluded since it is not material in any of
the periods presented. Preferred stock dividends represent the pretax
earnings required to cover preferred stock dividends.

27
<PAGE>
COMPANY MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

CERTAIN STATEMENTS IN THIS SECTION CONSTITUTE "FORWARD-LOOKING STATEMENTS"
WITHIN THE MEANING OF SECTION 27A OF THE SECURITIES ACT AND SECTION 21E OF THE
EXCHANGE ACT. SUCH FORWARD-LOOKING STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS,
UNCERTAINTIES AND OTHER FACTORS THAT MAY CAUSE ACTUAL RESULTS, PERFORMANCE OR
ACHIEVEMENTS OF THE COMPANY OR PTC TO DIFFER MATERIALLY FROM ANY FUTURE RESULTS,
PERFORMANCE OR ACHIEVEMENTS EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING
STATEMENTS.

NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1997

RESULTS OF OPERATIONS

Earnings for the third quarter of 1997 increased 185% to $906,000 compared
to the same quarter of 1996. Earnings for the first nine months of 1997
increased 59% to $2,868,000 compared to the same period in 1996.

Legislation enacted on September 30, 1996 together with companion
legislation enacted earlier in the quarter resulted in a $474,000 reduction in
1996 net income for the three-month and nine-month periods ended September 30,
1996. The legislation required a special assessment on thrift institutions,
based on March 1995 deposit levels, in order to recapitalize the SAIF, resulting
in a pre-tax charge of $545,000. Additionally, a tax advantage available to
thrift institutions in the calculation of allowable tax bad debt reserves was
eliminated, granting forgiveness of any tax liability prior to 1987, but
resulting in an income tax expense of $145,000 on the bad debt reserve recapture
since January 1, 1987.

Before the nonrecurring charges, net income for the first nine months of
1996 would have been $2,273,000 and earnings for the third quarter would have
been $792,000. Compared with adjusted 1996 income, earnings for the third
quarter of 1997 increased 14% and year-to-date earnings increased 26%.

Non-interest income in 1997 reflects approximately $179,000 of nonrecurring
income from the sale of other real estate owned. Insurance commissions in 1997
declined due mainly to lower levels of profit sharing income based on claims
experience. Trust income and service charge income for 1997 increased over the
prior year period. Non-interest expense reflects increased salaries and employee
benefits and reduced FDIC assessments (excluding the special 1996 assessment)
due to a lower insurance assessment rate.

Net income per common share for the third quarter equaled $0.72 in 1997,
compared to $0.25 in 1996. Per share earnings for the first nine months of 1997
and 1996 were $2.29 and $1.40 respectively. Net income for 1996 was reduced by
$0.38 per common share due to the nonrecurring charges for the special SAIF
assessment and expense related to the tax law change. Excluding the nonrecurring
charges, net income per common share for the third quarter of 1996 would have
equaled $0.63 and nine-month net income per common share would have equaled
$1.78.

The Company's return on average total assets for the third quarter was 1.06%
in 1997, and 0.40% in 1996. Year-to-date return on average total assets was
1.14% and 0.77% for 1997 and 1996. Before the nonrecurring charges, return on
average assets in 1996 would have been 0.99% for the third quarter and 0.97%
year-to-date.

Return on average common shareholders' equity for the third quarter was
12.17% in 1997 and 4.66% in 1996. Year-to-date return on average shareholders'
equity was 13.39% and 8.82% for 1997 and 1996, respectively. Without the
nonrecurring charges, return on average common shareholders' equity in 1996
would have been 11.69% for the third quarter and 11.21% year-to-date.

NET INTEREST INCOME

The volume and yield of earning assets and the cost of interest-bearing
liabilities influence net interest income. Net interest margin reflects the mix
of interest-bearing and non-interest-bearing liabilities that fund earning
assets, as well as interest spreads between the rates earned on these assets and
the rates paid

28
<PAGE>
on interest-bearing liabilities. Third quarter net interest income of $3,312,000
in 1997 increased 10% from $3,002,000 in 1996. The first nine months of net
interest income increased by $935,000 or 11% over the same period in 1996.

Throughout 1996 and the current year, the Company has employed a
deposit-pricing strategy focused on retaining and attracting lower cost
short-to-medium term funds. Management correctly anticipated a relatively flat
rate environment throughout 1996 and thus far into 1997. The Company believes
this strategy greatly enhanced 1996 net interest income and has had a positive
effect on the first nine months of 1997 earnings, even though interest rates
have increased slightly since year-end 1996. In the first nine months of 1997,
the Company increased its net interest margin to 4.13% or 15 basis points over
the same period last year.

PROVISION FOR LOAN LOSSES

This topic is discussed under the heading "--Loans, Credit Risk and the
Allowance and Provision for Possible Loan Losses".

NON-INTEREST INCOME

Non-interest income in the first nine months of 1997 exceeded the prior year
period by $277,000 or 25%. Nonrecurring non-interest income of $179,000 was
realized on the sale of real estate acquired in 1996 in lieu of foreclosure. Net
security losses of $80,000 were realized in the first nine months of 1997
compared to no gain or loss for the same period in 1996. Third quarter
non-interest income declined from the same period last year by $16,000 primarily
as a result of securities losses of $83,000 during the third quarter of 1997.

Service charges on deposit accounts represent the largest component of the
first nine months of 1997 recurring non-interest income, equaling 32% in 1997
and 35% in 1996. Service charges on deposit accounts in the first nine months of
1997 increased by $84,000, or 22%, primarily due to the strong growth in a new
interest-bearing checking account introduced in early 1996. Deposit growth,
interest rate variables and non-sufficient funds charges have also affected
service charge income in 1997. Management believes that throughout the remainder
of 1997 the Company will experience additional deposit growth, generating even
higher service charge income. Insurance commissions declined $27,000 in the
first nine months of 1997 compared to the same period last year. This decline
represents the loss of year-end profit sharing programs from primary carriers
due to poor claims experience and to a lower volume of business. Trust income
increased $19,000 over 1996 due to an increase in estate income and assets under
management. The level of estate assets administered may cause trust income to
fluctuate significantly from year to year.

NON-INTEREST INCOME

<TABLE>
<CAPTION>
1997 1996
---------------------- ----------------------
NINE NINE
3RD QTR MONTHS 3RD QTR MONTHS
----------- --------- ----------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Insurance commissions.................................. $ 102 $ 316 $ 90 $ 343
Trust fees............................................. 56 169 50 150
Service charges on deposit accounts.................... 157 462 136 378
Loss on sales of securities............................ (83) (80) -- --
Other income........................................... 111 503 83 222
----- --------- ----- ---------
$ 343 $ 1,370 $ 359 $ 1,093
----- --------- ----- ---------
----- --------- ----- ---------
</TABLE>

29
<PAGE>
NON-INTEREST EXPENSE

The largest component of non-interest expense is personnel expense.
Personnel expenses increased in the first nine months of 1997 by $105,000, or
3%. Improvements in technology implemented in the past 21 months have enabled
the Company to effectively control staffing levels during the periods presented.
Normal staff salary adjustments and increased benefit costs have been incurred
in both 1997 and 1996. Both periods include amounts accrued in connection with
the employee performance incentive compensation plan. Personnel expenses for the
full year in 1997 are not expected to change materially from 1996.

The 1997 omnibus-spending package enacted on September 30, 1996 required the
thrift industry to recapitalize SAIF with a one-time assessment, based on March
31, 1995 deposits, and delayed a pro rata sharing of the Financing Corp.
("FICO") bond interest payments for three years. The one-time assessment imposed
on Regional Bank equaled approximately $545,000 and reduced 1996 third quarter
earnings.

Deposit insurance premiums (excluding the $545,000 special assessment in
1996) were $87,000 less in 1997 compared to the same prior year period due to an
overall lower rate on which the insurance premium was calculated. Since the bank
insurance fund reached a mandated funding level in 1995, the 1996 assessment
rate for the Company's commercial bank was reduced to the $2,000 per year
minimum level permissible increasing to 1.29 cents per $100 of deposits in 1997.

Through the year 1999, thrift institutions will pay approximately five times
higher assessment rates than commercial banks (6.44 cents versus 1.29 cents per
$100 of deposits), but this is a significant reduction from the 23 cents per
$100 of deposits assessed prior to September 30, 1996. Commencing in the year
2000, commercial banks and thrifts will pay the same assessment rate of 2.43
cents per $100 of deposits. Based on current deposit levels and projected
growth, Regional Bank will save approximately $540,000 in the three-year period
through 1999 due to the lower assessment rate.

NON-INTEREST EXPENSE

<TABLE>
<CAPTION>
1997 1996
-------------------- --------------------
NINE NINE
3RD QTR MONTHS 3RD QTR MONTHS
--------- --------- --------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Salaries and employee benefits......................... $ 1,198 $ 3,483 $ 1,118 $ 3,378
Premises and equipment expenses........................ 390 1,168 365 1,124
Professional fees...................................... 55 161 54 163
Amortization of core deposit intangibles............... 7 23 9 27
Deposit insurance/supervisory assessment............... 35 104 63 191
FDIC special assessment................................ -- -- 545 545
Stationery, printing, supplies......................... 86 259 73 222
Insurance.............................................. 25 77 22 80
Postage................................................ 43 138 41 140
Other operating expenses............................... 258 788 272 738
--------- --------- --------- ---------
$ 2,097 $ 6,201 $ 2,562 $ 6,608
--------- --------- --------- ---------
--------- --------- --------- ---------
</TABLE>

INCOME TAXES

In August 1996, President Clinton signed into law the Small Business Job
Protection Act of 1996. Included within that tax legislation was the repeal of
certain bad debt provisions applicable to thrifts. The percent-of-taxable-income
method for computing additions to the thrift tax bad debt reserves for years
beginning after December 31, 1995 was eliminated. The bill also required that
thrift institutions recapture all or a portion of their tax bad debt reserves
added since December 31, 1987. Accordingly, the Company recorded a $145,000
income tax expense in the third quarter of 1996 related to the tax bad debt
reserve recapture for Regional Bank. The unrecaptured base year reserve at
December 31, 1987 will not be subject to recapture as long as the institution
continues to carry on the business of banking.

30
<PAGE>
The effective tax rate (excluding the aforementioned bad debt reserve
recapture) for the first nine months was approximately 40% for both 1997 and
1996. The Company and its subsidiaries will file consolidated income tax returns
for 1997.

FINANCIAL CONDITION

Total assets at September 30, 1997 increased $13,705,000 to $342,051,000
from $328,346,000 at December 31, 1996.

Total average loans for the first nine months of 1997 have increased
$27,210,000 or 13% and average instalment loans have increased $14,569,000 or
70% compared to the same period in 1996. Average loans represent approximately
69% of average assets in the first nine months of 1997 compared to 66% for the
same period in 1996. Management intends to continue to emphasize loan growth
throughout the remainder of 1997. Securities maturities and increased deposits
have been used to fund loan growth in 1997.

Average earning assets represented 95% of average total assets for the first
nine months of 1997 and 1996.

Average non-interest-bearing deposits for the first nine months of 1997
increased 7% compared to the same period in 1996. Average interest-bearing
deposits increased $19,721,000 or 8% for the 1997 period compared to 1996.
Average interest-bearing demand deposits increased $10,098,000 for the nine
months in 1997 compared to 1996, primarily due to the success of a new
interest-bearing checking account introduced early in 1996. Average savings
accounts have decreased slightly for the 1997 period compared to 1996. Average
money market investment accounts decreased $5,437,000 or 15% compared to the
prior year due to the shifting of funds to the new interest-bearing demand
deposit. Average certificates of deposit and other time deposits increased
approximately $15,501,000 for the nine months in 1997 compared to the prior year
period.

Long-term debt is primarily the balance of the Company's loan for the
purchase of Regional Bank. A principal payment of $375,000 was paid on June 30,
1997. During the third quarter of 1997, the Company negotiated the refinancing
of the balance of its outstanding debt of $4,625,000, which was originally due
December 31, 1997. The new note will mature on July 1, 2002 and requires a
principal payment of $125,000 on January 1, 1998 and $500,000 semiannual
payments thereafter on July 1 and January 1 until maturity. Interest will be
paid quarterly. The loan shall bear interest at a rate equal to the lender's
prime rate, less 25 basis points and at the Company's option, all or any portion
of the outstanding balance may bear interest at a fixed rate equal to 150 basis
points above LIBOR for one, two, three, six or twelve month interest periods.
The loan is secured by the capital stock of the Company's subsidiaries and the
loan agreement contains restrictions on debt, guarantees and mergers, in
addition to other affirmative and negative covenants. The Company believes it
has complied with all terms and covenants of the loan agreement.

Shareholders' equity was $30,084,000 on September 30, 1997 compared to
$27,749,000 at year-end 1996. Book value per common share increased to $24.05 or
8% from $22.18 at December 31, 1996. The unrealized gain on securities available
for sale, net of taxes, totaled $487,000 or $0.39 per share at September 30,
1997 compared to an unrealized gain of $95,000 or $0.07 at year end 1996.
Excluding the net unrealized gains on securities available for sale, book value
per share was $23.66 at September 30, 1997 or an increase of 7% over the
comparable book value at year end 1996. The Company redeemed $1,000,000 of its
preferred stock in March 1996, $500,000 in June 1996 and the remainder in
September 1996. Commencing October 1, 1996, all earnings accrue solely to the
common shareholders.

LOANS, CREDIT RISK AND THE ALLOWANCE AND PROVISION FOR POSSIBLE LOAN LOSSES

Total loans increased $24,754,000 or 11% since December 31, 1996 primarily
reflecting the expansion of the consumer loan portfolio and management's
emphasis on indirect automobile financing, which began in late 1995 and has
continued to the present. Consumer loans increased to $42,340,000 or 54% since
December 31, 1996. The Company's emphasis on increasing consumer loans provides
greater diversification within the portfolio and generates higher yields than
residential real estate loans.

31
<PAGE>
Net chargeoffs were $19,000 at September 30, 1997 compared to net chargeoffs
of $21,000 at September 30, 1996. As a percentage of average loans, net
chargeoffs equaled 0.01% respectively for September 30, 1997 and 1996. In prior
periods, the Company has historically outperformed its peer group's net loan
loss average. Although peer group data for the third quarter of 1997 is not yet
available, management believes that trend should continue.

The adequacy of the allowance for loan losses in each subsidiary is reviewed
at least monthly. The determination of the provision amount in any period is
based on management's continuing review and evaluation of loan loss experience,
changes in the composition of the loan portfolio, current economic conditions,
the amount of loans presently outstanding, and the amount and composition of
growth expectations. The allowance for loan losses as of September 30, 1997 is
considered adequate by management.

SUMMARY OF ALLOWANCE FOR LOAN LOSSES

<TABLE>
<CAPTION>
NINE MONTHS
ENDED YEAR ENDED
SEPTEMBER 30, DECEMBER 31,
1997 1996
------------- -------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Balance at beginning of period............................... $ 2,506 $ 2,754
Chargeoffs................................................... (189) (456)
Recoveries................................................... 170 58
Provision for loan losses.................................... 183 150
------ ------
Balance at end of period..................................... $ 2,670 $ 2,506
------ ------
------ ------
Ratio of net chargeoffs to average loans outstanding during
the period................................................. .01% .19%
Ratio of provision for loan losses to average loans
outstanding during the period.............................. .08% .07%
Ratio of allowance to total loans at end of period........... 1.09% 1.14%
</TABLE>

INVESTMENT SECURITIES

The Company's investment policy prohibits trading activities and does not
allow investment in high-risk derivative products or junk bonds. All investment
securities are classified as "available for sale" ("AFS") and are carried at
fair value with unrealized gains and losses, net of taxes, excluded from
earnings and reported as a separate component of shareholders' equity. A net
unrealized gain of $815,000 was recorded to adjust the AFS portfolio to current
market value at September 30, 1997 compared to a net unrealized gain of $167,000
at December 31, 1996.

At September 30, 1997, the tax equivalent yield of the investment securities
portfolio was 6.60%, compared to 6.45% at December 31, 1996.

Variable rate securities comprised 49% of the total portfolio on September
30, 1997 compared to 50% on December 31, 1996. The weighted average repriceable
life of the portfolio at quarter end was 2.26 years in 1997 compared to 2.06
years at year-end 1996.

SOURCES OF FUNDS

Deposits generated within local markets provide the major source of funding
for earning assets. Average total deposits were 90% and 88% of total earning
assets at September 30, 1997 and 1996, respectively. Total interest-bearing
deposits averaged 91% of average total deposits at September 30, 1997 and 1996.
Management is continuing efforts to increase the percentage of
transaction-related deposits to total deposits due to the positive effect on
earnings.

32
<PAGE>
CAPITAL RESOURCES

Common shareholders' equity increased $2,335,000 to $30,084,000 at September
30, 1997 compared to December 31, 1996. The Company redeemed $1,000,000 of its
preferred stock in March 1996, $500,000 in June 1996 and the remaining $500,000
in September 1996.

The Federal Reserve and other regulatory agencies have adopted risk-based
capital guidelines, which assign risk weightings to assets and off-balance sheet
items. Tier 1 capital consists of shareholders' equity less goodwill, while
total capital consists of core capital, certain debt instruments and a portion
of the loan losses. At September 30, 1997, Tier 1 capital to total assets was
8.58%. Total capital to risk-adjusted assets was 14.68%. Both ratios
substantially exceed all required ratios established for bank holding companies.
Risk-adjusted capital levels of the Company's subsidiary Banks exceed regulatory
definitions of well-capitalized institutions.

The Company declared and paid common dividends of $0.26 per share in the
third quarter of 1997 and $0.21 for the same quarter in 1996. Common dividends
declared and paid year-to-date total $0.74 and $0.61 per share respectively for
1997 and 1996. Book value per common share increased to $24.05 from $22.18 at
year-end 1996. The net adjustment for AFS securities increased book value by
$0.39 at September 30, 1997 compared to $0.07 at December 31, 1996.

LIQUIDITY

Liquidity management involves maintaining sufficient cash levels to fund
operations and to meet the requirements of borrowers, depositors, and creditors.
Higher levels of liquidity bear higher corresponding costs, measured in terms of
lower yields on short-term, more liquid earning assets, and higher interest
expense involved in extending liability maturities. Liquid assets include cash
and cash equivalents, loans and securities maturing within one year, and money
market instruments. In addition, the Company holds $69,766,000 of AFS securities
maturing after one year which can be sold to meet liquidity needs.

Liquidity is supported by maintaining a relatively stable funding base,
which is achieved by diversifying funding sources, extending the contractual
maturity of liabilities, and limiting reliance on volatile short-term purchased
funds. Short-term funding needs may arise from declines in deposits or other
funding sources, drawdowns of loan commitments and requests for new loans. The
Company's strategy is to fund assets to the maximum extent possible with core
deposits, which provide a sizable source of relatively stable and low-cost
funds. Average core deposits funded approximately 90% and 88% of total earning
assets at September 30, 1997 and 1996, respectively.

Management believes the Company has sufficient liquidity to meet all
reasonable borrower, depositor, and creditor needs in the present economic
environment. The Company has not received any recommendations from regulatory
authorities, which would materially affect liquidity, capital resources or
operations.

INTEREST RATE RISK

At September 30, 1997 the Company held approximately $174,179,000 in assets
comprised of securities, loans, short-term investments, and federal funds sold,
which were interest sensitive in one year or less time horizons. The Company's
interest rate sensitivity analysis at September 30, 1997 appears below. Core
deposits are distributed or spread among the various repricing categories based
upon historical patterns of repricing which are reviewed periodically by
management. The assumptions regarding these repricing characteristics greatly
influence conclusions regarding interest sensitivity. Management believes its
assumptions regarding these liabilities are reasonable.

Effective asset/liability management requires the maintenance of a proper
ratio between maturing or repriceable interest-earning assets and
interest-bearing liabilities. It is the policy of the Company that rate-
sensitive assets less rate-sensitive liabilities to total assets are kept within
a range of 80% to 130%.

33
<PAGE>
RATE SENSITIVITY ANALYSIS AT SEPTEMBER 30, 1997
MATURING OR REPRICING

<TABLE>
<CAPTION>
OVER 3-5
3 MONTHS 1 YEAR 3 YEARS YEARS
---------- ---------- ---------- -------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Rate-sensitive assets......................................... $ 97,319 $ 76,860 $ 41,380 $ 40,711
Rate-sensitive liabilities(1)................................. 108,452 96,198 51,308 24,036
---------- ---------- ---------- -------------
Rate sensitivity gap (assets less liabilities)................ $ (11,133) $ (19,338) $ (9,928) $ 16,675
---------- ---------- ---------- -------------
---------- ---------- ---------- -------------
Rate sensitivity gap (cumulative)............................. $ (11,133) $ (30,471) $ (40,399) $ (23,724)
---------- ---------- ---------- -------------
---------- ---------- ---------- -------------
Percent of total assets (cumulative).......................... (3.3%) (8.9%) (11.8%) (6.9%)
Rate-sensitive assets/liabilities (cumulative)................ 89.7% 85.1% 84.2% 91.5%
</TABLE>

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

(1) Interest-bearing transaction and savings accounts are not presented as
immediately repriceable.

FACILITIES AND TECHNOLOGY

In an effort to make its services more accessible and convenient, the
Company intends to relocate the Grantline Branch of Regional Bank. Construction
of the new facility is currently in progress, and should be completed in the
fourth quarter of 1997. The Company is also considering the relocation of
certain Union Bank branches. These potential changes will increase visibility,
enhance drive-thru banking and ATM accessibility, and improve ingress and
egress.

During 1996, many technological improvements were initiated. Certain of
these improvements, such as upgrading communication lines, have provided faster
response time for customer transactions. Others represent capital investments,
which allow the Company to continue to effectively compete within a financial
services industry that is becoming increasingly dependent upon technology. In
1997, several hundred thousand dollars is being invested in additional
technology enhancements, such as an automated voice response information system,
additional ATMs, laser printed deposit statements, optical disk storage, and an
increase in the power and memory of the AS400 computer system which will allow
for improved efficiency in the management of computer resources.

ACCOUNTING CHANGES

Statement of Financial Accounting Standards ("SFAS") No. 128, EARNINGS PER
SHARE, is effective for the Company's 1997 annual financial statements. This
statement simplifies the calculations of earnings per share. The Company does
not expect the new disclosure for basic earnings per share will be different
from primary earnings per share as currently calculated and disclosed.
Additional disclosures related to the potential dilution that could occur from
unexercised stock options will not affect the Company since it currently has no
stock options plans.

SFAS No. 129, DISCLOSURE OF INFORMATION ABOUT CAPITAL STRUCTURE, continues
the current requirements to disclose certain information about an entity's
capital structure found in various standards. This statement consolidates
specific disclosure requirements from those standards. SFAS No. 129 is effective
for the Company's 1997 annual financial statements.

Management does not expect adoption of these statements to have any material
effect on 1997 financial statements.

SFAS No. 130, REPORTING COMPREHENSIVE INCOME, establishes standards for
reporting and displaying comprehensive income and its components (revenues,
expenses, gains and losses) in a full set of general-purpose financial
statements. This statement does not require a specific format for that financial
statement but requires that an enterprise display an amount representing total
comprehensive income for the period in that financial statement.

34
<PAGE>
SFAS No. 130 will also require the Company to (a) classify items of other
comprehensive income by their nature in a financial statement and (b) display
the accumulated balance of other comprehensive income separately from retained
earnings and additional paid-in capital in the equity section of a statement of
financial position.

SFAS No. 130 is effective for fiscal years beginning after December 15,
1997. Reclassification of financial statements for earlier periods provided for
comparative purposes is required.

SFAS No. 131, DISCLOSURES ABOUT SEGMENTS OF AN ENTERPRISE AND RELATED
INFORMATION, establishes standards for the way public business enterprises
report information about operating segments in annual financial statements and
requires that those enterprises report selected information about operating
segments in interim financial reports to shareholders. It also establishes
standards for related disclosures about products and services, geographic areas
and major customers.

SFAS No. 131 does not apply to nonpublic enterprises or to not-for-profit
organizations.

SFAS No. 131 requires that a public business enterprise report financial and
descriptive information about its reportable operating segments. Operating
segments are components of an enterprise about which separate financial
information is available that is evaluated regularly by the chief operating
decision-maker in deciding how to allocate resources and in assessing
performance. Generally, financial information is required to be reported on the
basis that it is used internally for evaluating segment performance and deciding
how to allocate resources to segments.

SFAS No. 131 requires that a public business enterprise report a measure of
segment profit or loss, certain specific revenue and expense items and segment
assets. It requires reconciliation of total segment revenues, total segment
profit or loss, total segment assets and other amounts disclosed for segments to
corresponding amounts in the enterprise's general purpose financial statements.
SFAS No. 131 also requires that a public business report descriptive information
about the way that the operating segments used in reporting were determined, the
products and services provided by the operating segments, differences between
the measurements used in reporting segment information and those used in the
enterprise's general purpose financial statements and changes in the measurement
of segment amounts from period to period.

SFAS No. 131 is effective for financial statements for periods beginning
after December 15, 1997. In the initial year of application, comparative
information for earlier years is to be restated. SFAS No. 131 need not be
applied to interim financial statements in the initial year of its application,
but comparative information for interim periods in the initial year of
application is to be reported in financial statements for interim periods in the
second year of application.

Management has not yet determined the effect of implementing SFAS Nos. 130
and 131.

YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996

OVERVIEW

The Company operates under the broad tenets of a long-term strategic plan
("Plan") designed to improve the Company's financial performance, expand its
competitive ability and enhance long-term shareholder value. The Plan is
premised on the belief of the Company's board of directors that the Company can
best promote long-term shareholder interests by pursuing strategies which will
continue to preserve it's community-focused philosophy.

In conformance with the Plan, during 1994, the Company consolidated the
operations of its two commercial banking subsidiaries to form Union Bank, and
sold three underperforming branches of Regional Bank. The Company believes each
of those actions increased its operating efficiency and the latter improved its
net interest margin. The Plan also focused on improving net interest margin by
reducing the Company's dependence on expensive, non-core deposits.

35
<PAGE>
During 1995, the Company initiated actions intended to build a stronger
customer base in its primary markets. The Company invested approximately
$500,000 to renovate Regional Bank's main office, providing direct lobby access
of all customer service and loan personnel, and greatly improving drive-up and
electronic banking services. Unlike many of the large super regional banks,
which are closing branches in record numbers, the Company believes it is
important to maintain community banking centers. Accordingly, an additional
$500,000 was invested to create two new branch offices. The Allison Lane branch
in Jeffersonville was opened by Regional Bank to provide greater access to
present and prospective customers in Clark County. Union Bank opened the IGA
supermarket branch in Greensburg, exclusively providing seven-day banking and
extended hours to the community. In an effort to make its services more
accessible and convenient, the Company intends to relocate the Grantline Branch
of Regional Bank. The Company is also considering the relocation of certain
Union Bank branches. These potential changes are designed to increase
visibility, enhance drive-thru banking and ATM accessibility, and improve
ingress and egress.

A continuing tenet of the Plan is to establish and cultivate more proactive
relationships with financial analysts and market makers in the Company's stock.
As a result of our relationship-building efforts, Stifel, Nicolaus & Company,
Incorporated, based in St. Louis, Missouri, became a market maker in Indiana
United Bancorp shares in November, 1996, joining current market makers J.J.B.
Hilliard/W.L. Lyons, Inc. and NatCity Investments, Inc.

The Company initiated a sales philosophy in 1995 supported by a
performance-based employee incentive program. The initial phase of this program
included sales training for all customer service personnel. In 1996, sales
training evolved to encompass all customer contact personnel. Customer service
personnel now receive advanced sales training in order to become more effective
in cross-selling techniques. The performance-based employee incentive program
earned over $121,000 in 1996 for employees engaged in all facets of the Company.

During 1996, many technological improvements were initiated. Certain of
these improvements, such as upgrading communication lines, have provided faster
response time for customer transactions. Others represent capital investments
which allow the Company to continue to effectively compete within a financial
services industry that is becoming increasingly dependent upon technology. In
1997, several hundred thousand dollars are budgeted for additional technology
enhancements, such as an automated voice response information system, additional
ATMs, laser printed deposit statements, optical disk storage, and an increase in
the power and memory of the AS400 computer system which will allow for improved
efficiency in the management of computer resources.

The dynamics of the Plan assure continually evolving goals, and the extent
of the Company's success will depend upon how well it anticipates and responds
to competitive changes within its markets, the interest rate environment and
other external forces.

RESULTS OF OPERATIONS

Annual net income ranged between $2,529,000 and $2,870,000 for the past
three years. Significant nonrecurring items impacted net income in 1994 and
1996. In 1994, earnings included a $1,229,000 gain on the sale of three
under-performing Regional Bank branches and a loss of $154,000 on the sale of
securities. These nonrecurring items resulted in additional net income of
$650,000. The Federal omnibus spending package enacted on September 30, 1996,
together with companion legislation enacted earlier in the year, resulted in a
$474,000 reduction of 1996 net income. The legislation imposed a special
assessment on thrift institutions to recapitalize the SAIF, resulting in a
pre-tax charge of $545,000. Additionally, a tax advantage available to thrift
institutions in the calculation of allowable tax bad debt reserves was
eliminated, granting forgiveness of any tax liability prior to 1987, but
resulting in an income tax expense of $145,000 on the bad debt reserve recapture
since January 1, 1987. See "--Income Taxes." Excluding these nonrecurring

36
<PAGE>
charges, net income for 1996 was $3,166,727, a 25% increase over the prior year.
There were no significant nonrecurring income or expense items in 1995.

Non-interest income in 1996 reflects a decline in insurance commissions due
mainly to lower levels of profit sharing received from participating companies
based on claims experience for the year. Trust income and service charge income
increased over the prior year. Non-interest expense reflects reduced FDIC
assessments, excluding the special assessment mentioned previously, due to a
lower deposit insurance assessment rate. Professional fees increased in 1996 as
compared to the prior year.

Net income per common share from recurring operations equaled $2.49 in 1996,
compared to $1.91 in 1995, and $1.58 in 1994. Including the FDIC special
assessment and bad debt recapture expense, 1996 earnings equaled $2.11 per
share. The gain realized on the sale of Regional Bank's branches increased 1994
earnings per share by $0.59.

The Company's return on average total assets was 0.85% in 1996, 0.82% in
1995, and 0.86% in 1994. Excluding nonrecurring charges, return on average
assets for 1996 was 1.00%. Return on average common shareholders' equity during
these three years was 9.89%, 9.73%, and 12.18%, respectively. Excluding non-
recurring charges, return on average common shareholders' equity for 1996 was
11.58%.

NET INTEREST INCOME

Net interest income is influenced by the volume and yield of earning assets
and the cost of interest-bearing liabilities. Net interest margin reflects the
mix of interest-bearing and non-interest-bearing liabilities that fund earning
assets, as well as interest spreads between the rates earned on these assets and
the rates paid on interest-bearing liabilities. Net interest income of
$12,056,000 in 1996 reflects a 9% increase from $11,095,000 in 1995, which was
3% below 1994.

Throughout 1996, the Company employed a deposit-pricing strategy focused on
retaining and attracting lower cost, short-to-medium term funds. Management
correctly anticipated a relatively flat rate environment throughout 1996 and
into 1997. The Company believes this strategy greatly enhanced 1996 net interest
income and will also have a positive effect on 1997 earnings. Although many of
the Company's peer group competitors reported flat or marginally changed net
interest margins for the full year 1996, the Company increased its net interest
margin by 23 basis points. Since year-end 1993, the Company has increased its
net interest margin by 48 basis points.

The changes in interest income and interest expense resulting from changes
in volume and rate are summarized in the following tables. Variances have been
allocated on the basis of the absolute relationship between volume and rate.

37
<PAGE>
CHANGES IN NET INTEREST INCOME AND NET INTEREST MARGIN
(TAXABLE EQUIVALENT BASIS)(1)

<TABLE>
<CAPTION>
PERCENT CHANGE
------------------------
<S> <C> <C> <C> <C> <C>
1996 1995 1994 1996/95 1995/94
--------- --------- --------- ----------- -----------
(DOLLARS IN THOUSANDS)
Interest income
Loans....................................................... $ 18,266 $ 16,938 $ 15,941 7.8 6.3
Investment securities....................................... 5,403 5,655 6,265 (4.5) (9.7)
Federal funds sold.......................................... 380 305 116 24.6 162.9
Short-term investments...................................... 13 49 15 (73.5) 226.7
--------- --------- ---------
Total interest income..................................... 24,062 22,947 22,337 4.9 2.7
--------- --------- ---------
Interest expense
Interest-bearing demand accounts............................ 868 833 832 4.2 0.1
Money market investment accounts............................ 1,133 1,297 1,216 (12.6) 6.7
Savings deposits............................................ 944 894 742 5.6 20.5
Certificates of deposit and other time deposits............. 7,918 7,284 6,997 8.7 4.1
Borrowings.................................................. 1,143 1,544 1,114 (26.0) 38.6
--------- --------- ---------
Total interest expense.................................... 12,006 11,852 10,901 1.3 8.7
--------- --------- ---------
Net interest income........................................... $ 12,056 $ 11,095 $ 11,436 8.7 (3.0)
--------- --------- ---------
--------- --------- ---------
Net interest margin........................................... 4.00% 3.77% 3.57% 6.1 5.6
--------- --------- ---------
--------- --------- ---------
</TABLE>

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

(1) Adjusted to reflect income related to securities and loans exempt from
Federal income taxes reduced by nondeductible portion of interest expense.

38
<PAGE>
VOLUME/RATE ANALYSIS OF CHANGES IN NET INTEREST INCOME
(TAXABLE EQUIVALENT BASIS)(1)

<TABLE>
<CAPTION>
1996 VS. 1995 1995 VS. 1994
--------------------------------- -------------------------------
<S> <C> <C> <C> <C> <C> <C>
VOLUME RATE TOTAL VOLUME RATE TOTAL
----------- --------- --------- --------- --------- ---------
(DOLLARS IN THOUSANDS)
Interest income
Loans.................. $ 904 $ 424 $ 1,328 $ (505) $ 1,502 $ 997
Investment
securities........... (259) 7 (252) (1,270) 660 (610)
Federal funds sold..... 104 (29) 75 131 58 189
Short-term
investments.......... (29) (7) (36) 17 17 34
----- --------- --------- --------- --------- ---------
Total interest
income............. 720 395 1,115 (1,627) 2,237 610
----- --------- --------- --------- --------- ---------
Interest expense
Interest-bearing demand
accounts............. 51 (16) 35 (114) 115 1
Money market investment
accounts............. (136) (28) (164) (255) 336 81
Savings deposits....... 74 (24) 50 (38) 190 152
Certificates of deposit
and other time
deposits............. 616 18 634 (886) 1,173 287
Borrowings............. (255) (146) (401) 60 370 430
----- --------- --------- --------- --------- ---------
Total interest
expense............ 350 (196) 154 (1,233) 2,184 951
----- --------- --------- --------- --------- ---------
Changes in net interest
income................. $ 370 $ 591 961 $ (394) $ 53 (341)
----- --------- --------- ---------
----- --------- --------- ---------
Change in taxable
equivalent
adjustments............ 17 23
--------- ---------
Change in net interest
income after taxable
equivalent
adjustments............ $ 978 $ (318)
--------- ---------
--------- ---------
</TABLE>

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

(1) Adjusted to reflect income related to securities and loans exempt from
Federal income taxes reduced by nondeductible portion of interest expense.

PROVISION FOR LOAN LOSSES

This topic is discussed under the heading "--Loans, Credit Risk and the
Allowance and Provision for Possible Loan Losses."

NON-INTEREST INCOME

Non-interest income normalized in 1996 and 1995 after benefiting from a gain
of $1,229,000 from the sale of branches in 1994. Non-interest income in 1996
exceeded 1995 by $45,000 or 3%. Excluding the sale of branches, non-interest
income in 1995 exceeded 1994 by $98,000 or 7%. There were no securities gains or
losses in 1996, versus a $16,000 gain in 1995 and a loss of $154,000 in 1994.

Insurance commissions continue to represent the largest component of
recurring non-interest income, equaling 29%, 32% and 37% in 1996, 1995 and 1994.
Declines of $36,000 and $71,000 in 1995 and 1994 primarily reflected
reorganization and relocation disruptions of insurance operations in Jay County.
The current year decline of $35,000 represents the loss of year-end profit
sharing programs from primary carriers due to 1996 claims experience. Trust
income increased $43,000 over 1995, fueled by a $12,000 increase in estate
income and a strong stock market in 1996. The level of estate assets
administered may cause trust income to fluctuate significantly from year to
year. Service charges on deposit accounts increased in 1996 by $70,000, or 16%,
primarily due to the strong growth in a new interest-bearing checking account
introduced in early 1996. Deposit growth and interest rate variables also
affected service charge income in 1996. Service charges on deposit accounts
decreased in both 1995 and 1994 compared to

39
<PAGE>
prior years. It is anticipated that in 1997 the Company will experience
additional deposit growth, generating even higher service charge income.

NON-INTEREST EXPENSE

The largest component of non-interest expense is personnel expense.
Personnel expenses increased in 1996 by $15,000, or less than 1%, after
declining by $86,000 in 1995. The average number of full-time equivalent
employees in 1996 was four persons less than the average 1995 staffing level,
which was fifteen persons less than 1994. Improvements in technology implemented
throughout 1996 enabled the Company to effectively control staffing levels.
Normal staff salary adjustments and increased benefit costs were incurred in
both 1996 and 1995, including $121,000 and $53,000 in 1996 and 1995,
respectively, earned by employees in connection with the performance incentive
compensation plan. Although certain employee benefit costs increased in 1996,
health care benefit costs decreased. Personnel expenses in 1997 are not expected
to change materially from 1996.

Deposit insurance, excluding the $545,000 special assessment, was $205,000
less in 1996 than the prior year, due to a lower rate on which the insurance
premium was calculated. In mid-1995, the FDIC reduced deposit insurance premiums
paid by soundly managed banks, including Union Bank, by 83%. Since the bank
insurance fund reached a mandated funding level in 1995, the assessment rate for
the Company's commercial bank was further reduced to the $2,000 minimum level
permissible in 1996.

After two long years of debate, Congress finally agreed to a legislative
package to adequately capitalize the SAIF. This legislation was included in the
Federal omnibus spending package enacted on September 30, 1996. It required the
thrift industry to recapitalize the SAIF with a one-time assessment and delayed
a PRO RATA sharing of the FICO bond interest payments for three years. The
one-time assessment imposed on Regional Bank equaled approximately $545,000.

For the next three years, thrift institutions will pay approximately five
times higher assessment rates than commercial banks (6.44 cents versus 1.29
cents per $100 of deposits), but this is a significant reduction from the 23
cents per $100 of deposits assessed prior to September 30, 1996. After the three
year period, commercial banks and thrifts will pay the same assessment rate of
2.43 cents per $100 of deposits. Based on current deposit levels and projected
growth, Regional Bank will save approximately $540,000 in the next three years
due to the lower assessment rate.

40
<PAGE>
NON-INTEREST INCOME AND EXPENSE

<TABLE>
<CAPTION>
PERCENT CHANGE
------------------------
<S> <C> <C> <C> <C> <C>
1996 1995 1994 1996/95 1995/94
--------- --------- --------- ----------- -----------
(DOLLARS IN THOUSANDS)
NON-INTEREST INCOME
Insurance commissions........................................... $ 438 $ 473 $ 509 (7.4)% (7.1)%
Fiduciary activities............................................ 233 190 200 22.6 (5.0)
Service charges on deposit accounts............................. 520 450 475 15.6 (5.3)
Securities gains (losses)....................................... 16 (154)
Gain on sale of branches........................................ 1,229
Other income.................................................... 311 328 329 (5.2) (0.3)
--------- --------- ---------
Total non-interest income..................................... $ 1,502 $ 1,457 $ 2,588 3.1% (43.7)%
--------- --------- ---------
--------- --------- ---------
NON-INTEREST EXPENSE
Salaries and employee benefits.................................. $ 4,482 $ 4,467 $ 4,553 0.3% (1.9)%
Premises and equipment expense.................................. 1,477 1,469 1,521 0.5 (3.4)
Professional fees............................................... 222 205 395 8.3 (48.1)
Deposit insurance............................................... 190 395 666 (51.9) (40.7)
FDIC special assessment......................................... 545
Amortization of intangibles..................................... 35 40 46 (12.5) (13.0)
Other expense................................................... 1,667 1,653 1,859 0.8 (11.1)
--------- --------- ---------
Total non-interest expense.................................... $ 8,618 $ 8,229 $ 9,040 4.7% (9.0)%
--------- --------- ---------
--------- --------- ---------
Net non-interest expense, excluding nonrecurring items, as a
percent of average assets....................................... 2.07% 2.20% 2.29%
</TABLE>

INCOME TAXES

On August 20, 1996, President Clinton signed into law the Small Business Job
Protection Act of 1996. Included within this tax legislation was the repeal of
certain tax advantages to thrifts applicable to tax bad debt provision
calculations. The bill eliminated the percent-of-taxable-income method for
computing tax liability on additions to thrift's bad debt reserves for years
beginning after December 31, 1995. The bill also required that thrift
institutions recapture all or a portion of their tax bad debt reserves added
since December 31, 1987. Accordingly, income tax expense of $145,000 was
recorded on the tax bad debt recapture in 1996, resulting primarily from the
decrease in loans included in the sale of Regional Bank's branches in 1994. The
unrecaptured base year tax reserve will not be subject to recapture, as long as
the institution continues to carry on the business of banking and meets other
criteria.

The effective tax rate was 40% for 1996, 40% in 1995 and 39% in 1994. The
Company and its subsidiaries filed consolidated income tax returns for 1996.

FINANCIAL CONDITION

Total average assets in 1996 increased $9,244,000 over the prior year.
Average assets declined by $27,188,000 in 1995 as compared to 1994, primarily
due to deposit pricing strategies and the sale of branches in October 1994. For
comparability, average assets in 1994 would have been $20,000,000 less if the
branch sale had occurred on January 1, 1994. Changes in average assets in 1995
and 1996 reflect normalized operations.

Year-end assets increased to $328,346,000 from $313,067,000 at December 31,
1995. Cash, cash equivalents and short-term investments increased at year-end
1995 to provide funding for loans scheduled

41
<PAGE>
to close shortly after December 31, 1995. Securities maturities and repayments,
as well as increased levels of interest-bearing deposits, were used to fund loan
growth in 1996.

Average earning assets have represented 95% of average total assets for the
past three years. Average loans represent approximately 66% of average assets in
1996 compared to 65% in 1995 and 62% in 1994. Management intends to continue its
emphasis on loan growth in 1997.

Average non-interest-bearing deposits increased less than 1% in 1996
compared to a 4% increase in 1995. Average interest-bearing deposits increased
$11,981,000 or 5% in 1996 compared to 1995. Average interest-bearing demand
deposits increased $1,924,000, primarily due to the success of a new interest-
bearing checking account introduced early in 1996. Average savings accounts
increased 8% due to the continued success of a premium passbook savings account
introduced in 1995. Money market investment accounts decreased 11% as compared
to the prior year due to the shifting of funds to the new interest-bearing
demand account and the premium savings passbook account. Average certificates of
deposit and other time deposit increased approximately $11,557,000 in 1996,
primarily in certificates of deposit of $100,000 and over.

AVERAGE DEPOSITS

<TABLE>
<CAPTION>
1996 1995 1994
--------------------- --------------------- ---------------------
<S> <C> <C> <C> <C> <C> <C>
AMOUNT RATE AMOUNT RATE AMOUNT RATE
---------- --------- ---------- --------- ---------- ---------
(DOLLARS IN THOUSANDS)
Non-interest bearing.............................. $ 24,714 -- $ 24,545 -- $ 23,678 --
Interest-bearing accounts......................... 32,830 2.64% 30,906 2.70% 35,435 2.35%
Money market investments accounts................. 31,584 3.59 35,369 3.67 43,527 2.79
Savings........................................... 29,264 3.23 26,979 3.31 28,357 2.62
Certificates of deposit and other time deposits... 148,509 5.33 136,952 5.32 155,317 4.50
---------- ---------- ----------
Totals.......................................... $ 266,901 4.07% $ 254,751 4.05% $ 286,314 3.42%
---------- --- ---------- --- ---------- ---------
---------- --- ---------- --- ---------- ---------
</TABLE>

As of December 31, 1996, certificates of deposit of $100,000 or more were
scheduled to mature as follows:

<TABLE>
<CAPTION>
3 MONTHS 3-6 6-12 OVER 12
OR LESS MONTHS MONTHS MONTHS TOTAL
----------- --------- --------- ----------- ---------
<S> <C> <C> <C> <C> <C>
Amount.................................... $ 18,001 $ 6,463 $ 4,441 $ 3,178 $ 32,083
Percent................................... 56% 20% 14% 10% 100%
</TABLE>

Long-term debt is primarily the Company's loan for the purchase of Regional
Bank and is secured by the capital stock of the Company's Subsidiary Banks. The
Company successfully renegotiated the rate with the lender, effective July 1,
1995. Interest adjusts quarterly to the lender's prime rate, less 25 basis
points. The Company believes it has complied with all terms and covenants of the
loan agreement. The Company prepaid $250,000 on long-term debt in 1996, and
$750,000 in 1995. A principal payment of $375,000 is due June 30, 1997 and the
balance of the loan is due December 31, 1997. Prior to that time, the Company
intends to negotiate the refinancing of its long-term borrowing needs. See
"--Nine Months Ended September 30, 1996 and 1997--Financial Condition."

Shareholders' equity was $27,749,000 on December 31, 1996 compared to
$28,245,000 on December 31, 1995. Book value per common share increased to
$22.18 or 6% from $20.98 at year end 1995. The unrealized gain on securities
available for sale, net of taxes, totaled $95,000 or $.07 per share at December
31, 1996 compared to an unrealized gain of $195,000 or $.15 at December 31,
1995. Excluding the net unrealized gains or losses on securities available for
sale, book value per share was $22.11 at

42
<PAGE>
December 31, 1996, or an increase of 6% over the comparable book value at year
end 1995. In 1995, $400,000 of preferred stock was redeemed. The Company
redeemed the remaining $2,000,000 of its preferred stock in 1996. All future
earnings available to shareholders will now accrue solely to the common
shareholders until such time, if any, as the Company sells additional preferred
stock.

AVERAGE BALANCE SHEET AND NET INTEREST ANALYSIS
(TAXABLE EQUIVALENT BASIS)(1)
<TABLE>
<CAPTION>
DECEMBER
DECEMBER 31, 1996 DECEMBER 31, 1995 31, 1994
--------------------------------- --------------------------------- ---------
AVERAGE YIELD/ AVERAGE YIELD/ AVERAGE
BALANCE INTEREST RATE BALANCE INTEREST RATE BALANCE
--------- ----------- --------- --------- ----------- --------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Short-term investments................. $ 257 $ 13 5.06% $ 812 $ 49 6.03% $ 451
Federal funds sold..................... 7,094 380 5.36 5,196 305 5.87 2,751
Securities
Taxable.............................. 81,971 5,123 6.25 85,421 5,326 6.24 105,941
Tax-exempt........................... 3,755 280 7.46 4,327 329 7.60 4,916
--------- ----------- --------- ----------- ---------
Total securities................... 85,726 5,403 6.30 89,748 5,655 6.30 110,857
Loans(2)
Commercial........................... 62,983 6,059 9.62 64,589 6,116 9.47 66,002
Real estate mortgage................. 121,232 9,660 7.97 116,314 8,815 7.58 123,423
Consumer............................. 22,349 2,392 10.70 15,760 1,807 11.47 14,179
Government guaranteed loans.......... 1,948 155 7.96 2,383 200 8.39 3,064
--------- ----------- --------- ----------- ---------
Total loans........................ 208,512 18,266 8.76 199,046 16,938 8.51 206,668
--------- ----------- --------- ----------- ---------
Total earning assets............... 301,589 24,062 7.98 294,802 22,947 7.79 320,727
--------- ----------- --------- ----------- ---------
Allowance for loan losses.............. (2,760) (2,732) (2,760)
Unrealized losses on securities........ (224) (1,054) (1,471)
Cash and due from banks................ 9,456 7,744 7,633
Premises and equipment................. 5,953 5,799 6,297
Other assets........................... 2,893 3,104 4,425
--------- --------- ---------
Total assets....................... $ 316,907 $ 307,663 $ 334,851
--------- --------- ---------
--------- --------- ---------

LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing deposits
Interest-bearing demand accounts..... $ 32,830 $ 868 2.64% $ 30,906 $ 833 2.70% $ 35,435
Money market investment accounts..... 31,584 1,133 3.59 35,369 1,297 3.67 43,527
Savings.............................. 29,264 944 3.23 26,979 894 3.31 28,357
Certificates of deposit and other
time deposits...................... 148,509 7,918 5.33 136,952 7,284 5.32 155,317
--------- ----------- --------- ----------- ---------
Total interest-bearing deposits.... 242,187 10,863 4.49 230,206 10,308 4.48 262,636
Short-term borrowings.................. 13,316 689 5.17 15,947 932 5.84 11,694
Long-term debt......................... 5,606 454 8.10 6,950 612 8.81 8,835
--------- ----------- --------- ----------- ---------
Total interest-bearing
liabilities...................... 261,109 12,006 4.60 253,103 11,852 4.68 283,165
Non-interest-bearing demand deposits... 24,714 24,545 23,678
Other liabilities...................... 3,540 3,243 3,250
--------- --------- ---------
Total liabilities.................. 289,363 280,891 310,093
Shareholders' equity................... 27,544 26,772 24,758
--------- ----------- --------- ----------- ---------
Total liabilities and shareholders'
equity........................... $ 316,907 12,006 3.98%(3) $ 307,663 11,852 4.02(3) $ 334,851
--------- ----------- --------- ----------- ---------
--------- --------- ---------
Net interest income.................. $ 12,056 4.00% $ 11,095 3.77%
----------- -----------
----------- -----------
Conversion of tax exempt income to a
fully taxable equivalent basis
using a marginal rate of 34%....... $ 95 $ 112
----------- -----------
----------- -----------

YIELD/
INTEREST RATE
----------- ---------

Short-term investments................. $ 15 3.33%
Federal funds sold..................... 116 4.22
Securities
Taxable.............................. 5,871 5.54
Tax-exempt........................... 394 8.01
-----------
Total securities................... 6,265 5.65
Loans(2)
Commercial........................... 5,697 8.63
Real estate mortgage................. 8,521 6.90
Consumer............................. 1,530 10.79
Government guaranteed loans.......... 193 6.30
-----------
Total loans........................ 15,941 7.71
-----------
Total earning assets............... 22,337 6.97
-----------
Allowance for loan losses..............
Unrealized losses on securities........
Cash and due from banks................
Premises and equipment.................
Other assets...........................

Total assets.......................

Interest-bearing deposits
Interest-bearing demand accounts..... $ 832 2.35%
Money market investment accounts..... 1,216 2.79
Savings.............................. 742 2.62
Certificates of deposit and other
time deposits...................... 6,997 4.50
-----------
Total interest-bearing deposits.... 9,787 3.73
Short-term borrowings.................. 483 4.13
Long-term debt......................... 631 7.14
-----------
Total interest-bearing
liabilities...................... 10,901 3.85
Non-interest-bearing demand deposits...
Other liabilities......................

Total liabilities..................
Shareholders' equity...................
-----------
Total liabilities and shareholders'
equity........................... 10,901 3.40(3)

Net interest income.................. $ 11,436 3.57%
-----------
-----------
Conversion of tax exempt income to a
fully taxable equivalent basis
using a marginal rate of 34%....... $ 135
-----------
-----------
</TABLE>

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

(1) Adjusted to reflect income related to securities and loans exempt from
Federal income taxes.

(2) Nonaccruing loans have been included in the average balances.

(3) Total interest expense divided by total earning assets.

43
<PAGE>
LOANS, CREDIT RISK AND THE ALLOWANCE AND PROVISION FOR POSSIBLE LOAN LOSSES

Loans remain the Company's largest concentration of assets and continue to
represent the greatest risk. The loan underwriting standards observed by each of
the Company's subsidiaries are viewed by management as a deterrent to the
emergence of an abnormal level of problem loans and a subsequent increase in net
chargeoffs. The Company's conservative loan underwriting standards have
historically resulted in higher loan quality and lower levels of net chargeoffs
than peer bank averages. The Company also believes credit risks may be elevated
if undue concentrations of loans in specific industry segments and to
out-of-area borrowers are incurred. Accordingly, the Company's board of
directors regularly monitors such concentrations to determine compliance with
its restrictive loan allocation policy. The Company believes it has no undue
concentrations of loans.

Total loans increased 9%, primarily reflecting the expansion of the consumer
loan portfolio and management's emphasis on indirect automobile financing which
began in late 1995 and has continued to the present. Consumer loans increased
50% in 1996. The Company's emphasis on increasing consumer loans provides
greater diversification within the portfolio and generates higher yields than
residential real estate loans. Although the Company limits its exposure to
long-term fixed rate residential mortgage loans and generally observes 20%
minimum downpayment guidelines, it originated both fixed rate loans and loans
with little or no downpayment for a noncompeting mortgage lender during 1996.
This program assisted the Company in serving all segments of the community
without incurring unacceptable levels of credit exposure or interest rate risk.
The origination of these loans provides fee income.

LOAN PORTFOLIO

<TABLE>
<CAPTION>
DECEMBER 31
----------------------------------------------------------
1996 1995 1994 1993 1992
---------- ---------- ---------- ---------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Types of Loans
Commercial......................................... $ 7,834 $ 7,796 $ 7,595 $ 11,028 $ 16,300
Agricultural production financing and other loans
to farmers....................................... 11,178 9,996 7,859 8,845 7,471
Commercial real estate mortgage.................... 27,691 24,129 25,619 27,036 32,645
Residential real estate mortgage................... 109,962 103,239 101,455 111,600 101,953
Farm real estate................................... 26,843 28,910 28,358 25,483 22,064
Construction and development....................... 6,589 6,863 7,161 3,455 1,786
Consumer........................................... 27,567 18,342 13,870 14,752 17,992
Government guaranteed loans purchased.............. 1,819 2,080 2,819 3,309 3,789
---------- ---------- ---------- ---------- ----------
Total loans...................................... $ 219,483 $ 201,355 $ 194,736 $ 205,508 $ 204,000
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
</TABLE>

44
<PAGE>
MATURITIES AND SENSITIVITIES OF COMMERCIAL AND CONSTRUCTION
LOANS TO CHANGES IN INTEREST RATES AT DECEMBER 31, 1996

<TABLE>
<CAPTION>
WITHIN 1-5 OVER
1 YEAR YEARS 5 YEARS TOTAL
--------- --------- --------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
MATURITIES BY LOAN TYPE
Commercial............................................................ $ 6,554 $ 817 $ 463 $ 7,834
Agricultural production financing and other loans to farmers.......... 10,130 598 450 11,178
Construction.......................................................... 6,310 135 144 6,589
Government guaranteed loans........................................... 0 461 1,358 1,819
--------- --------- --------- ---------
Totals.............................................................. $ 22,994 $ 2,011 $ 2,415 $ 27,420
--------- --------- --------- ---------
--------- --------- --------- ---------
Percent............................................................... 84% 7% 9% 100%
--------- --------- --------- ---------
--------- --------- --------- ---------
RATE SENSITIVITY
Fixed rate............................................................ $ 2,445 $ 1,160 $ 1,057 $ 4,662
Variable rate......................................................... 20,549 851 1,358 22,758
--------- --------- --------- ---------
Totals.............................................................. $ 22,994 $ 2,011 $ 2,415 $ 27,420
--------- --------- --------- ---------
--------- --------- --------- ---------
</TABLE>

The Company regards its ability to identify and correct loan quality
problems as one of its greatest strengths. Loans are placed in a nonaccruing
status when in management's judgment the collateral value and/or the borrower's
financial condition does not justify accruing interest. As a general rule,
commercial and real estate loans are reclassified to nonaccruing status at or
before becoming 90 days past due. Interest previously recorded but not deemed
collectible is reversed and charged against current income. Subsequent interest
payments collected on nonaccrual loans may thereafter be recognized as interest
income or may be applied as a reduction of the loan balance, as circumstances
warrant. Non-real estate secured consumer loans are not placed in nonaccruing
status, but are charged off when policy-determined delinquent status is reached.

Net chargeoffs were $398,000 in 1996, $60,000 in 1995 and $13,000 in 1994.
As a percentage of average loans, net chargeoffs equaled 0.19%, 0.03% and 0.01%
in 1996, 1995 and 1994, respectively. The increase in 1996 was caused primarily
by the $334,000 chargeoff of portions of two loans currently held by Regional
Bank. In each of the previous two periods, the Company significantly
outperformed its peer group's net loan loss average.

Foreclosed real estate held by the Company at December 31, 1996 totaled
$1,000,000 and consisted of a single property. The property is expected to be
sold by mid-year 1997 with minimal gain or loss realized. After the sale,
foreclosed real estate will decrease to a level more closely mirroring prior
years. See

"--Nine Months Ended September 30, 1996 and 1997--Results of Operations."

Management maintains a listing of loans warranting either the assignment of
a specific reserve amount or other special administrative attention. This
listing, together with a listing of all classified loans, nonaccrual loans and
loans delinquent 30 days or more, is reviewed monthly by the board of directors
of each subsidiary.

The ability to absorb loan losses promptly when problems are identified is
invaluable to a banking organization. Most often, losses incurred as a result of
prompt, aggressive collection actions are much lower than losses incurred after
prolonged legal proceedings. Accordingly, the Company observes the practice of
quickly initiating stringent collection efforts in the early stages of loan
delinquency.

The adequacy of the allowance for loan losses in each subsidiary is reviewed
at least monthly. The determination of the provision amount in any period is
based on management's continuing review and

45
<PAGE>
evaluation of loan loss experience, changes in the composition of the loan
portfolio, current economic conditions, the amount of loans presently
outstanding, and the amount and composition of growth expectations. The
allowance for loan losses as of December 31, 1996, is considered adequate by
management.

UNDERPERFORMING LOANS

<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------------------------------------
1996 1995 1994 1993 1992
--------- --------- --------- --------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Nonaccruing loans................................................ $ 1,245 $ 1,569 $ 1,030 $ 1,208 $ 2,543
Accruing loans contractually past due 90 days or more............ 5 34 113
Restructured loans............................................... 16 267
--------- --------- --------- --------- ---------
Total.......................................................... $ 1,250 $ 1,603 $ 1,143 $ 1,224 $ 2,810
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
Percent of total loans......................................... .6% .8% .6% .6% 1.4%
</TABLE>

SUMMARY OF ALLOWANCE FOR LOAN LOSSES

<TABLE>
<CAPTION>
1996 1995 1994 1993 1992
--------- --------- --------- --------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Balance at January 1............................................. $ 2,754 $ 2,784 $ 2,682 $ 2,686 $ 3,008
--------- --------- --------- --------- ---------
Chargeoffs
Commercial..................................................... 352 91 6 239 1,123
Real estate mortgage........................................... 38 65 189 44
Consumer....................................................... 104 31 21 17 95
--------- --------- --------- --------- ---------
Total chargeoffs............................................. 456 160 92 445 1,262
--------- --------- --------- --------- ---------
Recoveries
Commercial..................................................... 33 61 37 52 199
Real estate mortgage........................................... 1 27 15 7
Consumer....................................................... 24 12 27 32 47
--------- --------- --------- --------- ---------
Total recoveries............................................. 58 100 79 84 253
--------- --------- --------- --------- ---------
Net chargeoffs................................................... 398 60 13 361 1,009
Provision for loan losses........................................ 150 30 115 357 687
--------- --------- --------- --------- ---------
Balance at December 31........................................... $ 2,506 $ 2,754 $ 2,784 $ 2,682 $ 2,686
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
Net chargeoffs to average loans.................................. .19% .03% .01% .18% .49%
Provision for loan losses to average loans....................... .07 .02 .06 .17 .33
Allowance to total loans at year end............................. 1.14 1.37 1.43 1.31 1.32
</TABLE>

46
<PAGE>
ALLOCATION OF THE ALLOWANCE FOR LOAN LOSSES
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------------------------------------------------------------------------------------
1996 1995 1994 1993
------------------------ ------------------------ ------------------------ ------------------------
AMOUNT PERCENT AMOUNT PERCENT AMOUNT PERCENT AMOUNT PERCENT
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Real estate
Residential............ $ 144 6% $ 134 5% $ 146 5% $ 142 5%
Farm real estate....... 13 1 14 14 1
Commercial............. 313 12 575 21 702 25 468 18
Construction and
development.......... 71 3 75 3 52 2 35 1
----------- --- ----------- --- ----------- --- ----------- ---
Total real estate.... 541 22 798 29 914 33 645 24
----------- --- ----------- --- ----------- --- ----------- ---
Commercial
Agribusiness........... 151 6 117 4 151 5 182 7
Other commercial....... 203 8 445 16 131 5 226 8
----------- --- ----------- --- ----------- --- ----------- ---
Total commercial..... 354 14 562 20 282 10 408 15
----------- --- ----------- --- ----------- --- ----------- ---
Consumer................. 207 8 131 5 66 2 83 3
Unallocated.............. 1,404 56 1,263 46 1,522 55 1,546 58
----------- --- ----------- --- ----------- --- ----------- ---
Total................ $ 2,506 100% $ 2,754 100% $ 2,784 100% $ 2,682 100%
----------- --- ----------- --- ----------- --- ----------- ---
----------- --- ----------- --- ----------- --- ----------- ---

1992
------------------------
AMOUNT PERCENT
----------- -----------

<S> <C> <C>
Real estate
Residential............ $ 87 3%
Farm real estate.......
Commercial............. 705 26
Construction and
development.......... 16 1
----------- ---
Total real estate.... 808 30
----------- ---
Commercial
Agribusiness........... 191 7
Other commercial....... 323 12
----------- ---
Total commercial..... 514 19
----------- ---
Consumer................. 109 4
Unallocated.............. 1,255 47
----------- ---
Total................ $ 2,686 100%
----------- ---
----------- ---
</TABLE>

The allocation is based primarily on previous credit loss experience,
adjusted for changes in the risk characteristics of each category. Additional
amounts are allocated based on an evaluation of the loss potential of individual
troubled loans and the anticipated effect of economic conditions on both
individual loans and loan categories. Because the allocation is based on
estimates and subjective judgment, it is not necessarily indicative of the
specific amounts or loan categories in which losses may ultimately occur.

SFAS No. 122, ACCOUNTING FOR MORTGAGE SERVICING RIGHTS, pertains to mortgage
banking and financial institutions that conduct operations that are
substantially similar to the primary operations of a mortgage banking
enterprise. SFAS No. 122 eliminates the accounting distinction between mortgage
servicing rights that are acquired through loan origination activities and those
acquired through purchase transactions. Under SFAS No. 122, if the Company
enters into mortgage banking activities and sells or securitizes loans and
retains the mortgage servicing rights, the Company must allocate the total cost
of the mortgage loans to the mortgage servicing rights and the loans (without
the rights) based on their relative fair values.

SFAS No. 122 was effective for the Company in 1996. Since the Company does
not currently engage in mortgage banking activities, the adoption of SFAS No.
122 did not have any material effect on 1996 operations or financial position.

INVESTMENT SECURITIES

Investment securities offer flexibility in the Company's management of
interest rate risk, and are the primary means by which the Company provides
liquidity and responds to changing maturity characteristics of assets and
liabilities. The Company's investment policy prohibits trading activities and
does not allow investment in high risk derivative products or junk bonds.

In 1994, the Company adopted new accounting rules for securities. The rules
require that each security must be individually designated as a held to maturity
("HTM") security or as an AFS security. Late in 1995, the Financial Accounting
Standards Board ("FASB") allowed an unprecedented "one time" transition
reclassification. While more than 90% of the Company's investments were already
designated AFS, the Company took this opportunity to reclassify all remaining
HTM securities to AFS to provide even greater management flexibility in
responding to changes within financial markets.

47
<PAGE>
As of December 31, 1996, all investment securities are classified as AFS and
are carried at fair value with unrealized gains and losses, net of taxes,
excluded from earnings and reported as a separate component of shareholders'
equity. An unrealized gain of $167,000 was recorded to adjust the AFS portfolio
to current market value at December 31, 1996, compared to an unrealized gain of
$333,000 at December 31, 1995.

At year end 1996, the tax equivalent yield of the investment securities
portfolio was 6.45%, representing an increase from 6.33% at year end 1995, and
6.16% at year end 1994.

In 1994, management began to reduce the variable portion of the investment
securities portfolio. Variable rate securities comprised 50% of the total
portfolio on December 31, 1996 compared to 55% and 65% on December 31, 1995 and
1994. The reduction of variable rate securities extended the year end weighted
average repriceable life of the portfolio to 2.06 years compared to 1.14 years
in 1995.

INVESTMENT SECURITIES
(CARRYING VALUES AT DECEMBER 31)

<TABLE>
<CAPTION>
WITHIN 1-5 5-10 BEYOND
1 YEAR YEARS YEARS 10 YEARS TOTALS
--------- --------- --------- --------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Available for sale:
U.S. Treasury............................................. $ 2,004 $ 2,004
Federal agencies.......................................... 3,087 $ 10,048 $ 11,689 24,824
State and municipal....................................... 396 1,586 1,765 $ 328 4,075
Mortgage-backed securities................................ 33 4,670 3,304 42,035 50,042
Corporate and other securities............................ 242 242
--------- --------- --------- --------- ---------
Total available for sale................................ $ 5,520 $ 16,304 $ 17,000 $ 42,363 $ 81,187
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
Weighted average yield(1)................................... 5.14% 5.87% 6.94% 6.66% 6.45%
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
</TABLE>

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

(1) Adjusted to reflect income related to securities exempt from Federal income
taxes reduced by nondeductible portion of interest expense.

Amounts in the table above are based on scheduled maturity dates. Variable
interest rates are subject to change not less than annually based upon certain
interest rate indexes. Expected maturities will differ from contractual
maturities because issuers may have the right to call or prepay obligations with
or without call or prepayment penalties.

As of December 31, 1996, there are no corporate bonds and other securities
which represent more than 10% of shareholders' equity.

SOURCES OF FUNDS

The Company relies primarily on customer deposits and securities sold under
repurchase agreements, along with shareholders' equity, to fund earning assets.
On an infrequent basis, Federal Home Loan Bank ("FHLB") advances are used to
provide additional funds.

Deposits generated within local markets provide the major source of funding
for earning assets. Average total deposits were 88% and 86% of total earning
assets in 1996 and 1995. Total interest-bearing deposits averaged 91%, 90% and
92% of average total deposits during 1996, 1995 and 1994. Management is
continuing efforts to increase the percentage of transaction-related deposits to
total deposits due to the positive effect on earnings.

48
<PAGE>
Securities sold under repurchase agreements ("repos") are high denomination
investments utilized by public entities and commercial customers as an element
of their cash management responsibilities. Repos are not subject to FDIC
assessment so they are less costly than large certificates of deposit. With the
reduction in the FDIC assessment, repos do not offer as much cost advantage as
previously experienced. Management utilized large denomination certificates of
deposit in 1996 to replace a portion of customer funds previously invested in
repos.

Even though short-term borrowings temporarily increased 18% at year end 1996
compared to 1995, the Company decreased average repos and other short-term
borrowings in 1996 to $13,316,000 or 17% below 1995. FHLB advances which matured
in early 1996 represented most of the decrease. The FHLB advances were used to
fund loans and other earning assets of Regional Bank in 1995. Depending upon the
level of loan demand, management may again elect to use FHLB advances in 1997 as
part of its cash management strategy.

Information related to repurchase agreements is shown in the table below and
information on other short-term borrowings is not required since the average
balances outstanding during the periods were less than 30% of shareholders'
equity.

REPURCHASE AGREEMENTS

<TABLE>
<CAPTION>
1996 1995 1994
--------- --------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Balance at December 31....................................... $ 12,989 $ 10,735 $ 9,977
Maximum outstanding at any month end......................... 15,903 15,174 16,384
Daily average amount outstanding............................. 11,564 10,162 9,041
Weighted daily average interest rate......................... 5.14% 5.67% 3.99%
Weighted daily interest rate at December 31.................. 5.12 5.28 5.39
</TABLE>

The Company continued to prepay long-term debt in 1996. Long-term debt
decreased $1,000,000 in 1996 of which $250,000 represented reductions in excess
of scheduled payments. Management may continue its history of accelerated
payments in 1997. On December 31, 1997 the remaining balance is due. Prior to
that time, the Company intends to negotiate the refinancing of its long-term
borrowing needs.

CAPITAL RESOURCES

Common shareholders' equity increased $1,504,000 to $27,749,000 at December
31, 1996. Total shareholders' equity declined by $496,000 due primarily to the
early redemption of $2,000,000 of preferred stock in 1996. Redemptions in 1995
and 1994 totaled $400,000 and $300,000. All of the preferred shares have now
been redeemed.

The Federal Reserve and other regulatory agencies have adopted risk-based
capital guidelines which assign risk weightings to assets and off-balance sheet
items. The Company's Tier 1 capital consists of shareholders' equity less
goodwill, while total capital consists of core capital, certain debt instruments
and a portion of the allowance for credit losses. At December 31, 1996, Tier 1
capital to total assets was 8.31%. Total capital to risk-adjusted assets was
15.05%. Both ratios substantially exceed all required ratios established for
bank holding companies. Risk-adjusted capital levels of the Company's subsidiary
banks exceed regulatory definitions of well-capitalized institutions.

Shareholders' equity is impacted by the Company's decision to categorize its
entire securities portfolio as AFS under accounting rules adopted January 1,
1994. Securities in this category are carried at fair value, and shareholders'
equity is adjusted to reflect unrealized gains and losses, net of taxes.

The Company declared and paid common dividends of $0.83 per share in 1996
and $0.69 in 1995. Book value per common share increased to $22.18 from $20.98
in 1995. The net adjustment for AFS securities increased book value by $0.07 and
$0.15 at December 31, 1996 and 1995. Depending on market

49
<PAGE>
conditions, the adjustment for AFS securities can cause significant fluctuations
in equity. The dividend payment rate on preferred stock was 6.34% during each of
the past two years.

LIQUIDITY

Liquidity management involves maintaining sufficient cash levels to fund
operations and to meet the requirements of borrowers, depositors, and creditors.
Higher levels of liquidity bear higher corresponding costs, measured in terms of
lower yields on short-term, more liquid earning assets, and higher interest
expense involved in extending liability maturities. Liquid assets total
$47,810,000, and include cash and cash equivalents, loans and securities
maturing within one year, and money market instruments. In addition, the Company
holds $75,667,000 of AFS securities maturing after one year which can be sold to
meet liquidity needs.

Liquidity is supported by maintaining a relatively stable funding base,
which is achieved by diversifying funding sources, extending the contractual
maturity of liabilities, and limiting reliance on volatile short-term purchased
funds. Short-term funding needs can arise from declines in deposits or other
funding sources, drawdowns of loan commitments and requests for new loans. The
Company's strategy is to fund assets to the maximum extent possible with core
deposits, which provide a sizable source of relatively stable and low-cost
funds. Average core deposits funded approximately 89% of total earning assets at
December 31 in each of the last three years.

Management believes the Company has sufficient liquidity to meet all
reasonable borrower, depositor, and creditor needs in the present economic
environment. The Company has not received any recommendations from regulatory
authorities which would materially affect liquidity, capital resources or
operations.

INTEREST RATE RISK

At year end 1996, the Company held approximately $169,349,000 in assets
comprised of securities, loans, short-term investments, and federal funds sold,
which were interest sensitive in one year or less time horizons. The Company's
interest rate sensitivity analysis for the year ended December 31, 1996 appears
in the following table. Core deposits are distributed or spread among the
various repricing categories based upon historical patterns of repricing which
are reviewed periodically by management. The assumptions regarding these
repricing characteristics greatly influence conclusions regarding interest
sensitivity. Management believes its assumptions regarding these liabilities are
reasonable.

The Company will seek to attain a more neutral gap position in 1997 based
upon the belief that the current interest rate environment will remain
relatively stable throughout 1997. In any event, the Company does not anticipate
that its earnings will be materially impacted in 1997, regardless of the
direction interest rates may trend.

50
<PAGE>
RATE SENSITIVITY ANALYSIS AT DECEMBER 31, 1996
MATURING OR REPRICING

<TABLE>
<CAPTION>
OVER 5
YEARS OR
3 MONTHS 1 YEAR 3 YEARS 5 YEARS INSENSITIVE TOTAL
------------- ------------- ------------- ------------- ------------ -------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Rate-sensitive assets........... $ 88,660 $ 80,689 $ 42,413 $ 36,530 $ 80,054 $ 328,346
Rate-sensitive liabilities...... 109,123 79,800 53,989 22,258 63,176 $ 328,346
------------- ------------- ------------- ------------- ------------ -------------
Rate sensitivity gap (assets
less liabilities)............. $ (20,463) $ 889 $ (11,576) $ 14,272 $ 16,878
------------- ------------- ------------- ------------- ------------
------------- ------------- ------------- ------------- ------------
Rate sensitivity gap
(cumulative).................. $ (20,463) $ (19,574) $ (31,150) $ (16,878)
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
Percent of total assets
(cumulative).................. (6.2)% (6.0)% (9.5)% (5.1)%
Rate-sensitive assets/
liabilities (cumulative)...... 81.2% 89.6% 87.2% 93.6%
</TABLE>

EFFECTS OF CHANGING PRICES

The Company's asset and liability structure is substantially different from
that of an industrial company in that most of its assets and liabilities are
monetary in nature. Management believes the impact of inflation on financial
results depends upon the Company's ability to react to changes in interest rates
and, by such reaction, reduce the inflationary impact on performance. Interest
rates do not necessarily move in the same direction at the same time, or at the
same magnitude, as the prices of other goods and services. As discussed
previously, management relies on its ability to manage the relationship between
interest-sensitive assets and liabilities to protect against wide interest rate
fluctuations, including those resulting from inflation.

ACCOUNTING CHANGES

The FASB has issued SFAS No. 121, ACCOUNTING FOR THE IMPAIRMENT OF
LONG-LIVED ASSETS TO BE DISPOSED OF. This statement establishes guidance for
recognizing and measuring impairment losses and requires that the carrying
amount of impaired assets be reduced to fair value. Long-lived assets and
certain identifiable intangibles must be reviewed for impairment whenever events
indicate that the carrying amount of the assets may not be recoverable.

SFAS No. 121 was effective in 1996 for the Company. The adoption of SFAS No.
121 did not have any material effect on results of operation or financial
condition in 1996.

SFAS No. 123, STOCK BASED COMPENSATION, was effective for the Company in
1996. This statement requires expanded disclosures rather than recognition of
compensation cost as was originally required by the exposure draft of this
statement for fixed, at the money, options. However, employers are encouraged to
recognize the cost of stock-based compensation plans in their financial
statements. Currently, the Company has no stock-based compensation plans and
adoption of SFAS No. 123 did not have any effect on 1996 financial statements.

SFAS No. 125, ACCOUNTING FOR TRANSFERS AND SERVICING OF FINANCIAL ASSETS AND
EXTINGUISHMENTS OF LIABILITIES, provides consistent standards for distinguishing
transfers of financial assets that are sales from transfers that are considered
secured borrowings.

A transfer of financial assets in which the transferor surrenders control
over those assets is accounted for as a sale to the extent that consideration
other than beneficial interests in the transferred assets is

51
<PAGE>
received in exchange. The transferor has surrendered control over transferred
assets only if certain conditions are met.

This statement provides detailed measurement standards for assets and
liabilities included in these transactions. It also includes implementation
guidance for assessing isolation of transferred assets and for accounting for
transfers of many specific types of transactions.

Except as amended by SFAS No. 127, SFAS No. 125 is effective for transfers
and servicing of financial assets and extinguishments of liabilities occurring
after December 31, 1996 and is to be applied prospectively. Earlier or
retroactive application is not permitted. SFAS No. 127 defers for one year the
effective date (a) of paragraph 15 of SFAS No. 125 and, (b) for repurchase
agreement, dollar-roll, securities lending, and similar transactions, of
paragraphs 9-12 and 237(b) of SFAS No. 125.

SFAS No. 127 provides additional guidance on the types of transactions for
which the effective date of SFAS No. 125 has been deferred. It also requires
that if it is not possible to determine whether a transfer occurring during
calendar-year 1997 is part of a repurchase agreement, dollar-roll, securities
lending, or similar transaction, then paragraphs 9-12 of SFAS No. 125 should be
applied to that transfer.

Management does not expect adoption of these statements to have any material
effect on 1997 financial statements.

QUARTERLY FINANCIAL INFORMATION FOR 1996 AND 1995

<TABLE>
<CAPTION>
1996 1995
------------------------------------------ ------------------------------------------
FOURTH THIRD SECOND FIRST FOURTH THIRD SECOND FIRST
--------- --------- --------- --------- --------- --------- --------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Total interest income.............. $ 6,275 $ 6,070 $ 5,884 $ 5,737 $ 5,908 $ 5,784 $ 5,658 $ 5,485
Total interest expense............. 3,138 3,068 2,921 2,879 3,047 3,060 2,986 2,758
Net interest income................ 3,137 3,002 2,963 2,858 2,861 2,724 2,672 2,727
Provision for loan losses.......... 60 30 33 27 12 9 6 3
Net interest income after provision
for loan losses.................. 3,077 2,972 2,930 2,831 2,849 2,715 2,666 2,724
Non-interest income................ 409 359 413 321 343 334 430 350
Non-interest expense............... 2,010 2,562 2,045 2,001 1,961 2,003 2,103 2,163
Income before income tax........... 1,476 769 1,298 1,151 1,231 1,046 993 911
Income tax......................... 582 451 514 454 485 417 392 357
--------- --------- --------- --------- --------- --------- --------- ---------
Net income......................... $ 894 $ 318 $ 784 $ 697 $ 746 $ 629 $ 601 $ 554
--------- --------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- --------- ---------
Net income per common share........ $ 0.71 $ 0.25 $ 0.61 $ 0.54 $ 0.57 $ 0.47 $ 0.45 $ 0.41
Dividends paid per common share.... 0.22 0.21 0.20 0.20 0.20 0.17 0.16 0.16
</TABLE>

52
<PAGE>
PTC MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS

GENERAL

The business of PTC consists of holding and administering its interest in
People's Trust. The principal business of People's Trust consists of attracting
deposits from consumer and commercial customers and making loans to individuals
and businesses. People's Trust offers various products for depositors, including
checking and savings accounts, certificates of deposit and safe deposit boxes.
Loans consist principally of loans to individuals secured by mortgage liens on
residential properties, consumer loans generally secured by liens on personal
property, and loans to businesses generally secured by liens on business assets
such as inventory, accounts receivable, commercial real estate and other
property. People's Trust also offers trust services to individuals, businesses
and institutions.

People's Trust operates 17 banking offices in nine eastern and southeastern
counties in Indiana. In 1996, People's Trust opened new banking offices in the
Greensburg and Connersville markets and in the first quarter of 1997 purchased
an office in Hanover. People's Trust will continue to take advantage of
opportunities to expand its number of locations if the expansion appears to
represent a profitable opportunity, however, there is no assurance this
expansion will occur.

NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1997

RESULTS OF OPERATIONS

Net income for the nine months ended September 30, 1997 was $2,702,000
compared to $2,391,000 for the same period in 1996, which represented a $311,000
or 13.0% increase. Earnings per share also increased from $2.31 per share to
$2.64 per share for the same period. Higher net interest income, which was
partially offset by higher non-interest expense, accounted for most of the
increase in net income. Net income and earnings per share for the third quarter
of 1997 versus the third quarter of 1996 were also higher. Again, higher net
interest income, offset by higher non-interest expenses, were the main
contributors.

For the nine-month period ended September 30, 1997, as compared to the same
period in 1996, net interest income increased by $872,000 or 11.3%. A similar
proportional increase also occurred during the third quarter of 1997 versus the
third quarter of 1996. Higher volumes (average balances) of financial assets and
liabilities, rather than changes in underlying interest rates, were the main
reason for increased interest income and interest expense. Average loans were
$209,000,000 for the nine months ended September 30, 1997 compared to
$181,300,000 for the same period in 1996, or about $27,700,000 higher. Average
deposits were $266,900,000 for the nine-month period ended September 30, 1997
versus $243,900,000 for 1996, or about $23,000,000 higher. Net interest margin
(net interest income on a tax equivalent basis divided by average total earnings
assets) was 4.46% for the nine-month period ended September 30, 1997 and 4.38%
for the same period in 1996.

Non-interest income was relatively stable for the nine-month period ended
September 30, 1997 versus 1996; however, certain components of non-interest
income did change significantly. Mortgage banking income, which consists of
gains (losses) on loan sales and service fee income, was $103,000 higher for the
third quarter of 1997 versus 1996, and $189,000 higher for the nine-month period
ended September 30,

53
<PAGE>
1997 versus 1996. During the second and third quarters, the long-term interest
rates charged on mortgages declined and PTC saw an increase in refinancing and
new originations take place. Gains on securities included a sale of common stock
in 1996, but was a one-time gain and therefore not reported in 1997.

Non-interest expense increased from $5,272,000 for the nine months ended
September 30, 1996 to $5,918,000 for the same period in 1997, or a $646,000
increase. Most of this increase was related to higher salaries and benefits and
higher occupancy and equipment expense. Higher salary and benefit costs were
directly attributed to a revised management structure which was implemented on
January 1, 1997; and called for the hiring of several new commercial lenders, a
financial controller, an executive vice president, and several regional sales
managers so PTC could be better positioned for additional growth and loan
production activity.

Higher occupancy and equipment expenses were directly attributed to PTC's
expansion of its current ATM program which included the refurbishing of four
existing ATM's, the addition of four new ATM's and the addition of one cash
dispenser at an Indiana convenience store. PTC also converted to a new network
and service provider in order to attain long term cost reductions in driving the
ATM network. In addition, PTC expanded its branch network by acquiring a full
service branch in March 1997 in Hanover, Indiana, and establishing a de novo
branch in Madison, Indiana in September 1997.

FINANCIAL CONDITION

Total assets increased slightly by $6,158,000 or 2.1% from December 31, 1996
to September 30, 1997. Gross loans increased by $23,690,000 or 12.0% during the
same period. A decline in cash equivalents of $7,904,000 was used to fund the
increase in loans, along with sales and maturities of available-for-sale
securities. Loan demand continued to be strong in 1997. PTC believes it has
positioned itself to grow its loan portfolio by adding employees to increase
originations. As of September 30, 1997, PTC had obtained an 80.0% loan to
deposit ratio. A detailed presentation of loans by category follows:

<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1997 1996 $ CHANGE % CHANGE
------------- ------------ --------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Construction loans.............................................. $ 13,462 $ 13,650 (188) (1.4)%
Real estate--farmland........................................... 11,948 8,302 3,646 43.9
Real estate--1-4 family residential............................. 88,473 79,808 8,665 10.8
Real estate--non-farm, non-residential.......................... 48,917 35,068 13,849 39.5
Commercial and industrial....................................... 17,932 22,986 (5,054) (22.0)
Consumer loans.................................................. 22,227 24,543 (2,266) (9.2)
Tax-exempt loans................................................ 11,347 8,390 2,957 35.2
Other loans..................................................... 6,297 4,216 2,081 49.3
------------- ------------ ---------
Total loans..................................................... $ 220,653 $ 196,963 $ 23,690 12.0%
------------- ------------ --------- -----
------------- ------------ --------- -----
</TABLE>

54
<PAGE>
ASSET QUALITY

Provision for loan losses was relatively stable for 1997 versus 1996. An
analysis of activity in the allowance for loan losses follows:

<TABLE>
<CAPTION>
NINE MONTHS NINE MONTHS
ENDED ENDED
SEPTEMBER 30, 1997 SEPTEMBER 30, 1996
------------------- -------------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Balance at January 1...................................................... $ 2,000 $ 1,722
Provision for loan losses................................................. 610 616
Losses charged to allowance............................................... (750) (327)
Recoveries credited to allowance.......................................... 109 144
------ ------
Balance at September 30................................................... $ 1,969 $ 2,155
------ ------
------ ------
</TABLE>

PTC maintains a watch list and performs an ongoing loan review function. On
a quarterly basis the allowance for loan loss calculation is completed. While
management believes that the allowance is adequate as of September 30, 1997, it
intends to significantly fund the provision during the fourth quarter because
PTC's overall loan growth exceeded 13.5% in 1996 and will exceed 14% growth in
1997. A comparative review of the PTC's allowance for loan loss to its peer
group, which consists of financial institutions between $150,000,000 and
$300,000,000 in assets, was completed. Through this analysis, it was determined
that PTC's allowance to total loans percentage relationship was significantly
less than its peer group. Management will fund the reserve during the fourth
quarter of 1997 to bring PTC closer to its peer group and to recognize the
tremendous growth experienced during the past two years.

A summary of non-performing loans follows:

<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1997 1996
------------- -------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Non-accrual loans................................................................... $ 2,349 $ 1,794
Restructured loans.................................................................. -- --
Accruing loans 90 days or more past due............................................. 56 34
------ ------
Total non-performing loans........................................................ $ 2,405 $ 1,828
------ ------
------ ------

Allowance for loan losses........................................................... $ 1,969 $ 2,000
Allowance/total loans............................................................... 0.89% 1.02%
Allowance/non-performing loans...................................................... 81.9 109.4
Non-performing loans/total loans.................................................... 1.09 0.93
</TABLE>

Chargeoffs were $750,000 for 1997, of which $550,000 was related to one loan
relationship. As of September 30, 1997, the carrying value of loans to a
bankrupt commercial borrower was $750,000, which is included in non-accrual
loans. An agreed settlement has been approved through the bankruptcy courts and
payment is expected before year end. No additional loss is expected.

CAPITAL

Shareholders' equity increased from $21,653,000 at December 31, 1996 to
$23,740,000 at September 30, 1997. The increase of $2,087,000 was almost solely
due to retained earnings--net income less cash dividends.

PTC and People's Trust are subject to regulatory capital requirements
administered by the federal banking agencies. "Consolidated" actual and minimum
required capital ratios for capital adequacy and prompt corrective action
purposes are presented below. ("Bank only" ratios are substantially the same as

55
<PAGE>
"consolidated"). PTC and People's Trust are both considered "well-capitalized"
for prompt corrective action purposes.

<TABLE>
<CAPTION>
MINIMUM REQUIRED TO
BE "WELL-
MINIMUM REQUIRED FOR CAPITALIZED" UNDER
CAPITAL ADEQUACY PROMPT CORRECTIVE
ACTUAL PURPOSES ACTION REGULATIONS
--------- ----------------------- ---------------------
<S> <C> <C> <C>
AS OF SEPTEMBER 30, 1997
- -----------------------------------------------------------------
Tier 1 capital to average assets............................... 7.26% 4.0% 5.0%
Tier 1 capital to risk-weighted assets......................... 10.73 4.0 6.0
Total capital to risk-weighted assets.......................... 11.70 8.0 10.0

AS OF DECEMBER 31, 1996
- -----------------------------------------------------------------
Tier 1 capital to average assets............................... 6.73% 4.0% 5.0%
Tier 1 capital to risk-weighted assets......................... 10.54 4.0 6.0
Total capital to risk-weighted assets.......................... 11.60 8.0 10.0
</TABLE>

LIQUIDITY

Liquidity management involves maintaining sufficient cash levels to fund
operations and to meet the requirements of borrowers, depositors and creditors.
High levels of liquidity bear higher corresponding costs, measured in terms of
lower yields on short-term investments, more liquid earning assets, and higher
interest expense involved in extending liability maturities. Liquid assets
include cash and cash equivalents, loans and securities maturing within one
year, and money market instruments. In addition, PTC holds $20,972,000 of AFS
securities maturing after one year which can be sold to meet liquidity needs.

Liquidity is supported by maintaining a relatively stable funding base,
which is achieved by diversifying funding sources, extending the contractual
maturity of liabilities, and limiting reliance on volatile short-term purchased
funds. Short-term funding needs may arise from declines in deposits or other
funding sources, draw downs of loan commitments and requests for new loans.
PTC's strategy is to fund assets to the maximum extent possible with core
deposits, which provide a sizable source of relatively stable and low-cost
funds. Average core deposits funded approximately 87% of total earning assets at
September 30, 1997.

Management believes PTC has sufficient liquidity to meet all reasonable
borrower, depositor, and creditor needs in the present economic environment. PTC
has not received any recommendations from regulatory authorities, which would
materially affect liquidity, capital resources or operations.

INTEREST RATE RISK

At September 30, 1997, PTC held approximately $178,606,000 in assets
comprised of securities, loans, short-term investments, and federal funds sold,
which were interest sensitive in one year or less time horizons. PTC's interest
rate sensitivity analysis at September 30, 1997 appears below. Core deposits are
distributed or spread among the various repricing categories based upon
historical patterns of repricing which are reviewed periodically by management.
The assumptions regarding these repricing characteristics greatly influence
conclusions regarding interest sensitivity. Management believes its assumptions
regarding these liabilities are reasonable.

56
<PAGE>
assets less rate-sensitive liabilities to total assets are kept within a range
of 85% to 115% for all time periods one year and longer.

<TABLE>
<CAPTION>
MATURING OR REPRICING
(DOLLARS IN THOUSANDS)
3 MONTHS ONE YEAR 5 YEARS 5 YEARS
------------- ------------- ------------ ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Rate-sensitive assets.................................. $ 63,131 115,475 85,065 $ 25,335
Rate-sensitive liabilities............................. 88,169 111,064 47,496 29,396
------------- ------------- ------------ ------------
Rate-sensitive GAP (assets less liabilities)........... $ (25,038) $ 4,411 $ 37,569 $ (4,061)
------------- ------------- ------------ ------------
------------- ------------- ------------ ------------
Rate-sensitive GAP (cumulative)........................ $ (25,038) $ (20,627) $ 16,942 $ 12,881
------------- ------------- ------------ ------------
------------- ------------- ------------ ------------
Percent of total assets (cumulative)................... (8.3)% (6.8)% 5.6 % 4.3 %
Rate-sensitive assets/liabilities (cumulative)......... 71.6 89.6 106.9 104.7
</TABLE>

EFFECTS OF CHANGING PRICES

PTC's asset and liability structure is substantially different from that of
an industrial company in that most of its assets and liabilities are monetary in
nature. Management believes the impact of inflation on financial results depends
upon PTC's ability to react to changes in interest rates and, by such reaction,
reduce the inflationary impact on performance. Interest rates do not necessarily
move in the same direction at the same time, or at the same magnitude, as the
prices of other goods and services, As discussed previously, management relies
on its ability to manage the relationship between interest-sensitive asset and
liabilities to protect against wide interest rate fluctuations, including those
resulting from inflation.

FACILITIES AND TECHNOLOGY

In an effort to make its service more accessible and convenient, PTC is
considering renovating its main banking facility in Rushville. This renovation
will enhance customer accessibility to the bank's various products and services
as well as enhance drive-through banking, ATM accessibility and customer
parking.

During 1997, PTC initiated many technological improvements. Certain of these
improvements represent capital investments, which allows PTC to continue to
efficiently compete within the financial services industry which is becoming
increasingly dependent upon technology. Investments are being made in additional
ATM's, cash dispensers, Automated Voice Response System, debit cards, and
additional state-of-the-art personal computers which will allow for improved
efficiencies in customer service.

YEAR ENDED DECEMBER 31, 1995 AND 1996

The following discussion and analysis provides information regarding PTC's
consolidated financial condition and results of operations as of and for the
years ended December 31, 1995 and 1996.

EARNINGS SUMMARY

PTC's net income for 1996 was $3,276,000 compared with net income for 1995
of $2,907,000, an increase of $369,000 or 12.7%. Earnings per share were $3.17
in 1996 compared to $2.86 for 1995.

NET INTEREST INCOME

Net interest income is the principal component of net income for PTC and is
determined by the relative size and characteristics of interest-earning assets
and interest-bearing liabilities. The increase in net income in 1996 resulted
primarily from an increase in net interest income. For the years ended December
31, 1996 and 1995 net interest income was $10,422,000 and $9,585,000,
respectively. This represents an increase in 1996 of $840,000 (8.03%).

57
<PAGE>
Growth in net interest income is drawn primarily from growth in earning
assets. Average earning assets increased to $257,011,000 in 1996 from
$234,731,000 in 1995, an increase of $22,280,000 (9.5%). The most significant
increase in average earning assets occurred in average loans which increased
$16,943,000 (10.1%) to $184,447,000 in 1996. Increasing loan balances were the
primary cause of the increase in net interest income during 1996. The following
table sets forth, for the periods indicated, information regarding the average
balances of interest-earning assets and interest-bearing liabilities, the dollar
amount of interest income and interest expense, and the resulting yield on
average interest-earning assets and rates on average interest-bearing
liabilities. Average balances are also provided for non-earning assets, non-
interest-bearing liabilities and shareholders' equity.

Net interest income also depends on the rates paid on assets and the rates
paid on liabilities. The net interest margin represents net interest income as a
percent of average earning assets. The net interest margin, or margin on earning
assets, was 4.39% in 1996 and 4.37% in 1995. Interest rates were low and stable
during this time period and the result has been about the same margins.

58
<PAGE>
RATE/VOLUME ANALYSIS
<TABLE>
<CAPTION>
1996 1995
---------------------------------- --------------------------------
<S> <C> <C> <C> <C> <C> <C>
AVERAGE AVERAGE AVERAGE AVERAGE
BALANCE INTEREST RATE BALANCE INTEREST RATE
---------- --------- ----------- ---------- --------- ---------

<CAPTION>
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
EARNING ASSETS
Short-term investments
Interest-bearing balances with banks................. $ 2,274 $ 130 5.72% $ 1,034 $ 62 6.00%
Federal funds sold................................... 7,317 433 5.92 7,923 473 5.97
Securities:
Taxable.............................................. 38,224 2,440 6.38 39,394 2,498 6.34
Non-taxable(1)....................................... 24,749 1,805 7.29 18,876 2,424 7.54
Loans and leases:(2)
Taxable(3)........................................... 176,529 16,658 9.44 160,915 15,062 9.36
Non-taxable(1)....................................... 7,918 708 8.94 6,589 582 8.83
---------- --------- ----- ---------- --------- ---------
Total earning assets................................. 257,011 22,174 8.63 234,731 20,101 8.56
---------- --------- ----- ---------- --------- ---------
Cash and due from banks................................ 6,992 6,196
Premises and equipment, net............................ 3,246 2,971
Intangible assets...................................... 1,678 1,899
Accrued interest receivable and other assets........... 3,384 3,051
Less: Allowance for loan losses........................ (1,976) (1,607)
---------- ----------
Total assets......................................... $ 270,335 $ 247,241
---------- ----------
---------- ----------
INTEREST-BEARING LIABILITIES
Savings and interest-bearing demand deposits........... $ 78,529 2,247 2.86 75,087 2,155 2.87
Time deposits.......................................... 148,079 8,590 5.80 132,604 7,579 5.72
Notes payable.......................................... 782 60 7.67 1,247 102 8.18
---------- --------- ---------- ---------
Total interest-bearing liabilities................... 227,390 10,897 4.79 208,938 9,836 4.71
---------- --------- ----- ---------- --------- ---------
Demand deposit accounts................................ 20,136 18,778
Other liabilities...................................... 2,396 1,879
---------- ----------
Total liabilities.................................... 249,922 229,595
Shareholders' equity................................... 20,413 17,646
---------- ----------
Total liabilities and shareholders' equity........... $ 270,335 $ 247,241
---------- ----------
---------- ----------
Net interest/spread.................................... $ 11,277 3.84% $ 10,265 3.85%
--------- ----- --------- ---------
--------- ----- --------- ---------
Margin................................................. 4.39% 4.37%
----- ---------
----- ---------
</TABLE>

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

(1) Effective tax rates were determined as though interest earned on PTC's
investments in municipal bonds and loans was fully taxable. Interest yields
on state and municipal securities are presented on a fully taxable
equivalent basis using a 34% tax rate.

(2) Interest income on loans included fees of $437,000 and $370,000 for 1996 and
1995.

(3) Non-accrual loans are included in average balance.

The following table presents information regarding PTC's interest income and
interest expense for the periods indicated. The table presents the amount of
change in interest income or interest expense which is attributable to the
change in the average balance (volume) and the amount of change which is related
to change in rates. The net change, attributable to the combined impact of
volume and rate, has been allocated proportionately to the change due to volume
and the change due to rate. Increases in balances

59
<PAGE>
were responsible for an increase in net interest income of $1,058,000 during
1996, however, this was offset by a decrease in spread of $46,000 resulting in a
$1,012,000 increase in net interest income.
<TABLE>
<CAPTION>
1996-1995
---------------------------------
<S> <C> <C> <C>
CHANGE CHANGE
TOTAL DUE TO DUE TO
CHANGE VOLUME RATE
--------- --------- -----------

<CAPTION>
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
EARNING ASSETS
Short-term investments
Interest-bearing balances with banks............................................... $ 68 $ 71 $ (3)
Federal funds sold................................................................. (40) -- (40)
Securities
Taxable............................................................................ (58) (75) 17
Non-taxable........................................................................ 381 430 (49)
Loans and leases
Taxable............................................................................ 1,596 1,472 124
Non-taxable........................................................................ 126 119 7
--------- --------- -----
Total earning assets............................................................. 2,073 2,017 56
--------- --------- -----
INTEREST-BEARING LIABILITIES
Savings and interest-bearing demand deposits......................................... 92 99 (7)
Time deposits........................................................................ 1,011 896 115
Notes payable........................................................................ (42) (36) (6)
--------- --------- -----
Total interest-bearing liabilities............................................... 1,061 959 102
--------- --------- -----
Net interest/spread.............................................................. $ 1,012 $ 1,058 $ (46)
--------- --------- -----
--------- --------- -----
</TABLE>

NON-INTEREST INCOME

Total non-interest income was $2,349,000 in 1996 and $1,902,000 in 1995.
This reflected an increase in 1996 of $447,000 (23.5%). Service charges on
deposit accounts were relatively flat in 1996 compared to 1995. The amounts were
$1,199,000 in 1996 compared to $1,192,000 in 1995.

Mortgage banking revenues included net gains and losses realized when
mortgage loans were sold into the secondary market, service fee revenue earned
from servicing those loans after they were sold and points paid by customers at
time of closing. Mortgage banking revenue, as reflected in PTC's financial
statements, has not been reduced by the associated costs, such as compensation
expense, which is shown elsewhere within non-interest expense. Total mortgage
banking revenue was $795,000 in 1996 and $447,000 in 1995. This reflects an
increase in 1996 of $348,000 (78%). The majority of this increase is from PTC
adopting SFAS No. 122 which recognizes the income value of servicing rights.
This accounting change increased income in mortgage banking $225,000 in 1996.

People's Trust sold its travel agency in April, 1996 so it could concentrate
its focus on additional banking facilities, products and services. As a result,
travel commission revenues decreased from $178,000 in 1995 to $66,000 in 1996
(62.8%). PTC does not engage in the purchase and sale of securities with the
intent to generate gains. PTC may sell available-for-sale securities for
liquidity or to manage its asset/ liability position. During 1996, such sales,
as well as gains and losses realized when securities were called prior to their
maturity, generated net gains of $104,000 compared to losses in 1995 of $76,000.

60
<PAGE>
NON-INTEREST EXPENSE

Non-interest expense, or overhead, includes the costs of personnel,
occupancy, data processing equipment, insurance, and other costs of sustaining
operations. Overhead for the years ended December 31, 1996 and 1995 was
$7,103,000 and $6,639,000, respectively. This reflects increases of $464,000
(7%) in 1996. More than half of total non-interest expense was comprised of
salaries and employee benefits. During 1996 and 1995 salaries and employee
benefits were $4,137,000 and $3,725,000 respectively. This represents an 11%
increase which was due to People's Trust opening and staffing two new branches
during 1996. The new branches are expected to have a positive effect on net
income by the beginning of 1998.

FDIC insurance expense decreased $249,000 in 1996 as a result of a decrease
in the premium rates charged to insured banks. Other operating expenses
increased $208,000 from 1995 to 1996 for a variety of reasons, including higher
advertising and promotional expenses, legal and professional fees, and charge
card expenses.

INCOME TAXES

PTC's income tax expense was affected primarily by the level of pre-tax
income. As income increased, tax expense did as well. Tax expense for 1996
increased $364,000 over 1995. PTC can and does purchase tax-free investments and
originates tax-free loans as a means of generating tax-free income, effectively
mitigating tax expense.

ASSET AND LIABILITY MANAGEMENT

PTC engages in a formal process of measuring and defining the amount of
interest rate risk. Interest rate risk is the effect on net interest income
resulting from changes in interest rates. The goal of the asset and liability
management process is to maintain a high, yet stable, net interest margin by
identifying the degree of interest rate risk and developing tactics and
strategies to mitigate the extent to which net interest income will be affected
by changes in interest rates.

The following table illustrates the repricing opportunities, or "rate
sensitivity" of interest-earning assets and interest bearing liabilities. A
repricing may occur if the rate on the asset or liability changes as interest
rates change, or, when the rate is fixed, at the time they mature. The "gap" is
the difference between rate sensitive assets and rate sensitive liabilities
within a specific time frame. Gap is considered an indicator of the effect a
change in interest may have on net interest income.

As of December 31, 1996, PTC's rate-sensitive liabilities exceeded
rate-sensitive assets through one year. This would indicate that if rates
increase, net interest income may decrease. In order to determine accurately the
effect of changes in interest rates, the repricing effect of each type of
interest-earning asset and interest-bearing liability must be measured. Assets
and liabilities have different characteristics and the magnitude of change
differs for each. Management continually monitors the changes to net interest
income which may result from changing interest rates.

61
<PAGE>
INTEREST RATE SENSITIVITY ANALYSIS

<TABLE>
<CAPTION>
4-12 1-5 AFTER NON-INTEREST
0-3 MONTHS MONTHS YEARS 5 YEARS BEARING TOTAL
---------- ---------- --------- --------- ----------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Cash and due from banks.......................... $ 10,772 $ 2,213 $ 12,985
Federal funds sold............................... 13,200 13,200
Interest bearing balances with financial
institutions................................... $ 898 $ 999 1,897
Securities....................................... 3,460 5,538 46,828 $ 7,768 63,594
Loans............................................ 40,103 100,731 36,897 17,337 1,895 196,963
Allowance for loan losses........................ (2,000) (2,000)
Other assets..................................... 9,936 9,936
---------- ---------- --------- --------- ----------- ----------
Total assets................................... 67,535 107,167 84,724 25,105 12,044 $ 296,575
---------- ---------- --------- --------- ----------- ----------
----------

Non-interest-bearing deposits.................... $ 32,350 $ 32,350
Passbook savings................................. $ 30,114 30,114
Interest bearing deposits........................ $ 57,654 -- 57,654
CD's >100M....................................... 9,232 12,330 $ 7,388 28,950
CD's >100M....................................... 22,296 47,173 39,924 $ 12 109,405
IRA's............................................ 2,115 3,369 7,169 12,653
Note payable..................................... 500 500
Other liabilities................................ 3,296 3,296
Capital.......................................... 21,653 21,653
---------- ---------- --------- --------- ----------- ----------
Total liabilities.............................. 91,797 92,986 54,481 12 57,299 $ 296,575
---------- ---------- --------- --------- ----------- ----------
----------

Periodic gap....................................... $ (24,262) $ 14,181 $ 30,243 $ 25,093 $ (45,255)
---------- ---------- --------- --------- -----------
---------- ---------- --------- --------- -----------
Cumulative gap..................................... $ (24,262) $ (10,081) $ 20,162 $ 45,255
---------- ---------- --------- ---------
---------- ---------- --------- ---------
</TABLE>

A significant assumption that creates the large negative gap in the 0 to 3
month category is that all interest-bearing demand accounts are subject to
immediate repricing. While it is true that contractually, those accounts are
subject to immediate repricing, the rates paid on those accounts are not
generally tied to specific indices and are influenced by market conditions and
other factors. Accordingly, a general movement in interest rates, either up or
down, may not have any immediate effect on the rates paid on these deposit
accounts. The foregoing table illustrates only one source of information about
sensitivity to interest rate movements. The core of PTC's asset and liability
management process consists of simulations that take into account the time that
various assets and liabilities may reprice and the degree to which various
categories of such assets and liabilities will respond to general interest rate
movements. Interest rate risk can only be represented by a measurement of the
effects of changing interest rates given the capacity for, and magnitude of,
change of specific assets and liabilities.

LIQUIDITY

Liquidity refers to the availability of funds to meet deposit withdrawals,
fund loan commitments and pay expenses. During 1996, PTC's loan portfolio
increased to $197,000,000 at December 31, 1996 from $173,000,000 at December 31,
1995, an increase of $24,000,000 or 13.7%. Increases in deposits provided one
source of funding for loan growth in 1996. Average interest-bearing deposits
increased $21,000 (10%) between 1995 and 1996. Additional funding for loan
growth was provided through sales and maturities of securities.

62
<PAGE>
A common measure of liquidity is the loan to deposit ratio. As of December
31, PTC had a loan to deposit ratio of 72.6% in 1996, and 71.7% in 1995.
Increasing this ratio was an important goal for PTC's management during 1996,
and significantly added to PTC's profitability.

Loan commitments include unfunded portions of lines of credit and commercial
letters of credit. These unfunded commitments may or may not require funding. At
December 31, 1996 and 1995, such commitments totaled $30,000,000 and
$18,000,000, respectively. Loan commitments generate fee income for PTC.

LOAN QUALITY

PTC has maintained a high level of quality in the loan portfolio.
Non-performing loans are those loans which are past due more than 90 days and
still accruing interest and those loans on which PTC no longer accrues interest.
As of December 31, 1996 and 1995, non-performing loans totaled $1,828,000 and
$1,464,000, respectively. As a percent of total loans, non-performing loans were
0.93% at December 31, 1996 and 0.84% at December 31, 1995.

The provision for loan losses is a charge to earnings to provide for
potential loan losses. The provision for loan losses was $828,000 in 1996 and
$740,000 in 1995. Coverage of potential loan losses is provided by the allowance
for loan losses. The adequacy of the allowance for loan losses is evaluated at
least quarterly by the credit review function and management based upon a review
of identified loans with more than a normal degree of risk, historical loss
percentages, and present and forecasted economic conditions affecting borrowers.
At December 31, the allowance for loan losses was $2,000,000 for 1996 and
$1,722,000 for 1995. As a percent of total loans, the allowance for loan losses
was 1.02% and 0.99% at those points in time. Management's analysis indicates
that the allowance for loan losses at December 31, 1996, was adequate to cover
potential losses on identified loans with credit problems and on the remaining
portfolio. Contained within the general allowance for loan loss specific
allocations can be made if management can determine a loss. In the case of loans
to a bankrupt commercial borrower, management had specifically reserved
$475,000.

Gross loan chargeoffs in 1996 and 1995 were $726,000 and $855,000,
respectively. As a percentage of average loans, gross loan chargeoffs were 0.39%
and 0.51% for those periods.

Effective January 1, 1995, PTC was required to adopt SFAS No. 114 which
required recognition of loan impairment. Loans are considered impaired if full
principal or interest payments are not anticipated. Impaired loans are carried
at the present value of expected cash flows discounted at the loan's effective
interest rate or at the fair value of the collateral if the loan is collateral
dependent. A portion of the allowance for loan losses is allocated to impaired
loans. PTC's average investment in impaired loans during 1996 was $844,000. At
December 31, 1996, $1,300,000 of loans were deemed to be impaired and $475,000
of the allowance for loan losses was allocated to those loans. At December 31,
1995, impaired loans were $129,000. The large increase in impaired loans was
related to loans to Bennett Funding.

CAPITAL

In June, 1994, PTC completed a rights offering of its common shares at
$25.00 per share ($15.50 per share when adjusted for a subsequent stock split
and stock dividend). The net proceeds after commissions and expenses from the
sale of 60,000 shares were approximately $1,480,000. This rights offering
included options which were exercised in January 1996, resulting in the issuance
of 28,449 shares for a total of $485,000 at $17.05 per share ($15.50 when
adjusted for a subsequent stock dividend). In April, 1996, PTC repurchased
22,632 shares at a market price of $30 per share ($27.27 when adjusted for a
subsequent stock dividend).

Both PTC and People's Trust are required to comply with capital requirements
promulgated by their primary regulators. Those regulations require the
maintenance of specified levels of capital to total assets

63
<PAGE>
(the leverage ratio) and to risk-weighted assets (the risk-based capital ratio).
These regulations require maintaining a leverage ratio of at least 5% for
"well-capitalized" entities and a total risk-based capital ratio of at least
10%.

PTC and People's Trust were in full compliance with all regulatory capital
requirements at December 31, 1996. The following table indicates PTC's actual
capital levels at the dates indicated.

REGULATORY CAPITAL REQUIREMENTS

<TABLE>
<CAPTION>
MINIMUM REQUIRED
TO BE WELL-
CAPITALIZED
MINIMUM REQUIRED UNDER PROMPT
FOR CAPITAL CORRECTIVE
ADEQUACY PURPOSES ACTION REGULATIONS
ACTUAL
-------------------- ---------------------- ----------------------
<S> <C> <C> <C> <C> <C> <C>
AMOUNT RATIO AMOUNT RATIO AMOUNT RATIO
--------- --------- --------- ----- --------- -----
(DOLLARS IN THOUSANDS)
Total capital (to
risk-weighted assets)
PTC.................... $ 21,836 11.60% $ 15,055 8.0% $ 18,819 10.0%
People's Trust......... 21,487 11.46 14,995 8.0 18,744 10.0

Tier 1 capital (to
risk-weighted assets)
PTC.................... 19,836 10.54 7,528 4.0 11,291 6.0
People's Trust......... 19,487 10.40 7,498 4.0 11,246 6.0

Tier 1 capital (to
average assets)
PTC.................... 19,836 6.73 11,795 4.0 14,744 5.0
People's Trust......... 19,487 6.63 11,753 4.0 14,692 5.0
</TABLE>

PTC and People's Trust at year-end 1996 were categorized as
well-capitalized.

SELECTED FINANCIAL RATIOS

The following table indicates certain key financial ratios for PTC for the
years indicated:

<TABLE>
<CAPTION>
1996 1995
--------- ---------
<S> <C> <C>
Return on assets............................................................. 1.21% 1.18%
Return on equity............................................................. 16.05 16.48
Dividend payout ratio........................................................ 21 19
Equity to assets ratio....................................................... 7.55 7.14
</TABLE>

NEW ACCOUNTING PRONOUNCEMENTS

SFAS No. 125 was issued by the FASB in 1996. It revises the accounting for
transfers of financial assets, such as loans and securities, and for
distinguishing between sales and secured borrowings. It is effective for some
transactions in 1997 and others in 1998. The effect on the financial statements
of PTC and People's Trust is not expected to be material.

64
<PAGE>
BUSINESS OF THE COMPANY

GENERAL

The Company was initially formed in Owensboro, Kentucky in 1982 as First
Commonwealth Bancorp. The Company reincorporated under the laws of the State of
Indiana under its present name in 1983, and relocated to Greensburg, Indiana in
anticipation of acquiring Union Bank. In 1987, The Peoples Bank, in Portland,
Indiana ("Peoples Bank"), was acquired and as of December 31, 1991, Regional
Bank was acquired. Effective July 1, 1994, the Company merged Union Bank with
Peoples Bank, with the resulting bank renamed Union Bank and Trust Company of
Indiana ("Union Bank"). Through Union Bank and Regional Bank, the Company
operates twelve offices with 143 full-time equivalent employees in eastern and
southern Indiana. As of September 30, 1997, the Company had consolidated assets
of $342 million, consolidated deposits of $286 million and shareholders' equity
of $30 million.

Through its subsidiaries, the Company offers a broad range of financial
services, including: accepting time and transaction deposits; making consumer,
commercial, agri-business and real estate mortgage loans; issuing credit cards;
renting safe deposit facilities; providing general agency personal and business
insurance services; providing personal and corporate trust services; and
providing other corporate services such as payroll processing, letters of credit
and repurchase agreements.

The Company's subsidiaries are located in non-metropolitan areas and their
business is centered in loans and deposits generated within markets considered
to be largely rural in nature. In addition to competing with other banks, thrift
institutions, credit unions and finance companies located within their service
areas, they also compete, directly and indirectly, with all providers of
financial services.

RECENT DEVELOPMENTS

The Company is a party to an Agreement and Plan of Merger with PTC dated as
of October 8, 1997 (the "Merger Agreement") pursuant to which PTC would merge
with and into the Company and People's Trust would become a wholly owned
subsidiary of the Company, and each outstanding share of PTC at the effective
time of the merger would be converted into the right to receive 1.075 shares of
common stock of the Company (the "PTC Merger"). The Company expects to issue in
the aggregate up to 1,136,417 shares of common stock in the PTC Merger. The PTC
Merger is expected to be completed late in the fourth quarter of 1997 or early
in the first quarter of 1998.

65
<PAGE>
Merger is not consummated, the anticipated significant increase in the Company's
capital base due to the PTC Merger will not be realized. Consequently, due to
regulatory capital requirements, the Company's ability to utilize a portion of
the offering proceeds for future acquisitions and other growth would be
adversely affected if the PTC Merger is not consummated.

EMPLOYEES

As of September 30, 1997, the Company and its subsidiaries had approximately
151 full-time equivalent employees to whom it provides a variety of benefits.
Management believes that its relationship with its employees is good.

REGULATION AND SUPERVISION OF THE COMPANY

The Company is a bank holding company ("BHC") within the meaning of the Bank
Holding Company Act of 1956, as amended ("BHCA"). This Act subjects BHCs to
regulations of the Federal Reserve and restricts the business of BHCs to banking
and related activities. In addition, the Company is a nondiversified unitary
savings and loan holding company subject to regulations, examinations,
supervision and reporting requirements of the Office of Thrift Supervision
("OTS").

Under the BHCA, a BHC is, with limited exceptions, prohibited from acquiring
direct or indirect ownership or control of voting stock of any company which is
not a bank or engaging in any activity other than managing or controlling banks.
A BHC may, however, own shares of a company engaged in activities which the
Federal Reserve has determined to be so closely related to banking or managing
or controlling banks as to be a proper incident thereto.

Acquisitions by the Company of banks and savings associations are subject to
federal and state regulation. Any acquisition by the Company of more than five
percent of the voting stock of any bank requires prior approval of the Federal
Reserve. Acquisition of savings associations is also subject to the approval of
the OTS.

Indiana law permits BHCs to acquire BHCs and banks out of state on a
reciprocal basis, subject to certain limitations. Under current law, the Company
may acquire banks, and may be acquired by BHCs, located in any state in the
United States which permits reciprocal entry by Indiana BHCs. Under the BHCA,
BHCs may acquire savings associations without geographic restrictions.

A BHC and its subsidiaries are prohibited from engaging in certain tying
arrangements in connection with the extension of credit, lease or sale of
property, or the provision of any property or service.

The Company is under the jurisdiction of the Commission and state securities
commission for matters relating to the offering and sale of its securities. The
Company is subject to the Commission's rules and regulations relating to
periodic reporting, reporting to shareholders, proxy solicitation and insider
trading. See "Available Information."

The Company's income is principally derived from dividends paid on the
common stock of its subsidiaries. The payment of these dividends is subject to
certain regulatory restrictions.

Under Federal Reserve policy, the Company is expected to act as a source of
financial strength to, and commit resources to support, its affiliates. As a
result of such policy, the Company may be required to commit resources to its
affiliate banks in circumstances where it might not otherwise do so.

66
<PAGE>
REGULATION AND SUPERVISION OF THE SUBSIDIARY BANKS

Union Bank is supervised, regulated and examined by the Indiana Department
of Financial Institutions ("DFI") and the FDIC. Regional Bank is supervised,
regulated and examined by the OTS. A cease-and-desist order may be issued
against the banks, if the respective agency finds that the activities of the
bank represents an unsafe and unsound banking practice or violation of law.

The deposits of Union Bank are insured by the BIF of the FDIC. The deposits
of Regional Bank are insured by the SAIF of the FDIC. The FDIC has the authority
to change premiums twice per year. Commencing in 1997 and until 1999, thrift
institutions will pay approximately five times higher assessment rates than
commercial banks (6.44 cents versus 1.29 cents per $100 of deposits). After the
three year period, BIF and SAIF-insured institutions will pay the same
assessment rate of 2.43 cents per $100 of deposits. Based on 1996 year end
deposit levels, Union Bank's deposit insurance expense will increase
approximately $22,000 and Regional Bank will save approximately $155,000
compared to the assessment rates paid in 1996 as a result of these changes.

Branching by banks in Indiana is subject to the jurisdiction, and requires
the prior approval, of the bank's or savings bank's primary federal regulatory
authority and, if the branching bank is a state bank, of the DFI. Under Indiana
law, the banks may branch anywhere in the state.

The Company is a legal entity separate and distinct from its subsidiary
Banks. There are various legal limitations on the extent to which the Banks can
supply funds to the Company. The principal source of the Company's funds
consists of dividends from its subsidiary Banks. State and Federal law restrict
the amount of dividends which may be paid by banks and savings banks. In
addition, the Banks are subject to certain restrictions on extensions of credit
to the Company, on investments in the stock or other securities of the Company
and in taking such stock or securities as collateral for loans.

LEGISLATION

The Federal Deposit Insurance Corporation Improvement Act of 1991 ("FDICIA")
represented a comprehensive and fundamental change to banking supervision and
mandates the development of additional regulations governing almost every aspect
of the operations, management and supervision of banks and BHCs.

FDICIA also included several supervisory reforms related to the frequency of
regulatory examinations and audit requirements. FDICIA also required the
adoption of safety and soundness standards on matters such as loan underwriting
and documentation, and compensation and other employee benefits; mandated
consumer protection disclosures with respect to deposit accounts; and the
establishment of a risk-based deposit insurance system. To date, many of the
provisions of FDICIA have been implemented.

FDICIA requires banking regulators to take prompt corrective actions with
respect to depository institutions that fall below certain capital levels and
prohibit any depository institution from making a capital distribution that
would cause it to be considered undercapitalized. Banking regulators were also
required to revise their capital standards to take into account interest rate
risk. A policy statement has been proposed providing a supervisory framework to
measure and monitor interest rate risk at individual banks. Banks may use an
internal model which provides a measure of the change in a bank's economic
value. The results of the supervisory and internal models would be one factor
regulators will consider in their assessment of capital adequacy. Other factors
will also be considered.

Certain regulations define relevant capital measures for five capital
categories. A "well capitalized" institution is one that has a total risk-based
capital ratio of at least 10%, a Tier 1 risk-based capital ratio of at least 8%,
a leverage ratio of at least 5% and is not subject to regulatory direction to
maintain a specific level for any capital measure. An "adequately capitalized"
institution is one that has ratios greater than 8%, 4% and 4%. An institution is
"undercapitalized" if its respective ratios are less than 8%, 4% and 4%.
"Significantly undercapitalized" institutions have ratios of less than 6%, 3%
and 3%. An institution is deemed to be "critically undercapitalized" if it has a
ratio of tangible equity to total assets that is 2% or

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less. Institutions with capital ratios at levels of "undercapitalized" or lower
are subject to various limitations which, in most situations, will reduce the
competitiveness of the institution.

The Riegle Community Development and Regulatory Improvement Act of 1994
("Riegle Act") was signed into law in 1994. The Riegle Act contains seven titles
pertaining to community development and home ownership protection, small
business capital formation, paperwork reduction and regulatory improvement,
money laundering and flood insurance.

In September 1994, the Riegle-Neal Interstate Banking and Branching
Efficiency Act of 1994 ("Branching Act") was enacted. In general, the Branching
Act permits BHCs that are adequately capitalized and adequately managed to
acquire banks located in any other state, subject to certain total deposit
limitations. The Branching Act also permits full interstate branching. States,
however, may have elected to prohibit interstate branching and merger
transactions by enacting legislation prior to June 1, 1997 that applies equally
to all out-of-state banks and expressly prohibits mergers involving out-of-state
banks. Indiana did not enact such legislation.

The monetary policies of regulatory authorities have a significant effect of
the operating results of banks and BHCs. The nature of future monetary policies
and the effect of such policies on the future business and earnings of the
Company and its subsidiaries cannot be predicted.

The Deposit Insurance Funds Act was enacted in 1996 and contained several
major provisions. The new law recapitalized the SAIF by a one-time assessment on
all SAIF-insured deposits. For 1997 through 1999 the banking industry will help
pay for the Financing Corp. ("FICO") bond interest payments at an assessment
rate that is one-fifth the rate paid by thrifts. Beginning January 1, 2000, the
FICO interest payments will be paid pro-rata by banks and thrifts. Deposit
shifting is prohibited for three years and the $2,000 annual minimum deposit
insurance assessment was repealed. The BIF and SAIF will be merged on January 1,
1999 providing a law is passed by that date merging the bank and thrift
charters. In addition, there were more than forty regulatory relief provisions
in this bill.

CAPITAL REQUIREMENTS

The Company and its subsidiary Banks must meet certain minimum capital
requirements mandated by the Federal Reserve, FDIC, OTS and DFI. These
regulatory agencies require BHCs and banks to maintain certain minimum ratios of
primary capital to total assets and total capital to total assets. The Federal
Reserve requires BHCs to maintain a minimum Tier 1 leverage ratio of 3% capital
to total assets; however, for all but the most highly rated institutions which
do not anticipate significant growth, the minimum Tier 1 leverage ratio is 3%
plus an additional cushion of 100 to 200 basis points. As of September 30, 1997,
the Company's leverage ratio of capital to total assets was 8.58%.

The Federal Reserve, OTS and FDIC each have approved the imposition of
"risk-adjusted" capital ratios on BHCs and financial institutions. The Company
and its subsidiaries had capital to assets ratios and risk-adjusted capital
ratios at September 30, 1997, in excess of the applicable regulatory minimum
requirements.

YEAR 2000 COMPUTER ISSUES

In the next two years, most large companies will face a potentially serious
information systems (computer) problem because many software application and
operational programs written in the past may not properly recognize calendar
dates beginning in the year 2000. This problem could force computers to either
shut down or provide incorrect data or information. The Company began the
process of identifying the changes required to its computer programs and
hardware, in consultation with software and hardware providers and bank
regulators, in early 1997. While the Company believes it is taking all
appropriate steps to assure year 2000 compliance, it is dependent on vendor
compliance to some extent. The Company is requiring its systems and software
vendors to represent that the services and products provided are, or will be,
year 2000 compliant, and contemplates a program of testing compliance. The
Company estimates that

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its costs related to year 2000 compliance will be at least $50,000 and may be
significantly more. The "year 2000" problem is persuasive and complex as
virtually every computer operation will be affected in some way by the rollover
of the two digit year value to 00. Consequently, no assurance can be given that
year 2000 compliance can be achieved without costs and uncertainties that might
affect future financial results or cause reported financial information not to
be necessarily indicative of future operating results or future financial
condition.

DESCRIPTION OF THE PREFERRED SECURITIES

The Preferred Securities will be issued pursuant to the terms of the Trust
Agreement. The Trust Agreement will be qualified as an indenture under the Trust
Indenture Act. The Property Trustee, State Street Bank and Trust Company, will
act as indenture trustee for the Preferred Securities under the Trust Agreement
for purposes of complying with the provisions of the Trust Indenture Act. The
terms of the Preferred Securities will include those stated in the Trust
Agreement and those made part of the Trust Agreement by the Trust Indenture Act.
The following summary of the material terms and provisions of the Preferred
Securities and the Trust Agreement does not purport to be complete and is
subject to, and is qualified in its entirety by reference to, the Trust
Agreement, the Trust Act, and the Trust Indenture Act. Wherever particular
defined terms of the Trust Agreement are referred to, but not defined herein,
such defined terms are incorporated herein by reference. The form of the Trust
Agreement has been filed as an exhibit to the Registration Statement of which
this Prospectus forms a part.

GENERAL

Pursuant to the terms of the Trust Agreement, the Trustees, on behalf of IUB
Trust, will issue the Trust Securities. All of the Common Securities will be
owned by the Company. The Preferred Securities will represent preferred
undivided beneficial interests in the assets of IUB Trust and the holders
thereof will be entitled to a preference in certain circumstances with respect
to Distributions and amounts payable on redemption or liquidation over the
Common Securities, as well as other benefits as described in the Trust
Agreement. The Trust Agreement does not permit the issuance by IUB Trust of any
securities other than the Trust Securities or the incurrence of any indebtedness
by IUB Trust.

The Preferred Securities will rank PARI PASSU, and payments will be made
thereon pro rata, with the Common Securities, except as described under
"--Subordination of the Common Securities." Legal title to the Subordinated
Debentures will be held by the Property Trustee in trust for the benefit of the
holders of the Trust Securities. The Guarantee executed by the Company for the
benefit of the holders of the Preferred Securities will be a guarantee on a
subordinated basis with respect to the Preferred Securities, but will not
guarantee payment of Distributions or amounts payable on redemption or
liquidation of such Preferred Securities when IUB Trust does not have funds on
hand available to make such payments. State Street Bank and Trust Company, as
Guarantee Trustee, will hold the Guarantee for the benefit of the holders of the
Preferred Securities. See "Description of the Guarantee."

DISTRIBUTIONS

PAYMENT OF DISTRIBUTIONS. Distributions on each Preferred Security will be
payable at the annual rate of % of the stated Liquidation Amount of $10,
payable quarterly in arrears on March 31, June 30, September 30 and December 31
of each year, to the holders of the Preferred Securities on the relevant record
dates (each date on which Distributions are payable in accordance with the
foregoing, a "Distribution Date"). The record date will be the 15th day of the
month in which the relevant Distribution Date occurs. Distributions will
accumulate from , 1997, the date of original issuance. The first
Distribution Date for the Preferred Securities will be December 31, 1997. The
amount of Distributions payable for any period will be computed on the basis of
a 360-day year of twelve 30-day months. In the event that any date on which
Distributions are payable on the Preferred Securities is not a Business Day,
then payment of the Distributions payable on such date will be made on the next
succeeding day that is a Business Day (and without any additional Distributions,
interest or other payment in respect of any such delay) with the same

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force and effect as if made on the date such payment was originally due and
payable. "Business Day" means any day other than a Saturday or a Sunday or a day
on which Federal or state banking institutions in the Borough of Manhattan, the
City of New York, are authorized or required by law, executive order or
regulation to close, or a day on which the corporate trust office of the
Property Trustee or the corporate trust office of the Debenture Trustee is
closed for business.

EXTENSION PERIOD. The Company has the right under the Indenture, so long as
no Debenture Event of Default has occurred and is continuing, to defer the
payment of interest on the Subordinated Debentures at any time, or from time to
time (each, an "Extension Period"), which, if exercised, would defer quarterly
Distributions on the Preferred Securities during any such Extension Period.
Distributions to which the holders of the Preferred Securities are entitled will
accumulate additional Distributions thereon at the rate per annum of %
thereof, compounded quarterly from the relevant Distribution Date.
"Distributions," as used herein, includes any such additional Distributions. The
right to defer the payment of interest on the Subordinated Debentures is
limited, however, to a period, in each instance, not exceeding 20 consecutive
quarters and no Extension Period may extend beyond the Stated Maturity of the
Subordinated Debentures. During any such Extension Period, the Company may not
(i) declare or pay any dividends or distributions on, or redeem, purchase,
acquire or make a liquidation payment with respect to, any of the Company's
capital stock, (ii) make any payment of principal, interest or premium, if any,
on or repay, repurchase or redeem any debt securities of the Company that rank
PARI PASSU with or junior in interest to the Subordinated Debentures or make any
guarantee payments with respect to any guarantee by the Company of the debt
securities of any subsidiary of the Company if such guarantee ranks PARI PASSU
with or junior in interest to the Subordinated Debentures (other than payments
under the Guarantee), or (iii) redeem, purchase or acquire less than all of the
Subordinated Debentures or any of the Preferred Securities. Prior to the
termination of any such Extension Period, the Company may further defer the
payment of interest; provided that such Extension Period may not exceed 20
consecutive quarters or extend beyond the Stated Maturity of the Subordinated
Debentures. Upon the termination of any such Extension Period and the payment of
all amounts then due, the Company may elect to begin a new Extension Period,
subject to the above requirements. Subject to the foregoing, there is no
limitation on the number of times that the Company may elect to begin an
Extension Period.

The Company has no current intention of exercising its right to defer
payments of interest by extending the interest payment period on the
Subordinated Debentures.

SOURCE OF DISTRIBUTIONS. The funds of IUB Trust available for distribution
to holders of its Preferred Securities will be limited to payments under the
Subordinated Debentures in which IUB Trust will invest the proceeds from the
issuance and sale of its Trust Securities. See "Description of the Subordinated
Debentures." Distributions will be paid through the Property Trustee who will
hold amounts received in respect of the Subordinated Debentures in the Property
Account for the benefit of the holders of the Trust Securities. If the Company
does not make interest payments on the Subordinated Debentures, the Property
Trustee will not have funds available to pay Distributions on the Preferred
Securities. The payment of Distributions (if and to the extent IUB Trust has
funds legally available for the payment of such Distributions and cash
sufficient to make such payments) is guaranteed by the Company. See "Description
of the Guarantee." Distributions on the Preferred Securities will be payable to
the holders thereof as they appear on the register of holders of the Preferred
Securities on the relevant record dates, which will be the 15th day of the month
in which the relevant Distribution Date occurs.

REDEMPTION

GENERAL. The Subordinated Debentures will mature on December 31, 2027. The
Company will have the right to redeem the Subordinated Debentures (i) on or
after December 31, 2002, in whole at any time or in part from time to time, or
(ii) at any time, in whole (but not in part), within 180 days following the
occurrence of a Tax Event, a Capital Treatment Event or an Investment Company
Event, in each case subject to receipt of prior approval by the Federal Reserve
if then required under applicable capital

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guidelines or policies of the Federal Reserve. The Company will not have the
right to purchase the Subordinated Debentures, in whole or in part, from IUB
Trust until after December 31, 2002. See "Description of the Subordinated
Debentures--General."

MANDATORY REDEMPTION. Upon the repayment or redemption, in whole or in
part, of any Subordinated Debentures, whether at Stated Maturity or upon earlier
redemption as provided in the Indenture, the proceeds from such repayment or
redemption will be applied by the Property Trustee to redeem a Like Amount (as
defined herein) of the Trust Securities, upon not less than 30 nor more than 60
days notice, at a redemption price (the "Redemption Price") equal to the
aggregate Liquidation Amount of such Trust Securities plus accumulated but
unpaid Distributions thereon to the date of redemption (the "Redemption Date").
See "Description of the Subordinated Debentures--Redemption or Exchange." If
less than all of the Subordinated Debentures are to be repaid or redeemed on a
Redemption Date, then the proceeds from such repayment or redemption will be
allocated to the redemption of the Trust Securities pro rata.

DISTRIBUTION OF SUBORDINATED DEBENTURES. Subject to the Company having
received prior approval of the Federal Reserve if so required under applicable
capital guidelines or policies of the Federal Reserve, the Company will have the
right at any time to dissolve, wind-up or terminate IUB Trust and, after
satisfaction of the liabilities of creditors of IUB Trust as provided by
applicable law, cause the Subordinated Debentures to be distributed to the
holders of Trust Securities in liquidation of IUB Trust. See "--Liquidation
Distribution upon Termination."

TAX EVENT REDEMPTION, CAPITAL TREATMENT EVENT REDEMPTION OR INVESTMENT
COMPANY EVENT REDEMPTION. If a Tax Event, a Capital Treatment Event or an
Investment Company Event in respect of the Trust Securities occurs and is
continuing, the Company has the right to redeem the Subordinated Debentures in
whole (but not in part) and thereby cause a mandatory redemption of such Trust
Securities in whole (but not in part) at the Redemption Price within 180 days
following the occurrence of such Tax Event, Capital Treatment Event or
Investment Company Event. In the event a Tax Event, a Capital Treatment Event or
an Investment Company Event has occurred with respect to the Trust Securities
and the Company does not elect to redeem the Subordinated Debentures and thereby
cause a mandatory redemption of such Trust Securities or to liquidate IUB Trust
and cause the Subordinated Debentures to be distributed to holders of such Trust
Securities in liquidation of IUB Trust as described below under "--Liquidation
Distribution upon Termination," such Preferred Securities will remain
outstanding and Additional Payments (as defined herein) may be payable on the
Subordinated Debentures.

"Additional Payments" means the additional amounts as may be necessary in
order that the amount of Distributions then due and payable by IUB Trust on the
outstanding Trust Securities will not be reduced as a result of any additional
taxes, duties and other governmental charges to which IUB Trust has become
subject as a result of a Tax Event.

"Like Amount" means (i) with respect to a redemption of Trust Securities,
Trust Securities having a Liquidation Amount equal to that portion of the
principal amount of Subordinated Debentures to be contemporaneously redeemed in
accordance with the Indenture, which will be used to pay the Redemption Price of
such Trust Securities, and (ii) with respect to a distribution of Subordinated
Debentures to holders of Trust Securities in connection with a dissolution or
liquidation of IUB Trust, Subordinated Debentures having a principal amount
equal to the Liquidation Amount of the Trust Securities of the holder to whom
such Subordinated Debentures are distributed. Each Subordinated Debenture
distributed pursuant to clause (ii) above will carry with it accumulated
interest in an amount equal to the accumulated and unpaid interest then due on
such Subordinated Debentures.

"Liquidation Amount" means the stated amount of $10 per Trust Security.

After the liquidation date fixed for any distribution of Subordinated
Debentures for Preferred Securities (i) such Preferred Securities will no longer
be deemed to be outstanding, and (ii) any certificates representing Preferred
Securities will be deemed to represent the Subordinated Debentures having a
principal amount equal to the Liquidation Amount of such Preferred Securities,
and bearing accrued and

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unpaid interest in an amount equal to the accrued and unpaid Distributions on
the Preferred Securities until such certificates are presented to the
Administrative Trustees or their agent for transfer or reissuance.

There can be no assurance as to the market prices for the Preferred
Securities or the Subordinated Debentures that may be distributed in exchange
for Preferred Securities if a dissolution and liquidation of IUB Trust were to
occur. The Preferred Securities that an investor may purchase, or the
Subordinated Debentures that an investor may receive on dissolution and
liquidation of IUB Trust, may, therefore, trade at a discount to the price that
the investor paid to purchase the Preferred Securities offered hereby.

REDEMPTION PROCEDURES

Preferred Securities redeemed on each Redemption Date will be redeemed at
the Redemption Price with the applicable proceeds from the contemporaneous
redemption of the Subordinated Debentures. Redemptions of the Preferred
Securities will be made and the Redemption Price will be payable on each
Redemption Date only to the extent that IUB Trust has funds on hand available
for the payment of such Redemption Price. See "--Subordination of the Common
Securities."

If IUB Trust gives a notice of redemption in respect of its Preferred
Securities, then, by 12:00 noon, eastern standard time, on the Redemption Date,
to the extent funds are available, the Property Trustee will irrevocably deposit
with the paying agent for the Preferred Securities funds sufficient to pay the
aggregate Redemption Price and will give the paying agent for the Preferred
Securities irrevocable instructions and authority to pay the Redemption Price to
the holders thereof upon surrender of their certificates evidencing such
Preferred Securities. Notwithstanding the foregoing, Distributions payable on or
prior to the Redemption Date for any Preferred Securities called for redemption
will be payable to the holders of such Preferred Securities on the relevant
record dates for the related Distribution Dates. If notice of redemption will
have been given and funds deposited as required, then upon the date of such
deposit, all rights of the holders of such Preferred Securities so called for
redemption will cease, except the right of the holders of such Preferred
Securities to receive the Redemption Price and any Distribution payable on or
prior to the Redemption Date, but without interest on such Redemption Price, and
such Preferred Securities will cease to be outstanding. In the event that any
date fixed for redemption of Preferred Securities is not a Business Day, then
payment of the Redemption Price payable on such date will be made on the next
succeeding day which is a Business Day (and without any additional Distribution,
interest or other payment in respect of any such delay) with the same force and
effect as if made on such date. In the event that payment of the Redemption
Price in respect of Preferred Securities called for redemption is improperly
withheld or refused and not paid either by IUB Trust, or by the Company pursuant
to the Guarantee, Distributions on such Preferred Securities will continue to
accrue at the then applicable rate, from the Redemption Date originally
established by IUB Trust for such Preferred Securities to the date such
Redemption Price is actually paid, in which case the actual payment date will be
considered the date fixed for redemption for purposes of calculating the
Redemption Price. See "Description of the Guarantee."

Subject to applicable law (including, without limitation, United States
Federal securities law), and further provided that the Company does not and is
not continuing to exercise its right to defer interest payments, the Company or
its subsidiaries may at any time and from time to time purchase outstanding
Preferred Securities by tender, in the open market or by private agreement.

Payment of the Redemption Price on the Preferred Securities and any
distribution of Subordinated Debentures to holders of Preferred Securities will
be made to the applicable holders thereof as they appear on the register for the
Preferred Securities on the relevant record date, which date will be the date 15
days prior to the Redemption Date or liquidation date, as applicable.

If less than all of the Trust Securities are to be redeemed on a Redemption
Date, then the aggregate Liquidation Amount of such Trust Securities to be
redeemed will be allocated pro rata to the Trust Securities based upon the
relative Liquidation Amounts of such classes. The particular Preferred
Securities to be redeemed will be selected by the Property Trustee from the
outstanding Preferred Securities not

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previously called for redemption, by such method as the Property Trustee deems
fair and appropriate and which may provide for the selection for redemption of
portions (equal to $10 or an integral multiple of $10 in excess thereof) of the
Liquidation Amount of the Preferred Securities of a denomination larger than
$10. The Property Trustee will promptly notify the registrar for the Preferred
Securities in writing of the Preferred Securities selected for redemption and,
in the case of any Preferred Securities selected for partial redemption, the
Liquidation Amount thereof to be redeemed. For all purposes of the Trust
Agreement, unless the context otherwise requires, all provisions relating to the
redemption of the Preferred Securities will relate to the portion of the
aggregate Liquidation Amount of the Preferred Securities which has been or is to
be redeemed.

Notice of any redemption will be mailed at least 30 days but not more than
60 days before the Redemption Date to each holder of Trust Securities to be
redeemed at its registered address. Unless the Company defaults in payment of
the redemption price on the Subordinated Debentures, on and after the Redemption
Date interest will cease to accrue on such Subordinated Debentures or portions
thereof (and Distributions will cease to accrue on the related Preferred
Securities or portions thereof) called for redemption.

SUBORDINATION OF THE COMMON SECURITIES

Payment of Distributions on, and the Redemption Price of, the Preferred
Securities and Common Securities, as applicable, will be made pro rata based on
the Liquidation Amount of the Preferred Securities and Common Securities;
provided, however, that if on any Distribution Date or Redemption Date a
Debenture Event of Default has occurred and is continuing, no payment of any
Distribution on, or Redemption Price of, any of the Common Securities, and no
other payment on account of the redemption, liquidation or other acquisition of
such Common Securities, will be made unless payment in full in cash of all
accumulated and unpaid Distributions on all of the outstanding Preferred
Securities for all Distribution periods terminating on or prior thereto, or in
the case of payment of the Redemption Price the full amount of such Redemption
Price on all of the outstanding Preferred Securities then called for redemption,
will have been made or provided for, and all funds available to the Property
Trustee will first be applied to the payment in full in cash of all
Distributions on, or Redemption Price of, the Preferred Securities then due and
payable.

In the case of any Event of Default resulting from a Debenture Event of
Default, the Company as holder of the Common Securities will be deemed to have
waived any right to act with respect to any such Event of Default under the
Trust Agreement until the effect of all such Events of Default with respect to
the Preferred Securities have been cured, waived or otherwise eliminated. Until
any such Events of Default under the Trust Agreement with respect to the
Preferred Securities has been so cured, waived or otherwise eliminated, the
Property Trustee will act solely on behalf of the holders of the Preferred
Securities and not on behalf of the Company, as holder of the Common Securities,
and only the holders of the Preferred Securities will have the right to direct
the Property Trustee to act on their behalf.

LIQUIDATION DISTRIBUTION UPON TERMINATION

The Company will have the right at any time to dissolve, wind-up or
terminate IUB Trust and cause the Subordinated Debentures to be distributed to
the holders of the Preferred Securities. Such right is subject, however, to the
Company having received prior approval of the Federal Reserve if then required
under applicable capital guidelines or policies of the Federal Reserve.

Pursuant to the Trust Agreement, IUB Trust will automatically terminate upon
expiration of its term and will terminate earlier on the first to occur of (i)
certain events of bankruptcy, dissolution or liquidation of the Company, (ii)
the distribution of a Like Amount of the Subordinated Debentures to the holders
of its Trust Securities, if the Company, as depositor, has given written
direction to the Property Trustee to terminate IUB Trust (which direction is
optional and wholly within the discretion of the Company, as depositor), (iii)
redemption of all of the Preferred Securities as described under "--Redemption--

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Mandatory Redemption," or (iv) the entry of an order for the dissolution of IUB
Trust by a court of competent jurisdiction.

If an early termination occurs as described in clause (i), (ii) or (iv) of
the preceding paragraph, IUB Trust will be liquidated by the Trustees as
expeditiously as the Trustees determine to be possible by distributing, after
satisfaction of liabilities to creditors of IUB Trust as provided by applicable
law, to the holders of such Trust Securities a Like Amount of the Subordinated
Debentures, unless such distribution is determined by the Property Trustee not
to be practical, in which event such holders will be entitled to receive out of
the assets of IUB Trust available for distribution to holders, after
satisfaction of liabilities to creditors of IUB Trust as provided by applicable
law, an amount equal to, in the case of holders of Preferred Securities, the
aggregate of the Liquidation Amount plus accrued and unpaid Distributions
thereon to the date of payment (such amount being the "Liquidation
Distribution"). If such Liquidation Distribution can be paid only in part
because IUB Trust has insufficient assets available to pay in full the aggregate
Liquidation Distribution, then the amounts payable directly by IUB Trust on the
Preferred Securities will be paid on a pro rata basis. The Company, as the
holder of the Common Securities, will be entitled to receive distributions upon
any such liquidation pro rata with the holders of the Preferred Securities,
except that, if a Debenture Event of Default has occurred and is continuing, the
Preferred Securities will have a priority over the Common Securities. See
"--Subordination of the Common Securities."

Under current United States Federal income tax law and interpretations and
assuming, as expected, that IUB Trust is treated as a grantor trust, a
distribution of the Subordinated Debentures should not be a taxable event to
holders of the Preferred Securities. Should there be a change in law, a change
in legal interpretation, a Tax Event or other circumstances, however, the
distribution could be a taxable event to holders of the Preferred Securities.
See "Certain Federal Income Tax Consequences--Receipt of Subordinated Debentures
or Cash Upon Liquidation of IUB Trust." If the Company elects neither to redeem
the Subordinated Debentures prior to maturity nor to liquidate IUB Trust and
distribute the Subordinated Debentures to holders of the Preferred Securities,
the Preferred Securities will remain outstanding until the repayment of the
Subordinated Debentures.

If the Company elects to liquidate IUB Trust and thereby causes the
Subordinated Debentures to be distributed to holders of the Preferred Securities
in liquidation of IUB Trust, the Company will continue to have the right to
shorten or extend the maturity of such Subordinated Debentures, subject to
certain conditions. See "Description of the Subordinated Debentures--General."

LIQUIDATION VALUE

The amount of the Liquidation Distribution payable on the Preferred
Securities in the event of any liquidation of IUB Trust is $10 per Preferred
Security plus accrued and unpaid Distributions thereon to the date of payment,
which may be in the form of a distribution of such amount in Subordinated
Debentures, subject to certain exceptions. See "--Liquidation Distribution upon
Termination."

EVENTS OF DEFAULT; NOTICE

Any one of the following events constitutes an event of default under the
Trust Agreement (an "Event of Default") with respect to the Preferred Securities
(whatever the reason for such Event of Default and whether voluntary or
involuntary or effected by operation of law or pursuant to any judgment, decree
or order of any court or any order, rule or regulation of any administrative or
governmental body):

(i) the occurrence of a Debenture Event of Default (see "Description of
the Subordinated Debentures--Debenture Events of Default");

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(ii) default by IUB Trust or the Property Trustee in the payment of any
Distribution when it becomes due and payable, and continuation of such
default for a period of 30 days;

(iii) default by IUB Trust or the Property Trustee in the payment of any
Redemption Price of any Trust Security when it becomes due and payable;

(iv) default in the performance, or breach, in any material respect, of
any covenant or warranty of the Trustees in the Trust Agreement (other than
a covenant or warranty a default in the performance of which or the breach
of which is dealt with in clauses (ii) or (iii) above), and continuation of
such default or breach for a period of 60 days after there has been given,
by registered or certified mail, to the defaulting Trustee(s) by the holders
of at least 25% in aggregate Liquidation Amount of the outstanding Preferred
Securities, a written notice specifying such default or breach and requiring
it to be remedied and stating that such notice is a "Notice of Default"
under the Trust Agreement; or

(v) the occurrence of certain events of bankruptcy or insolvency with
respect to the Property Trustee and the failure by the Company to appoint a
successor Property Trustee within 60 days thereof.

Within five Business Days after the occurrence of any Event of Default
actually known to the Property Trustee, the Property Trustee will transmit
notice of such Event of Default to the holders of the Preferred Securities, the
Administrative Trustees and the Company, as depositor, unless such Event of
Default has been cured or waived. The Company, as depositor, and the
Administrative Trustees are required to file annually with the Property Trustee
a certificate as to whether or not they are in compliance with all the
conditions and covenants applicable to them under the Trust Agreement.

If a Debenture Event of Default has occurred and is continuing, the
Preferred Securities will have a preference over the Common Securities upon
termination of IUB Trust. See "--Liquidation Distribution upon Termination." The
existence of an Event of Default does not entitle the holders of Preferred
Securities to accelerate the maturity thereof.

REMOVAL OF IUB TRUST TRUSTEES

Unless a Debenture Event of Default has occurred and is continuing, any
Trustee may be removed at any time by the holder of the Common Securities. If a
Debenture Event of Default has occurred and is continuing, the Property Trustee
and the Delaware Trustee may be removed at such time by the holders of a
majority in Liquidation Amount of the outstanding Preferred Securities. In no
event, however, will the holders of the Preferred Securities have the right to
vote to appoint, remove or replace the Administrative Trustees, which voting
rights are vested exclusively in the Company as the holder of the Common
Securities. No resignation or removal of a Trustee and no appointment of a
successor trustee will be effective until the acceptance of appointment by the
successor trustee in accordance with the provisions of the Trust Agreement.

CO-TRUSTEES AND SEPARATE PROPERTY TRUSTEE

Unless an Event of Default has occurred and is continuing, at any time or
times, for the purpose of meeting the legal requirements of the Trust Indenture
Act or of any jurisdiction in which any part of the Trust Property (as defined
in the Trust Agreement) may at the time be located, the Company, as the holder
of the Common Securities, will have power to appoint one or more Persons (as
defined in the Trust Agreement) either to act as a co-trustee, jointly with the
Property Trustee, of all or any part of such Trust Property, or to act as
separate trustee of any such Trust Property, in either case with such powers as
may be provided in the instrument of appointment, and to vest in such Person or
Persons in such capacity any property, title, right or power deemed necessary or
desirable, subject to the provisions of the Trust Agreement. In case a Debenture
Event of Default has occurred and is continuing, the Property Trustee alone will
have power to make such appointment.

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MERGER OR CONSOLIDATION OF TRUSTEES

Any Person into which the Property Trustee, the Delaware Trustee or any
Administrative Trustee that is not a natural person may be merged or converted
or with which it may be consolidated, or any Person resulting from any merger,
conversion or consolidation to which such Trustee is a party, or any Person
succeeding to all or substantially all the corporate trust business of such
Trustee, will be the successor of such Trustee under the Trust Agreement,
provided such Person is otherwise qualified and eligible.

MERGERS, CONSOLIDATIONS, AMALGAMATIONS OR REPLACEMENTS OF IUB TRUST

IUB Trust may not merge with or into, consolidate, amalgamate, or be
replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to any Person, except as described below. IUB Trust
may, at the request of the Company, with the consent of the Administrative
Trustees and without the consent of the holders of the Preferred Securities, the
Property Trustee or the Delaware Trustee, merge with or into, consolidate,
amalgamate, or be replaced by or convey, transfer or lease its properties and
assets substantially as an entirety to a trust organized as such under the laws
of any state; provided, that (i) such successor entity either (a) expressly
assumes all of the obligations of IUB Trust with respect to the Preferred
Securities, or (b) substitutes for the Preferred Securities other securities
having substantially the same terms as the Preferred Securities (the "Successor
Securities") so long as the Successor Securities rank the same as the Preferred
Securities rank in priority with respect to distributions and payments upon
liquidation, redemption and otherwise, (ii) the Company expressly appoints a
trustee of such successor entity possessing the same powers and duties as the
Property Trustee in its capacity as the holder of the Subordinated Debentures,
(iii) the Successor Securities are listed, or any Successor Securities will be
listed upon notification of issuance, on any national securities exchange or
other organization on which the Preferred Securities are then listed (including,
if applicable, the Nasdaq National Market), if any, (iv) such merger,
consolidation, amalgamation, replacement, conveyance, transfer or lease does not
adversely affect the rights, preferences and privileges of the holders of the
Preferred Securities (including any Successor Securities) in any material
respect, (v) prior to such merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease, the Company has received an opinion from
independent counsel to the effect that (a) such merger, consolidation,
amalgamation, replacement, conveyance, transfer or lease does not adversely
affect the rights, preferences and privileges of the holders of the Preferred
Securities (including any Successor Securities) in any material respect, and (b)
following such merger, consolidation, amalgamation, replacement, conveyance,
transfer or lease, neither IUB Trust nor such successor entity will be required
to register as an "investment company" under the Investment Company Act, and
(vi) the Company owns all of the common securities of such successor entity and
guarantees the obligations of such successor entity under the Successor
Securities at least to the extent provided by the Guarantee, the Indenture, the
Subordinated Debentures, the Trust Agreement and the Expense Agreement.
Notwithstanding the foregoing, IUB Trust will not, except with the consent of
holders of 100% in Liquidation Amount of the Preferred Securities, consolidate,
amalgamate, merge with or into, or be replaced by or convey, transfer or lease
its properties and assets substantially as an entirety to any other Person or
permit any other Person to consolidate, amalgamate, merge with or into, or
replace it if such consolidation, amalgamation, merger, replacement, conveyance,
transfer or lease would cause IUB Trust or the successor entity to be classified
as other than a grantor trust for United States Federal income tax purposes.

VOTING RIGHTS; AMENDMENT OF TRUST AGREEMENT

Except as provided below and under "Description of the Guarantee--Amendments
and Assignment" and as otherwise required by the Trust Act and the Trust
Agreement, the holders of the Preferred Securities will have no voting rights.

The Trust Agreement may be amended from time to time by the Company, the
Property Trustee and the Administrative Trustees, without the consent of the
holders of the Preferred Securities (i) with respect to acceptance of
appointment by a successor trustee, (ii) to cure any ambiguity, correct or
supplement any

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provisions in such Trust Agreement that may be inconsistent with any other
provision, or to make any other provisions with respect to matters or questions
arising under the Trust Agreement (provided such amendment is not inconsistent
with the other provisions of the Trust Agreement), (iii) to modify, eliminate or
add to any provisions of the Trust Agreement to such extent as is necessary to
ensure that IUB Trust will be classified for United States Federal income tax
purposes as a grantor trust at all times that any Trust Securities are
outstanding or to ensure that IUB Trust will not be required to register as an
"investment company" under the Investment Company Act, or (iv) to reduce or
increase the Liquidation Amount per Trust Security and simultaneously to
increase or reduce the number of Trust Securities issued and outstanding solely
for the purpose of maintaining the eligibility of the Preferred Securities for
listing or quotation on any national securities exchange or other organization
on which the Preferred Securities are then listed or quoted (including, if
applicable, the Nasdaq National Market); provided, however, that in the case of
clause (ii), such action may not adversely affect in any material respect the
interests of any holder of Trust Securities and that, in the case of clause
(iv), the aggregate Liquidation Amount of the Trust Securities outstanding, upon
completion of any such reduction or increase, must be the same as the aggregate
Liquidation Amount of the Trust Securities outstanding immediately prior to any
such reduction or increase, and any amendments of such Trust Agreement will
become effective when notice thereof is given to the holders of Trust Securities
(or, in the case of an amendment pursuant to clause (iv), as of the date
specified in the notice). The Trust Agreement may be amended by the Trustees and
the Company with (i) the consent of holders representing not less than a
majority in the aggregate Liquidation Amount of the outstanding Trust
Securities, and (ii) receipt by the Trustees of an opinion of counsel to the
effect that such amendment or the exercise of any power granted to the Trustees
in accordance with such amendment will not affect IUB Trust's status as a
grantor trust for United States Federal income tax purposes or IUB Trust's
exemption from status as an "investment company" under the Investment Company
Act. Notwithstanding anything in this paragraph to the contrary, without the
consent of each holder of Trust Securities, the Trust Agreement may not be
amended to (a) change the amount or timing of any Distribution on the Trust
Securities or otherwise adversely affect the amount of any Distribution required
to be made in respect of the Trust Securities as of a specified date, or (b)
restrict the right of a holder of Trust Securities to institute suit for the
enforcement of any such payment on or after such date.

The Trustees will not, so long as any Subordinated Debentures are held by
the Property Trustee, (i) direct the time, method and place of conducting any
proceeding for any remedy available to the Debenture Trustee, or executing any
trust or power conferred on the Property Trustee with respect to the
Subordinated Debentures, (ii) waive any past default that is waivable under the
Indenture, (iii) exercise any right to rescind or annul a declaration that the
principal of all the Subordinated Debentures will be due and payable, or (iv)
consent to any amendment, modification or termination of the Indenture or the
Subordinated Debentures, where such consent is required, without, in each case,
obtaining the prior approval of the holders of a majority in aggregate
Liquidation Amount of all outstanding Preferred Securities; provided, however,
that where a consent under the Indenture requires the consent of each holder of
Subordinated Debentures affected thereby, no such consent will be given by the
Property Trustee without the prior consent of each holder of the Preferred
Securities. The Trustees may not revoke any action previously authorized or
approved by a vote of the holders of the Preferred Securities except by
subsequent vote of the holders of the Preferred Securities. The Property Trustee
will notify each holder of Preferred Securities of any notice of default with
respect to the Subordinated Debentures. In addition to obtaining the foregoing
approvals of the holders of the Preferred Securities, prior to taking any of the
foregoing actions, the Trustees must obtain an opinion of counsel experienced in
such matters to the effect that IUB Trust will not be classified as an
association taxable as a corporation for United States Federal income tax
purposes on account of such action.

Any required approval of holders of Preferred Securities may be given at a
meeting of holders of Preferred Securities convened for such purpose or pursuant
to written consent. The Property Trustee will cause a notice of any meeting at
which holders of Preferred Securities are entitled to vote, or of any matter

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upon which action by written consent of such holders is to be taken, to be given
to each holder of record of Preferred Securities in the manner set forth in the
Trust Agreement.

No vote or consent of the holders of Preferred Securities will be required
for IUB Trust to redeem and cancel its Preferred Securities in accordance with
the Trust Agreement.

Notwithstanding the fact that holders of Preferred Securities are entitled
to vote or consent under any of the circumstances described above, any of the
Preferred Securities that are owned by the Company, the Trustees or any
affiliate of the Company or any Trustee will, for purposes of such vote or
consent, be treated as if they were not outstanding.

PAYMENT AND PAYING AGENCY

Payments in respect of the Preferred Securities will be made by check mailed
to the address of the holder entitled thereto as such address will appear on the
register of holders of the Preferred Securities. The paying agent for the
Preferred Securities will initially be the Property Trustee and any co-paying
agent chosen by the Property Trustee and acceptable to the Administrative
Trustees and the Company. The paying agent for the Preferred Securities may
resign as paying agent upon 30 days' written notice to the Property Trustee and
the Company. In the event that the Property Trustee no longer is the paying
agent for the Preferred Securities, the Administrative Trustees will appoint a
successor (which must be a bank or trust company acceptable to the
Administrative Trustees and the Company) to act as paying agent.

REGISTRAR AND TRANSFER AGENT

The Property Trustee will act as the registrar and the transfer agent for
the Preferred Securities. Registration of transfers of Preferred Securities will
be effected without charge by or on behalf of IUB Trust, but upon payment of any
tax or other governmental charges that may be imposed in connection with any
transfer or exchange. IUB Trust will not be required to register or cause to be
registered the transfer of Preferred Securities after such Preferred Securities
have been called for redemption.

INFORMATION CONCERNING THE PROPERTY TRUSTEE

The Property Trustee, other than upon the occurrence and during the
continuance of an Event of Default, undertakes to perform only such duties as
are specifically set forth in the Trust Agreement and, upon the occurrence and
during the continuance of an Event of Default, must exercise the same degree of
care and skill as a prudent person would exercise or use in the conduct of his
or her own affairs. Subject to this provision, the Property Trustee is under no
obligation to exercise any of the powers vested in it by the Trust Agreement at
the request of any holder of Preferred Securities unless it is offered
reasonable indemnity against the costs, expenses and liabilities that might be
incurred thereby. If no Event of Default has occurred and is continuing and the
Property Trustee is required to decide between alternative causes of action,
construe ambiguous provisions in the Trust Agreement or is unsure of the
application of any provision of the Trust Agreement, and the matter is not one
on which holders of Preferred Securities are entitled under the Trust Agreement
to vote, then the Property Trustee will take such action as is directed by the
Company and if not so directed, will take such action as it deems advisable and
in the best interests of the holders of the Trust Securities and will have no
liability except for its own bad faith, negligence or willful misconduct.

MISCELLANEOUS

The Administrative Trustees are authorized and directed to conduct the
affairs of and to operate IUB Trust in such a way that IUB Trust will not be
deemed to be an "investment company" required to be registered under the
Investment Company Act or classified as an association taxable as a corporation
for United States Federal income tax purposes and so that the Subordinated
Debentures will be treated as indebtedness of the Company for United States
Federal income tax purposes. The Company and the

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Administrative Trustees are authorized, in this connection, to take any action,
not inconsistent with applicable law, the certificate of trust of IUB Trust or
the Trust Agreement, that the Company and the Administrative Trustees determine
in their discretion to be necessary or desirable for such purposes.

Holders of the Preferred Securities have no preemptive or similar rights.

The Trust Agreement and the Preferred Securities will be governed by, and
construed in accordance with, the internal laws of the State of Delaware.

DESCRIPTION OF THE SUBORDINATED DEBENTURES

Concurrently with the issuance of the Preferred Securities, IUB Trust will
invest the proceeds thereof, together with the consideration paid by the Company
for the Common Securities, in the Subordinated Debentures issued by the Company.
The Subordinated Debentures will be issued as unsecured debt under the
Indenture, to be dated as of , 1997 (the "Indenture"), between the Company
and State Street Bank and Trust Company, as trustee (the "Debenture Trustee").
The Indenture will be qualified as an indenture under the Trust Indenture Act.
The following summary of the material terms and provisions of the Subordinated
Debentures and the Indenture does not purport to be complete and is subject to,
and is qualified in its entirety by reference to, the Indenture and the Trust
Indenture Act. Wherever particular defined terms of the Indenture are referred
to, but not defined herein, such defined terms are incorporated herein by
reference. The form of the Indenture has been filed as an exhibit to the
Registration Statement of which this Prospectus forms a part.

GENERAL

The Subordinated Debentures will be limited in aggregate principal amount to
approximately $19,072,170 (or $21,932,990 if the option described under the
heading "Underwriting" is exercised by the Underwriter), such amount being the
sum of the aggregate stated Liquidation Amount of the Trust Securities. The
Subordinated Debentures will bear interest at the annual rate of % of the
principal amount thereof, payable quarterly in arrears on March 31, June 30,
September 30, and December 31 of each year (each, an "Interest Payment Date")
beginning , 1997, to the Person (as defined in the Indenture) in whose
name each Subordinated Debenture is registered, subject to certain exceptions,
at the close of business on the fifteenth day of the last month of the calendar
quarter. It is anticipated that, until the liquidation, of IUB Trust, the
Subordinated Debentures will be held in the name of the Property Trustee in
trust for the benefit of the holders of the Preferred Securities. The amount of
interest payable for any period will be computed on the basis of a 360-day year
of twelve 30-day months. In the event that any date on which interest is payable
on the Subordinated Debentures is not a Business Day, then payment of the
interest payable on such date will be made on the next succeeding day that is a
Business Day (and without any interest or other payment in respect of any such
delay), with the same force and effect as if made on the date such payment was
originally payable. Accrued interest that is not paid on the applicable Interest
Payment Date will bear additional interest on the amount thereof (to the extent
permitted by law) at the rate per annum of % thereof, compounded quarterly.
The term "interest," as used herein, includes quarterly interest payments,
interest on quarterly interest payments not paid on the applicable Interest
Payment Date and Additional Payments, as applicable.

The Subordinated Debentures will mature on December 31, 2027 (such date, as
it may be shortened or extended as hereinafter described, the "Stated
Maturity"). Such date may be shortened at any time by the Company to any date
not earlier than December 31, 2002, subject to the Company having received prior
approval of the Federal Reserve if then required under applicable capital
guidelines or policies of the Federal Reserve. Such date may also be extended at
any time at the election of the Company but in no event to a date later than
December 31, 2036, provided that at the time such election is made and at the
time of extension (i) the Company is not in bankruptcy, otherwise insolvent or
in liquidation, (ii) the Company is not in default in the payment of any
interest or principal on the Subordinated Debentures, (iii) IUB Trust is not in
arrears on payments of Distributions on the Preferred Securities and no deferred

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Distributions are accumulated, and (iv) the Company has a Senior Debt rating of
investment grade. In the event that the Company elects to shorten or extend the
Stated Maturity of the Subordinated Debentures, it will give notice thereof to
the Debenture Trustee, IUB Trust and to the holders of the Subordinated
Debentures no more than 180 days and no less than 90 days prior to the
effectiveness thereof. The Company will not have the right to purchase the
Subordinated Debentures, in whole or in part, from IUB Trust until after
December 31, 2002, except if a Tax Event, a Capital Treatment Event or an
Investment Company Event has occurred and is continuing.

The Subordinated Debentures will be unsecured and will rank junior and be
subordinate in right of payment to all Senior Debt, Subordinated Debt and
Additional Senior Obligations of the Company. Because the Company is a holding
company, the right of the Company to participate in any distribution of assets
of any Subsidiary Bank, upon any such Subsidiary Bank's liquidation or
reorganization or otherwise (and thus the ability of holders of the Subordinated
Debentures to benefit indirectly from such distribution), is subject to the
prior claim of creditors of such Subsidiary Bank, except to the extent that the
Company may itself be recognized as a creditor of such Subsidiary Bank. The
Subordinated Debentures will, therefore, be effectively subordinated to all
existing and future liabilities of the Subsidiary Banks, and holders of
Subordinated Debentures should look only to the assets of the Company for
payments on the Subordinated Debentures. The Indenture does not limit the
incurrence or issuance of other secured or unsecured debt of the Company,
including Senior Debt, Subordinated Debt and Additional Senior Obligations,
whether under the Indenture or any existing indenture or other indenture that
the Company may enter into in the future or otherwise. See "--Subordination."

The Indenture does not contain provisions that afford holders of the
Subordinated Debentures protection in the event of a highly leveraged
transaction or other similar transaction involving the Company that may
adversely affect such holders.

OPTION TO EXTEND INTEREST PAYMENT PERIOD

The Company has the right under the Indenture at any time during the term of
the Subordinated Debentures, so long as no Debenture Event of Default has
occurred and is continuing, to defer the payment of interest at any time, or
from time to time (each, an "Extension Period"). The right to defer the payment
of interest on the Subordinated Debentures is limited, however, to a period, in
each instance, not exceeding 20 consecutive quarters and no Extension Period may
extend beyond the Stated Maturity of the Subordinated Debentures. At the end of
each Extension Period, the Company must pay all interest then accrued and unpaid
(together with interest thereon at the annual rate of %, compounded
quarterly, to the extent permitted by applicable law). During an Extension
Period, interest will continue to accrue and holders of Subordinated Debentures
(or the holders of Preferred Securities if such securities are then outstanding)
will be required to accrue and recognize income for United States Federal income
tax purposes. See "Certain Federal Income Tax Consequences--Potential Extension
of Interest Payment Period and Original Issue Discount."

During any such Extension Period, the Company may not (i) declare or pay any
dividends or distributions on, or redeem, purchase, acquire or make a
liquidation payment with respect to, any of the Company's capital stock, (ii)
make any payment of principal, interest or premium, if any, on or repay,
repurchase or redeem any debt securities of the Company that rank PARI PASSU
with or junior in interest to the Subordinated Debentures or make any guarantee
payments with respect to any guarantee by the Company of the debt securities of
any subsidiary of the Company if such guarantee ranks PARI PASSU or junior in
interest to the Subordinated Debentures (other than payments under the
Guarantee), or (iii) redeem, purchase or acquire less than all of the
Subordinated Debentures or any of the Preferred Securities. Prior to the
termination of any such Extension Period, the Company may further defer the
payment of interest; provided that no Extension Period may exceed 20 consecutive
quarters or extend beyond the Stated Maturity of the Subordinated Debentures.
Upon the termination of any such Extension Period and the payment of all amounts
then due on any Interest Payment Date, the Company may elect to

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begin a new Extension Period subject to the above requirements. No interest will
be due and payable during an Extension Period, except at the end thereof. The
Company has no present intention of exercising its rights to defer payments of
interest on the Subordinated Debentures. The Company must give the Property
Trustee, the Administrative Trustees and the Debenture Trustee notice of its
election of such Extension Period at least two Business Days prior to the
earlier of (i) the next succeeding date on which Distributions on the Trust
Securities would have been payable except for the election to begin such
Extension Period, or (ii) the date the Trust is required to give notice of the
record date, or the date such Distributions are payable, to the Nasdaq National
Market (or other applicable self-regulatory organization) or to holders of the
Preferred Securities, but in any event at least one Business Day before such
record date. Subject to the foregoing, there is no limitation on the number of
times that the Company may elect to begin an Extension Period.

ADDITIONAL SUMS

If IUB Trust or the Property Trustee is required to pay any additional
taxes, duties or other governmental charges as a result of the occurrence of a
Tax Event, the Company will pay to the holders of the Subordinated Debentures as
additional amounts (referred to herein as "Additional Payments") on the
Subordinated Debentures such additional amounts as may be required so that the
net amounts received and retained by IUB Trust after paying any such additional
taxes, duties or other governmental charges will not be less than the amounts
IUB Trust would have received had such additional taxes, duties or other
governmental charges not been imposed.

REDEMPTION OR EXCHANGE

The Company will have the right to redeem the Subordinated Debentures prior
to maturity (i) on or after December 31, 2002, in whole at any time or in part
from time to time, or (ii) at any time in whole (but not in part), within 180
days following the occurrence of a Tax Event, a Capital Treatment Event or an
Investment Company Event, in each case at a redemption price equal to the
accrued and unpaid interest on the Subordinated Debentures so redeemed to the
date fixed for redemption, plus 100% of the principal amount thereof. Any such
redemption prior to the Stated Maturity will be subject to prior approval of the
Federal Reserve if then required under applicable capital guidelines or policies
of the Federal Reserve.

"Tax Event" means the receipt by IUB Trust of an opinion of counsel
experienced in such matters to the effect that, as a result of any amendment to,
or change (including any announced prospective change) in, the laws (or any
regulations thereunder) of the United States or any political subdivision or
taxing authority thereof or therein, or as a result of any official
administrative pronouncement or judicial decision interpreting or applying such
laws or regulations, which amendment or change is effective or which
pronouncement or decision is announced on or after the date of issuance of the
Preferred Securities under the Trust Agreement, there is more than an
insubstantial risk that (i) interest payable by the Company on the Subordinated
Debentures is not, or within 90 days of the date of such opinion will not be,
deductible by the Company, in whole or in part, for United States Federal income
tax purposes, (ii) IUB Trust is, or will be within 90 days after the date of
such opinion of counsel, subject to United States Federal income tax with
respect to income received or accrued on the Subordinated Debentures, or (iii)
IUB Trust is, or will be within 90 days after the date of such opinion of
counsel, subject to more than a de minimis amount of other taxes, duties,
assessments or other governmental charges. The Company must request and receive
an opinion with regard to such matters within a reasonable period of time after
it becomes aware of the possible occurrence of any of the events described in
clauses (i) through (iii) above.

"Capital Treatment Event" means the receipt by IUB Trust of an opinion of
counsel experienced in such matters to the effect that, as a result of any
amendment to or any change (including any announced prospective change) in the
laws (or any regulations thereunder) of the United States or any political
subdivision thereof or therein, or as a result of any official administrative
pronouncement or judicial decision interpreting or applying such laws or
regulations, which amendment or change is effective or such

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proposed change, pronouncement or decision is announced on or after the date of
issuance of the Preferred Securities under the Trust Agreement, there is more
than an insubstantial risk of impairment of the Company's ability to treat the
aggregate Liquidation Amount of the Preferred Securities (or any substantial
portion thereof) as "Tier 1 capital" (or the then equivalent thereof) for
purposes of the capital adequacy guidelines of the Federal Reserve, as then
applicable to the Company, provided, however, that the inability of the Company
to treat all or any portion of the Liquidation Amount of the Preferred
Securities as Tier 1 capital shall not constitute the basis for a Capital
Treatment Event if such inability results from the Company having cumulative
preferred capital in excess of the amount which may qualify for treatment as
Tier 1 capital under applicable capital adequacy guidelines of the Federal
Reserve.

"Investment Company Event" means the receipt by IUB Trust of an opinion of
counsel experienced in such matters to the effect that, as a result of the
occurrence of a change in law or regulation or a change in interpretation or
application of law or regulation by any legislative body, court, governmental
agency or regulatory authority, IUB Trust is or will be considered an
"investment company" that is required to be registered under the Investment
Company Act, which change becomes effective on or after the date of original
issuance of the Preferred Securities.

Notice of any redemption will be mailed at least 30 days but not more than
60 days before the redemption date to each holder of Subordinated Debentures to
be redeemed at its registered address. Unless the Company defaults in payment of
the redemption price for the Subordinated Debentures, on and after the
redemption date interest ceases to accrue on such Subordinated Debentures or
portions thereof called for redemption.

The Subordinated Debentures will not be subject to any sinking fund.

DISTRIBUTION UPON LIQUIDATION

As described under "Description of the Preferred Securities--Liquidation
Distribution upon Termination," under certain circumstances involving the
termination of IUB Trust, the Subordinated Debentures may be distributed to the
holders of the Preferred Securities in liquidation of IUB Trust after
satisfaction of liabilities to creditors of IUB Trust as provided by applicable
law. Any such distribution will be subject to receipt of prior approval by the
Federal Reserve if then required under applicable policies or guidelines of the
Federal Reserve. If the Subordinated Debentures are distributed to the holders
of Preferred Securities upon the liquidation of IUB Trust, the Company will use
its best efforts to list the Subordinated Debentures on the Nasdaq National
Market or such stock exchanges, if any, on which the Preferred Securities are
then listed. There can be no assurance as to the market price of any
Subordinated Debentures that may be distributed to the holders of Preferred
Securities.

RESTRICTIONS ON CERTAIN PAYMENTS

If at any time (i) there has occurred a Debenture Event of Default, (ii) the
Company is in default with respect to its obligations under the Guarantee, or
(iii) the Company has given notice of its election of an Extension Period as
provided in the Indenture with respect to the Subordinated Debentures and has
not rescinded such notice, or such Extension Period, or any extension thereof,
is continuing, the Company will not (1) declare or pay any dividends or
distributions on, or redeem, purchase, acquire, or make a liquidation payment
with respect to, any of the Company's capital stock, (2) make any payment of
principal, interest or premium, if any, on or repay or repurchase or redeem any
debt securities of the Company that rank PARI PASSU with or junior in interest
to the Subordinated Debentures or make any guarantee payments with respect to
any guarantee by the Company of the debt securities of any subsidiary of the
Company if such guarantee ranks PARI PASSU or junior in interest to the
Subordinated Debentures (other than payments under the Guarantee), or (3)
redeem, purchase or acquire less than all of the Subordinated Debentures or any
of the Preferred Securities.

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SUBORDINATION

The Indenture provides that the Subordinated Debentures are subordinated and
junior in right of payment to all Senior Debt, Subordinated Debt and Additional
Senior Obligations of the Company. Upon any payment or distribution of assets to
creditors upon any liquidation, dissolution, winding up, reorganization,
assignment for the benefit of creditors, marshaling of assets or any bankruptcy,
insolvency, debt restructuring or similar proceedings in connection with any
insolvency or bankruptcy proceedings of the Company, the holders of Senior Debt,
Subordinated Debt and Additional Senior Obligations of the Company will first be
entitled to receive payment in full of principal of (and premium, if any) and
interest, if any, on such Senior Debt, Subordinated Debt and Additional Senior
Obligations of the Company before the holders of Subordinated Debentures will be
entitled to receive or retain any payment in respect of the principal of or
interest on the Subordinated Debentures.

In the event of the acceleration of the maturity of any Subordinated
Debentures, the holders of all Senior Debt, Subordinated Debt and Additional
Senior Obligations of the Company outstanding at the time of such acceleration
will first be entitled to receive payment in full of all amounts due thereon
(including any amounts due upon acceleration) before the holders of the
Subordinated Debentures will be entitled to receive or retain any payment in
respect of the principal of or interest on the Subordinated Debentures.

No payments on account of principal or interest in respect of the
Subordinated Debentures may be made if there has occurred and is continuing a
default in any payment with respect to Senior Debt, Subordinated Debt or
Additional Senior Obligations of the Company or an event of default with respect
to any Senior Debt, Subordinated Debt or Additional Senior Obligations of the
Company resulting in the acceleration of the maturity thereof, or if any
judicial proceeding is pending with respect to any such default.

"Debt" means, with respect to any Person, whether recourse is to all or a
portion of the assets of such Person and whether or not contingent, (i) every
obligation of such person for money borrowed, (ii) every obligation of such
Person evidenced by bonds, debentures, notes or other similar instruments,
including obligations incurred in connection with the acquisition of property,
assets or businesses, (iii) every reimbursement obligation of such Person with
respect to letters of credit, bankers' acceptances or similar facilities issued
for the account of such Person, (iv) every obligation of such Person issued or
assumed as the deferred purchase price of property or services (but excluding
trade accounts payable or accrued liabilities arising in the ordinary course of
business), (v) every capital lease obligation of such Person, and (vi) and every
obligation of the type referred to in clauses (i) through (v) of another Person
and all dividends of another Person the payment of which, in either case, such
Person has guaranteed or is responsible or liable, directly or indirectly, as
obligor or otherwise.

"Senior Debt" means, with respect to the Company, the principal of (and
premium, if any) and interest, if any (including interest accruing on or after
the filing of any petition in bankruptcy or for reorganization relating to the
Company whether or not such claim for post-petition interest is allowed in such
proceeding), on Debt, whether incurred on or prior to the date of the Indenture
or thereafter incurred, unless, in the instrument creating or evidencing the
same or pursuant to which the same is outstanding, it is provided that such
obligations are not superior in right of payment to the Subordinated Debentures
or to other Debt which is PARI PASSU with, or subordinated to, the Subordinated
Debentures; provided, however, that Senior Debt will not be deemed to include
(i) any Debt of the Company which when incurred and without respect to any
election under section 1111(b) of the United States Bankruptcy Code of 1978, as
amended, was without recourse to the Company, (ii) any Debt of the Company to
any of its subsidiaries, (iii) any Debt to any employee of the Company, (iv) any
Debt which by its terms is subordinated to trade accounts payable or accrued
liabilities arising in the ordinary course of business to the extent that
payments made to the holders of such Debt by the holders of the Subordinated
Debentures as a result of the subordination provisions of the Indenture would be
greater than they otherwise would have been as a result of any obligation of
such holders to pay amounts over to the obligees on such trade accounts payable
or accrued liabilities arising in the ordinary course of business as a result of
subordination provisions to which such Debt is subject, and (v) Debt which
constitutes Subordinated Debt.

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"Subordinated Debt" means, with respect to the Company, the principal of
(and premium, if any) and interest, if any (including interest accruing on or
after the filing of any petition in bankruptcy or for reorganization relating to
the Company whether or not such claim for post-petition interest is allowed in
such proceeding), on Debt, whether incurred on or prior to the date of the
Indenture or thereafter incurred, which is by its terms expressly provided to be
junior and subordinate to other Debt of the Company (other than the Subordinated
Debentures).

"Additional Senior Obligations" means, with respect to the Company, all
indebtedness, whether incurred on or prior to the date of the Indenture or
thereafter incurred, for claims in respect of derivative products such as
interest and foreign exchange rate contracts, commodity contracts and similar
arrangements; provided, however, that Additional Senior Obligations do not
include claims in respect of Senior Debt or Subordinated Debt or obligations
which, by their terms, are expressly stated to be not superior in right of
payment to the Subordinated Debentures or to rank PARI PASSU in right of payment
with the Subordinated Debentures. "Claim," as used herein, has the meaning
assigned thereto in Section 101(4) of the United States Bankruptcy Code of 1978,
as amended.

The Indenture places no limitation on the amount of additional Senior Debt,
Subordinated Debt or Additional Senior Obligations that may be incurred by the
Company. The Company expects from time to time to incur additional indebtedness
constituting Senior Debt, Subordinated Debt and Additional Senior Obligations.
As of September 30, 1997, the Company had aggregate Senior Debt, Subordinated
Debt and Additional Senior Obligations of approximately $4.6 million. Because
the Company is a holding company, the Subordinated Debentures are effectively
subordinated to all existing and future liabilities of the Company subsidiaries,
including obligations to depositors of Union Bank, Regional Bank and any other
bank that may become a subsidiary of the Company.

PAYMENT AND PAYING AGENTS

Payment of principal of and any interest on the Subordinated Debentures will
be made at the office of the Debenture Trustee in Boston, Massachusetts, except
that, at the option of the Company, payment of any interest may be made (i) by
check mailed to the address of the Person entitled thereto as such address
appears in the register of holders of the Subordinated Debentures, or (ii) by
transfer to an account maintained by the Person entitled thereto as specified in
the register of holders of the Subordinated Debentures, provided that proper
transfer instructions have been received by the regular record date. Payment of
any interest on Subordinated Debentures will be made to the Person in whose name
such Subordinated Debenture is registered at the close of business on the
regular record date for such interest, except in the case of defaulted interest.
The Company may at any time designate additional paying agents for the
Subordinated Debentures or rescind the designation of any paying agent for the
Subordinated Debentures; however, the Company will at all times be required to
maintain a paying agent in Boston, Massachusetts and each place of payment for
the Subordinated Debentures.

Any moneys deposited with the Debenture Trustee or any paying agent for the
Subordinated Debentures, or then held by the Company in trust, for the payment
of the principal of or interest on the Subordinated Debentures and remaining
unclaimed for two years after such principal or interest has become due and
payable will be repaid to the Company on May 31 of each year or (if then held in
trust by the Company) will be discharged from such trust and the holder of such
Subordinated Debenture will thereafter look, as a general unsecured creditor,
only to the Company for payment thereof.

REGISTRAR AND TRANSFER AGENT

The Debenture Trustee will act as the registrar and the transfer agent for
the Subordinated Debentures. Subordinated Debentures may be presented for
registration of transfer (with the form of transfer endorsed thereon, or a
satisfactory written instrument of transfer, duly executed), at the office of
the registrar in Boston, Massachusetts. The Company may at any time rescind the
designation of any such transfer agent or approve a change in the location
through which any such transfer agent acts. The Company may at any time
designate additional transfer agents with respect to the Subordinated
Debentures. In the event of any redemption, neither the Company nor the
Debenture Trustee will be required to

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(i) issue, register the transfer of or exchange Subordinated Debentures during a
period beginning at the opening of business 15 days before the day of selection
for redemption of Subordinated Debentures and ending at the close of business on
the day of mailing of the relevant notice of redemption, or (ii) transfer or
exchange any Subordinated Debentures so selected for redemption, except, in the
case of any Subordinated Debentures being redeemed in part, any portion thereof
not to be redeemed.

MODIFICATION OF INDENTURE

The Company and the Debenture Trustee may, from time to time without the
consent of the holders of the Subordinated Debentures, amend, waive or
supplement the Indenture for specified purposes, including, among other things,
curing ambiguities, defects or inconsistencies and qualifying, or maintaining
the qualification of, the Indenture under the Trust Indenture Act. The Indenture
contains provisions permitting the Company and the Debenture Trustee, with the
consent of the holders of not less than a majority in principal amount of the
outstanding Subordinated Debentures, to modify the Indenture; provided, that no
such modification may, without the consent of the holder of each outstanding
Subordinated Debenture affected by such proposed modification, (i) extend the
fixed maturity of the Subordinated Debentures, or reduce the principal amount
thereof, or reduce the rate or extend the time of payment of interest thereon,
or (ii) reduce the percentage of principal amount of Subordinated Debentures,
the holders of which are required to consent to any such modification of the
Indenture; provided that so long as any of the Preferred Securities remain
outstanding, no such modification may be made that requires the consent of the
holders of the Subordinated Debentures, and no termination of the Indenture may
occur, and no waiver of any Debenture Event of Default may be effective, without
the prior consent of the holders of at least a majority of the aggregate
Liquidation Amount of the Preferred Securities and that if the consent of the
holder of each Subordinated Debenture is required, such modification will not be
effective until each holder of Trust Securities has consented thereto.

DEBENTURE EVENTS OF DEFAULT

The Indenture provides that any one or more of the following described
events with respect to the Subordinated Debentures that has occurred and is
continuing constitutes an event of default (each, a "Debenture Event of
Default") with respect to the Subordinated Debentures:

(i) failure for 30 days to pay any interest on the Subordinated
Debentures, when due (subject to the deferral of any due date in the case of
an Extension Period);

(ii) failure to pay any principal on the Subordinated Debentures when
due whether at maturity, upon redemption by declaration or otherwise;

(iii) failure to observe or perform in any material respect certain other
covenants contained in the Indenture for 90 days after written notice to the
Company from the Debenture Trustee or the holders of at least 25% in
aggregate outstanding principal amount of the Subordinated Debentures; or

(iv) certain events in bankruptcy, insolvency or reorganization of the
Company.

The holders of a majority in aggregate outstanding principal amount of the
Subordinated Debentures have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Debenture Trustee. The
Debenture Trustee, or the holders of not less than 25% in aggregate outstanding
principal amount of the Subordinated Debentures, may declare the principal due
and payable immediately upon a Debenture Event of Default. The holders of a
majority in aggregate outstanding principal amount of the Subordinated
Debentures may annul such declaration and waive the default if the default
(other than the non-payment of the principal of the Subordinated Debentures
which has become due solely by such acceleration) has been cured and a sum
sufficient to pay all matured installments of interest and principal due
otherwise than by acceleration has been deposited with the Debenture Trustee.
Should the holders of the Subordinated Debentures fail to annul such declaration
and waive such default, the holders of a majority in aggregate Liquidation
Amount of the Preferred Securities will have such right.

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The Company is required to file annually with the Debenture Trustee a
certificate as to whether or not the Company is in compliance with all the
conditions and covenants applicable to it under the Indenture.

If a Debenture Event of Default has occurred and is continuing, the Property
Trustee will have the right to declare the principal of and the interest on such
Subordinated Debentures, and any other amounts payable under the Indenture, to
be forthwith due and payable and to enforce its other rights as a creditor with
respect to such Subordinated Debentures.

ENFORCEMENT OF CERTAIN RIGHTS BY HOLDERS OF THE PREFERRED SECURITIES

If a Debenture Event of Default has occurred and is continuing and such
event is attributable to the failure of the Company to pay interest on or
principal of the Subordinated Debentures on the payment date on which such
payment is due and payable, then a holder of Preferred Securities may institute
a legal proceeding directly against the Company for enforcement of payment to
such holder of the principal of or interest on such Subordinated Debentures
having a principal amount equal to the aggregate Liquidation Amount of the
Preferred Securities of such holder (a "Direct Action"). In connection with such
Direct Action, the Company will have a right of set-off under the Indenture to
the extent of any payment made by the Company to such holder of Preferred
Securities in the Direct Action. The Company may not amend the Indenture to
remove the foregoing right to bring a Direct Action without the prior written
consent of the holders of all of the Preferred Securities. If the right to bring
a Direct Action is removed, IUB Trust may become subject to the reporting
obligations under the Exchange Act. The Company has the right under the
Indenture to set-off any payment made to such holder of Preferred Securities by
the Company in connection with a Direct Action.

The holders of the Preferred Securities will not be able to exercise
directly any remedies, other than those set forth in the preceding paragraph,
available to the holders of the Subordinated Debentures unless there has been an
Event of Default under the Trust Agreement. See "Description of the Preferred
Securities--Events of Default; Notice."

CONSOLIDATION, MERGER, SALE OF ASSETS AND OTHER TRANSACTIONS

The Company may not consolidate with or merge into any other Person or
convey or transfer its properties and assets substantially as an entirety to any
Person, and any Person may not consolidate with or merge into the Company or
sell, convey, transfer or otherwise dispose of its properties and assets
substantially as an entirety to the Company, unless (i) in the event the Company
consolidates with or merges into another Person or conveys or transfers its
properties and assets substantially as an entirety to any Person, the successor
Person is organized under the laws of the United States or any State or the
District of Columbia, and such successor Person expressly assumes by
supplemental indenture the Company's obligations on the Subordinated Debentures,
(ii) immediately after giving effect thereto, no Debenture Event of Default, and
no event which, after notice or lapse of time or both, would become a Debenture
Event of Default, has occurred and is continuing, and (iii) certain other
conditions as prescribed in the Indenture are met.

SATISFACTION AND DISCHARGE

The Indenture will cease to be of further effect (except as to the Company's
obligations to pay certain sums due pursuant to the Indenture and to provide
certain officers' certificates and opinions of counsel described therein) and
the Company will be deemed to have satisfied and discharged the Indenture when,
among other things, all Subordinated Debentures not previously delivered to the
Debenture Trustee for cancellation (i) have become due and payable, or (ii) will
become due and payable at their Stated Maturity within one year or are to be
called for redemption within one year, and the Company deposits or causes to be
deposited with the Debenture Trustee funds, in trust, for the purpose and in an
amount sufficient to pay and discharge the entire indebtedness on the
Subordinated Debentures not previously delivered to the

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Debenture Trustee for cancellation, for the principal and interest to the date
of the deposit or to the Stated Maturity or redemption date, as the case may be.
Governing Law

The Indenture and the Subordinated Debentures will be governed by and
construed in accordance with the laws of the State of Indiana.

INFORMATION CONCERNING THE DEBENTURE TRUSTEE

The Debenture Trustee has and is subject to all the duties and
responsibilities specified with respect to an indenture trustee under the Trust
Indenture Act. Subject to such provisions, the Debenture Trustee is under no
obligation to exercise any of the powers vested in it by the Indenture at the
request of any holder of Subordinated Debentures, unless offered reasonable
indemnity by such holder against the costs, expenses and liabilities which might
be incurred thereby. The Debenture Trustee is not required to expend or risk its
own funds or otherwise incur personal financial liability in the performance of
its duties if the Debenture Trustee reasonably believes that repayment or
adequate indemnity is not reasonably assured to it.

MISCELLANEOUS

The Company has agreed, pursuant to the Indenture, for so long as Trust
Securities remain outstanding, (i) to maintain directly or indirectly 100%
ownership of the Common Securities of IUB Trust (provided that certain
successors which are permitted pursuant to the Indenture may succeed to the
Company's ownership of the Common Securities), (ii) not to voluntarily
terminate, wind up or liquidate IUB Trust, except upon prior approval of the
Federal Reserve if then so required under applicable capital guidelines or
policies of the Federal Reserve, and (a) in connection with a distribution of
Subordinated Debentures to the holders of the Preferred Securities in
liquidation of IUB Trust, or (b) in connection with certain mergers,
consolidations or amalgamations permitted by the Trust Agreement, and (iii) to
use its reasonable efforts, consistent with the terms and provisions of the
Trust Agreement, to cause IUB Trust to remain classified as a grantor trust and
not as an association taxable as a corporation for United States Federal income
tax purposes.

DESCRIPTION OF THE GUARANTEE

The Preferred Securities Guarantee Agreement (the "Guarantee") will be
executed and delivered by the Company concurrently with the issuance of the
Preferred Securities for the benefit of the holders of the Preferred Securities.
The Guarantee will be qualified as an indenture under the Trust Indenture Act.
The Guarantee Trustee will act as indenture trustee under the Guarantee for
purposes of complying with the provisions of the Trust Indenture Act. The
Guarantee Trustee, State Street Bank and Trust Company, will hold the Guarantee
for the benefit of the holders of the Preferred Securities. The following
summary of the material terms and provisions of the Guarantee does not purport
to be complete and is subject to, and qualified in its entirety by reference to,
all of the provisions of the Guarantee and the Trust Indenture Act. Wherever
particular defined terms of the Guarantee are referred to, but not defined
herein, such defined terms are incorporated herein by reference. The form of the
Guarantee has been filed as an exhibit to the Registration Statement of which
this Prospectus forms a part.

GENERAL

The Company will, pursuant to the Guarantee, irrevocably agree to pay in
full on a subordinated basis, to the extent set forth therein, the Guarantee
Payments (as defined herein) to the holders of the Preferred Securities, as and
when due, regardless of any defense, right of set-off or counterclaim that IUB
Trust may have or assert other than the defense of payment. The following
payments with respect to the Preferred Securities, to the extent not paid by or
on behalf of IUB Trust (the "Guarantee Payments"), will be subject to the
Guarantee: (i) any accrued and unpaid Distributions required to be paid on the
Preferred Securities, to the extent that IUB Trust has funds available therefor
at such time, (ii) the Redemption Price with

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respect to any Preferred Securities called for redemption to the extent that IUB
Trust has funds available therefor at such time, and (iii) upon a voluntary or
involuntary dissolution, winding up or liquidation of IUB Trust (other than in
connection with the distribution of Subordinated Debentures to the holders of
Preferred Securities or a redemption of all of the Preferred Securities), the
lesser of (a) the amount of the Liquidation Distribution, to the extent IUB
Trust has funds available therefor at such time, and (b) the amount of assets of
IUB Trust remaining available for distribution to holders of Preferred
Securities in liquidation of IUB Trust. The obligation of the Company to make a
Guarantee Payment may be satisfied by direct payment of the required amounts by
the Company to the holders of the Preferred Securities or by causing IUB Trust
to pay such amounts to such holders.

The Guarantee will not apply to any payment of Distributions except to the
extent IUB Trust has funds available therefor. If the Company does not make
interest payments on the Subordinated Debentures held by IUB Trust, IUB Trust
will not pay Distributions on the Preferred Securities and will not have funds
legally available therefor.

STATUS OF THE GUARANTEE

The Guarantee will constitute an unsecured obligation of the Company and
will rank subordinate and junior in right of payment to all Senior Debt,
Subordinated Debt and Additional Senior Obligations of the Company in the same
manner as the Subordinated Debentures. The Guarantee does not place a limitation
on the amount of additional Senior Debt, Subordinated Debt or Additional Senior
Obligations that may be incurred by the Company. The Company expects from time
to time to incur additional indebtedness constituting Senior Debt, Subordinated
Debt and Additional Senior Obligations.

The Guarantee will constitute a guarantee of payment and not of collection
(that is, the guaranteed party may institute a legal proceeding directly against
the Company to enforce its rights under the Guarantee without first instituting
a legal proceeding against any other Person). The Guarantee will not be
discharged except by payment of the Guarantee Payments in full to the extent not
paid by IUB Trust or upon distribution of the Subordinated Debentures to the
holders of the Preferred Securities. Because the Company is a holding company,
the right of the Company to participate in any distribution of assets of any
Subsidiary Bank upon such Subsidiary Bank's liquidation or reorganization or
otherwise is subject to the prior claims of creditors of that Subsidiary Bank,
except to the extent the Company may itself be recognized as a creditor of that
Subsidiary Bank. The Company's obligations under the Guarantee, therefore, will
be effectively subordinated to all existing and future liabilities of the
Company subsidiaries, and claimants should look only to the assets of the
Company for payments thereunder.

AMENDMENTS AND ASSIGNMENT

Except with respect to any changes which do not materially adversely affect
the rights of holders of the Preferred Securities (in which case no vote will be
required), the Guarantee may not be amended without the prior approval of the
holders of not less than a majority of the aggregate Liquidation Amount of the
outstanding Preferred Securities. See "Description of the Preferred
Securities--Voting Rights; Amendment of Trust Agreement." All guarantees and
agreements contained in the Guarantee will bind the successors, assigns,
receivers, trustees and representatives of the Company and will inure to the
benefit of the holders of the Preferred Securities then outstanding.

EVENTS OF DEFAULT

An event of default under the Guarantee will occur upon the failure of the
Company to perform any of its payment or other obligations thereunder. The
holders of not less than a majority in aggregate Liquidation Amount of the
Preferred Securities have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Guarantee Trustee in
respect of the Guarantee or to direct the exercise of any trust or power
conferred upon the Guarantee Trustee under the Guarantee.

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Any holder of Preferred Securities may institute a legal proceeding directly
against the Company to enforce its rights under the Guarantee without first
instituting a legal proceeding against IUB Trust, the Guarantee Trustee or any
other Person.

The Company, as guarantor, is required to file annually with the Guarantee
Trustee a certificate as to whether or not the Company is in compliance with all
the conditions and covenants applicable to it under the Guarantee.

INFORMATION CONCERNING THE GUARANTEE TRUSTEE

The Guarantee Trustee, other than during the occurrence and continuance of a
default by the Company in performance of the Guarantee, undertakes to perform
only such duties as are specifically set forth in the Guarantee and, after
default with respect to the Guarantee, must exercise the same degree of care and
skill as a prudent person would exercise or use in the conduct of his or her own
affairs. Subject to such provisions, the Guarantee Trustee is under no
obligation to exercise any of the powers vested in it by the Guarantee at the
request of any holder of any Preferred Securities, unless it is offered
reasonable indemnity against the costs, expenses and liabilities that might be
incurred thereby.

TERMINATION OF THE GUARANTEE

The Guarantee will terminate and be of no further force and effect upon (a)
full payment of the Redemption Price of the Preferred Securities, (b) full
payment of the amounts payable upon liquidation of IUB Trust, or (c)
distribution of the Subordinated Debentures to the holders of the Preferred
Securities. The Guarantee will continue to be effective or will be reinstated,
as the case may be, if at any time any holder of the Preferred Securities must
restore payment of any sums paid under such Preferred Securities or the
Guarantee. Governing Law

The Guarantee will be governed by and construed in accordance with the laws
of the State of Indiana.

EXPENSE AGREEMENT

The Company will, pursuant to the Agreement as to Expenses and Liabilities
entered into by it under the Trust Agreement (the "Expense Agreement"),
irrevocably and unconditionally guarantee to each person or entity to whom IUB
Trust becomes indebted or liable, the full payment of any costs, expenses or
liabilities of IUB Trust, other than obligations of IUB Trust to pay to the
holders of the Preferred Securities or other similar interests in IUB Trust of
the amounts due such holders pursuant to the terms of the Preferred Securities
or such other similar interests, as the case may be. Third party creditors of
IUB Trust may proceed directly against the Company under the Expense Agreement,
regardless of whether such creditors had notice of the Expense Agreement.

RELATIONSHIP AMONG THE PREFERRED SECURITIES, THE SUBORDINATED
DEBENTURES AND THE GUARANTEE

FULL AND UNCONDITIONAL GUARANTEE

Payments of Distributions and other amounts due on the Preferred Securities
(to the extent IUB Trust has funds available for the payment of such
Distributions) are irrevocably guaranteed by the Company as and to the extent
set forth under "Description of the Guarantee." The Company and IUB Trust
believe that, taken together, the obligations of the Company under the
Subordinated Debentures, the Indenture, the Trust Agreement, the Expense
Agreement, and the Guarantee provide, in the aggregate, a full, irrevocable and
unconditional guarantee, on a subordinated basis, of payment of Distributions
and other amounts due on the Preferred Securities. No single document standing
alone or operating in conjunction with fewer than all of the other documents
constitutes such guarantee. It is only the combined operation of these documents
that has the effect of providing a full, irrevocable and unconditional guarantee
of the obligations of IUB Trust under the Preferred Securities. If and to the
extent that the Company does not

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make payments on the Subordinated Debentures, IUB Trust will not pay
Distributions or other amounts due on the Preferred Securities. The Guarantee
does not cover payment of Distributions when IUB Trust does not have sufficient
funds to pay such Distributions. In such event, the remedy of a holder of
Preferred Securities is to institute a legal proceeding directly against the
Company for enforcement of payment of such Distributions to such holder. The
obligations of the Company under the Guarantee are subordinate and junior in
right of payment to all Senior Debt, Subordinated Debt and Additional Senior
Obligations of the Company.

SUFFICIENCY OF PAYMENTS

As long as payments of interest and other payments are made when due on the
Subordinated Debentures, such payments will be sufficient to cover Distributions
and other payments due on the Preferred Securities, primarily because (i) the
aggregate principal amount of the Subordinated Debentures will be equal to the
sum of the aggregate stated Liquidation Amount of the Trust Securities, (ii) the
interest rate and interest and other payment dates on the Subordinated
Debentures will match the Distribution rate and Distribution and other payment
dates for the Preferred Securities, (iii) the Company will pay for all and any
costs, expenses and liabilities of IUB Trust (except the obligations of IUB
Trust to holders of the Preferred Securities), and (iv) the Trust Agreement
further provides that IUB Trust will not engage in any activity that is not
consistent with the limited purposes of IUB Trust.

ENFORCEMENT RIGHTS OF HOLDERS OF PREFERRED SECURITIES

A holder of any Preferred Security may institute a legal proceeding directly
against the Company to enforce its rights under the Guarantee without first
instituting a legal proceeding against the Guarantee Trustee, IUB Trust or any
other Person. A default or event of default under any Senior Debt, Subordinated
Debt or Additional Senior Obligations of the Company would not constitute a
default or Event of Default. In the event, however, of payment defaults under,
or acceleration of, Senior Debt, Subordinated Debt or Additional Senior
Obligations of the Company, the subordination provisions of the Indenture
provide that no payments may be made in respect of the Subordinated Debentures
until such Senior Debt, Subordinated Debt or Additional Senior Obligations has
been paid in full or any payment default thereunder has been cured or waived.
Failure to make required payments on the Subordinated Debentures would
constitute an Event of Default.

LIMITED PURPOSE OF IUB TRUST

The Preferred Securities evidence a preferred undivided beneficial interest
in the assets of IUB Trust. IUB Trust exists for the exclusive purposes of (i)
issuing the Trust Securities representing undivided beneficial interests in the
assets of IUB Trust, (ii) investing the gross proceeds of the Trust Securities
in the Subordinated Debentures issued by the Company, and (iii) engaging in only
those other activities necessary, advisable, or incidental thereto. A principal
difference between the rights of a holder of a Preferred Security and the rights
of a holder of a Subordinated Debenture is that a holder of a Subordinated
Debenture is entitled to receive from the Company the principal amount of and
interest accrued on Subordinated Debentures held, while a holder of Preferred
Securities is entitled to receive Distributions from IUB Trust (or from the
Company under the Guarantee) if and to the extent IUB Trust has funds available
for the payment of such Distributions.

RIGHTS UPON TERMINATION

Upon any voluntary or involuntary termination, winding-up or liquidation of
IUB Trust involving the liquidation of the Subordinated Debentures, the holders
of the Preferred Securities will be entitled to receive, out of assets held by
IUB Trust, the Liquidation Distribution in cash. See "Description of the
Preferred Securities--Liquidation Distribution upon Termination." Upon any
voluntary or involuntary

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liquidation or bankruptcy of the Company, the Property Trustee, as holder of the
Subordinated Debentures, would be a subordinated creditor of the Company,
subordinated in right of payment to all Senior Debt, Subordinated Debt and
Additional Senior Obligations of the Company (as set forth in the Indenture),
but entitled to receive payment in full of principal and interest before any
shareholders of the Company receive payments or distributions. Since the Company
is the guarantor under the Guarantee and has agreed to pay for all costs,
expenses and liabilities of IUB Trust (other than the obligations of IUB Trust
to the holders of its Preferred Securities), the positions of a holder of the
Preferred Securities and a holder of the Subordinated Debentures relative to
other creditors and to shareholders of the Company in the event of liquidation
or bankruptcy of the Company are expected to be substantially the same.

CERTAIN FEDERAL INCOME TAX CONSEQUENCES

GENERAL

The following is a summary of the material United States Federal income tax
considerations that may be relevant to the purchasers of Preferred Securities
which has been passed upon by Greenebaum Doll & McDonald, PLLC, special counsel
to the Company and IUB Trust insofar as it relates to matters of law and legal
conclusions. The conclusions expressed herein are based upon current provisions
of the Internal Revenue Code of 1986, as amended (the "Code"), regulations
thereunder and current administrative rulings and court decisions, all of which
are subject to change at any time, with possible retroactive effect. Subsequent
changes may cause tax consequences to vary substantially from the consequences
described below. See "Possible Changes in Tax Laws." Furthermore, the
authorities on which the following summary is based are subject to various
interpretations, and it is therefore possible that the United States Federal
income tax treatment of the purchase, ownership, and disposition of Preferred
Securities may differ from the treatment described below.

No attempt has been made in the following discussion to comment on all
United States Federal income tax matters affecting purchasers of Preferred
Securities. Moreover, the discussion generally focuses on holders of Preferred
Securities who are individual citizens or residents of the United States and who
acquire Preferred Securities on their original issue at their offering price and
hold Preferred Securities as capital assets. The discussion has only limited
application to dealers in securities, corporations, estates, trusts or
nonresident aliens and does not address all the tax consequences that may be
relevant to holders who may be subject to special tax treatment, such as, for
example, banks, thrifts, real estate investment trusts, regulated investment
companies, insurance companies, dealers in securities or currencies, tax-exempt
investors, or persons that will hold the Preferred Securities as a position in a
"straddle," as part of a "synthetic security" or "hedge," as part of a
"conversion transaction" or other integrated investment, or as other than a
capital asset. The following summary also does not address the tax consequences
to persons that have a functional currency other than the U.S. dollar or the tax
consequences to shareholders, partners or beneficiaries of a holder of Preferred
Securities. Further, it does not include any description of any alternative
minimum tax consequences or the tax laws of any state or local government or of
any foreign government that may be applicable to the Preferred Securities.

Each prospective investor should consult, and should rely exclusively on,
such investor's own tax advisors in analyzing the federal, state, local and
foreign tax consequences of the purchase, ownership or disposition of Preferred
Securities.

CLASSIFICATION OF THE SUBORDINATED DEBENTURES

The Company intends to take the position that the Subordinated Debentures
will be classified for United States Federal income tax purposes as indebtedness
of the Company under current law and, by acceptance of a Preferred Security,
each holder covenants to treat the Subordinated Debentures as indebtedness and
the Preferred Securities as evidence of an indirect beneficial ownership
interest in the

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<PAGE>
Subordinated Debentures. No assurance can be given, however, that such position
of the Company will not be challenged by the Internal Revenue Service or, if
challenged, that such a challenge will not be successful. The remainder of this
discussion assumes that the Subordinated Debentures will be classified for
United States Federal income tax purposes as indebtedness of the Company.

CLASSIFICATION OF IUB TRUST

Under current law and assuming full compliance with the terms of the Trust
Agreement and Indenture (and certain other documents described herein), IUB
Trust will be classified for United States Federal income tax purposes as a
grantor trust and not as an association taxable as a corporation. Accordingly,
for United States Federal income tax purposes, each holder of Preferred
Securities generally will be treated as owning an undivided beneficial interest
in the Subordinated Debentures, and each holder will be required to include in
its return any income, gain, loss or expense with respect to its allocable share
of the Subordinated Debentures whether or not cash is actually distributed to
such holder.

Because income on the Preferred Securities will constitute interest income
for United States Federal income tax purposes, corporate holders of Preferred
Securities will not be entitled to claim a dividends received deduction in
respect of such income.

POTENTIAL EXTENSION OF INTEREST PAYMENT PERIOD AND ORIGINAL ISSUE DISCOUNT

The Company's option to extend the interest payment period on the
Subordinated Debentures may cause the indebtedness to be issued with original
issue discount ("OID"). Under Treasury regulations (the "Regulations"),a
contingency that stated interest will not be timely paid that is "remote" will
be ignored in determining whether such debt instrument is issued with OID.
Because the exercise by the Company of its option to defer the payment of stated
interest on the Subordinated Debentures would prevent the Company from declaring
dividends on any class of equity, the Company believes that the likelihood of
its exercising the option is "remote" withing the meaning of the Regulations. As
a result, the Company intends to take the position that the Subordinated
Debentures will not be deemed to be issued with OID at the time of their initial
issuance. If this position is sustained, a holder of the Preferred Securities
should include in gross income such holder's allocable share of interest on the
Subordinated Debentures.

There can be no assurance, however, that the Internal Revenue Service will
not successfully contest the Company's position. If the Internal Revenue Service
were successful in such a contention, then all of the stated interest payments
on the Subordinated Debentures would be treated as OID. In such case, the
holders of the Preferred Securities would be required to include OID in income
on an economic accrual basis regardless of whether any interest is actually paid
or their method of tax accounting, but will not be required to report actual
payments of interest as taxable income.

If the Company's position that there is no OID initially is upheld, but the
Company exercises its option to defer any payment of interest, the Subordinated
Debentures would at the time of such exercise be treated as issued with OID, and
all stated interest thereafter payable on the Subordinated Debentures would be
treated as OID. In such event, the holders of the Preferred Securities would be
required to account for the OID as stated in the immediately preceding
paragraph. Consequently, a holder of Preferred Securities would be required to
include in gross income OID even though the Company would not make any actual
interest payments during an Extension Period.

MARKET DISCOUNT AND ACQUISITION PREMIUM

Holders of Preferred Securities other than a holder who purchased the
Preferred Securities upon original issuance may be considered to have acquired
their undivided interests in the Subordinated Debentures with "market discount"
or "acquisition premium" as such phrases are defined for United States Federal
income tax purposes. Such holders are advised to consult their tax advisors as
to the income tax consequences of the acquisition, ownership and disposition of
the Preferred Securities.

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RECEIPT OF SUBORDINATED DEBENTURES OR CASH UPON LIQUIDATION OF IUB TRUST

Under certain circumstances, as described under "Description of the
Preferred Securities--Redemption or Exchange" and "--Liquidation Distribution
upon Termination," the Subordinated Debentures may be distributed to holders of
Preferred Securities upon a liquidation of IUB Trust. Under current United
States Federal income tax law, such a distribution would be treated as a
nontaxable event to each such holder and would result in such holder having an
aggregate tax basis in the Subordinated Debentures received in the liquidation
equal to such holder's aggregate tax basis in the Preferred Securities
immediately before the distribution. A holder's holding period in the
Subordinated Debentures so received in liquidation of IUB Trust would include
the period for which such holder held the Preferred Securities.

If, however, a Tax Event occurs which results in IUB Trust being treated as
an association taxable as a corporation, the distribution would likely
constitute a taxable event to IUB Trust and holders of the Preferred Securities.
Each holder of a Preferred Security would recognize gain or loss if such holder
exchanged the Preferred Securities for the Subordinated Debentures it received
upon liquidation of IUB Trust. Under certain circumstances described herein, the
Subordinated Debentures may be redeemed for cash and the proceeds of such
redemption distributed to holders in redemption of their Preferred Securities.
Under current law, such a redemption would, for United States Federal income tax
purposes, constitute a taxable disposition of the redeemed Preferred Securities,
and a holder would recognize gain or loss as if the holder sold such Preferred
Securities for cash. See "Description of the Preferred Securities-- Redemption
or Exchange" and "--Liquidation Distribution upon Termination."

DISPOSITION OF PREFERRED SECURITIES

Upon the sale of the Preferred Securities, a holder will recognize a gain or
loss in an amount equal to the difference between its adjusted tax basis in the
Preferred Securities and the amount realized on the sale of such Preferred
Securities (except to the extent of any amount received in respect of accrued
but unpaid interest not previously included in income). Assuming that the
Company's position that there is no OID initially is upheld, and that the
Company does not exercise its payment of interest on the Subordinated
Debentures, a holder's adjusted tax basis for the Preferred Securities generally
will be its initial purchase price increased by OID previously includible in the
holder's gross income to the date of disposition and decreased by payments
received on the Preferred Securities, since the date the Preferred Securities
were deemed to have OID, in respect of OID to the date of disposition. Such gain
or loss generally will be a capital gain or loss. As a result of the recently
enacted Taxpayer Relief Act of 1997, in the case of noncorporate taxpayers, the
tax rates applicable to capital gains from the disposition of Preferred
Securities generally will vary depending upon whether, at the time of
disposition, the Preferred Securities have been held for more than twelve months
or more than eighteen months.

The Preferred Securities may trade at a price that does not accurately
reflect the value of accrued but unpaid interest with respect to the underlying
Subordinated Debentures. A holder that disposes of its Preferred Securities
between record dates for payment of distributions thereon will be required to
include as ordinary income either OID (if applicable) or accrued but unpaid
interest on the Subordinated Debentures through the date of disposition. To the
extent that the amount realized on the sale is less than the holder's adjusted
tax basis, a holder will recognize a capital loss. Subject to certain limited
exceptions, capital losses cannot be applied to offset ordinary income for
United States Federal income tax purposes.

POSSIBLE CHANGES IN TAX LAWS

Certain legislative proposals were made in 1996 and 1997 which were designed
to eliminate the ability of issuers of certain instruments from deducting
interest paid on those instruments. These proposals were not, however,
incorporated into the legislation recently enacted as the Taxpayer Relief Act of
1997. Nevertheless, there can be no assurance that other legislation enacted
after the date hereof will not adversely affect the ability of the Company to
deduct the interest payable on the Subordinated Debentures, and such legislation
could be retroactive in effect. Consequently, there can be no assurance that a
Tax Event will not occur. A Tax Event would permit the Company, upon approval of
the Federal Reserve if then required under applicable capital guidelines or
policies of the Federal Reserve, to cause a redemption

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<PAGE>
of the Preferred Securities before, as well as after, December 31, 2002. See
"Description of the Subordinated Debentures--Redemption" and "Description of the
Preferred Securities--Redemption--Tax Event Redemption, Capital Treatment Event
Redemption or Investment Company Event Redemption."

BACKUP WITHHOLDING AND INFORMATION REPORTING

The amount of OID accrued on the Preferred Securities held of record by
individual citizens or residents of the United States, or certain trusts,
estates, and partnerships, will be reported to the Internal Revenue Service on
Forms 1099, which forms should be mailed to such holders of Preferred Securities
by January 31 following each calendar year. Payments made on, and proceeds from
the sale of, the Preferred Securities may be subject to a "backup" withholding
tax (currently at 31%) unless the holder complies with certain identification
and other requirements. Any amounts withheld under the backup withholding rules
will be allowed as a credit against the holder's United States Federal income
tax liability, provided the required information is provided to the Internal
Revenue Service.

THE UNITED STATES FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED
FOR GENERAL INFORMATION ONLY AND MAY NOT BE APPLICABLE DEPENDING UPON THE
PARTICULAR SITUATION OF A HOLDER OF PREFERRED SECURITIES. HOLDERS OF PREFERRED
SECURITIES SHOULD CONSULT THEIR TAX ADVISORS WITH RESPECT TO THE TAX
CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF THE PREFERRED
SECURITIES, INCLUDING THE TAX CONSEQUENCES UNDER STATE, LOCAL, FOREIGN AND OTHER
TAX LAWS AND THE POSSIBLE EFFECTS OF CHANGES IN UNITED STATES FEDERAL OR OTHER
TAX LAWS.

ERISA CONSIDERATIONS

Employee benefit plans that are subject to the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), or Section 4975 of the Code
("Plans"), generally may purchase Preferred Securities, subject to the investing
fiduciary's determination that the investment in Preferred Securities satisfies
ERISA's fiduciary standards and other requirements applicable to investments by
the Plan.

In any case, the Company and/or any of its affiliates may be considered a
"party in interest" (within the meaning of ERISA) or a "disqualified person"
(within the meaning of Section 4975 of the Code) with respect to certain plans
(generally, Plans maintained or sponsored by, or contributed to by, any such
persons with respect to which the Company or an affiliate is a fiduciary or
Plans for which the Company or an affiliate provides services). The acquisition
and ownership of Preferred Securities by a Plan (or by an individual retirement
arrangement or other Plans described in Section 4975(e)(1) of the Code) with
respect to which the Company or any of its affiliates is considered a party in
interest or a disqualified person may constitute or result in a prohibited
transaction under ERISA or Section 4975 of the Code, unless such Preferred
Securities are acquired pursuant to and in accordance with an applicable
exemption.

As a result, Plans with respect to which the Company or any of its
affiliates is a party in interest or a disqualified person should not acquire
Preferred Securities unless such Preferred Securities are acquired pursuant to
and in accordance with an applicable exemption. Any other Plans or other
entities whose assets include Plan assets subject to ERISA or Section 4975 of
the Code proposing to acquire Preferred Securities should consult with their own
counsel.

UNDERWRITING

Stifel, Nicolaus & Company, Incorporated (the "Underwriter") has agreed,
subject to the terms and conditions set forth in the Underwriting Agreement, the
form of which is filed as an exhibit to the Registration Statement of which this
Prospectus forms a part, to purchase 1,850,000 Preferred Securities from IUB
Trust. The Underwriter has agreed in the Underwriting Agreement, subject to the
terms and conditions set forth therein, to purchase all the Preferred Securities
offered hereby if any of the Preferred Securities are purchased.

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<PAGE>
The Underwriter has advised IUB Trust that it proposes initially to offer
the Preferred Securities to the public at the public offering price set forth on
the cover page of this Prospectus, and to certain dealers at such price less a
concession not in excess of $ per Preferred Security. The Underwriter
may allow, and such dealers may reallow, a discount not in excess of
$ per Preferred Security to certain other dealers. After the initial
public offering, the public offering price, concession and discount may be
changed. Because the National Association of Securities Dealers, Inc. ("NASD")
is expected to view the Preferred Securities as interests in a direct
participation program, the offering of the Preferred Securities is being made in
compliance with the applicable provisions of Rule 2810 of the NASD's Conduct
Rules.

In view of the fact that the proceeds of the sale of the Preferred
Securities will be used to purchase the Subordinated Debentures of the Company,
the Underwriting Agreement provides that the Company will pay as compensation to
the Underwriter for arranging the investment therein of such proceeds
$ per Preferred Security (or $ in the aggregate) for the account
of the Underwriter.

IUB Trust has granted the Underwriter an option to purchase up to an
additional 277,500 Preferred Securities at the initial public offering price.
Such option, which expires 30 days from the date of this Prospectus, may be
exercised solely to cover over-allotments. To the extent that the Underwriter
exercises its option to purchase additional Preferred Securities, IUB Trust will
issue and sell to the Company additional Common Securities in an aggregate
Liquidation Amount equal to at least 3% of the total capital of IUB Trust and
the Company will issue and sell to IUB Trust Subordinated Debentures in an
aggregate principal amount equal to the aggregate Liquidation Amount of the
additional Preferred Securities being purchased pursuant to the option.

Application has been made to have the Preferred Securities approved for
quotation on the Nasdaq National Market. The Underwriter has advised IUB Trust
that it presently intends to make a market in the Preferred Securities after the
commencement of trading on the Nasdaq National Market, but no assurances can be
made as to the liquidity of such Preferred Securities or that an active and
liquid trading market will develop or, if developed, that it will continue. The
offering price and distribution rate have been determined by negotiations among
representatives of the Company and the Underwriter, and the offering price of
the Preferred Securities may not be indicative of the market price following the
offering. The Underwriter will have no obligation to make a market in the
Preferred Securities, however, and may cease market-making activities, if
commenced, at any time.

IUB Trust and the Company have agreed to indemnify the Underwriter against,
or contribute to payments that the Underwriter may be required to make in
respect of, certain liabilities, including liabilities under the Securities Act.

In connection with the offering of the Preferred Securities, the Underwriter
and any selling group members and their respective affiliates may engage in
transactions effected in accordance with Rule 104 of the Commission's Regulation
M that are intended to stabilize, maintain or otherwise affect the market price
of the Preferred Securities. Such transactions may include over-allotment
transactions in which the Underwriter creates a short position for its own
account by selling more Preferred Securities than it is committed to purchase
from IUB Trust. In such case, to cover all or part of the short position, the
Underwriter may exercise the over-allotment option described above or may
purchase Preferred Securities in the open market following completion of the
initial offering of the Preferred Securities. The Underwriter also may engage in
stabilizing transactions in which it bids for, and purchases, Preferred
Securities at a level above that which might otherwise prevail in the open
market for the purpose of preventing or retarding a decline in the market price
of the Preferred Securities. The Underwriter also may reclaim any selling
concessions allowed to a dealer if the Underwriter repurchases Preferred
Securities distributed by that dealer. Any of the foregoing transactions may
result in the maintenance of a price for the Preferred Securities at a level
above that which might otherwise prevail in the open market. Neither the Company
nor the Underwriter makes any representation or prediction as to the direction
or magnitude of any effect

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<PAGE>
that the transactions described above may have on the price of the Preferred
Securities. The Underwriter is not required to engage in any of the foregoing
transactions and, if commenced, such transactions may be discontinued at any
time without notice.

MISCELLANEOUS

VALIDITY OF SECURITIES

Certain matters of Delaware law relating to the validity of the Preferred
Securities, the enforceability of the Trust Agreement and the formation of IUB
Trust will be passed upon by Richards, Layton & Finger, special Delaware counsel
to the Company and IUB Trust. Certain legal matters for the Company and IUB
Trust, including the validity of the Guarantee and the Subordinated Debentures,
will be passed upon for the Company and IUB Trust by David W. Harper, Esq.,
Louisville, Kentucky, counsel to the Company and IUB Trust, and Greenebaum Doll
& McDonald PLLC, Louisville, Kentucky, special counsel to the Company and IUB
Trust. Certain legal matters will be passed upon for the Underwriter by Bryan
Cave LLP, St. Louis, Missouri. Counsel for the Company, IUB Trust and the
Underwriter will rely on the opinion of Richards, Layton & Finger as to matters
of Delaware law. Certain matters relating to United States Federal income tax
considerations will be passed upon for the Company by Greenebaum Doll & McDonald
PLLC.

EXPERTS

The consolidated financial statements of the Company as of December 31, 1996
and 1995, and for each of the years in the three year period ended December 31,
1996, included in this Prospectus have been audited by Geo. S. Olive & Co. LLC,
independent accountants, to the extent and for the periods set forth in its
report appearing elsewhere herein. The consolidated financial statements of the
Company are included herein in reliance upon such report given upon the
authority of such firm as an expert in auditing and accounting.

The consolidated financial statements of PTC as of December 31, 1996 and
1995, and for each of the years in the two year period ended December 31, 1996,
included in this Prospectus have been audited by Crowe, Chizek and Company LLP,
independent accountants, to the extent and for the periods set forth in its
report appearing elsewhere herein. The consolidated financial statements of PTC
are included herein in reliance upon such report given upon the authority of
such firm as an expert in auditing and accounting.

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The following documents previously filed by the Company with the Commission
under the Exchange Act, or where indicated certain portions thereof, are
incorporated herein by reference:

1. The Company's Annual Report on Form 10-K for the year ended December
31, 1996;

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2. The Company's Quarterly Reports on Form 10-Q for the periods ended
March 31, 1997, June 30, 1997 and September 30, 1997; and

3. The Company's Current Report on Form 8-K dated October 20, 1997.

Any statement contained in a document incorporated or deemed to be
incorporated by reference shall be deemed to be modified or superseded for
purposes hereof to the extent that a statement contained herein (or in any other
subsequently filed document that is or is deemed to be incorporated by reference
herein) modifies or supersedes such previous statement. Any statement so
modified or superseded shall not be deemed to constitute a part hereof except as
so modified or superseded.

THE COMPANY WILL PROVIDE WITHOUT CHARGE TO ANY PERSON TO WHOM THIS
PROSPECTUS IS DELIVERED, ON THE WRITTEN OR ORAL REQUEST OF SUCH PERSON, A COPY
OF ANY OR ALL OF THE FOREGOING DOCUMENTS INCORPORATED BY REFERENCE HEREIN (OTHER
THAN EXHIBITS, UNLESS SUCH EXHIBITS ARE SPECIFICALLY INCORPORATED BY REFERENCE
IN SUCH DOCUMENTS). REQUESTS FOR SUCH DOCUMENTS SHOULD BE DIRECTED TO INDIANA
UNITED BANCORP, 201 N. BROADWAY, P.O. BOX 87, GREENSBURG, INDIANA 47240-0087,
ATTN: JAY B. FAGER, CHIEF FINANCIAL OFFICER (TELEPHONE (812) 663-0157).

As used herein, the terms "Prospectus" and "herein" mean this Prospectus,
including the documents incorporated or deemed to be incorporated herein by
reference, as the same may be amended, supplemented or otherwise modified from
time to time. Statements contained in this Prospectus as to the contents of any
contract or other document referred to herein do not purport to be complete, and
where reference is made to the particular provisions of such contract or other
document, such provisions are qualified in all respects by reference to all of
the provisions of such contract or other document.

AVAILABLE INFORMATION

The Company is subject to the informational requirements of the Exchange Act
and in accordance therewith files reports, proxy statements and other
information with the Commission. Such reports, proxy statements and other
information filed with the Commission can be inspected and copied at the public
reference facilities maintained by the Commission at Room 1024, 450 Fifth
Street, N.W., Judiciary Plaza, Washington, D.C. 20549 and at the following
Regional Offices of the Commission: 7 World Trade Center, Suite 1300, New York,
New York 10048 and Citicorp Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661. Copies of such material can be obtained from the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Judiciary Plaza,
Washington, D.C. 20549 at prescribed rates. The Company files its reports, proxy
statements and other information electronically with the Commission and such
information also may be accessed through the Commission's electronic data
gathering, analysis and retrieval system ("EDGAR") via electronic means,
including the Commission's home page on the Internet (http://www.sec.gov). The
Company's shares of common stock are traded on the Nasdaq National Market
(trading symbol: IUBC) and such information relating to the Company may also be
inspected at the offices of the National Association of Securities Dealers,
Inc., 1735 K. Street N.W., Washington, D.C. 20006.

The Company has filed with the Commission a registration statement on Form
S-2 (together with all amendments, exhibits and schedules thereto, the
"Registration Statement") under the Securities Act with respect to the
securities offered hereby. This Prospectus does not contain all of the
information set forth in the Registration Statement filed by the Company with
the Commission, certain portions of which are omitted in accordance with the
rules and regulations of the Commission. Such additional information is
available for inspection and copying at the offices of the Commission.
Statements contained in this Prospectus or in any document incorporated into
this Prospectus by reference as to the contents of any contract or other
document referred to herein or therein are not necessarily complete, and in each
instance reference is made to the copy of such contract or other document filed
as an exhibit to the Registration Statement or such other document, each such
statement being qualified in all respects by such reference.

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No separate financial statements of IUB Trust have been included herein. The
Company does not consider that such financial statements would be material to
the holders of the Preferred Securities because (i) all of the voting securities
of IUB Trust will be owned by the Company, a reporting company under the
Exchange Act, (ii) IUB Trust has no independent operations and exists for the
sole purpose of issuing securities representing undivided beneficial interest in
the assets of IUB Trust and investing the proceeds thereof in the Subordinated
Debentures issued by the Company, and (iii) the obligations of the Company
described herein to provide certain indemnities in respect of and be responsible
for certain costs, expenses, debts and liabilities of IUB Trust under the
Indenture and pursuant to the Trust Agreement, the guarantee issued by the
Company with respect to the Preferred Securities, and the Subordinated
Debentures purchased by IUB Trust and the related Indenture, taken together,
constitute, in the belief of the Company and IUB Trust, a full and unconditional
guarantee of payments due on the Preferred Securities. See "Description of the
Subordinated Debentures" and "Description of the Guarantee".

IUB Trust is not currently subject to the information reporting requirements
of the Exchange Act. IUB Trust will become subject to such requirements upon the
effectiveness of the Registration Statement, although it intends to seek and
expects to receive an exemption therefrom.

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INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND
PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<S> <C>
COMPANY UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

Interim Consolidated Balance Sheet as of September 30, 1997 (unaudited) and December
31, 1996............................................................................ F-3

Interim Consolidated Statement of Income for the nine months ended September 30, 1997
and 1996 (unaudited)................................................................ F-4

Interim Consolidated Statement of Cash Flows for the nine months ended September 30,
1997 and 1996 (unaudited)........................................................... F-5

Interim Consolidated Statement of Changes to Shareholders' Equity for the nine months
ended September 30, 1997 and 1996 (unaudited)....................................... F-6

Notes to Interim Consolidated Financial Statements (unaudited)....................... F-7

COMPANY AUDITED CONSOLIDATED FINANCIAL STATEMENTS

Independent Auditor's Report......................................................... F-8

Consolidated Balance Sheets as of December 31, 1996 and 1995......................... F-9

Consolidated Statement of Income for each of the years ended December 31, 1996, 1995
and 1994............................................................................ F-10

Consolidated Statement of Cash Flows for each of the years ended December 31, 1996,
1995 and 1994....................................................................... F-11

Consolidated Statement of Changes in Shareholders' Equity for each of the years ended
December 31, 1996, 1995 and 1994.................................................... F-12

Notes to Consolidated Financial Statements........................................... F-13

PTC UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

Interim Consolidated Balance Sheets as of September 30, 1997 (unaudited) and December
31, 1996............................................................................ F-26

Interim Consolidated Statements of Income for the nine months ended September 30,
1997 and 1996 (unaudited)........................................................... F-27

Interim Consolidated Statements of Cash Flows for the nine months ended September 30,
1997 and 1996 (unaudited)........................................................... F-28

Interim Consolidated Statements of Changes in Shareholders' Equity for the nine
months ended September 30, 1997 and 1996 (unaudited)................................ F-29

Notes to Interim Consolidated Financial Statements (unaudited)....................... F-30

PTC AUDITED CONSOLIDATED FINANCIAL STATEMENTS

Independent Auditor's Report......................................................... F-31

Consolidated Balance Sheets as of December 31, 1996 and 1995......................... F-32

Consolidated Statements of Income for each of the years ended December 31, 1996 and
1995................................................................................ F-33

Consolidated Statements of Cash Flows for each of the years ended December 31, 1996
and 1995............................................................................ F-34

Consolidated Statements of Changes in Shareholders' Equity for each of the years
ended December 31, 1996 and 1995.................................................... F-35

Notes to Consolidated Financial Statements........................................... F-36
</TABLE>

F-1
<PAGE>
<TABLE>
<S> <C>
COMPANY AND PTC PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS

Pro Forma Combined Condensed Balance Sheet as of September 30, 1997 (unaudited)...... F-46

Pro Forma Combined Condensed Statement of Income for the nine months ended September
30, 1997 (unaudited)................................................................ F-47

Pro Forma Combined Condensed Statement of Income for the year ended December 31, 1996
(unaudited)......................................................................... F-48

Pro Forma Combined Condensed Statement of Income for the year ended December 31, 1995
(unaudited)......................................................................... F-49

Pro Forma Combined Condensed Statement of Income for the year ended December 31, 1994
(unaudited)......................................................................... F-50

Notes to Pro Forma Combined Condensed Financial Statements (unaudited)............... F-51
</TABLE>

F-2
<PAGE>
COMPANY INTERIM CONSOLIDATED BALANCE SHEET

(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
DECEMBER 31, 1996
SEPTEMBER 30, 1997 -----------------
------------------
(UNAUDITED)
<S> <C> <C>
ASSETS
Cash and due from banks.................................................. $ 10,464 $ 13,236
Interest-bearing demand deposits......................................... 74 60
Federal funds sold....................................................... 7,300 5,900
-------- --------
Cash and cash equivalents.............................................. 17,838 19,196
Short-term investments................................................... -- 100
Securities available for sale............................................ 71,422 81,187
Loans.................................................................... 244,237 219,483
Less: Allowance for loan losses.......................................... 2,670 2,506
-------- --------
Net loans.............................................................. 241,567 216,977
Premises and equipment................................................... 6,355 5,919
Federal Home Loan Bank stock............................................. 1,138 1,138
Core deposit intangibles................................................. 83 106
Accrued interest receivable.............................................. 2,186 1,952
Other real estate........................................................ -- 1,000
Other assets............................................................. 1,462 771
-------- --------
Total assets........................................................... $ 342,051 $ 328,346
-------- --------
-------- --------
LIABILITIES

Deposits
Non-interest bearing................................................... $ 25,263 $ 29,001
Interest bearing....................................................... 260,497 247,401
-------- --------
Total deposits....................................................... 285,760 276,402
Short-term borrowings.................................................. 17,885 15,683
Long-term debt......................................................... 4,625 5,000
Accrued interest payable............................................... 1,404 1,272
Other liabilities...................................................... 2,293 2,240
-------- --------
Total liabilities.................................................... 311,967 300,597
-------- --------
SHAREHOLDERS' EQUITY
Preferred stock
Authorized--400,000 shares
Issued and outstanding--None........................................... -- --
Common stock $1 stated value:
Authorized--3,000,000 shares
Issued and outstanding--1,250,897 shares............................... 1,251 1,251
Paid-in surplus.......................................................... 10,677 10,677
Valuation adjustment-Securities AFS...................................... 487 95
Retained earnings........................................................ 17,669 15,726
-------- --------
Total shareholders' equity............................................. 30,084 27,749
-------- --------
Total liabilities and shareholders' equity............................. $ 342,051 $ 328,346
-------- --------
-------- --------
</TABLE>

See notes to consolidated condensed financial statements.

F-3
<PAGE>
COMPANY INTERIM CONSOLIDATED STATEMENT OF INCOME

(UNAUDITED)

(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1997 1996 1997 1996
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Interest income
Loans, including fees................................... $5,332 $4,639 $15,388 $13,458
Investment securities:
Taxable............................................... 1,150 1,323 3,616 3,835
Tax-exempt............................................ 46 44 143 141
Federal funds sold...................................... 104 62 250 247
Interest-bearing deposits............................... -- 2 1 11
---------- ---------- ---------- ----------
Total interest income............................... 6,632 6,070 19,398 17,692
---------- ---------- ---------- ----------
Interest expense
Deposits................................................ 3,048 2,775 8,832 8,025
Short-term borrowings................................... 177 182 510 500
Long-term debt.......................................... 95 111 297 343
---------- ---------- ---------- ----------
Total interest expense.............................. 3,320 3,068 9,639 8,868
---------- ---------- ---------- ----------
Net interest income....................................... 3,312 3,002 9,759 8,824
Provision for loan losses............................... 58 30 183 90
---------- ---------- ---------- ----------
Net interest income after provision for loan losses....... 3,254 2,972 9,576 8,734
Noninterest income:
Securities losses....................................... (83) -- (80) --
Other operating income.................................. 426 359 1,450 1,093
---------- ---------- ---------- ----------
Total noninterest income............................ 343 359 1,370 1,093
---------- ---------- ---------- ----------
Noninterest expense....................................... 2,097 2,562 6,201 6,608
---------- ---------- ---------- ----------
Income before income tax.................................. 1,500 769 4,745 3,219
Income tax expense...................................... 594 451 1,877 1,420
---------- ---------- ---------- ----------
Net income................................................ $ 906 $ 318 $2,868 $1,799
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Per common share:
Net income.............................................. $0.72 $0.25 $2.29 $1.40
Cash dividends declared................................. 0.26 0.21 0.74 0.61
Average common shares outstanding......................... 1,250,897 1,250,897 1,250,897 1,250,897
</TABLE>

See notes to consolidated condensed financial statements.

F-4
<PAGE>
COMPANY INTERIM CONSOLIDATED STATEMENT OF CASH FLOWS

(UNAUDITED)

(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30
1997 1996
--------- ---------
<S> <C> <C>
Cash flows from operating activities
Net income............................................................................. $ 2,868 $ 1,799
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses............................................................ 183 90
Depreciation and amortization........................................................ 537 495
Premiums and discounts amortization on investment securities......................... 42 81
Amortization of loan and deposit fair value adjustments.............................. 79 76
Amortization and reduction of core deposit intangibles............................... 23 27
Securities losses.................................................................... 80 --
Net change in
Income receivable.................................................................. (234) (139)
Interest payable................................................................... 132 (68)
Other adjustments.................................................................... 186 (705)
--------- ---------
Net cash provided by operating activities.......................................... 3,896 1,656
--------- ---------
Cash flows from investing activities
Net change in short-term investments................................................... 86 5,035
Purchases of securities available for sale............................................. (2,376) (15,717)
Proceeds from maturities and paydowns of securities available for sale................. 10,106 11,326
Proceeds from sales of securities available for sale................................... 2,035 --
Net change in loans.................................................................... (24,754) (13,674)
Purchases of premises and equipment.................................................... (973) (396)
Proceeds from other real estate........................................................ 1,000 45
Other investment activities............................................................ (638) (141)
--------- ---------
Net cash used by investing activities.............................................. (15,514) (13,522)
--------- ---------
Cash flows from financing activities
Net change in:
Noninterest bearing, NOW, money market and savings deposits.......................... (1,550) (6,923)
Certificates of deposit.............................................................. 10,908 15,608
Short-term borrowings................................................................ 2,202 1,538
Payments on long-term debt............................................................. (375) (500)
Redemption of preferred stock.......................................................... -- (2,000)
Cash dividends......................................................................... (925) (814)
--------- ---------
Net cash provided by financing activities............................................ 10,260 6,909
--------- ---------
Net decrease in cash and cash equivalents................................................ (1,358) (4,957)
Cash and cash equivalents, beginning of period........................................... 19,196 18,929
--------- ---------
Cash and cash equivalents, end of period................................................. $ 17,838 $ 13,972
--------- ---------
--------- ---------
</TABLE>

See notes to consolidated condensed financial statements.

F-5
<PAGE>
COMPANY INTERIM CONSOLIDATED STATEMENT OF CHANGES
TO SHAREHOLDERS' EQUITY

(UNAUDITED)

(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
1997 1996
--------- ---------
<S> <C> <C>
Balance, January 1....................................................................... $ 27,749 $ 28,245
Net income............................................................................... 2,868 1,799
Net change in unrealized gains (losses) on securities available for sale................. 392 (493)
Redemption of preferred stock............................................................ -- (2,000)
Cash dividends:
Preferred stock........................................................................ -- (50)
Common stock........................................................................... (925) (763)
--------- ---------
Balance, September 30.................................................................... $ 30,084 $ 26,738
--------- ---------
--------- ---------
</TABLE>

See notes to consolidated condensed financial statements.

F-6
<PAGE>
COMPANY NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

(TABLE DOLLARS AMOUNTS IN THOUSANDS)

NOTE 1.

The significant accounting policies followed by Indiana United Bancorp
("Company") and its subsidiaries, Union Bank and Trust Company of Indiana
("Union Bank") and Regional Federal Savings Bank ("Regional Bank") for interim
financial reporting are consistent with the accounting policies followed for
annual financial reporting. All adjustments, consisting only of normal recurring
adjustments, which in the opinion of management are necessary for a fair
presentation of the results for the periods reported, have been included in the
accompanying consolidated financial statements. The results of operations for
the nine months ended September 30, 1997 are not necessarily indicative of those
expected for the remainder of the year.

NOTE 2:

On October 8, 1997, the Company signed a definitive agreement to acquire
P.T.C. Bancorp ("PTC"), Brookville, Indiana in a proposed transaction viewed as
a merger of equals with the combined entity retaining the name of Indiana United
Bancorp. The definitive agreement provides that PTC shareholders (including
option holders) will receive 1.075 shares of Company common stock in exchange
for each share owned or option held of PTC common stock.

The consolidated company will hold assets totaling almost $650 million and
will have market capitalization of more than $100 million based upon current
market values. Upon completion of the merger, Indiana United Bancorp will
operate 29 offices in 12 counties throughout the eastern and southern regions of
Indiana.

The proposed transaction is subject to various regulatory approvals and the
approval of the shareholders of both organizations. It is expected that the
transaction will be accounted for as a "pooling of interests". Although the
Company anticipates that the merger will be consummated during the first quarter
of 1998, there can be no assurance that the transaction will be completed.

NOTE 3:

The Company is in process of preparing a registration statement to be filed
with the Securities and Exchange Commission ("SEC") for the purpose of issuing
$18,500,000 Cumulative Trust Preferred Securities ("Preferred Securities"). The
Preferred Securities will represent undivided beneficial interests in the assets
of a statutory business trust being established by the Company. The Company will
acquire all the common securities of the business trust. The assets of the
business trust will consist solely of Subordinated Debentures issued by the
Company and purchased with the proceeds from the issuance of the Preferred
Securities. The Company will guarantee the payment of the Preferred Securities.

Under the risk-based guideline established by the Federal Reserve, a portion
of the proceeds from the sale of Preferred Securities are expected to qualify as
Tier 1 or core capital. These guidelines provide that the Preferred Securities
cannot exceed 25% of total Tier 1 capital of the Company, however; the amount in
excess of the 25% limitation will constitute Tier 2, or supplementary capital.

For financial reporting purposes, the business trust will be treated as a
wholly owned subsidiary of the Company and the accounts of the business trust
will be included in the consolidated financial statements of the Company. The
Preferred Securities will be presented as a separate line item in the
consolidated balance sheet and interest on the Preferred Securities will be
recorded as an expense in the consolidated statement of income. In addition,
appropriate disclosures in the footnotes to the consolidated financial
statements describing the Preferred Securities, Subordinated Debentures,
business trust and the guarantee will be presented.

F-7
<PAGE>
INDEPENDENT AUDITOR'S REPORT

To the Shareholders and
Board of Directors
Indiana United Bancorp
Greensburg, Indiana

We have audited the consolidated balance sheet of Indiana United Bancorp and
subsidiaries as of December 31, 1996 and 1995, and the related consolidated
statements of income, changes in shareholders' equity and cash flows for each of
the three years in the period ended December 31, 1996. These consolidated
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements described above
present fairly, in all material respects, the consolidated financial position of
Indiana United Bancorp and subsidiaries as of December 31, 1996 and 1995, and
the results of their operations and their cash flows for each of the three years
in the period ended December 31, 1996, in conformity with generally accepted
accounting principles.

As discussed in the notes to the financial statements, the Company changed
its method of accounting for investments in securities in 1994.

Geo. S. Olive & Co. LLC

Indianapolis, Indiana

February 3, 1997

F-8
<PAGE>
INDIANA UNITED BANCORP AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET

<TABLE>
<CAPTION>
DECEMBER 31,
------------------------------
1996 1995
-------------- --------------
<S> <C> <C>
ASSETS
Cash and due from banks........................................................ $ 13,236,256 $ 11,707,236
Interest-bearing demand deposits............................................... 59,658 71,698
Federal funds sold............................................................. 5,900,000 7,150,000
-------------- --------------
Cash and cash equivalents.................................................... 19,195,914 18,928,934
Short-term investments......................................................... 100,000 5,100,000
Investment securities available for sale....................................... 81,186,867 80,650,912
Loans.......................................................................... 219,483,489 201,354,517
Allowance for loan losses.................................................... (2,505,853) (2,754,227)
-------------- --------------
Net loans.................................................................. 216,977,636 198,600,290
Premises and equipment......................................................... 5,918,643 6,024,994
Federal Home Loan Bank stock................................................... 1,137,815 1,137,815
Income receivable.............................................................. 1,951,803 1,974,331
Core deposit intangibles....................................................... 106,228 141,638
Foreclosed real estate......................................................... 1,000,000 45,000
Other assets................................................................... 771,242 463,094
-------------- --------------
Total assets................................................................. $ 328,346,148 $ 313,067,008
-------------- --------------
-------------- --------------
LIABILITIES
Deposits
Non-interest bearing......................................................... $ 29,001,245 $ 30,335,037
Interest bearing............................................................. 247,400,928 232,011,066
-------------- --------------
Total deposits............................................................. 276,402,173 262,346,103
Short-term borrowings.......................................................... 15,683,491 13,240,300
Long-term debt................................................................. 5,000,000 6,000,000
Interest payable............................................................... 1,271,737 1,388,635
Other liabilities.............................................................. 2,239,784 1,846,551
-------------- --------------
Total liabilities.......................................................... 300,597,185 284,821,589
-------------- --------------

COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY
Preferred stock
Authorized--400,000 shares
Issued and outstanding--20,000 shares
Series M-1987 convertible preferred shares................................. 2,000,000
Common stock, $1 par value
Authorized--3,000,000
Issued and outstanding--1,250,897 shares..................................... 1,250,897 1,250,897
Paid-in capital................................................................ 10,677,045 10,677,045
Retained earnings.............................................................. 15,726,495 14,122,382
Net unrealized gain on securities available for sale........................... 94,526 195,095
-------------- --------------
Total shareholders' equity............................................... 27,748,963 28,245,419
-------------- --------------
Total liabilities and shareholders' equity............................... $ 328,346,148 $ 313,067,008
-------------- --------------
-------------- --------------
</TABLE>

See notes to consolidated financial statements.

F-9
<PAGE>
INDIANA UNITED BANCORP AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF INCOME

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------------
1996 1995 1994
------------- ------------- -------------
<S> <C> <C> <C>
INTEREST INCOME
Loans receivable.................................................. $ 18,266,420 $ 16,938,330 $ 15,940,601
Investment securities
Taxable......................................................... 5,122,743 5,326,297 5,871,583
Tax exempt...................................................... 185,231 216,816 259,772
Federal funds sold................................................ 379,965 304,619 115,626
Short-term investments............................................ 12,469 49,002 15,075
------------- ------------- -------------
Total interest income......................................... 23,966,828 22,835,064 22,202,657
------------- ------------- -------------
INTEREST EXPENSE
Deposits.......................................................... 10,862,835 10,307,724 9,787,434
Short-term borrowings............................................. 689,789 931,944 482,907
Long-term debt.................................................... 453,527 611,978 630,901
------------- ------------- -------------
Total interest expense........................................ 12,006,151 11,851,646 10,901,242
------------- ------------- -------------
NET INTEREST INCOME................................................. 11,960,677 10,983,418 11,301,415
Provision for loan losses......................................... 150,000 30,000 115,000
------------- ------------- -------------
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES................. 11,810,677 10,953,418 11,186,415
------------- ------------- -------------
NON-INTEREST INCOME
Insurance commissions............................................. 438,405 472,998 508,935
Fiduciary activities.............................................. 232,494 189,417 200,241
Service charges on deposit accounts............................... 519,609 450,060 474,896
Net realized gains (losses) on securities......................... 16,296 (154,297)
Gain on sale of branches.......................................... 1,228,751
Other income...................................................... 311,204 328,032 329,346
------------- ------------- -------------
Total non-interest income....................................... 1,501,712 1,456,803 2,587,872
------------- ------------- -------------
NON-INTEREST EXPENSE
Salaries and employee benefits.................................... 4,481,548 4,467,408 4,552,848
Net occupancy expenses............................................ 764,086 804,977 835,351
Equipment expenses................................................ 712,683 664,109 685,805
Professional fees................................................. 221,927 204,578 395,383
Deposit insurance expense......................................... 735,576 394,672 666,402
Amortization of core deposit intangibles.......................... 35,410 40,468 45,527
Other expenses.................................................... 1,667,259 1,653,251 1,858,864
------------- ------------- -------------
Total non-interest expense...................................... 8,618,489 8,229,463 9,040,180
------------- ------------- -------------
INCOME BEFORE INCOME TAX............................................ 4,693,900 4,180,758 4,734,107
Income tax expense................................................ 2,001,351 1,651,366 1,863,756
------------- ------------- -------------
NET INCOME.......................................................... $ 2,692,549 $ 2,529,392 $ 2,870,351
------------- ------------- -------------
------------- ------------- -------------
Net income per common share......................................... $ 2.11 $ 1.91 $ 2.17
Weighted Average Shares Outstanding................................. 1,250,897 1,250,897 1,250,897
</TABLE>

See notes to consolidated financial statements.

F-10
<PAGE>
INDIANA UNITED BANCORP AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CASH FLOWS

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------
1996 1995 1994
----------- ----------- -----------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income............................................................. $ 2,692,549 $ 2,529,392 $ 2,870,351
Adjustments to reconcile net income to net cash provided by operating
activities Provision for loan losses................................. 150,000 30,000 115,000
Depreciation and amortization........................................ 644,673 623,686 621,777
Deferred income tax.................................................. 188,387 (60,950) (158,955)
Securities amortization, net......................................... 72,066 105,445 128,563
Amortization of fair value adjustments on loans and deposits......... 90,600 81,544 (34,768)
Amortization of core deposit intangibles............................. 35,410 40,468 45,527
Investment securities (gains) losses................................. (16,296) 154,297
Net change in
Income receivable.................................................. 22,528 (78,370) 68,069
Interest payable................................................... (116,898) 524,295 52,213
Gain on sale of branches............................................. (1,228,751)
Other adjustments.................................................... (496,966) 44,534 152,967
----------- ----------- -----------
Net cash provided by operating activities........................ 3,282,349 3,823,748 2,786,290
----------- ----------- -----------
INVESTING ACTIVITIES
Net change in short-term investments................................... 5,000,000 (4,952,843) 100,825
Purchases of securities available for sale............................. (16,850,769) (5,738,936) (24,219,400)
Proceeds from maturities and paydowns of securities available for
sale................................................................. 16,531,638 11,841,444 27,871,655
Proceeds from sales of securities available for sale................... 9,369,943 26,477,204
Purchases of securities held to maturity............................... (324,520) (2,429,679)
Proceeds from maturities and paydowns of securities held to maturity... 752,427 791,211
Net change in loans.................................................... (19,617,946) (6,833,403) (2,475,422)
Purchases of premises and equipment.................................... (556,117) (1,195,505) (454,942)
Proceeds from sale of other real estate................................ 50,000 63,177 1,579,817
Net cash and cash equivalents paid in branch sales..................... (9,019,963)
Other investing activities............................................. 17,000 10,000 17,573
----------- ----------- -----------
Net cash provided (used) by investing activities................... (15,426,194) 2,991,784 18,238,879
----------- ----------- -----------
FINANCING ACTIVITIES
Net change in
Non-interest-bearing, NOW, money market and savings deposits......... 1,534,086 (3,040,069) (7,872,722)
Certificates of deposit.............................................. 12,521,984 4,036,023 (16,212,020)
Short-term borrowings................................................ 4,443,191 439,426 2,331,938
Repayment of long-term debt............................................ (1,000,000) (1,500,000) (1,875,000)
Proceeds from FHLB advances............................................ 5,190,000
Repayment of FHLB advances............................................. (2,000,000) (3,190,000)
Cash dividends......................................................... (1,088,436) (1,002,599) (839,461)
Redemption of preferred stock.......................................... (2,000,000) (400,000) (300,000)
Other financing activities............................................. (10,424)
----------- ----------- -----------
Net cash provided (used) by financing activities................... 12,410,825 532,781 (24,777,689)
----------- ----------- -----------
NET CHANGE IN CASH AND CASH EQUIVALENTS.................................. 266,980 7,348,313 (3,752,520)
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR............................. 18,928,934 11,580,621 15,333,141
----------- ----------- -----------
CASH AND CASH EQUIVALENTS, END OF YEAR................................... $19,195,914 $18,928,934 $11,580,621
----------- ----------- -----------
----------- ----------- -----------
ADDITIONAL CASH FLOWS INFORMATION
Interest paid.......................................................... $12,123,049 $11,327,351 $10,931,300
Income tax paid........................................................ 1,885,288 1,943,281 1,628,500
Loan balances transferred to foreclosed real estate.................... 1,000,000
</TABLE>

See notes to consolidated financial statements.

F-11
<PAGE>
INDIANA UNITED BANCORP AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY

<TABLE>
<CAPTION>
NET
UNREALIZED
GAIN (LOSS)
ON
PREFERRED STOCK COMMON STOCK SECURITIES
-------------------- -------------------- PAID-IN RETAINED AVAILABLE
SHARES AMOUNT SHARES AMOUNT CAPITAL EARNINGS FOR SALE TOTAL
--------- --------- --------- --------- ---------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCES, JANUARY 1, 1994........ 27,000 $2,700,000 1,137,578 $1,137,578 $8,099,038 $13,266,449 $25,203,065
Net income for 1994............ 2,870,351 2,870,351
Cash dividends.................
Preferred stock--$6.34 per
share...................... (156,915) (156,915)
Common stock--$.60 per
share...................... (682,546) (682,546)
10% stock dividend............. 113,319 113,319 2,578,007 (2,691,326)
Adjustment for cash paid in
lieu of issuing fractional
shares....................... (10,424) (10,424)
Cumulative effect of change in
method of accounting for
securities................... $ 846,177 846,177
Net change in unrealized gain
(loss) on securities
available for sale........... (3,487,650) (3,487,650)
Redemption of preferred
stock........................ (3,000) (300,000) (300,000)
--------- --------- --------- --------- ---------- ----------- ----------- ----------
BALANCES, DECEMBER 31, 1994...... 24,000 2,400,000 1,250,897 1,250,897 10,677,045 12,595,589 (2,641,473) 24,282,058
Net income for 1995............ 2,529,392 2,529,392
Cash dividends.................
Preferred stock-- $6.34 per
share...................... (139,480) (139,480)
Common stock--$.69 per
share...................... (863,119) (863,119)
Net change in unrealized gain
(loss) on securities
available for sale........... 2,836,568 2,836,568
Redemption of preferred
stock........................ (4,000) (400,000) (400,000)
--------- --------- --------- --------- ---------- ----------- ----------- ----------
BALANCES, DECEMBER 31, 1995...... 20,000 2,000,000 1,250,897 1,250,897 10,677,045 14,122,382 195,095 28,245,419
Net income for 1996............ 2,692,549 2,692,549
Cash dividends
Preferred stock--$6.34 per
share...................... (50,192) (50,192)
Common stock--$.83 per
share...................... (1,038,244) (1,038,244)
Net change in unrealized gain
(loss) on securities
available for sale........... (100,569) (100,569)
Redemption of preferred
stock........................ (20,000) (2,000,000) (2,000,000)
--------- --------- --------- --------- ---------- ----------- ----------- ----------
BALANCES, DECEMBER 31, 1996 $ 0 1,250,897 $1,250,897 $10,677,045 $15,726,495 $ 94,526 $27,748,963
--------- --------- --------- --------- ---------- ----------- ----------- ----------
--------- --------- --------- --------- ---------- ----------- ----------- ----------
</TABLE>

See notes to consolidated financial statements.

F-12
<PAGE>
INDIANA UNITED BANCORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(TABLE DOLLAR AMOUNTS IN THOUSANDS)

NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accounting and reporting policies of Indiana United Bancorp ("Company"),
and its wholly owned subsidiaries, ("Banks"), conform to generally accepted
accounting principles and reporting practices followed by the banking industry.
The more significant of the policies are described below.

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.

The Company is a bank holding company whose principal activity is the
ownership and management of the Banks. Union Bank and Trust Company of Indiana
("Union Bank") headquartered in Greensburg, Indiana operates under a state
charter and is subject to regulation by the Indiana Department of Financial
Institutions ("DFI") and the Federal Deposit Insurance Corporation ("FDIC").
Regional Federal Savings Bank ("Regional Bank"), headquartered in New Albany,
Indiana is a federally-chartered thrift and is subject to regulation by the
Office of Thrift Supervision ("OTS") and the FDIC.

The Banks generate commercial, mortgage and consumer loans and receive
deposits from customers located primarily in Decatur, Floyd, Clark and Jay
Counties, Indiana, and surrounding counties. The Banks' loans are generally
secured by specific items of collateral including real property, consumer assets
and business assets. Although the Banks have diversified loan portfolios, a
substantial portion of their debtors' ability to honor their contracts is
dependent upon economic conditions in the agricultural industry.

CONSOLIDATION--The consolidated financial statements include the accounts of
the Company and the Banks after elimination of all material intercompany
transactions and accounts.

INVESTMENT SECURITIES--Debt securities are classified as held to maturity
("HTM") when the Company has the positive intent and ability to hold the
securities to maturity. Securities HTM are carried at amortized cost.

Debt securities not classified as HTM are classified as available for sale
("AFS"). Securities AFS are carried at fair value with unrealized gains and
losses reported separately through shareholders' equity, net of tax.

Amortization of premiums and accretion of discounts are recorded as interest
income from securities. Realized gains and losses are recorded as net security
gains (losses). Gains and losses on sales of securities are determined on the
specific-identification method.

At January 1, 1994, investment securities with an approximate carrying value
of $125,081,000 were reclassified as AFS. This reclassification resulted in an
increase in total shareholders' equity, net of tax, of $846,177.

LOANS are carried at the principal amount outstanding. Interest income is
accrued on the principal balances of loans. The accrual of interest on impaired
loans is discontinued when, in management's opinion, the borrower may be unable
to meet payments as they become due. When interest accrual is discontinued, all
unpaid accrued interest is reversed. Interest income is subsequently recognized
only to the extent cash payments are received unless such amounts are applied to
principal amounts outstanding. Certain loan fees and direct costs are being
deferred and amortized as an adjustment of yield on the loans.

F-13
<PAGE>
INDIANA UNITED BANCORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(TABLE DOLLAR AMOUNTS IN THOUSANDS)

PROVISION FOR LOAN LOSSES and the adequacy of the allowance for loan losses
are based on management's continuing review and evaluation of the loan
portfolio, current economic conditions, past loss experience and other pertinent
factors. Impaired loans are measured by the present value of expected cash
flows, or the fair value of the collateral of the loan, if collateral dependent.

The determination of the adequacy of the allowance for loan losses is based
on estimates that are particularly susceptible to significant changes in the
economic environment and market conditions. Management believes that as of
December 31, 1996, the allowance for loan losses is adequate based on
information currently available. A worsening or protracted economic decline in
the area within which the Company operates would increase the likelihood of
additional losses due to credit and market risks and could create the need for
additional loss reserves.

PREMISES AND EQUIPMENT are carried at cost net of accumulated depreciation.
Depreciation is computed using the straight-line method for premises and the
declining-balance method for equipment based principally on the estimated useful
lives of the assets. Maintenance and repairs are expensed as incurred while
major additions and improvements are capitalized. Gains and losses on
dispositions are included in current operations.

FEDERAL HOME LOAN BANK STOCK is a required investment for institutions that
are members of the Federal Home Loan Bank ("FHLB") system. The required
investment in the common stock is based on a predetermined formula.

FORECLOSED REAL ESTATE is carried at the lower of cost or fair value less
estimated selling costs. When foreclosed real estate is acquired, any required
adjustment is charged to the allowance for loan losses. All subsequent activity
is included in current operations.

CORE DEPOSIT INTANGIBLES resulting from the value of the future stream of
income allocated to customer deposits acquired in acquisitions is being
amortized over a period of 15 years using accelerated methods.

INCOME TAX in the consolidated statement of income includes deferred income
tax provisions or benefits for all significant temporary differences in
recognizing income and expenses for financial reporting and income tax purposes.
The Company files consolidated income tax returns with its subsidiaries.

EARNINGS PER SHARE have been computed based upon the weighted average common
shares outstanding during each year.

RESTRICTION ON CASH AND DUE FROM BANKS

The Banks are required to maintain reserve funds in cash and/or on deposit
with the Federal Reserve Bank. The reserve required at December 31, 1996, was
$1,565,000.

F-14
<PAGE>
INDIANA UNITED BANCORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(TABLE DOLLAR AMOUNTS IN THOUSANDS)

INVESTMENT SECURITIES

<TABLE>
<CAPTION>
DECEMBER 31, 1996
----------------------------------------------------
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
----------- ------------- ------------- ---------
<S> <C> <C> <C> <C>
Available for sale
U.S. Treasury.................................................... $ 2,006 $ 3 $ 5 $ 2,004
Federal agencies................................................. 24,556 416 148 24,824
State and municipal.............................................. 4,057 35 17 4,075
Mortgage-backed securities....................................... 50,157 489 604 50,042
Corporate obligations............................................ 244 2 242
----------- ----- ----- ---------
Total investment securities.................................. $ 81,020 $ 943 $ 776 $ 81,187
----------- ----- ----- ---------
----------- ----- ----- ---------
</TABLE>

<TABLE>
<CAPTION>
DECEMBER 31, 1995
----------------------------------------------------
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
----------- ------------- ------------- ---------
<S> <C> <C> <C> <C>
Available for sale
U.S. Treasury.................................................... $ 3,016 $ 12 $ 10 $ 3,018
Federal agencies................................................. 12,257 259 104 12,412
State and municipal.............................................. 3,955 80 1 4,034
Mortgage-backed securities....................................... 60,610 582 425 60,767
Corporate obligations............................................ 480 60 420
----------- ----- ----- ---------
Total investment securities.................................. $ 80,318 $ 933 $ 600 $ 80,651
----------- ----- ----- ---------
----------- ----- ----- ---------
</TABLE>

The amortized cost and fair value of securities AFS at December 31, 1996 by
contractual maturity, are shown below. Expected maturities will differ from
contractual maturities because issuers may have the right to call or prepay
obligations with or without call or prepayment penalties.

<TABLE>
<CAPTION>
AVAILABLE FOR SALE
----------------------
AMORTIZED FAIR
COST VALUE
----------- ---------
<S> <C> <C>
Within one year............................................................................ $ 5,509 $ 5,487
Two through five years..................................................................... 11,703 11,634
Six through ten years...................................................................... 13,327 13,696
After ten years............................................................................ 324 328
----------- ---------
30,863 31,145
Mortgage-backed securities................................................................. 50,157 50,042
----------- ---------
Totals............................................................................... $ 81,020 $ 81,187
----------- ---------
----------- ---------
</TABLE>

Securities with a carrying value of $25,009,600 and $23,621,600 were pledged
at December 31, 1996 and 1995 to secure certain deposits and for other purposes
as permitted or required by law.

F-15
<PAGE>
INDIANA UNITED BANCORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(TABLE DOLLAR AMOUNTS IN THOUSANDS)

Proceeds from sales of securities AFS during 1995 and 1994 were $9,369,943
and $26,477,204. Gross gains of $160,945 and $71,348 and gross losses of
$144,649 and $225,645 were realized on those sales in 1995 and 1994,
respectively.

The tax expense (benefit) for gains (losses) on security transactions for
the years ended December 31, 1995 and 1994 was $6,400 and $(61,100).

LOANS AND ALLOWANCE

<TABLE>
<CAPTION>
DECEMBER 31,
----------------------
1996 1995
---------- ----------
<S> <C> <C>
Commercial and industrial loans........................................................... $ 7,834 $ 7,796
Agricultural production financing......................................................... 11,178 9,996
Farm real estate.......................................................................... 26,843 28,910
Commercial real estate.................................................................... 27,691 24,129
Residential real estate................................................................... 109,962 103,239
Construction and development.............................................................. 6,589 6,863
Consumer.................................................................................. 27,567 18,342
Government guaranteed loans............................................................... 1,819 2,080
---------- ----------
Total loans......................................................................... $ 219,483 $ 201,355
---------- ----------
---------- ----------
</TABLE>

<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------------
1996 1995 1994
--------- --------- ---------
<S> <C> <C> <C>
Allowance for loan losses
Balances, January 1................................................................ $ 2,754 $ 2,784 $ 2,682
Provision for losses............................................................... 150 30 115
Recoveries on loans................................................................ 58 100 79
Loans charged off.................................................................. (456) (160) (92)
--------- --------- ---------
Balances, December 31.............................................................. $ 2,506 $ 2,754 $ 2,784
--------- --------- ---------
--------- --------- ---------
</TABLE>

Information on impaired loans is summarized below.

<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1996 1995
--------- ---------
<S> <C> <C>
Impaired loans with an allowance.......................................... $ 535 $ 573
Impaired loans for which the discounted cash flows or collateral value
exceeds the carrying value of the loan.................................. 613
--------- ---------
Total impaired loans.................................................. $ 1,148 $ 573
--------- ---------
--------- ---------
Allowance for impaired loans (included in the Company's allowance for loan
losses)................................................................. $ 120 $ 250
</TABLE>

<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
--------------------
1996 1995
--------- ---------
<S> <C> <C>
Average balance of impaired loans......................................... $ 1,996 $ 148
Interest income recognized on impaired loans.............................. 112 20
Cash-basis interest included above........................................ 112 20
</TABLE>

F-16
<PAGE>
INDIANA UNITED BANCORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(TABLE DOLLAR AMOUNTS IN THOUSANDS)

The Banks have entered into transactions with certain directors, executive
officers, significant shareholders and their affiliates or associates (related
parties). Such transactions were made in the ordinary course of business on
substantially the same terms and conditions, including interest rates and
collateral, as those prevailing at the same time for comparable transactions
with other customers, and did not, in the opinion of management, involve more
than normal credit risk or present other unfavorable features. The aggregate
amount of loans, as defined, to such related parties were as follows:

<TABLE>
<CAPTION>
1996 1995
--------- ---------
<S> <C> <C>
Balances, January 1....................................................... $ 5,941 $ 5,124
Changes in composition of related parties................................. (416) (399)
New loans, including renewals............................................. 2,986 2,382
Payments, etc., including renewals........................................ (547) (1,166)
--------- ---------
Balances, December 31..................................................... $ 7,964 $ 5,941
--------- ---------
--------- ---------
</TABLE>

PREMISES AND EQUIPMENT

<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1996 1995
--------- ---------
<S> <C> <C>
Land.................................................................... $ 909 $ 909
Buildings............................................................... 7,030 7,054
Equipment............................................................... 5,115 4,720
--------- ---------
Total cost.......................................................... 13,054 12,683
Accumulated depreciation................................................ (7,135) (6,658)
--------- ---------
Net................................................................. $ 5,919 $ 6,025
--------- ---------
--------- ---------
</TABLE>

DEPOSITS

<TABLE>
<CAPTION>
DECEMBER 31,
----------------------
1996 1995
---------- ----------
<S> <C> <C>
Non-interest-bearing.................................................. $ 29,001 $ 30,335
Interest-bearing demand............................................... 67,726 64,649
Savings deposits...................................................... 28,619 28,828
Certificates and other time deposits of $100,000 or more.............. 32,083 23,512
Other certificates and time deposits.................................. 118,973 115,022
---------- ----------
Total deposits.................................................... $ 276,402 $ 262,346
---------- ----------
---------- ----------
</TABLE>

F-17
<PAGE>
INDIANA UNITED BANCORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(TABLE DOLLAR AMOUNTS IN THOUSANDS)

Certificates and other time deposits maturing in years ending after December
31, 1996

<TABLE>
<S> <C>
1997.............................................................. $ 98,392
1998.............................................................. 36,087
1999.............................................................. 9,803
2000.............................................................. 4,839
2001.............................................................. 1,462
Thereafter........................................................ 473
---------
$ 151,056
---------
---------
</TABLE>

SHORT-TERM BORROWINGS

<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1996 1995
--------- ---------
<S> <C> <C>
Federal funds purchased................................................. $ 750
FHLB advances........................................................... $ 2,000
Securities sold under repurchase agreements............................. 12,989 10,735
U. S. Treasury demand notes............................................. 1,944 505
--------- ---------
Total short-term borrowings......................................... $ 15,683 $ 13,240
--------- ---------
--------- ---------
</TABLE>

Securities sold under agreements to repurchase consist of obligations of the
Company to other parties. The obligations are secured by U. S. Treasury
securities and Federal agencies, and such collateral is held by a safekeeping
agent. The maximum amount of outstanding agreements at any month-end during 1996
and 1995 totaled $15,903,000 and $15,174,000 and the daily average of such
agreements totaled $11,564,000 and $10,162,000. The weighted average yield was
5.12% and 5.28% at December 31, 1996 and 1995 while the weighted average yield
during 1996 and 1995 was approximately 5.14% and 5.67%.

The Company had a FHLB advance of $2,000,000 outstanding at December 31,
1995 which was repaid during 1996.

LONG-TERM DEBT

Long-term debt at December 31, 1996 consisted of a $5,000,000 secured term
loan. In January, 1992, the Company converted a line of credit to an $11,200,000
six-year secured term loan. Interest is payable quarterly and was at the
lender's base rate through June 30, 1995. Commencing July 1, 1995, the interest
rate converted to the lender's base rate, less .25%. Principal payments are due
semiannually. The loan is secured by all stock of the Banks and the loan
agreement contains restrictions on debt, guarantees and mergers, in addition to
other affirmative and negative covenants.

A principal payment of $375,000 is due June 30, 1997 with the remaining loan
balance due December 31, 1997. Management intends to refinance all or a portion
of the remaining balance during 1997.

F-18
<PAGE>
INDIANA UNITED BANCORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(TABLE DOLLAR AMOUNTS IN THOUSANDS)

INCOME TAX

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------
1996 1995 1994
--------- --------- ---------
<S> <C> <C> <C>
Income tax expense
Currently payable
Federal...................................................... $ 1,408 $ 1,317 $ 1,560
State........................................................ 405 395 463
Deferred
Federal...................................................... 179 (50) (128)
State........................................................ 9 (11) (31)
--------- --------- ---------
Total income tax expense................................. $ 2,001 $ 1,651 $ 1,864
--------- --------- ---------
--------- --------- ---------
Reconciliation of federal statutory to actual tax expense
Federal statutory income tax at 34%............................ $ 1,596 $ 1,421 $ 1,610
Tax exempt interest............................................ (57) (63) (77)
Effect of state income taxes................................... 273 253 285
Change in tax law.............................................. 144
Other.......................................................... 45 40 46
--------- --------- ---------
Actual tax expense....................................... $ 2,001 $ 1,651 $ 1,864
--------- --------- ---------
--------- --------- ---------
</TABLE>

A cumulative net deferred tax liability is included in other liabilities.
The components of the liability are as follows:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER
31,
--------------------
1996 1995
--------- ---------
<S> <C> <C>
Differences in accounting for loans...................................... $ (223) $ (263)
Differences in accounting for securities................................. (39) (49)
Differences in accounting for premises and equipment..................... (675) (730)
Differences in depreciation methods...................................... (210) (160)
Differences in accounting for loan losses................................ 289 506
Differences in accounting for securities available for sale.............. (72) (138)
State income tax......................................................... 15 13
Other.................................................................... (39) (11)
--------- ---------
$ (954) $ (832)
--------- ---------
--------- ---------
Assets................................................................... $ 304 $ 519
Liabilities.............................................................. (1,258) (1,351)
--------- ---------
$ (954) $ (832)
--------- ---------
--------- ---------
</TABLE>

No valuation allowance was necessary at anytime during 1996, 1995 and 1994.

Retained earnings include approximately $2,162,000 for which no deferred
income tax liability has been recognized. This amount represents an allocation
of income to bad debt deductions as of December 31, 1987 for tax purposes only.
Reduction of amounts so allocated for purposes other than tax bad debt losses
including redemption of bank stock or excess dividends, or loss of "bank"
status, would create

F-19
<PAGE>
INDIANA UNITED BANCORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(TABLE DOLLAR AMOUNTS IN THOUSANDS)

income for tax purposes only, which income would be subject to the then-current
corporate income tax rate. The unrecorded deferred income tax liability on the
above amount at December 31, 1996 was approximately $735,000.

COMMITMENTS AND CONTINGENT LIABILITIES

In the normal course of business there are outstanding commitments and
contingent liabilities, such as commitments to extend credit and standby letters
of credit, which are not included in the accompanying financial statements. The
Banks' exposure to credit loss in the event of nonperformance by the other party
to the financial instruments for commitments to extend credit and standby
letters of credit is represented by the contractual or notional amount of those
instruments. The Banks use the same credit policies in making such commitments
as they do for instruments that are included in the consolidated balance sheet.

Financial instruments whose contract amount represents credit risk as of
December 31 were as follows:

<TABLE>
<CAPTION>
1996 1995
--------- ---------
<S> <C> <C>
Commitments to extend credit............................................ $ 26,694 $ 21,097
Standby letters of credit............................................... 222 155
</TABLE>

Commitments to extend credit are agreements to lend to a customer as long as
there is no violation of any condition established in the contract. Commitments
generally have fixed expiration dates or other termination clauses and may
require payment of a fee. Since many of the commitments are expected to expire
without being drawn upon, the total commitment amounts do not necessarily
represent future cash requirements. Collateral held varies but may include
accounts receivable, inventory, property and equipment, and income-producing
commercial properties. Standby letters of credit are conditional commitments
issued by the Banks to guarantee the performance of a customer to a third party.

The Company and Banks may from time to time be subject to claims and
lawsuits which arise primarily in the ordinary course of business. Management is
presently not aware of any such claims.

PREFERRED SHARES

In 1987, the Company issued 30,000 shares of no-par value, $100 stated
value, convertible preferred stock. The Company redeemed 20,000 shares of
preferred stock in 1996, 4,000 shares in 1995 and 3,000 shares in 1994. The
total redemption price was $2,000,000 in 1996, $400,000 in 1995 and $300,000 in
1994. For 1994 through 1996, cash dividends were paid at the rate of 6.34% per
annum.

The Company's Articles of Incorporation permit the Board of Directors,
without further shareholder approval, to establish the relative rights,
designations, preferences and limitations or restrictions of the Company's
preferred stock prior to the issuance thereof.

RESTRICTIONS ON DIVIDENDS

Without prior approval, Union Bank is restricted by Indiana law and
regulations of the DFI, and the FDIC as to the maximum amount of dividends Union
Bank can pay to the parent in any calendar year to Union Bank's retained net
profits (as defined) for that year and the two preceding years.

The OTS regulations provide that a savings bank which meets fully phased-in
1994 capital requirements and is subjected only to "normal supervision", such as
Regional Bank, may pay out 100% of net income to date over the calendar year and
50% of surplus capital existing at the beginning of the calendar

F-20
<PAGE>
INDIANA UNITED BANCORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(TABLE DOLLAR AMOUNTS IN THOUSANDS)

year without supervisory approval, but with 30 days prior notice to OTS. As a
result of limitations relating to tax bad debt deductions, Regional Bank's
nontaxable dividends to the Company are limited to an amount approximately equal
to net income commencing in 1997.

At December 31, 1996, total shareholders' equity of the Banks was
$31,075,000 of which $29,504,000 was restricted or limited from dividend
distribution to the Company. As a practical matter, the Banks may restrict
dividends to a lesser amount because of the need to maintain an adequate capital
structure.

REGULATORY CAPITAL

The Company and Banks are subject to various regulatory capital requirements
administered by the federal banking agencies. Failure to meet minimum capital
requirements can initiate actions by the regulatory agencies that, if
undertaken, could have a material effect on the Company's financial statements.
Under capital adequacy guidelines and the regulatory framework for prompt
corrective action, the Company and Banks must meet specific capital guidelines
that involve quantitative measures of the Company's and Banks' assets,
liabilities, and certain off-balance-sheet items as calculated under regulatory
accounting practices. The Company's and Banks' capital amounts and
classification are also subject to qualitative judgments by the regulators about
components, risk weightings, and other factors.

At December 31, 1996, management of the Company believes that it meets all
capital adequacy requirements to which it is subject. The most recent
notification from the regulatory agencies categorized the Banks as well
capitalized under the regulatory framework for prompt corrective action. There
have been no conditions or events since that notification that management
believes have changed this categorization.

The Company's and Banks' actual and required capital amounts and ratios are
as follows:

<TABLE>
<CAPTION>
DECEMBER 31, 1996
----------------------------------------------------------------
REQUIRED FOR TO BE WELL
ACTUAL ADEQUATE CAPITAL(1) CAPITALIZED(1)
-------------------- -------------------- --------------------
AMOUNT RATIO AMOUNT RATIO AMOUNT RATIO
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
INDIANA UNITED BANCORP
Total capital(1) (to risk-weighted assets)... $ 29,934 15.6% $ 15,312 8.0% N/A
Tier I capital(1) (to risk-weighted
assets).................................... 27,540 14.4 7,656 4.0 N/A
Tier I capital(1) (to average assets)........ 27,540 8.4 13,152 4.0 N/A
UNION BANK
Total capital(1) (to risk-weighted assets)... 21,224 15.8 10,718 8.0 $ 13,398 10.0%
Tier I capital(1) (to risk-weighted
assets).................................... 19,547 14.6 5,359 4.0 8,039 6.0
Tier I capital(1) (to average assets)........ 19,547 9.0 8,708 4.0 10,885 5.0
REGIONAL BANK
Total risk-based capital(1) (to risk-weighted
assets)...................................... 12,076 19.2 5,021 8.0 6,277 10.0
Core capital(1) (to adjusted tangible assets).. 11,415 10.6 3,219 3.0 6,437 6.0
Core capital(1) (to adjusted total assets)..... 11,415 10.6 3,219 3.0 5,369 5.0
</TABLE>

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

(1) As defined by regulatory agencies

Regional Bank's tangible capital at December 31, 1996 was $11,415,000, which
amount was 10.6 percent of tangible assets and exceeded the required ratio of
1.5 percent.

F-21
<PAGE>
INDIANA UNITED BANCORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(TABLE DOLLAR AMOUNTS IN THOUSANDS)

LOAN SERVICING

Mortgage loans serviced for others are not included in the accompanying
consolidated balance sheet. The unpaid principal balances of mortgage loans
serviced for others totaled $2,960,000 and $2,302,000 at December 31, 1996 and
1995.

EMPLOYEE BENEFIT PLANS

The Company has a defined-contribution retirement plan in which
substantially all employees may participate. The Company matched employees'
contributions at the rate of $.70 for 1996, $.65 for 1995, and $.60 for 1994 for
each dollar contributed. In addition, the Company contributed 6.5% of total
compensation plus an additional 5.7% of each participant's compensation in
excess of $62,700 in 1996, $61,200 in 1995 and $60,600 in 1994. Expense for the
plan was $283,518 in 1996, $295,862 in 1995 and $273,053 in 1994.

DEPOSIT INSURANCE EXPENSE

Regional Bank's deposits are presently insured by the Savings Association
Insurance Fund ("SAIF"). A recapitalization plan for the SAIF was signed into
law on September 30, 1996, which provided for a special assessment on all
SAIF-insured institutions to enable the SAIF to achieve the required level of
reserves. The assessment of .0657% was based on March 31, 1995 deposits.
Regional Banks' special assessment totaled $545,000 before taxes, and was
charged against current income and included with deposit insurance expense.

FAIR VALUES OF FINANCIAL INSTRUMENTS

The following methods and assumptions were used to estimate the fair value
of each class of financial instrument:

CASH AND CASH EQUIVALENTS--The fair value of cash and cash equivalents
approximates carrying value.

SHORT-TERM INVESTMENTS--The fair value of short-term investments
approximates carrying value.

SECURITIES--Fair values are based on quoted market prices.

LOANS--For both short-term loans and variable-rate loans that reprice
frequently and with no significant change in credit risk, fair values are based
on carrying values. The fair value for other loans are estimated using
discounted cash flow analyses, using interest rates currently being offered for
loans with similar terms to borrowers of similar credit quality.

INCOME RECEIVABLE/INTEREST PAYABLE--The fair value of these amounts
approximates carrying values.

FHLB STOCK--Fair value of FHLB stock is based on the price at which it may
be resold to the FHLB.

DEPOSITS--The fair values of non-interest-bearing, interest-bearing demand,
and savings accounts are equal to the amount payable on demand at the balance
sheet date. The carrying amounts for variable rate, fixed-term certificates of
deposit approximate their fair values at the balance sheet date. Fair values for
fixed-rate certificates of deposit are estimated using a discounted cash flow
calculation that applies interest rates currently being offered on certificates
to a schedule of aggregated expected monthly maturities on such time deposits.

F-22
<PAGE>
INDIANA UNITED BANCORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(TABLE DOLLAR AMOUNTS IN THOUSANDS)

SHORT-TERM BORROWINGS--The interest rates for short-term borrowings
approximate market rates, thus the fair value approximates carrying value.

LONG-TERM DEBT--Long-term debt consists of an adjustable instrument tied to
a variable market interest rate. Fair value approximates carrying value.

The estimated fair values of the Company's financial instruments are as
follows:

<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------------------------
1996 1995
---------------------- ----------------------
CARRYING CARRYING
AMOUNT FAIR VALUE AMOUNT FAIR VALUE
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
ASSETS
Cash and cash equivalents...................................... $ 19,196 $ 19,196 $ 18,929 $ 18,929
Short-term investments......................................... 100 100 5,100 5,100
Securities available for sale.................................. 81,187 81,187 80,651 80,651
Loans, net..................................................... 216,978 217,690 198,600 199,316
Stock in FHLB.................................................. 1,138 1,138 1,138 1,138
Income receivable.............................................. 1,952 1,952 1,974 1,974
LIABILITIES
Deposits....................................................... 276,402 277,180 262,346 262,831
Borrowings
Short-term................................................... 15,683 15,683 13,240 13,240
Long-term.................................................... 5,000 5,000 6,000 6,000
Interest payable............................................... 1,272 1,272 1,389 1,389
</TABLE>

OTHER MATTERS

In October, 1994, the Company sold three underperforming branches of
Regional Bank including loans, deposits and fixed assets in order to concentrate
Regional Bank's resources in its primary market area. The sale resulted in a
gain of $1,228,751 which is shown separately in the consolidated statement of
income.

F-23
<PAGE>
CONDENSED FINANCIAL INFORMATION (PARENT COMPANY ONLY)

Presented below is condensed financial information as to financial position,
results of operations and cash flows of the Company:

CONDENSED BALANCE SHEET

<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1996 1995
--------- ---------
<S> <C> <C>
ASSETS
Cash on deposit and repurchase agreements................................................. $ 1,584 $ 1,940
Investment in subsidiaries................................................................ 31,171 32,325
Other assets.............................................................................. 186 128
--------- ---------
Total assets.......................................................................... $ 32,941 $ 34,393
--------- ---------
--------- ---------
LIABILITIES
Long-term debt............................................................................ $ 5,000 $ 6,000
Other liabilities......................................................................... 192 148
--------- ---------
Total liabilities..................................................................... 5,192 6,148
SHAREHOLDERS' EQUITY........................................................................ 27,749 28,245
--------- ---------
Total liabilities and shareholders' equity............................................ $ 32,941 $ 34,393
--------- ---------
--------- ---------
</TABLE>

CONDENSED STATEMENT OF INCOME

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------
1996 1995 1994
--------- --------- ---------
<S> <C> <C> <C>
INCOME
Dividends from subsidiaries....................................................... $ 4,500 $ 4,000 $ 2,425
Fees from subsidiaries............................................................ 33 55 88
Other income...................................................................... 102 73 77
--------- --------- ---------
Total income.................................................................. 4,635 4,128 2,590
--------- --------- ---------
EXPENSES
Interest expense.................................................................. 454 612 631
Salaries and benefits............................................................. 682 506 413
Professional fees................................................................. 94 84 117
Other expenses.................................................................... 224 236 210
--------- --------- ---------
Total expenses................................................................ 1,454 1,438 1,371
--------- --------- ---------
INCOME BEFORE INCOME TAX AND EQUITY IN UNDISTRIBUTED INCOME OF SUBSIDIARIES......... 3,181 2,690 1,219
Income tax benefit................................................................ 565 511 463
--------- --------- ---------
INCOME BEFORE EQUITY IN UNDISTRIBUTED INCOME OF SUBSIDIARIES........................ 3,746 3,201 1,682
EQUITY IN UNDISTRIBUTED INCOME OF SUBSIDIARIES...................................... (1,053) (672) 1,188
--------- --------- ---------
NET INCOME.......................................................................... $ 2,693 $ 2,529 $ 2,870
--------- --------- ---------
--------- --------- ---------
</TABLE>

F-24
<PAGE>
CONDENSED STATEMENT OF CASH FLOWS

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------
1996 1995 1994
--------- --------- ---------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income...................................................................... $ 2,693 $ 2,529 $ 2,870
(Undistributed) income of subsidiaries.......................................... 1,053 672 (1,188)
Other adjustments............................................................... 71 52 13
--------- --------- ---------
Net cash provided by operating activities................................... 3,817 3,253 1,695
--------- --------- ---------
INVESTING ACTIVITIES
Purchase of equipment........................................................... (102) (17) (34)
Proceeds from sale of equipment................................................. 17 18
--------- --------- ---------
Net cash used by investing activities....................................... (85) (17) (16)
--------- --------- ---------
FINANCING ACTIVITIES
Payments on long-term debt...................................................... (1,000) (1,500) (1,800)
Cash dividends.................................................................. (1,088) (1,003) (839)
Redemption of preferred stock................................................... (2,000) (400) (300)
Other financing activities...................................................... (10)
--------- --------- ---------
Net cash used by financing activities....................................... (4,088) (2,903) (2,949)
--------- --------- ---------
NET CHANGE IN CASH ON DEPOSIT AND REPURCHASE AGREEMENTS........................... (356) 333 (1,270)
CASH ON DEPOSIT AND REPURCHASE AGREEMENTS, BEGINNING OF YEAR...................... 1,940 1,607 2,877
--------- --------- ---------
CASH ON DEPOSIT AND REPURCHASE AGREEMENTS, END OF YEAR............................ $ 1,584 $ 1,940 $ 1,607
--------- --------- ---------
--------- --------- ---------
</TABLE>

F-25
<PAGE>
PTC INTERIM CONSOLIDATED BALANCE SHEETS

(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
DECEMBER 31,
1996
SEPTEMBER 30, ------------
1997
-------------
(UNAUDITED)
<S> <C> <C>
ASSETS
Cash and cash equivalents........................................................... $ 18,281 $ 26,185
Interest-bearing balances with financial institutions............................... 1,398 1,897
Available-for-sale securities....................................................... 28,132 38,376
Held-to-maturity securities......................................................... 25,761 25,218
Total loans......................................................................... 220,653 196,963
Less: Allowances for loan losses................................................ (1,969) (2,000)
------------- ------------
Net loans.................................................................. 218,684 194,963
Premises and equipment, net......................................................... 3,939 3,512
Accrued interest receivable and other assets........................................ 6,539 6,425
------------- ------------
$ 302,734 $ 296,576
------------- ------------
------------- ------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Deposits........................................................................ $ 275,679 $ 271,127
Notes payable................................................................... 250 500
Accrued interest payable and other liabilities.................................. 3,065 3,296
------------- ------------
Total liabilities............................................................. 278,994 274,923
Shareholders' equity
Common Stock.................................................................... 1,026 1,024
Additional paid-in capital...................................................... 10,439 10,413
Retained earnings............................................................... 12,109 10,018
Net unrealized gain or loss on available-for-sale securities.................... 166 198
------------- ------------
Total shareholders' equity.................................................... 23,740 21,653
------------- ------------
$ 302,734 $ 296,576
------------- ------------
------------- ------------
</TABLE>

See accompanying notes to consolidated financial statements.

F-26
<PAGE>
PTC INTERIM CONSOLIDATED STATEMENTS OF INCOME

(UNAUDITED)
(DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1997 1996 1997 1996
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
INTEREST INCOME
Interest and fees on loans................................. $5,017 $4,312 $14,316 $12,648
Interest on securities..................................... 836 946 2,639 2,696
Other interest............................................. 62 135 279 460
---------- ---------- ---------- ----------
Total interest income.................................... 5,915 5,393 17,234 15,804
INTEREST EXPENSE
Interest on deposits....................................... 2,976 2,752 8,653 8,074
Interest on notes payable.................................. 9 13 26 47
---------- ---------- ---------- ----------
Total interest expense................................... 2,985 2,765 8,679 8,121
---------- ---------- ---------- ----------
Net interest income.......................................... 2,930 2,628 8,555 7,683
Provision for loan losses.................................. (210) (227) (610) (616)
Net interest income after provision for loan losses.......... 2,720 2,401 7,945 7,067

NON-INTEREST INCOME
Service charges and fees on deposit accounts............... 331 299 944 887
Mortgage banking income.................................... 360 257 766 577
Gain (loss) on securities.................................. 8 4 8 103
Other income............................................... 48 49 142 195
---------- ---------- ---------- ----------
Total non-interest income................................ 747 609 1,860 1,762

NON-INTEREST EXPENSE
Salaries and benefits...................................... 1,156 1,045 3,346 3,117
Occupancy and equipment, net............................... 306 230 895 682
FDIC insurance............................................. 7 1 22 2
Data processing expense.................................... 98 88 289 266
Other operating expenses................................... 509 437 1,366 1,205
---------- ---------- ---------- ----------
Total non-interest expense............................... 2,076 1,801 5,918 5,272
---------- ---------- ---------- ----------
Income before income taxes................................... 1,391 1,209 3,887 3,557
Less: income taxes....................................... (429) (363) (1,185) (1,166)
---------- ---------- ---------- ----------
Net income................................................... $ 962 $ 846 $ 2,702 $ 2,391
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Earnings per share........................................... $ .94 $ .82 $ 2.64 $ 2.31
Average shares outstanding................................... 1,025,102 1,032,129 1,024,629 1,034,244
Dividends per share.......................................... $ .205 $ .165 $ .595 $ .475
</TABLE>

See accompanying notes to consolidated financial statements.

F-27
<PAGE>
PTC INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
NINE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, 1997 SEPTEMBER 30, 1996
------------------ ------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income.............................................................. $ 2,702 $ 2,391
Adjustments to reconcile net income to net cash from operating
activities
Depreciation.......................................................... 367 274
Provision for loan losses............................................. 610 616
(Gain)/loss on sale of securities..................................... (8) (103)
Amortization of intangible assets..................................... 173 164
Other adjustments..................................................... (342) (787)
------- -------
Net cash from operating activities.................................. 3,502 2,555

CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from paydowns and maturities of held-to-maturity securities.... 2,873 5,470
Proceeds from sales of available-for-sale securities.................... 4,506 3,381
Proceeds from paydowns and maturities of available-for-sale
securities............................................................ 7,728 12,874
Purchases of held-to-maturity securities................................ (3,416) (11,774)
Purchases of available-for-sale securities.............................. (1,982) (17,116)
Net change in loans..................................................... (24,300) (16,207)
Net change in deposits with other financial institutions................ 499 294
Property and equipment expenditures..................................... (794) (616)
------- -------
Net cash from investing activities.................................... (14,886) (23,694)

CASH FLOWS FROM FINANCING ACTIVITIES:
Net change in deposits.................................................. (2,236) 6,907
Deposits assumed in branch acquisition, net of premium paid............. 6,548 --
Dividends paid.......................................................... (610) (490)
Payments on note payable................................................ (250) (392)
Proceeds from issuance of stock......................................... 28 485
Redemption of stock..................................................... -- (620)
------- -------
Net cash from financing activities.................................... 3,480 5,890
------- -------
Net change in cash and cash equivalents................................... (7,904) (15,249)
Cash and cash equivalents at beginning of period.......................... 26,185 (24,474)
------- -------
Cash and cash equivalents at end of period................................ $ 18,281 $ 9,225
------- -------
------- -------
</TABLE>

See accompanying notes to consolidated financial statements.

F-28
<PAGE>
PTC INTERIM CONSOLIDATED STATEMENTS OF CHANGE IN

SHAREHOLDERS' EQUITY
(UNAUDITED)
(DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
NINE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, 1997 SEPTEMBER 30, 1996
------------------ ------------------
<S> <C> <C>
BALANCE JANUARY 1......................................................... $ 21,653 $ 19,218
Net income................................................................ 2,702 2,391
Issuance of stock......................................................... 28 485
Redemption of stock....................................................... -- (620)
Cash dividends paid....................................................... (610) (490)
Change in net unrealized gain or loss on available-for-sale securities.... (33) (231)
------- -------
Balance September 30...................................................... $ 23,740 $ 20,753
------- -------
------- -------
</TABLE>

See accompanying notes to consolidated financial statements.

F-29
<PAGE>
PTC NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1--BASIS OF PRESENTATION

The consolidated financial statements include the accounts of PTC Bancorp
(the "Company") and its wholly owned subsidiary, Peoples Trust Company (the
"Bank"). All significant intercompany accounts and transactions have been
eliminated.

These financial statements were prepared in accordance with the instructions
for Form 10-QSB and, therefore, do not include all of the disclosures necessary
for a complete presentation of financial position, results of operations and
cash flows in conformity with generally accepted accounting principles. These
financial statements have been prepared on a basis consistent with the annual
financial statements and include, in the opinion of management, all adjustments,
consisting of only normal recurring adjustments, necessary for a fair
presentation of the results of operations and financial position at the end of
and for the periods presented.

NOTE 2--PENDING ACCOUNTING CHANGES

The Company does not expect the anticipated adoption of any newly issued
accounting standards to have a material impact on future operations or financial
position.

NOTE 3--EARNINGS PER SHARE

Earnings per share have been computed based upon the weighted average number
of shares outstanding during the periods presented, adjusted for any stock
dividends. Common stock equivalents are not materially dilutive.

NOTE 4--PENDING BUSINESS COMBINATION

On October 8, 1997, the Company agreed to merge with Indiana United Bancorp
("IUB"). IUB is a bank and thrift holding company located in Greensburg,
Indiana. Under terms of the agreement, each outstanding common share of PTC
Bancorp, including shares outstanding under option plans, will be converted into
1.075 common shares of IUB. The proposed transaction requires approval by
regulatory authorities and shareholders of both companies. The proposed
transaction is expected to be consummated during the first quarter of 1998. It
is expected to be accounted for as a pooling-of-interests.

F-30
<PAGE>
REPORT OF INDEPENDENT AUDITORS

Board of Directors and Shareholders
P.T.C. Bancorp
Brookville, Indiana

We have audited the accompanying consolidated balance sheets of P.T.C.
Bancorp as of December 31, 1996 and 1995, and the related consolidated
statements of income, cash flows, and changes in shareholders' equity for the
years then ended. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of P.T.C.
Bancorp as of December 31, 1996 and 1995, and the results of its operations and
its cash flows for the years then ended in conformity with generally accepted
accounting principles.

Crowe, Chizek and Company LLP

Indianapolis, Indiana
January 23, 1997

F-31
<PAGE>
P.T.C. BANCORP

CONSOLIDATED BALANCE SHEETS

DECEMBER 31, 1996 AND 1995
ASSETS

<TABLE>
<CAPTION>
1996 1995
-------------- --------------
<S> <C> <C>
Cash and cash equivalents....................................................... $ 26,185,347 $ 24,474,107
Interest bearing balances with financial institutions.......................... 1,897,000 2,386,369
Securities available for sale, at fair value................................... 38,375,826 38,426,368
Securities held to maturity.................................................... 25,218,575 19,500,690
Loans, net of deferred loan fees............................................... 196,963,140 173,178,986
Allowance for loan losses...................................................... (2,000,324) (1,721,947)
-------------- --------------
Net loans.................................................................... 194,962,816 171,457,039
Premises and equipment, net.................................................... 3,511,742 3,066,738
Intangible assets.............................................................. 1,619,480 1,838,483
Accrued interest receivable and other assets................................... 4,805,212 3,561,956
-------------- --------------
Total assets............................................................. $ 296,575,998 $ 264,711,750
-------------- --------------
-------------- --------------

LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Deposits
Non-interest bearing deposits.............................................. $ 32,349,585 $ 19,752,746
Interest bearing deposits.................................................. 238,777,267 221,981,686
-------------- --------------
Total deposits........................................................... 271,126,852 241,734,432
Notes payable................................................................ 500,000 1,000,000
Accrued interest payable and other liabilities............................... 3,295,811 2,759,219
-------------- --------------
Total liabilities........................................................ 274,922,663 245,493,651
-------------- --------------
Commitments and contingencies
Shareholders' equity
Preferred stock, no par value; 1,000,000 shares authorized, no shares issued
and outstanding
Common stock, $1 stated value: 2,000,000 shares authorized, 1,024,276 and
924,069 shares issued and outstanding...................................... 1,024,276 924,069
Additional paid-in capital................................................... 10,413,146 7,908,794
Retained earnings............................................................ 10,017,584 10,208,434
Unrealized gain on securities available for sale, net........................ 198,329 176,802
-------------- --------------
Total shareholders' equity............................................... 21,653,335 19,218,099
-------------- --------------
Total liabilities and shareholders' equity............................... $ 296,575,998 $ 264,711,750
-------------- --------------
-------------- --------------
</TABLE>

See accompanying notes to financial statements.

F-32
<PAGE>
P.T.C. BANCORP

CONSOLIDATED STATEMENTS OF INCOME

YEARS ENDED DECEMBER 31, 1996 AND 1995

<TABLE>
<CAPTION>
1996 1995
-------------- --------------
<S> <C> <C>
INTEREST INCOME
Interest and fees on loans..................................................... $ 17,125,228 $ 15,446,482
Interest on investment securities
Taxable...................................................................... 2,440,146 2,497,641
Non-taxable.................................................................. 1,190,681 940,240
Interest on balances with financial institutions............................... 129,627 62,347
Interest on federal funds sold................................................. 433,394 473,399
-------------- --------------
Total interest income.................................................... 21,319,076 19,420,109
INTEREST EXPENSE
Interest on deposits........................................................... 10,837,329 9,733,562
Interest on notes payable...................................................... 59,968 101,717
-------------- --------------
Total interest expense................................................... 10,897,297 9,835,279
-------------- --------------

NET INTEREST INCOME.............................................................. 10,421,779 9,584,830
Provision for loan losses...................................................... 828,000 740,000
-------------- --------------
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES...................... 9,593,779 8,844,830

NON-INTEREST INCOME
Service charges on deposit accounts............................................ 1,198,556 1,192,275
Mortgage banking income........................................................ 795,208 446,859
Securities gains/(losses)...................................................... 103,650 (76,367)
Travel commission income....................................................... 66,249 177,906
Other income................................................................... 185,480 161,004
-------------- --------------
Total non-interest income................................................ 2,349,143 1,901,677

NON-INTEREST EXPENSES
Salaries and employee benefits................................................. 4,136,754 3,724,693
Occupancy and equipment expense................................................ 832,571 763,126
Data processing expense........................................................ 372,441 349,613
FDIC assessment................................................................ 2,000 250,796
Other operating expenses....................................................... 1,759,694 1,551,058
-------------- --------------
Total non-interest expense............................................... 7,103,460 6,639,286
-------------- --------------

INCOME BEFORE INCOME TAXES....................................................... 4,839,462 4,107,221
Provision for income taxes..................................................... 1,563,693 1,199,964
-------------- --------------

NET INCOME....................................................................... $ 3,275,769 $ 2,907,257
-------------- --------------
-------------- --------------

Net income per share............................................................. $ 3.17 $ 2.86
-------------- --------------
-------------- --------------
Weighted average common shares outstanding....................................... 1,031,922 1,016,476
-------------- --------------
-------------- --------------
</TABLE>

See accompanying notes to financial statements.

F-33
<PAGE>
P.T.C. BANCORP

CONSOLIDATED STATEMENTS OF CASH FLOWS

YEARS ENDED DECEMBER 31, 1996 AND 1995

<TABLE>
<CAPTION>
1996 1995
-------------- --------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income..................................................................... $ 3,275,769 $ 2,907,257
Adjustments to reconcile net income to net cash from operating activities:
Depreciation................................................................. 282,456 294,920
Provision for loan losses.................................................... 828,000 740,000
(Gain)/loss on sale of securities............................................ (103,650) 76,367
Amortization of intangible assets............................................ 219,003 230,006
Change in accrued interest receivable and other assets....................... (1,257,376) 17,776
Net amortization/(accretion) on securities................................... 115,337 (86,123)
Change in accrued interest payable and other liabilities..................... 536,591 655,718
-------------- --------------
Net cash from operating activities....................................... 3,896,130 4,835,921

CASH FLOWS FROM INVESTING ACTIVITIES:
Property and equipment expenditures............................................ (727,460) (633,368)
Loans made to customers and principal collections thereon...................... (24,333,777) (14,701,975)
Proceeds from sales, maturities, and principal paydowns of securities available
for sale..................................................................... 17,658,091 21,903,216
Proceeds from maturities and principal paydowns of securities held to
maturity..................................................................... 7,121,140 5,514,261
Purchases of securities available for sale..................................... (17,615,607) (20,898,559)
Purchases of securities held to maturity....................................... (12,807,006) (6,712,188)
Net change in deposits with other financial institutions....................... 489,369 (1,102,398)
-------------- --------------
Net cash from investing activities....................................... (30,215,250) (16,631,011)

CASH FLOWS FROM FINANCING ACTIVITIES:
Net change in deposit accounts................................................. 29,392,420 19,435,429
Payments on note payable....................................................... (500,000) (407,500)
Dividends paid................................................................. (678,929) (542,520)
Redemption of shares of stock.................................................. (689,590) --
Proceeds from issuance of stock................................................ 506,459 --
-------------- --------------
Net cash from financing activities....................................... 28,030,360 18,485,409
-------------- --------------

NET CHANGE IN CASH AND CASH EQUIVALENTS.......................................... 1,711,240 6,690,319

Cash and cash equivalents at beginning of year................................... 24,474,107 17,783,788
-------------- --------------
Cash and cash equivalents at end of year......................................... $ 26,185,347 $ 24,474,107
-------------- --------------
-------------- --------------
Cash paid during the period for:
Interest....................................................................... $ 10,879,210 $ 9,223,655
Income taxes................................................................... 1,721,825 1,224,500
</TABLE>

See accompanying notes to financial statements.

F-34
<PAGE>
P.T.C. BANCORP
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1996 AND 1995

<TABLE>
<CAPTION>
UNREALIZED
GAIN/(LOSS)
ON
ADDITIONAL SECURITIES TOTAL
COMMON PAID-IN RETAINED TREASURY AVAILABLE SHAREHOLDERS'
STOCK CAPITAL EARNINGS STOCK FOR SALE EQUITY
------------ ------------- ------------- ----------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
BALANCES AT JANUARY 1, 1995........ $ 857,627 $ 6,155,621 $ 9,868,073 $ (204,761) $ (909,344) $ 15,767,216

Net income....................... 2,907,257 2,907,257
Cash dividends ($.53 per
share)......................... (542,520) (542,520)
Cancellation of treasury
shares......................... (17,907) (186,854) 204,761 --
10% stock dividend (Note 1)...... 84,349 1,940,027 (2,024,376) --
Change in unrealized gain/ (loss)
on securities.................. 1,086,146 1,086,146
------------ ------------- ------------- ----------- ------------ -------------
BALANCES AT DECEMBER 31, 1995...... 924,069 7,908,794 10,208,434 -- 176,802 19,218,099

Net income....................... 3,275,769 3,275,769
Cash dividends ($.66 per
share)......................... (678,929) (678,929)
10% stock dividend (Note 1)...... 92,923 2,694,767 (2,787,690) --
Redemption of shares (22,634
shares)........................ (22,634) (666,956) (689,590)
Exercised stock options (1,469
shares)........................ 1,469 19,934 21,403
Issuance of shares to existing
shareholders (28,449 shares)... 28,449 456,607 485,056
Change in unrealized gain/ (loss)
on securities.................. 21,527 21,527
------------ ------------- ------------- ----------- ------------ -------------
BALANCE AT DECEMBER 31, 1996....... $ 1,024,276 $ 10,413,146 $ 10,017,584 $ -- $ 198,329 $ 21,653,335
------------ ------------- ------------- ----------- ------------ -------------
------------ ------------- ------------- ----------- ------------ -------------
</TABLE>

See accompanying notes to financial statements.

F-35
<PAGE>
P.T.C. BANCORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 1996 AND 1995

NOTE 1 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION: The consolidated financial statements include the
accounts of P.T.C. Bancorp (Company) and its wholly-owned subsidiary, People's
Trust Company (Bank). All significant intercompany transactions have been
eliminated in consolidation.

DESCRIPTION OF BUSINESS: P.T.C. Bancorp generates mortgage, commercial, and
installment loans and receives deposits from customers located primarily in
southeastern Indiana. The majority of the Company's loans are secured by
specific items of collateral including business assets, consumer assets and real
property.

USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS: The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets, liabilities, revenues and expenses.
Actual results could differ from those estimates. Estimates that are more
susceptible to change in the near term include the allowance for loan losses and
fair values of certain securities.

CASH AND CASH EQUIVALENTS: Cash and cash equivalents include cash on hand,
amounts due from banks and federal funds sold. Generally, federal funds are sold
for one-day periods. The Company reports net cash flows for customer loan
transactions, deposit transactions, and deposits made with other institutions.

SECURITIES: Securities are classified by management at date of purchase as
available for sale or held to maturity. Securities classified as available for
sale are securities that might be sold in response to changes in interest rates,
changes in prepayment risk, or other similar factors, and which are carried at
fair value. The unrealized gain/(loss) on securities available for sale is
reflected as a separate component of shareholders' equity, net of tax.
Securities classified as held to maturity are securities that the Company has
both the ability and positive intent to hold to maturity and are carried at
amortized cost (cost adjusted for amortization of premium or accretion of
discounts). Interest income on securities is recognized using the level yield
basis. Gains and losses on sales of securities are computed on a specific
identification basis.

LOANS HELD FOR SALE: During the normal course of business, the Company
originates certain mortgage loans for the purpose of selling them in certain
secondary markets. These loans are carried at the lower of aggregate cost or
market value.

LOANS: Loans are reported at the principal balance outstanding, net of
deferred loan fees and costs, the allowance for loan losses, and charge-offs.
Interest income is reported on the interest method and includes amortization of
net deferred loan fees and costs over the loan term.

Interest income is not reported when full loan repayment is in doubt,
typically when payments are past due over 90 days. Interest received on such
loans is recognized on the cash basis or reported as principal reductions.

ALLOWANCE FOR LOAN LOSSES: The allowance for loan losses is a valuation
allowance, increased by the provision for loan losses and decreased by
charge-offs less recoveries. Management estimates the allowance balance required
based on past loan loss experience, known and inherent risks in the portfolio,
information about specific borrower situations and estimated collateral values,
economic conditions, and other factors. Allocations of the allowance may be made
for specific loans, but the entire allowance is available for any loan that, in
management's judgment, should be charged-off.

F-36
<PAGE>
P.T.C. BANCORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1996 AND 1995

NOTE 1 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Loan impairment is reported when full payment under the loan terms is not
expected. Impairment is evaluated in total for smaller-balance loans of similar
nature such as residential mortgage, consumer, and credit card loans, and on an
individual loan basis for other loans. If a loan is impaired, a portion of the
allowance is allocated so that the loan is reported, net, at the present value
of estimated future cash flows using the loan's existing rate. Loans are
evaluated for impairment when payments are delayed, typically 90 days or more,
or when the internal grading system indicates a doubtful classification.

SERVICING RIGHTS: Upon adopting Financial Accounting Standard No. 122 at
the start of 1996, servicing rights represent the allocated value of servicing
rights retained on loans sold. Servicing rights are expensed in proportion to,
and over the period of, estimated net servicing revenues. Impairment is
evaluated based on the fair value of the rights, using groupings of the
underlying loans as to interest rates and term. Any impairment of a grouping is
reported as a valuation allowance.

PREMISES AND EQUIPMENT: Premises and equipment are stated at cost, net of
accumulated depreciation. Depreciation is charged to operating expense over the
useful lives of assets and is computed on straight-line and accelerated methods.
Maintenance and repairs are charged to operations as incurred. Improvements are
capitalized and disposals are recorded in the year sold or abandoned.

INTANGIBLE ASSETS: Intangible assets consist of goodwill and core deposit
intangibles. Goodwill is being amortized on a straight-line method over fifteen
years. The core deposit is being amortized based on the estimated life of the
deposits assumed, which is ten years.

STOCK OPTIONS: Expenses for compensation under stock option plans is based
on APB Opinion 25, with expense reported only if options are granted below
market price at date of grant. Proforma disclosures of net income and earnings
per share as required by FASB Statement No. 123 are not presented, because the
fair value of options granted during 1996 and 1995 is not material.

INCOME TAXES: Deferred tax liabilities and assets are determined at each
balance sheet date. They are measured by applying enacted tax laws to future
amounts that will result from differences in the financial statement and tax
basis of assets and liabilities. Recognition of deferred tax assets is limited
by the establishment of a valuation reserve unless management concludes that
they are more likely than not going to result in future tax benefits to the
Company. Income tax expense is the amount paid for the current year income tax
liability plus or minus the change in deferred taxes.

EARNINGS PER SHARE: Earnings per share is based on the weighted average
common shares outstanding. The Company declared a 10 percent stock dividend in
November, 1995 and 1996. Earnings and dividend per share amounts have been
retroactively restated. Stock options are not materially dilutive for earnings
per share purposes.

F-37
<PAGE>
P.T.C. BANCORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1996 AND 1995

NOTE 2 -- SECURITIES

The amortized cost and fair values of securities available for sale are as
follows at December 31:

<TABLE>
<CAPTION>
1996
------------------------------------------------------
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED
COST GAINS LOSSES FAIR VALUE
------------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
U.S. Treasury and government agency securities............. $ 30,066,088 $ 255,260 $ (42,771) $ 30,278,577
State and political subdivisions........................... 1,971,500 63,384 (338) 2,034,546
Mortgage-backed and other asset-backed securities.......... 2,582,657 46,082 (7,177) 2,621,562
Corporate debt securities.................................. 1,906,294 38,374 (24,399) 1,920,269
Equity securities.......................................... 1,520,872 -- -- 1,520,872
------------- ----------- ----------- -------------
Totals............................................... $ 38,047,411 $ 403,100 $ (74,685) $ 38,375,826
------------- ----------- ----------- -------------
------------- ----------- ----------- -------------
</TABLE>

<TABLE>
<CAPTION>
1995
------------------------------------------------------
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED
COST GAINS LOSSES FAIR VALUE
------------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
U.S. Treasury and government agency securities............. $ 27,892,354 $ 232,387 $ (51,533) $ 28,073,208
State and political subdivisions........................... 2,336,997 78,183 (4,562) 2,410,618
Mortgage-backed and other asset-backed securities.......... 2,782,970 50,560 (6,849) 2,826,682
Corporate debt securities.................................. 3,599,169 8,896 (14,315) 3,593,750
Equity securities.......................................... 1,522,110 -- -- 1,522,110
------------- ----------- ----------- -------------
Totals............................................... $ 38,133,600 $ 370,026 $ (77,259) $ 38,426,368
------------- ----------- ----------- -------------
------------- ----------- ----------- -------------
</TABLE>

F-38
<PAGE>
P.T.C. BANCORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1996 AND 1995

NOTE 2 -- SECURITIES (CONTINUED)
The amortized cost and fair values of securities held to maturity are as follows
at December 31:

<TABLE>
<CAPTION>
1996
------------------------------------------------------
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED
COST GAINS LOSSES FAIR VALUE
------------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
U.S. Treasury and government agency securities $ 167,763 $ 29,632 $ -- $ 197,395
State and political subdivisions........................... 24,187,781 228,516 (50,568) 24,365,729
Mortgage-backed securities................................. 296,915 37,800 (223) 334,492
Other debt securities...................................... 566,116 94 (2,846) 563,364
------------- ----------- ----------- -------------
Totals............................................... $ 25,218,575 $ 296,042 $ (53,637) $ 25,460,980
------------- ----------- ----------- -------------
------------- ----------- ----------- -------------
</TABLE>

<TABLE>
<CAPTION>
1995
------------------------------------------------------
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED
COST GAINS LOSSES FAIR VALUE
------------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
U.S. Treasury and government agency securities............. $ 154,914 $ 41,972 $ -- $ 196,886
State and political subdivisions........................... 17,895,268 244,728 (32,592) 18,107,406
Mortgage-backed securities................................. 950,508 61,933 -- 1,012,441
Other debt securities...................................... 500,000 -- -- 500,000
------------- ----------- ----------- -------------
Totals............................................... $ 19,500,690 $ 348,633 $ (32,592) $ 19,816,733
------------- ----------- ----------- -------------
------------- ----------- ----------- -------------
</TABLE>

The amortized cost and fair value of securities at December 31, 1996, by
contractual maturity, are shown below. Expected maturities will differ from
contractual maturities because issuers may have the right to call or prepay
obligations with or without call or prepayment penalties.

<TABLE>
<CAPTION>
AVAILABLE FOR SALE HELD TO MATURITY
---------------------------- ----------------------------
AMORTIZED AMORTIZED
COST FAIR VALUE COST FAIR VALUE
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Due in one year or less............................. $ 5,061,467 $ 5,065,127 $ 3,411,075 $ 3,432,023
Due after one year through five years............... 27,210,079 27,418,423 18,374,449 18,492,951
Due after five years through ten years.............. 1,303,734 1,344,787 1,957,637 1,977,253
Due after ten years................................. 368,602 405,055 1,178,499 1,224,261
------------- ------------- ------------- -------------
Total fixed maturity debt securities................ 33,943,882 34,233,392 24,921,660 25,126,488
Mortgage-backed securities.......................... 2,582,657 2,621,562 296,915 334,492
Equity securities................................... 1,520,872 1,520,872 -- --
------------- ------------- ------------- -------------
$ 38,047,411 $ 38,375,826 $ 25,218,575 $ 25,460,980
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
</TABLE>

Proceeds from sales of securities during 1996 and 1995 were $3,736,825 and
$3,573,149. Gross gains of $122,427 and gross losses of $18,777 were realized on
sales of available for sale securities in 1996. Gross gains of $8,408 and gross
losses of $84,775 were realized on sales of available for sale securities in
1995.

F-39
<PAGE>
P.T.C. BANCORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1996 AND 1995

NOTE 2 -- SECURITIES (CONTINUED)
At December 31, 1996 and 1995, securities carried at $2,263,725 and
$5,773,900 were pledged to secure public deposits and for other purposes.

NOTE 3 -- LOANS

Loans are comprised of the following classifications:

<TABLE>
<CAPTION>
1996 1995
-------------- --------------
<S> <C> <C>
Real estate--residential......................................................... $ 74,433,000 $ 61,544,000
Real estate--commercial.......................................................... 43,370,000 36,140,000
Real estate construction......................................................... 13,650,000 9,583,000
Commercial....................................................................... 41,655,000 39,518,000
Consumer......................................................................... 21,325,000 23,723,000
Other............................................................................ 2,875,000 2,987,000
Deferred loan fees............................................................... (345,000) (316,000)
-------------- --------------
Total loans, net of deferred loan fees..................................... $ 196,963,000 $ 173,179,000
-------------- --------------
-------------- --------------
</TABLE>

Residential real estate loans include loans held for sale of $430,000 and
$2,117,000.

Mortgage loans serviced for others are not reported as assets. These loans
totaled $86,495,000 and $69,090,000 at year-end 1996 and 1995. At year-end 1996,
mortgage servicing rights were $225,000. Activity during 1996 included $258,000
of additions and amortization expense of $33,000. There was no valuation
allowance at year-end 1996.

NOTE 4 -- ALLOWANCE FOR LOAN LOSSES

An analysis of the allowance for loan losses follows:

<TABLE>
<CAPTION>
1996 1995
------------ ------------
<S> <C> <C>
Beginning balance..................................................................... $ 1,721,947 $ 1,600,551
Provision for loan losses............................................................. 828,000 740,000
Losses charged to the allowance....................................................... (725,569) (855,690)
Recoveries credited to the allowance.................................................. 175,946 237,086
------------ ------------
Ending balance.................................................................. $ 2,000,324 $ 1,721,947
------------ ------------
------------ ------------

Impaired loans were as follows:
Year-end loans with no allowance for loan losses allocated............................ $ -- $ 128,797
Year-end loans with allowance for loan losses allocated............................... 1,300,000 --
Amount of the allowance allocated..................................................... 475,000 --
Average of impaired loans during the year............................................. 844,059 490,179
Interest income recognized during impairment.......................................... 27,756 --
Cash-basis interest income recognized................................................. 27,756 --
</TABLE>

F-40
<PAGE>
P.T.C. BANCORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1996 AND 1995

NOTE 5 -- PREMISES AND EQUIPMENT

A summary of premises and equipment at December 31 follows:

<TABLE>
<CAPTION>
1996 1995
------------ ------------
<S> <C> <C>
Land.................................................................................. $ 351,916 $ 351,916
Buildings and improvements............................................................ 3,738,630 3,418,627
Equipment and furniture............................................................... 2,481,732 2,090,435
------------ ------------
Total........................................................................... 6,572,278 5,860,978
Less accumulated depreciation......................................................... 3,060,536 2,794,240
------------ ------------
Total premises and equipment, net............................................... $ 3,511,742 $ 3,066,738
------------ ------------
------------ ------------
</TABLE>

NOTE 6 -- DEPOSITS

Certificates of deposits in denominations of $100,000 or more as of December
31, 1996 and 1995 were $28,948,860 and $24,318,073.

At year-end 1996, stated maturities of time deposits were:

<TABLE>
<S> <C>
1997.......................................................... $96,265,835
1998.......................................................... 36,673,139
1999.......................................................... 9,893,852
2000.......................................................... 6,163,774
2001.......................................................... 1,955,978
Thereafter.................................................... 29,172
-----------
$150,981,750
-----------
-----------
</TABLE>

NOTE 7 -- NOTES PAYABLE

The Company has a note payable maturing on December 31, 1998, which is
secured by 100% of the Bank's common stock. Payments are due each quarter,
consisting of $92,500 principal plus accrued interest. Interest is calculated
based on the LIBOR rate plus 2.85% (7.44% at December 31, 1996).

NOTE 8 -- BENEFIT PLANS

The Company maintains a 401(K) profit-sharing plan covering substantially
all employees. Under this plan, employer matching contributions are 50% of
employee contributions, up to 6% of eligible salary, plus a profit sharing
allocation to all eligible employees. Annual contributions are at the discretion
of the Board of Directors. Contributions provided for the 401(K) plan and
charged to operations totaled $157,893 and $148,657 in 1996 and 1995.

The Company maintains a stock option plan covering directors and executive
officers. Options are granted at no less than fair value of the Company's stock.
Accordingly, no compensation cost has been recognized. Options under the officer
plan are generally subject to a 4-year vesting schedule, and expire five years
from date of vesting. There were 5,060 options granted during 1995, and 2,365
during 1996. At year-end 1996, there were 32,731 options outstanding under the
officer plan with a weighted average exercise price of $16.93, and range of
exercise prices of $14.65 - $27.27. There were no options granted in 1995 or
1996 under the director's plan. At year-end 1996, there were 2,096 options
outstanding with an effective price of $13.23 per share.

F-41
<PAGE>
P.T.C. BANCORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1996 AND 1995

NOTE 9 -- INCOME TAXES

An analysis of the components of income taxes follows:

<TABLE>
<CAPTION>
1996 1995
------------ ------------
<S> <C> <C>
Current income taxes.............................................. $ 1,551,766 $ 1,354,446
Deferred income taxes............................................. 11,927 (154,482)
------------ ------------
Total income taxes.............................................. $ 1,563,693 $ 1,199,964
------------ ------------
------------ ------------
</TABLE>

The difference between the financial statement tax provision and amounts
computed by applying the federal income tax rate of 34% to pretax income is
reconciled as follows:

<TABLE>
<CAPTION>
1996 1995
------------ ------------
<S> <C> <C>
Expected provision................................................ $ 1,645,417 $ 1,396,455
Tax effect of:
Tax-exempt interest income...................................... (545,956) (448,220)
Non-deductible interest expense................................. 94,244 74,669
State income tax, net........................................... 278,603 231,799
Other items..................................................... 91,385 (54,739)
------------ ------------
Applicable income tax......................................... $ 1,563,693 $ 1,199,964
------------ ------------
------------ ------------
</TABLE>

The net deferred tax asset is comprised of the following components:

<TABLE>
<CAPTION>
1996 1995
----------- -----------
<S> <C> <C>
Deferred tax assets:
Allowance for loan losses......................................... $ 549,957 $ 439,692
Deferred compensation............................................. 55,737 60,490
Core deposit intangibles.......................................... 67,258 53,394
Other............................................................. 5,348 117,030
----------- -----------
678,300 670,606
Deferred tax liabilities:
Unrealized gain on securities available-for-sale.................. (130,085) (115,965)
Depreciation...................................................... (32,575) (16,113)
Accretion on securities........................................... (20,553) (17,394)
----------- -----------
(183,213) (149,472)

Valuation allowance................................................. -- --
----------- -----------
Net deferred tax asset............................................ $ 495,087 $ 521,134
----------- -----------
----------- -----------
</TABLE>

NOTE 10 -- COMMITMENTS AND CONTINGENCIES

The Company, in the ordinary course of business, has loans, commitments and
contingent liabilities, such as guarantees, commitments to extend credit, etc.,
which are not reflected in the accompanying consolidated balance sheets. The
Company's exposure to credit loss in the event of nonperformance by the

F-42
<PAGE>
P.T.C. BANCORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1996 AND 1995

NOTE 10 -- COMMITMENTS AND CONTINGENCIES (CONTINUED)
other party to the financial guarantees is represented by the contractual
amounts of those instruments. The Company uses the same credit policy to make
such commitments as it uses for on-balance-sheet items.

The contractual amount of these financial instruments are summarized as
follows:

<TABLE>
<CAPTION>
1996 1995
------------- -------------
<S> <C> <C>
Commitments to extend credit................................... $ 26,634,000 $ 15,879,000
Standby letters of credit...................................... 2,349,000 2,111,000
</TABLE>

The commitments to extend credit are agreements to lend to a customer as
long as there is no violation of any condition established under the contract.
Generally, such commitments are for no more than one year, and most are variable
rate contracts. These commitments are primarily credit card, overdraft
protection, and commercial lines of credit.

Since many commitments expire without being used, the amounts do not
necessarily represent future cash commitments. Collateral obtained upon exercise
of the commitment is determined using management's credit evaluation of the
borrower, and may include accounts receivable, inventory, property, land and
other items.

At December 31, 1996 and 1995, the Company was required by the Federal
Reserve to have $3,542,000 and $2,704,000 on deposit or as cash in hand. These
reserves do not earn interest.

NOTE 11 -- RELATED PARTY TRANSACTIONS

Certain directors, officers and principal shareholders of the Company were
also customers of the Bank. The aggregate amount of loans to these persons
totaled $2,139,417 and $2,520,434 at December 31, 1996 and 1995.

Related party deposits totaled $1,337,157 at year-end 1996.

NOTE 12 -- DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS

The following methods and assumptions were used to estimate the fair value
of each class of financial instruments for which it is practicable to estimate
that value:

CASH AND SHORT-TERM INVESTMENTS: For those short-term instruments, the
carrying amount is a reasonable estimate of fair value.

SECURITIES: For securities, fair value equals quoted market price, if
available. If a quoted market price is not available, fair value is estimated
using quoted market prices for similar instruments.

LOANS RECEIVABLE: The fair value of loans is estimated by discounting
future cash flows using the current rates at which similar loans would be made
to borrowers with similar credit ratings and for the same remaining maturities.

DEPOSIT LIABILITIES: The fair value of demand deposits, savings accounts,
and certain money market deposits is the amount payable on demand at the
reporting date. The fair value of fixed-maturity

F-43
<PAGE>
P.T.C. BANCORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1996 AND 1995

NOTE 12 -- DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS (CONTINUED)
certificates of deposit is estimated using the rates currently offered for
deposits of similar remaining maturities.

NOTES PAYABLE: Carrying value is a reasonable estimate of fair value for
this adjustable rate instrument.

OFF-BALANCE SHEET ITEMS: Carrying value is a reasonable estimate of fair
value. These instruments are short term in nature.

The estimated fair values of financial instruments at December 31 are as
follows:

<TABLE>
<CAPTION>
1996 1996
CARRYING VALUE FAIR VALUE
--------------- ---------------
<S> <C> <C>
Financial assets:
Cash and short-term investments.......................... $ 28,082,000 $ 28,082,000
Securities available for sale............................ 38,376,000 38,376,000
Securities held to maturity.............................. 25,219,000 25,461,000
Loans.................................................... 196,963,000 196,816,000
Financial liabilities:
Deposits................................................. (271,127,000) (271,807,000)
Notes payable............................................ (500,000) (500,000)
Off balance sheet items.................................... -- --
</TABLE>

<TABLE>
<CAPTION>
1995 1995
CARRYING VALUE FAIR VALUE
--------------- ---------------
<S> <C> <C>
Financial assets:
Cash and short-term investments.......................... $ 26,860,000 $ 26,860,000
Securities available for sale............................ 38,426,000 38,426,000
Securities held to maturity.............................. 19,500,000 19,817,000
Loans.................................................... 171,457,000 172,189,000
Financial liabilities:
Deposits................................................. (241,735,000) (242,814,000)
Notes payable............................................ (1,000,000) (1,000,000)
Off balance sheet items.................................... -- --
</TABLE>

NOTE 13 -- REGULATORY MATTERS

The Company and Bank are subject to regulatory capital requirements
administered by federal banking agencies. Capital adequacy guidelines and prompt
corrective action regulations involve quantitative measures of assets,
liabilities and certain off-balance-sheet items calculated under regulatory
accounting practices. Capital amounts and classifications are also subject to
qualitative judgments by regulators about components, risk weightings, and other
factors, and the regulators can lower classifications in certain cases. Failure
to meet various capital requirements can initiate regulatory action that could
have a direct material effect on the financial statements.

F-44
<PAGE>
P.T.C. BANCORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1996 AND 1995

NOTE 13 -- REGULATORY MATTERS (CONTINUED)
The prompt corrective action regulations provide five classifications,
including well capitalized, adequately capitalized, undercapitalized,
significantly undercapitalized, and critically undercapitalized, although these
terms are not used to represent overall financial condition. If adequately
capitalized, regulatory approval is required to accept brokered deposits. If
undercapitalized, capital distributions are limited, as is asset growth and
expansion, and plans for capital restoration are required. The minimum
requirements are:

<TABLE>
<CAPTION>
CAPITAL TO RISK-
WEIGHTED ASSETS
-------------------------- TIER 1 CAPITAL
TOTAL TIER 1 TO AVERAGE ASSETS
----- ------ ----------------------
<S> <C> <C> <C>
Well capitalized................................... 10% 6% 5%
Adequately capitalized............................. 8% 4% 4%
Undercapitalized................................... 6% 3% 3%
</TABLE>

At year end 1996, consolidated actual capital levels (in thousands) and
minimum required levels were:

<TABLE>
<CAPTION>
MINIMUM REQUIRED TO BE
MINIMUM REQUIRED FOR
WELL CAPITALIZED UNDER
CAPITAL ADEQUACY PROMPT CORRECTIVE
ACTUAL PURPOSES ACTION REGULATIONS
---------------------- ---------------------- ----------------------
AMOUNT RATIO AMOUNT RATIO AMOUNT RATIO
--------- ----------- --------- ----------- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
Total capital (to risk-weighted
assets)
Consolidated.................. $ 21,836 11.60% $ 15,055 8.0% $ 18,819 10.0%
Bank.......................... $ 21,487 11.46% $ 14,995 8.0% $ 18,744 10.0%

Tier 1 capital (to risk-weighted
assets)
Consolidated.................. $ 19,836 10.54% $ 7,528 4.0% $ 11,291 6.0%
Bank.......................... $ 19,487 10.40% $ 7,498 4.0% $ 11,246 6.0%

Tier 1 capital (to average
assets)
Consolidated.................. $ 19,836 6.73% $ 11,795 4.0% $ 14,744 5.0%
Bank.......................... $ 19,487 6.63% $ 11,753 4.0% $ 14,692 5.0%
</TABLE>

The Company and Bank at year-end 1996 were categorized as well capitalized.

NOTE 14 -- PENDING ACCOUNTING CHANGES

Financial Accounting Standard No. 125, Accounting for Transfers and
Servicing of Financial Assets and Extinguishment of Liabilities, was issued by
the Financial Accounting Standards Board in 1996. It revises the accounting for
transfers of financial assets, such as loans and securities, and for
distinguishing between sales and secured borrowings. It is effective for some
transactions in 1997 and others in 1998. The effect on the financial statements
is not expected to be material.

F-45
<PAGE>
INDIANA UNITED BANCORP AND SUBSIDIARIES
P.T.C. BANCORP AND SUBSIDIARY

PRO FORMA COMBINED CONDENSED BALANCE SHEET
SEPTEMBER 30, 1997
(UNAUDITED)

<TABLE>
<CAPTION>
PRO FORMA PRO FORMA
COMPANY PTC ADJUSTMENTS CONSOLIDATED
---------- ---------- ----------- ------------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
ASSETS
Cash and cash equivalents................................... $ 17,838 $ 18,281 $ 36,119
Short-term investments...................................... 1,398 $ 17,460(3) 18,858
Investment securities available-for-sale.................... 71,422 28,132 99,554
Investment securities held-to-maturity...................... 25,761 25,761
Loans....................................................... 244,237 220,653 464,890
Less: Allowance for loan losses............................. (2,670) (1,969) (4,639)
---------- ---------- ------------
Net loans................................................. 241,567 218,684 460,251
Premises and equipment, net................................. 6,355 3,939 10,294
Accrued interest receivable and other assets................ 4,869 6,539 1,040(3) 12,448
---------- ---------- ----------- ------------
Total assets............................................ $ 342,051 $ 302,734 $ 18,500 $ 663,285
---------- ---------- ----------- ------------
---------- ---------- ----------- ------------
LIABILITIES
Deposits.................................................... $ 285,760 $ 275,679 $ 561,439
Short-term borrowings....................................... 17,885 17,885
Long-term debt.............................................. 4,625 250 4,875
Guaranteed preferred beneficial interests in the Company's
subordinated debentures................................... $ 18,500(3) 18,500
Accrued interest payable and other liabilities.............. 3,697 3,065 6,762
---------- ---------- ----------- ------------
Total liabilities....................................... 311,967 278,994 18,500 609,461
---------- ---------- ----------- ------------
SHAREHOLDERS' EQUITY
Common stock................................................ 1,251 1,026 110(2) 2,387
Paid-in capital............................................. 10,677 10,439 (110)(2) 21,006
Retained earnings........................................... 17,669 12,109 29,778
Net unrealized gain on securities available-for-sale........ 487 166 653
---------- ---------- ----------- ------------
Total shareholders' equity.............................. 30,084 23,740 53,824
---------- ---------- ----------- ------------
Total liabilities and shareholders' equity.............. $ 342,051 $ 302,734 $ 18,500 $ 663,285
---------- ---------- ----------- ------------
---------- ---------- ----------- ------------
</TABLE>

F-46
<PAGE>
INDIANA UNITED BANCORP AND SUBSIDIARIES
P.T.C. BANCORP AND SUBSIDIARY

PRO FORMA COMBINED CONDENSED STATEMENT OF INCOME
NINE MONTHS ENDED SEPTEMBER 30, 1997
(UNAUDITED)

<TABLE>
<CAPTION>
PRO FORMA
COMPANY PTC CONSOLIDATED
----------- --------- -------------
<S> <C> <C> <C>
(IN THOUSANDS, EXCEPT PER SHARE
AMOUNTS)
Interest Income
Loans, including fees....................................................... $ 15,388 $ 14,316 29,704
Investment securities....................................................... 3,759 2,639 6,398
Other interest.............................................................. 251 279 530
----------- --------- ------
Total interest income..................................................... 19,398 17,234 36,632
----------- --------- ------
Interest Expense
Deposits.................................................................... 8,832 8,653 17,485
Short-term borrowings....................................................... 510 510
Long-term debt.............................................................. 297 26 323
----------- --------- ------
Total interest expense.................................................... 9,639 8,679 18,318
----------- --------- ------
Net interest income....................................................... 9,759 8,555 18,314
Provision for loan losses................................................... 183 610 793
----------- --------- ------
Net interest income after provision for loan losses......................... 9,576 7,945 17,521
----------- --------- ------
Non-interest Income
Insurance commissions....................................................... 316 75 391
Fiduciary activities........................................................ 169 20 189
Service charges on deposit accounts......................................... 462 944 1,406
Mortgage banking activities................................................. 766 766
Net realized gains (losses) on securities................................... (80) 8 (72)
Other....................................................................... 503 47 550
----------- --------- ------
Total non-interest income................................................. 1,370 1,860 3,230
----------- --------- ------
Non-interest Expense
Salaries and employees benefits............................................. 3,483 3,346 6,829
Net occupancy and equipment expense......................................... 1,168 895 2,063
Deposit insurance expense................................................... 104 22 126
Data processing expense..................................................... 289 289
Other....................................................................... 1,446 1,366 2,812
----------- --------- ------
Total non-interest expense................................................ 6,201 5,918 12,119
----------- --------- ------
Income Before Income Taxes.................................................... 4,745 3,887 8,632
Income Taxes.................................................................. 1,877 1,185 3,062
----------- --------- ------
NET INCOME.................................................................... 2,868 2,702 5,570
----------- --------- ------
----------- --------- ------
Net Income Per Common Share................................................... $ 2.29 $ 2.64 $ 2.33
Weighted Average common Shares Outstanding.................................... 1,251 1,025 2,387
</TABLE>

F-47
<PAGE>
INDIANA UNITED BANCORP AND SUBSIDIARIES
P.T.C. BANCORP AND SUBSIDIARY

PRO FORMA COMBINED CONDENSED STATEMENT OF INCOME
YEAR ENDED DECEMBER 31, 1996
(UNAUDITED)

<TABLE>
<CAPTION>
PRO FORMA
COMPANY PTC CONSOLIDATED
----------- --------- ------------
<S> <C> <C> <C>
(IN THOUSANDS, EXCEPT PER SHARE
AMOUNTS)
Interest Income
Loans, including fees....................................................... $ 18,266 $ 17,125 35,391
Investment securities....................................................... 5,308 3,631 8,939
Federal funds sold.......................................................... 380 433 813
Other interest.............................................................. 13 130 143
----------- --------- ------------
Total interest income..................................................... 23,967 21,319 45,286
----------- --------- ------------
Interest Expense
Deposits.................................................................... 10,863 10,837 21,700
Short-term borrowings....................................................... 689 689
Long-term debt.............................................................. 454 60 514
----------- --------- ------------
Total interest expense.................................................... 12,006 10,897 22,903
----------- --------- ------------
Net interest income....................................................... 11,961 10,422 22,383
Provision for loan losses................................................... 150 828 978
----------- --------- ------------
Net interest income after provision for loan losses......................... 11,811 9,594 21,405
----------- --------- ------------
Non-interest Income
Customer service fees, insurance commissions................................ 438 102 540
Fiduciary activities........................................................ 232 31 263
Service charges on deposit accounts......................................... 520 1,199 1,719
Mortgage banking income..................................................... 795 795
Net realized gains on securities............................................ 104 104
Other....................................................................... 312 118 430
----------- --------- ------------
Total non-interest income................................................. 1,502 2,349 3,851
----------- --------- ------------
Non-interest Expense
Salaries and employees benefits............................................. 4,482 4,137 8,619
Net occupancy and equipment expense......................................... 1,477 833 2,310
Deposit insurance expense................................................... 736 2 738
Data processing expense..................................................... 372 372
Other....................................................................... 1,924 1,760 3,684
----------- --------- ------------
Total non-interest expense................................................ 8,619 7,104 15,723
----------- --------- ------------
Income Before Income Taxes.................................................... 4,694 4,839 9,533
Income Taxes.................................................................. 2,001 1,563 3,564
----------- --------- ------------
NET INCOME.................................................................... 2,693 3,276 5,969
----------- --------- ------------
----------- --------- ------------
Net Income Per Common Share................................................... $ 2.11 $ 3.17 $ 2.49
Weighted Average Common Shares Outstanding.................................... 1,251 1,032 2,378
</TABLE>

F-48
<PAGE>
INDIANA UNITED BANCORP AND SUBSIDIARIES
P.T.C. BANCORP AND SUBSIDIARY

PRO FORMA COMBINED CONDENSED STATEMENT OF INCOME
YEAR ENDED DECEMBER 31, 1995
(UNAUDITED)

<TABLE>
<CAPTION>
PRO FORMA
COMPANY PTC CONSOLIDATED
----------- --------- ------------
(IN THOUSANDS, EXCEPT PER SHARE
AMOUNTS)
<S> <C> <C> <C>
Interest Income
Loans, including fees................................................. $ 16,938 $ 15,446 32,384
Investment securities................................................. 5,543 3,438 8,981
Federal funds sold.................................................... 305 473 778
Other interest........................................................ 49 63 112
----------- --------- ------------
Total interest income............................................. 22,835 19,420 42,255
----------- --------- ------------
Interest Expense
Deposits.............................................................. 10,308 9,733 20,041
Short-term borrowings................................................. 932 932
Long-term debt........................................................ 612 102 714
----------- --------- ------------
Total interest expense............................................ 11,852 9,835 21,687
----------- --------- ------------
Net interest income............................................... 10,983 9,585 20,568
Provision for loan losses............................................. 30 740 770
----------- --------- ------------
Net interest income after provision for loan losses................... 10,953 8,845 19,798
----------- --------- ------------
Non-interest Income
Insurance commissions................................................. 473 99 572
Fiduciary activities.................................................. 189 27 216
Service charges on deposit accounts................................... 450 1,192 1,642
Mortgage banking income............................................... 447 447
Net realized gains (losses) on securities............................. 16 (76) (60)
Other................................................................. 329 212 541
----------- --------- ------------
Total non-interest income......................................... 1,457 1,901 3,358
----------- --------- ------------
Non-interest Expense
Salaries and employees benefits....................................... 4,467 3,725 8,192
Net occupancy and equipment expense................................... 1,469 763 2,232
Deposit insurance expense............................................. 395 251 646
Data processing expense............................................... 350 350
Other................................................................. 1,898 1,550 3,448
----------- --------- ------------
Total non-interest expense........................................ 8,229 6,639 14,868
----------- --------- ------------
Income Before Income Taxes.............................................. 4,181 4,107 8,288
Income Taxes............................................................ 1,652 1,200 2,852
----------- --------- ------------
NET INCOME.............................................................. 2,529 2,907 5,436
----------- --------- ------------
----------- --------- ------------
Net Income Per Common Share............................................. $ 1.91 $ 2.86 $ 2.23
Weighted Average common Shares Outstanding.............................. 1,251 1,016 2,372
</TABLE>

F-49
<PAGE>
INDIANA UNITED BANCORP AND SUBSIDIARIES
P.T.C. BANCORP AND SUBSIDIARY

PRO FORMA COMBINED CONDENSED STATEMENT OF INCOME
YEAR ENDED DECEMBER 31, 1994
(UNAUDITED)

<TABLE>
<CAPTION>
PRO FORMA
COMPANY PTC CONSOLIDATED
----------- --------- ------------
(IN THOUSANDS, EXCEPT PER SHARE
AMOUNTS)
<S> <C> <C> <C>
Interest Income
Loans, including fees................................................. $ 15,941 $ 12,535 28,476
Investment securities................................................. 6,131 3,038 9,169
Federal funds sold.................................................... 115 252 367
Other interest........................................................ 15 113 128
----------- --------- ------------
Total interest income............................................. 22,202 15,938 38,140
----------- --------- ------------
Interest Expense
Deposits.............................................................. 9,787 7,117 16,904
Short-term borrowings................................................. 483 483
Long-term debt........................................................ 631 138 769
----------- --------- ------------
Total interest expense............................................ 10,901 7,255 18,156
----------- --------- ------------
Net interest income............................................... 11,301 8,683 19,984
Provision for loan losses............................................. 115 450 565
----------- --------- ------------
Net interest income after provision for loan losses................... 11,186 8,233 19,419
----------- --------- ------------
Non-interest Income
Insurance commissions................................................. 509 111 620
Fiduciary activities.................................................. 200 38 238
Service charges on deposit accounts................................... 475 1,024 1,499
Mortgage banking income............................................... 463 463
Net realized gains (losses) on securities............................. (154) (15) (169)
Gain on sale of branches.............................................. 1,229 1,229
Other................................................................. 329 255 584
----------- --------- ------------
Total non-interest income......................................... 2,588 1,876 4,464
----------- --------- ------------
Non-interest Expense
Salaries and employees benefits....................................... 4,553 3,344 7,897
Net occupancy and equipment expense................................... 1,521 899 2,420
Deposit insurance expense............................................. 666 430 1,096
Data processing expense............................................... 352 352
Other................................................................. 2,300 1,604 3,904
----------- --------- ------------
Total non-interest expense........................................ 9,040 6,629 15,669
----------- --------- ------------
Income Before Income Taxes.............................................. 4,734 3,480 8,214
Income Taxes............................................................ 1,864 1,079 2,943
----------- --------- ------------
NET INCOME.............................................................. 2,870 2,401 5,271
----------- --------- ------------
----------- --------- ------------
Net Income Per Common Share............................................. $ 2.17 $ 2.51 $ 2.25
Weighted Average common Shares Outstanding.............................. 1,251 957 2,273
</TABLE>

F-50
<PAGE>
NOTES TO PRO FORMA COMBINED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

NOTE 1

On October 8, 1997, the Company entered into a Merger Agreement to acquire
PTC and its subsidiary, Peoples Trust, in a stock-for-stock merger. The Merger
Agreement, which is subject to the approval of Company and PTC shareholders and
various banking regulatory authorities, provides that the Company will issue
1,136,417 shares of Company common stock to the shareholders of PTC in exchange
for all of the issued and outstanding shares of stock of PTC. The transaction is
expected to be accounted for as a pooling of interests.

The Pro Forma Consolidated Balance Sheet as of September 30, 1997, and
Consolidated Statements of Income for the three years ended December 31, 1996
and the nine months ended September 30, 1997 combine the historical consolidated
financial statements of the Company and PTC and are presented as if the Merger
had occurred on January 1, 1994, 1995, 1996 and 1997, after giving effect to the
pro forma adjustments described in the accompanying notes. In addition, the Pro
Forma Balance Sheet as of September 30, 1997, gives effect to the Offering
assuming the Underwriter's over-allotment option was not exercised.

The pro forma consolidated financial statements are not necessarily
indicative of the consolidated financial position or results of future
operations of the combined entity or of the actual results that would have been
achieved had the PTC Merger and the Offering been consummated as of the dates
indicated.

NOTE 2

Represents the acquisition adjustment which includes the elimination of
1,057,132 shares of common stock (including 30,731 options exercised) of PTC and
the issuance of 1,136,417 shares of the Company's common stock. The excess par
value of the issued shares over the retired shares has been adjusted to paid-in
capital.

NOTE 3

Represents the temporary investment of the net proceeds of $17,460,000, debt
issue costs of $1,040,000, and $18,500,000 long-term debt incurred, all of which
are related to the issuance of the Preferred Securities.

F-51
<PAGE>
- --------------------------------------------------------------------------------

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary........................................................ 6
Risk Factors.............................................................. 15
Use of Proceeds........................................................... 23
Market for the Preferred Securities....................................... 23
Accounting Treatment...................................................... 23
Capitalization............................................................ 24
Company Selected Financial Data........................................... 25
PTC Selected Financial Data............................................... 26
Pro Forma Selected Financial Data......................................... 27
Company Management's Discussion and Analysis of Financial Condition and
Results of Operations................................................... 28
PTC Management's Discussion and Analysis of Financial Condition and
Results of Operations................................................... 53
Business of the Company................................................... 65
Description of the Preferred Securities................................... 69
Description of the Subordinated Debentures................................ 79
Description of the Guarantee.............................................. 87
Expense Agreement......................................................... 89
Relationship Among the Preferred Securities, the Subordinated Debentures
and the Guarantee....................................................... 89
Certain Federal Income Tax
Consequences............................................................ 91
ERISA Considerations...................................................... 94
Underwriting.............................................................. 94
Validity of Securities.................................................... 96
Experts................................................................... 96
Incorporation of Certain Documents by Reference........................... 96
Available Information..................................................... 97
Index to Consolidated Financial Statements and Pro Forma Consolidated
Financial Statements.................................................... F-1
</TABLE>

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

NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS IN CONNECTION WITH THIS OFFERING OTHER THAN THOSE CONTAINED IN
THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION AND
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY IUB CAPITAL
TRUST, INDIANA UNITED BANCORP OR THE UNDERWRITER. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY
IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF INDIANA UNITED
BANCORP OR IUB CAPITAL TRUST SINCE THE DATE HEREOF OR THAT THE INFORMATION
CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO
BUY ANY SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS
UNLAWFUL.

1,850,000 PREFERRED SECURITIES

IUB CAPITAL TRUST

% CUMULATIVE TRUST PREFERRED SECURITIES
(LIQUIDATION AMOUNT $10
PER PREFERRED SECURITY)
GUARANTEED, AS DESCRIBED HEREIN, BY

[LOGO]

INDIANA UNITED BANCORP

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

$18,500,000
% SUBORDINATED DEBENTURES
OF

INDIANA UNITED BANCORP

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

Prospectus

, 1997

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

STIFEL, NICOLAUS & COMPANY
INCORPORATED

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

<PAGE>

PART II: INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

* Registration Fees . . . . . . . . . . . . . . . . . . . . . . . . . $ 6,447
* Legal Services. . . . . . . . . . . . . . . . . . . . . . . . . . . $80,000
* Printing and Engraving. . . . . . . . . . . . . . . . . . . . . . . $______
* Nasdaq Listing Fees . . . . . . . . . . . . . . . . . . . . . . . . $______
* Accounting Fees . . . . . . . . . . . . . . . . . . . . . . . . . . $______
* Trustee Fees and Expenses . . . . . . . . . . . . . . . . . . . . . $______
* Blue Sky Fees and Expenses. . . . . . . . . . . . . . . . . . . . . $ 3,000
* NASD Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,628
* Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . $______
* TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $______

ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

Under the Indiana Business Corporation Law, Indiana United Bancorp may
indemnify directors and officers against liabilities asserted against or
incurred by them while serving as such or while serving at its request as a
director, officer, partner, trustee, employee or agent of another foreign or
domestic corporation, partnership, joint venture, trust, employee benefit plan
or other enterprise if (i) the individual's conduct was in good faith, (ii) the
individual believed: (A) in the case of conduct in the individual's official
capacity, that the individual's conduct was in the corporation's best interests
and (B) in all other cases, that the individual's conduct was at least not
opposed to the corporation's best interests, and (iii) in the case of any
criminal proceeding, the individual either (A) had reasonable cause to believe
the individual's conduct was lawful or (B) had no reasonable cause to believe
the individual's conduct was unlawful. Because its articles of incorporation do
not provide otherwise, Indiana United Bancorp is required under the Indiana
Business Corporation Law to indemnify a director or officer who was wholly
successful, on the merits or otherwise, in the defense of any proceeding in
which the director or officer was a party because the director or officer was
serving the corporation in such capacity against reasonable expenses incurred in
connection with the proceeding.

The articles of incorporation of Indiana United Bancorp require the
indemnification of its directors and officers to the greatest extent permitted
by the Indiana Business Corporation Law.

The Indiana Business Corporation Law also permits Indiana United Bancorp to
purchase and maintain on behalf of its directors and officers insurance against
liabilities asserted against or incurred by an individual in such capacity,
whether or not Indiana United Bancorp otherwise has the power to indemnify the
individual against the same liability under the Indiana Business Corporation
Law. Under a directors' and officers' liability insurance policy, directors and
officers of Indiana United Bancorp are insured against certain liabilities,
including certain liabilities under the Securities Act of 1933, as amended.

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES:

The financial statements and exhibits filed as part of this
Registration Statement are as follows:

(a) List of Exhibits:

1 Form of Underwriting Agreement.

2 Agreement and Plan of Merger dated as of October 8, 1997
between Indiana United Bancorp and P.T.C. Bancorp
(incorporated by reference to Exhibit 2 to the
Current Report on Form 8-K of Indiana United Bancorp

<PAGE>

filed October 22, 1997 with the Commission (Commission
File No. 0-12422)).

4.1 Form of Indenture.

4.2 Form of Subordinated Debenture Certificate (included as
an exhibit to Exhibit 4.1).

4.3 Certificate of Trust of IUB Capital Trust.

4.4 Trust Agreement of IUB Capital Trust.

4.5 Form of Amended and Restated Trust Agreement.

4.6 Form of Preferred Security Certificate
(included as an exhibit to Exhibit 4.5).

4.7 Form of Preferred Securities Guarantee Agreement.

4.8 Form of Agreement as to Expenses and Liabilities
(included as an exhibit to Exhibit 4.5).

5.1 Opinion of Richards, Layton & Finger, special Delaware
counsel, as to legality of the Preferred Securities.*

5.2 Opinion of David W. Harper, Esq., as to the validity of
the issuance of the Subordinated Debentures.*

5.3 Opinion of Greenebaum Doll & McDonald, PLLC, as to the
validity of the issuance of the Subordinated Debentures.*

8.1 Tax opinion of Greenebaum Doll & McDonald, PLLC, as to
certain federal income tax matters.*

10.1 Loan Agreement dated December 31, 1991 between
Indiana United Bancorp and Merchants National
Bank and Trust Company of Indianapolis (incor-
porated by reference to Exhibit 10.1 to the
Annual Report on Form 10-K of Indiana United
Bancorp for the fiscal year ended December 31,
1991 (Commission File No. 0-12422)).

10.2 First Amendment to Loan Documents dated September
23, 1997 between Indiana United Bancorp and
National City Bank of Indiana (f/k/a Merchants
National Bank and Trust Company of Indianapolis)
(incorporated by reference to Exhibit 10.2 to the
Quarterly Report on Form 10-Q of Indiana United
Bancorp for the period ended September 30, 1997
(Commission File No. 0-12422)).

10.3 Commercial Note dated September 23, 1997 in the face
principal amount of $4,625,000 made by Indiana
United Bancorp to the order of National City Bank
of Indiana (incorporated by reference to Exhibit 10.3
to the Quarterly Report on Form 10-Q of Indiana United
Bancorp for the period ended September 30, 1997
(Commission File No. 0-12422)).

10.4 Employment Agreement dated as of October 10, 1995
between Indiana United Bancorp and Michael K.
Bauer.

10.5 Form of Employment Agreement between Indiana United
Bancorp and James L. Saner (Exhibit 5.20 to the
Agreement and Plan of Merger incorporated by
reference into this Registration Statement as Exhibit
2).

12. Statement regarding computation of ratio of earnings to
fixed charges.*

23.1 Consent of Richards, Layton & Finger (included in Exhibit
5.1)*.

II-2

<PAGE>

23.2 Consent of David W. Harper, Esq. (included in Exhibit 5.2)*.

23.3 Consent of Greenebaum Doll & McDonald, PLLC (included in
Exhibit 5.3)*.

23.4 Consent of Geo. S. Olive & Co., LLC.

23.5 Consent of Crowe Chizek and Company LLP.

24 Power of Attorney (included in the signature pages to this
registration statement).

25.1 Form T-1 Statement of Eligibility of State Street Bank and
Trust Company to act as trustee under the Indenture.

25.2 Form T-1 Statement of Eligibility of State Street Bank and
Trust Company to act as trustee under the Amended and
Restated Trust Agreement.

25.3 Form T-1 Statement of Eligibility of State Street Bank and
Trust Company to act as trustee under the Preferred
Securities Guarantee Agreement.

(b) Financial Statements Schedules**.

- ----------------------
* To be filed by amendment.
** All schedules are omitted because they are not required or applicable or
the required information is shown in the financial statements or the notes
thereto.

ITEM 17. UNDERTAKINGS

Each of the undersigned registrants hereby undertakes that:

(1) It will deliver or cause to be delivered with the prospectus, to each
person to whom the prospectus is sent or given, the latest annual report to
security holders that is incorporated by reference in the prospectus and
furnished pursuant to and meeting the requirements of Rule 14a-3 or Rule 14c-3
under the Securities Exchange Act of 1934; and, where interim financial
information required to be presented by Article 3 of Regulation S-X are not set
forth in the prospectus, to deliver, or cause to be delivered to each person to
whom the prospectus is sent or given, the latest quarterly report that is
specifically incorporated by reference in the prospectus to provide such interim
financial information.

(2) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.

(3) For purposes of determining any liability under the Securities
Act of 1933, as amended, the information omitted from the form of prospectus
filed as part of this Registration Statement in reliance upon Rule

II-3

<PAGE>

430A and contained in a form of prospectus filed by the registrants pursuant to
Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be
part of this Registration Statement as of the time it was declared effective.

(4) For the purpose of determining any liability under the
Securities Act of 1933, as amended, each post-effective amendment that contains
a form of prospectus shall be deemed to be a new registration statement relating
to the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.

(5) It shall provide to the Underwriter at the closing specified in the
underwriting agreement, certificates in such denominations and registered in
such names as required by the underwriter to permit prompt delivery to each
purchaser.

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-2 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Greensburg, State of Indiana, on the 19th day of
November, 1997.

INDIANA UNITED BANCORP

By: /s/ Robert E. Hoptry
----------------------------------------
Robert E. Hoptry, Chairman of the Board,
President and Chief Executive Officer

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Robert E. Hoptry and/or Jay B. Fager his true and
lawful attorney-in-fact and agent, with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any and all amendments, including post-effective amendments,
to this Registration Statement, including any registration statement for the
same offering that is to be effective upon filing pursuant to Rule 462(b) under
the Securities Act of 1933, and to file the same, with all exhibits thereto and
other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and each of them,
full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of them, or their
substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.

Name Capacity Date
---- -------- ----

/s/ Robert E. Hoptry Chairman of the Board, President November 18, 1997
- --------------------- and Chief Executive Officer
Robert E. Hoptry

/s/ Jay B. Fager Treasurer and Chief Financial November 18, 1997
- --------------------- Officer (and Principal Accounting
Jay B. Fager Officer)

/s/ William G. Barron Director November 18, 1997
- ---------------------
William G. Barron

II-4

<PAGE>

/s/ Philip A. Frantz Director November 18, 1997
- ---------------------
Philip A. Frantz

/s/ Martin G. Wilson Director November 18, 1997
- ---------------------
Martin G. Wilson

/s/ Edward J. Zoeller Director November 18, 1997
- ---------------------
Edward J. Zoeller

II-5

<PAGE>

SIGNATURE

Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-2 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Greensburg, State of Indiana, on the 19th day of
November, 1997.

IUB CAPITAL TRUST

By: /s/ Robert E. Hoptry
----------------------------------
Robert E. Hoptry, Trustee

By: /s/ Jay B. Fager
----------------------------------
Jay B. Fager, Trustee

By: /s/ Daryl R. Tressler
----------------------------------
Daryl R. Tressler, Trustee

II-6
<PAGE>

EXHIBIT INDEX

EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
1 Form of Underwriting Agreement.

2 Agreement and Plan of Merger dated as of October 8, 1997 between
Indiana United Bancorp and P.T.C. Bancorp (incorporated by reference
to Exhibit 2 to the Current Report on Form 8-K of Indiana
United Bancorp

filed October 22, 1997 with the Commission (Commission
File No. 0-12422)).

4.1 Form of Indenture.

4.2 Form of Subordinated Debenture Certificate (included as an exhibit
to Exhibit 4.1).

4.3 Certificate of Trust of IUB Capital Trust.

4.4 Trust Agreement of IUB Capital Trust.

4.5 Form of Amended and Restated Trust Agreement.

4.6 Form of Preferred Security Certificate (included as an exhibit to
Exhibit 4.5).

4.7 Form of Preferred Securities Guarantee Agreement.

4.8 Form of Agreement as to Expenses and Liabilities (included as an
exhibit to Exhibit 4.5).

5.1 Opinion of Richards, Layton & Finger, special Delaware counsel, as
to legality of the Preferred Securities.*

5.2 Opinion of David W. Harper, Esq., as to the validity of the issuance
of the Subordinated Debentures.*

5.3 Opinion of Greenebaum Doll & McDonald, PLLC, as to the validity of
the issuance of the Subordinated Debentures.*

8.1 Tax opinion of Greenebaum Doll & McDonald, PLLC, as to certain
federal income tax matters.*

10.1 Loan Agreement dated December 31, 1991 between Indiana United
Bancorp and Merchants National Bank and Trust Company of Indianapolis
(incorporated by reference to Exhibit 10.1 to the Annual Report on
Form 10-K of Indiana United Bancorp for the fiscal year ended
December 31, 1991 (Commission File No. 0-12422)).

10.2 First Amendment to Loan Documents dated September 23, 1997 between
Indiana United Bancorp and National City Bank of Indiana
(f/k/a Merchants National Bank and Trust Company of Indianapolis)
(incorporated by reference to Exhibit 10.2 to the Quarterly Report
on Form 10-Q of Indiana United Bancorp for the period ended
September 30, 1997 (Commission File No. 0-12422)).

10.3 Commercial Note dated September 23, 1997 in the face principal amount
of $4,625,000 made by Indiana United Bancorp to the order of National
City Bank of Indiana (incorporated by reference to Exhibit 10.3 to
the Quarterly Report on Form 10-Q of Indiana United Bancorp for the
period ended September 30, 1997 (Commission File No. 0-12422)).

1
<PAGE>

10.4 Employment Agreement dated as of October 10, 1995 between Indiana
United Bancorp and Michael K. Bauer.

10.5 Form of Employment Agreement between Indiana United Bancorp and
James L. Saner (Exhibit 5.20 to the Agreement and Plan of Merger
incorporated by reference into this Registration Statement as
Exhibit 2).

12. Statement regarding computation of ratio of earnings to fixed
charges.*

23.1 Consent of Richards, Layton & Finger (included in Exhibit 5.1)*.

23.2 Consent of David W. Harper, Esq. (included in Exhibit 5.2)*.

23.3 Consent of Greenebaum Doll & McDonald, PLLC (included in
Exhibit 5.3)*.

23.4 Consent of Geo. S. Olive & Co., LLC.

23.5 Consent of Crowe Chizek and Company LLP.

24 Power of Attorney (included in the signature pages to this
registration statement).

25.1 Form T-1 Statement of Eligibility of State Street Bank and
Trust Company to act as trustee under the Indenture.

25.2 Form T-1 Statement of Eligibility of State Street Bank and
Trust Company to act as trustee under the Amended and Restated
Trust Agreement.

25.3 Form T-1 Statement of Eligibility of State Street Bank and Trust
Company to act as trustee under the Preferred Securities Guarantee
Agreement.

<PAGE>

1,850,000 Preferred Securities
IUB Capital Trust

____ % Cumulative Trust Preferred Securities
(Liquidation Amount of $10 per Preferred Security)

UNDERWRITING AGREEMENT

_______________, 1997

STIFEL, NICOLAUS & COMPANY, INCORPORATED
500 North Broadway
St. Louis, Missouri 63102

Dear Ladies and Gentlemen:

Indiana United Bancorp, an Indiana corporation (the "Company"), and
its financing subsidiary, IUB Capital Trust, a Delaware business trust (the
"Trust," and hereinafter together with the Company, the "Offerors"), propose
that the Trust issue and sell to Stifel, Nicolaus & Company, Incorporated
(sometimes referred to herein as the "Underwriter"), pursuant to the terms of
this Agreement, 1,850,000 of the Trust's _____ % Cumulative Trust Preferred
Securities, with a liquidation amount of $10.00 per preferred security (the
"Preferred Securities"), to be issued under the Trust Agreement (as hereinafter
defined), the terms of which are more fully described in the Prospectus (as
hereinafter defined). The aforementioned 1,850,000 Preferred Securities to be
sold to the Underwriter are herein called the "Firm Preferred Securities."
Solely for the purpose of covering over-allotments in the sale of the Firm
Preferred Securities, the Offerors further propose that the Trust issue and sell
to the Underwriter, at its option, up to an additional 277,500 Preferred
Securities (the "Option Preferred Securities") upon exercise of the
over-allotment option granted in Section 1 hereof. The Firm Preferred
Securities and any Option Preferred Securities are herein collectively
referred to as the "Designated Preferred Securities."

The Offerors hereby confirm as follows their agreement with you in
connection with the proposed purchase of the Designated Preferred Securities.

1. SALE, PURCHASE AND DELIVERY OF DESIGNATED PREFERRED SECURITIES;
DESCRIPTION OF DESIGNATED PREFERRED SECURITIES.

(a) On the basis of the representations, warranties and agreements
herein contained, and subject to the terms and conditions herein set forth, the
Offerors hereby agree that the Trust shall issue and sell to the Underwriter and
the Underwriter agrees to purchase from the Trust, at a purchase price of $10.00
per share (the "Purchase Price"), the Firm Preferred Securities. Because the
proceeds from the sale of the Firm Preferred Securities will be used to purchase
from the Company its Debentures (as hereinafter defined and as described in the
Prospectus), the Company shall pay to the Underwriter a commission of $______
per Firm Preferred Security purchased (the "Firm Preferred Securities
Commission").

<PAGE>

In addition, on the basis of the representations, warranties and
agreements herein contained and subject to the terms and conditions herein set
forth, the Trust hereby grants to the Underwriter an option to purchase all or
any portion of the 277,500 Option Preferred Securities, and upon the exercise of
such option in accordance with this Section 1, the Offerors hereby agree that
the Trust shall issue and sell to the Underwriter all or any portion of the
Option Preferred Securities at the same Purchase Price per share paid for the
Firm Preferred Securities. Because the proceeds from the sale of the Option
Preferred Securities will be used to purchase from the Company its Debentures,
the Company shall pay to the Underwriter a commission of $_____ per Option
Preferred Security for each Option Preferred Security purchased (the "Option
Preferred Securities Commission"). The option hereby granted (the "Option")
shall expire 30 days after the date upon which the Registration Statement (as
hereinafter defined) becomes effective and may be exercised only for the purpose
of covering over-allotments which may be made in connection with the offering
and distribution of the Firm Preferred Securities. The Option may be exercised
in whole or in part at any time (but not more than once) by the Underwriter
giving notice (confirmed in writing) to the Trust setting forth the number of
Option Preferred Securities as to which the Underwriter is exercising the Option
and the time, date and place for payment and delivery of certificates for such
Option Preferred Securities. Such time and date of payment and delivery for the
Option Preferred Securities (the "Option Closing Date") shall be determined by
the Underwriter, but shall not be earlier than two nor later than five business
days after the exercise of such Option, nor in any event prior to the Closing
Date (as hereinafter defined). The Option Closing Date may be the same as the
Closing Date.

Payment of the Purchase Price and the Firm Preferred Securities
Commission and delivery of certificates for the Firm Preferred Securities shall
be made at the Underwriter's offices, located at 500 North Broadway, St. Louis,
Missouri 63102, or such other place as shall be agreed to by the Underwriter and
the Offerors, at 10:00 a.m., St. Louis time, on _____________, 1997, or at such
other time not more than five full business days thereafter as the Offerors and
the Underwriter shall determine (the "Closing Date"). If the Underwriter
exercises the Option to purchase any or all of the Option Preferred Securities,
payment of the Purchase Price and Option Preferred Securities Commission and
delivery of certificates for such Option Preferred Securities shall be made on
the Option Closing Date at the Underwriter's offices, or at such other place as
the Offerors and the Underwriter shall determine. Such payments shall be made
to an account designated by the Trust by wire transfer or certified or bank
cashier's check, in same day funds, in the amount of the Purchase Price
therefor, against delivery by or on behalf of the Trust to the Underwriter of
certificates for the Designated Preferred Securities to be purchased by the
Underwriter.

The Agreement contained herein with respect to the timing of the
Closing Date and Option Closing Date is intended to, and does, constitute an
express agreement, as described in Rule 15c6-[1(c)/1(a)] and (d) promulgated
under the 1934 Act (as defined herein), for a settlement date other than
[FOUR/THREE] business days after the date of the contract.

Certificates for Designated Preferred Securities to be purchased by
the Underwriter shall be delivered by the Offerors in fully registered form in
such authorized denominations and registered in such names as the Underwriter
shall request in writing not later than 12:00 noon, St. Louis time, two business
days prior to the Closing Date and, if applicable, the Option Closing Date.
Certificates for Designated Preferred Securities to be purchased by the
Underwriter shall be made available by the Offerors to the Underwriter for
inspection, checking and packaging at such office as the Underwriter may
designate in writing not later than 1:00 p.m., St. Louis time, on the last
business day prior to the Closing Date and, if applicable, on the last business
day prior to the Option Closing Date.

Time shall be of the essence, and delivery of the certificates for the
Designated Preferred Securities at the time and place specified pursuant to this
Agreement is a further condition of the Underwriter's obligations hereunder.

<PAGE>

(b) The Offerors propose that the Trust issue the Designated
Preferred Securities pursuant to an Amended and Restated Trust Agreement among
State Street Bank and Trust Company, as Property Trustee, Wilmington Trust
Company, as Delaware Trustee, the Administrative Trustees named therein,
(collectively, the "Trustees"), and the Company, in substantially the form
heretofore delivered to the Underwriter, said Agreement being hereinafter
referred to as the "Trust Agreement." In connection with the issuance of the
Designated Preferred Securities, the Company proposes (i) to issue its
Subordinated Debentures ( the "Debentures") pursuant to an Indenture, to be
dated as of ______________, 1997, between the Company and State Street Bank
and Trust Company, as Trustee (the "Indenture") and (ii) to guarantee certain
payments on the Designated Preferred Securities pursuant to a Preferred
Securities Guarantee Agreement between the Company and State Street Bank and
Trust Company, as guarantee trustee (the "Guarantee"), to the extent described
therein.

2. REPRESENTATIONS AND WARRANTIES.

(a) The Offerors jointly and severally represent and warrant to, and
agree with, the Underwriter that:

(i) The reports filed with the Securities and Exchange
Commission (the "Commission") by the Company under the Securities Exchange
Act of 1934, as amended (the "1934 Act") and the rules and regulations
thereunder (the "1934 Act Regulations") at the time they were filed with
the Commission, complied as to form in all material respects with the
requirements of the 1934 Act and the 1934 Act Regulations and did not
contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances in which they were made, not
misleading.

(ii) The Offerors have prepared and filed with the Commission a
registration statement on Form S-2 (File Numbers 333 _______ and
333 _____-01) for the registration of the Designated Preferred Securities,
the Guarantee and up to $21,275,000 aggregate principal amount of Debentures
under the Securities Act of 1933, as amended (the "1933 Act"), including
the related prospectus subject to completion, and one or more amendments to
such registration statement may have been so filed, in each case in
conformity in all material respects with the requirements of the 1933 Act,
the rules and regulations promulgated thereunder (the "1933 Act
Regulations") and the Trust Indenture Act of 1939, as amended (the "Trust
Indenture Act") and the rules and regulations thereunder. Copies of such
registration statement, including any amendments thereto, each Preliminary
Prospectus (as defined herein) contained therein and the exhibits,
financial statements and schedules to such registration statement, as
finally amended and revised, have heretofore been delivered by the Offerors
to the Underwriter. After the execution of this Agreement, the Offerors
will file with the Commission (A) if such registration statement, as it may
have been amended, has been declared by the Commission to be effective
under the 1933 Act, a prospectus in the form most recently included in an
amendment to such registration statement (or, if no such amendment shall
have been filed, in such registration statement), with such changes or
insertions as are required by Rule 430A of the 1933 Act Regulations ("Rule
430A") or permitted by Rule 424(b) of the 1933 Act Regulations ("Rule
424(b)") and as have been provided to and not objected to by the
Underwriter prior to (or as are agreed to by the Underwriter subsequent to)
the execution of this Agreement, or (B) if such registration statement, as
it may have been amended, has not been declared by the Commission to be
effective under the 1933 Act, an amendment to such registration statement,
including a form of final prospectus, necessary to permit such registration
statement to become effective, a copy of which amendment has been furnished
to and not objected to by the Underwriter prior to (or is agreed to by the
Underwriter

<PAGE>

subsequent to) the execution of this Agreement. As used in this
Agreement, the term "Registration Statement" means such registration
statement, as amended at the time when it was or is declared effective
under the 1933 Act, including (1) all financial schedules and exhibits
thereto, (2) all documents (or portions thereof) incorporated by
reference therein filed under the 1934 Act, and (3) any information
omitted therefrom pursuant to Rule 430A and included in the Prospectus
(as hereinafter defined); the term "Preliminary Prospectus" means each
prospectus subject to completion filed with such registration statement
or any amendment thereto including all documents (or portions thereof)
incorporated by reference therein under the 1934 Act (including the
prospectus subject to completion, if any, included in the Registration
Statement and each prospectus filed pursuant to Rule 424(a) under the
1933 Act); and the term "Prospectus" means the prospectus first filed
with the Commission pursuant to Rule 424(b)(1) or (4) or, if no
prospectus is required to be filed pursuant to Rule 424(b)(1) or (4), the
prospectus included in the Registration Statement, in each case including
the financial schedules and all documents (or portions thereof)
incorporated by reference therein under the 1934 Act. The date on which
the Registration Statement becomes effective is hereinafter referred to
as the "Effective Date."

(iii) The documents incorporated by reference in the
Preliminary Prospectus or Prospectus or from which information is so
incorporated by reference, when they became effective or were filed with
the Commission, as the case may be, complied in all material respects with
the requirements of the 1934 Act and the 1934 Act Regulations, and when
read together and with the other information in the Preliminary Prospectus
or Prospectus, as the case may be, at the time the Registration Statement
became or becomes effective and at the Closing Date and any Option Closing
Date, did not or will not, as the case may be, contain an untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.

(iv) No order preventing or suspending the use of any Prospectus
(or, if the Prospectus is not in existence, the most recent Preliminary
Prospectus) has been issued by the Commission, nor has the Commission, to
the knowledge of the Offerors, threatened to issue such an order or
instituted proceedings for that purpose. Each Preliminary Prospectus, at
the time of filing thereof, (A) complied in all material respects with the
requirements of the 1933 Act and the 1933 Act Regulations and (B) did not
contain an untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were
made, not misleading.

(v) At the Effective Date and at all times subsequent thereto,
up to and including the Closing Date and, if applicable, the Option Closing
Date, the Registration Statement and any post-effective amendment thereto
(A) complied and will comply in all material respects with the requirements
of the 1933 Act, the 1933 Act Regulations and the Trust Indenture Act (and
the rules and regulations thereunder) and (B) did not and will not contain
an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein,
not misleading. At the Effective Date and at all times when the Prospectus
is required to be delivered in connection with offers and sales of
Designated Preferred Securities, including, without limitation, the Closing
Date and, if applicable, the Option Closing Date, the Prospectus, as
amended or supplemented, (A) complied and will comply in all material
respects with the requirements of the 1933 Act and the 1933 Act Regulations
and the Trust Indenture Act (and the rules and regulations thereunder) and
(B) did not contain and will not contain an untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading.

<PAGE>

(vi) (A) The Company is duly organized, validly existing and in
good standing under the laws of the State of Indiana, with full corporate
and other power and authority to own, lease and operate its properties and
conduct its business as described in and contemplated by the Registration
Statement and the Prospectus (or, if the Prospectus is not in existence,
the most recent Preliminary Prospectus) and as currently being conducted
and is duly registered as a bank holding company under the Bank Holding
Company Act of 1956, as amended (the "BHC Act").

(B) The Trust has been duly created and is validly existing
as a statutory business trust in good standing under the Delaware Business
Trust Act with the power and authority (trust and other) to own its
property and conduct its business as described in the Registration
Statement and Prospectus, to issue and sell its common securities (the
"Common Securities") to the Company pursuant to the Trust Agreement, to
issue and sell the Designated Preferred Securities, to enter into and
perform its obligations under this Agreement and to consummate the
transactions herein contemplated; the Trust has no subsidiaries and is duly
qualified to transact business and is in good standing in each jurisdiction
in which the conduct of its business or the ownership of its property
requires such qualification; the Trust has conducted and will conduct no
business other than the transactions contemplated by this Agreement and
described in the Prospectus; the Trust is not a party to or bound by any
agreement or instrument other than this Agreement, the Trust Agreement and
the agreements and instruments contemplated by the Trust Agreement and
described in the Prospectus; the Trust has no liabilities or obligations
other than those arising out of the transactions contemplated by this
Agreement and the Trust Agreement and described in the Prospectus; the
Trust is not a party to or subject to any action, suit or proceeding of any
nature; the Trust is not, and at the Closing Date or any Option Closing
Date will not be classified as an association taxable as a corporation for
United States federal income tax purposes; and the Trust is, and as of the
Closing Date or any Option Closing Date will be, treated as a consolidated
subsidiary of the Company pursuant to generally accepted accounting
principles.

(vii) The Company has three (3) subsidiaries, the Trust, Union
Bank and Trust Company of Indiana and Regional Federal Savings Bank, New
Albany, Indiana (collectively, the "Banks"; and together with the Trust,
the "Subsidiaries"). The Company does not own or control, directly or
indirectly, more than 5% of any class of equity security of any corporation,
association or other entity other than the Subsidiaries. Each Subsidiary
is a bank, corporation or business trust duly organized, validly existing
and in good standing under the laws of its respective jurisdiction of
incorporation. Each such Subsidiary has full corporate and other power
and authority to own, lease and operate its properties and to conduct its
business as described in and contemplated by the Registration Statement and
the Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus) and as currently being conducted. The deposit
accounts of the Banks are insured by the Bank Insurance Fund administered
by the Federal Deposit Insurance Corporation (the "FDIC") up to the maximum
amount provided by law; and no proceedings for the modification,
termination or revocation of any such insurance are pending or threatened.

(viii) The Company and each of the Subsidiaries is duly qualified
to transact business as a foreign corporation and is in good standing in
each other jurisdiction in which it owns or leases property or conducts its
business so as to require such qualification. All of the issued and
outstanding shares of capital stock of the Subsidiaries (A) have been duly
authorized and are validly issued, (B) are fully paid and nonassessable,
except to the extent such shares may be deemed assessable under 12 U.S.C.
Section 55 or 12 U.S.C. Section 1831o, and (C) except as disclosed in the
Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus), are directly owned by the

<PAGE>

Company free and clear of any security interest, mortgage, pledge, lien,
encumbrance, restriction upon voting or transfer, preemptive rights, claim
or equity. There are no outstanding rights, warrants or options to acquire
or instruments convertible into or exchangeable for any capital stock or
equity securities of the Offerors or the Subsidiaries.

(ix) The capital stock of the Company and the equity securities
of the Trust conform to the description thereof contained in the Prospectus
(or, if the Prospectus is not in existence, the most recent Preliminary
Prospectus). The outstanding shares of capital stock and equity securities
of each Offeror have been duly authorized and validly issued and are fully
paid and nonassessable, and no such shares were issued in violation of the
preemptive or similar rights of any security holder of an Offeror; no
person has any preemptive or similar right to purchase any shares of
capital stock or equity securities of the Offerors. Except as disclosed in
the Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus), there are no outstanding rights, options or
warrants to acquire any securities of the Offerors, and there are no
outstanding securities convertible into or exchangeable for any such
securities and no restrictions upon the voting or transfer of any capital
stock of the Company or equity securities of the Trust pursuant to the
Company's corporate charter or bylaws, the Trust Agreement or any agreement
or other instrument to which an Offeror is a party or by which an Offeror
is bound.

(x) (A) The Trust has all requisite power and authority to
issue, sell and deliver the Designated Preferred Securities in accordance
with and upon the terms and conditions set forth in this Agreement, the
Trust Agreement, the Registration Statement and the Prospectus (or, if the
Prospectus is not in existence, the most recent Preliminary Prospectus).
All corporate and trust action required to be taken by the Offerors for the
authorization, issuance, sale and delivery of the Designated Preferred
Securities in accordance with such terms and conditions has been validly
and sufficiently taken. The Designated Preferred Securities, when
delivered in accordance with this Agreement, will be duly and validly
issued and outstanding, will be fully paid and nonassessable undivided
beneficial interests in the assets of the Trust, will be entitled to the
benefits of the Trust Agreement, will not be issued in violation of or
subject to any preemptive or similar rights, and will conform to the
description thereof in the Registration Statement and the Prospectus (or,
if the Prospectus is not in existence, the most recent Preliminary
Prospectus) and the Trust Agreement. None of the Designated Preferred
Securities, immediately prior to delivery, will be subject to any security
interest, lien, mortgage, pledge, encumbrance, restriction upon voting or
transfer, preemptive rights, claim, equity or other defect.

(B) The Debentures have been duly and validly authorized,
and, when duly and validly executed, authenticated and issued as provided
in the Indenture and delivered to the Trust pursuant to the Trust
Agreement, will constitute valid and legally binding obligations of the
Company entitled to the benefits of the Indenture and will conform to the
description thereof contained in the Prospectus.

(C) The Guarantee has been duly and validly authorized,
and, when duly and validly executed and delivered to the guarantee trustee
for the benefit of the Trust, will constitute a valid and legally binding
obligation of the Company and will conform to the description thereof
contained in the Prospectus.

(D) The Agreement as to Expenses and Liabilities between
the Company and the Trust (the "Expense Agreement") has been duly and
validly authorized, and, when duly and validly executed and delivered by
the Company, will constitute a valid and legally binding obligation of the
Company and will conform to the description thereof contained in the
Prospectus.

<PAGE>

(xi) The Offerors and the Subsidiaries have complied in all
material respects with all federal, state and local statutes, regulations,
ordinances and rules applicable to the ownership and operation of their
properties or the conduct of their businesses as described in and
contemplated by the Registration Statement and the Prospectus (or, if the
Prospectus is not in existence, the most recent Preliminary Prospectus) and
as currently being conducted.

(xii) The Offerors and the Subsidiaries have all material
permits, easements, consents, licenses, franchises and other governmental
and regulatory authorizations from all appropriate federal, state, local or
other public authorities ("Permits") as are necessary to own and lease
their properties and conduct their businesses in the manner described in
and contemplated by the Registration Statement and the Prospectus (or, if
the Prospectus is not in existence, the most recent Preliminary Prospectus)
and as currently being conducted in all material respects. All such
Permits are in full force and effect and each of the Offerors and the
Subsidiaries are in all material respects complying therewith, and no event
has occurred that allows, or after notice or lapse of time would allow,
revocation or termination thereof or will result in any other material
impairment of the rights of the holder of any such Permit. Such Permits
contain no restrictions that would materially impair the ability of the
Company or the Subsidiaries to conduct their businesses in the manner
consistent with their past practices. Neither the Offerors nor any of the
Subsidiaries has received notice or otherwise has knowledge of any
proceeding or action relating to the revocation or modification of any such
Permit.

(xiii) Neither of the Offerors nor any of the Subsidiaries is
in breach or violation of its corporate charter, by-laws or other governing
documents (including, without limitation, the Trust Agreement) in any
material respect. Neither of the Offerors nor any of the Subsidiaries is,
and no other party is, in violation, breach or default (with or without
notice or lapse of time or both) in the performance or observance of any
term, covenant, agreement, obligation, representation, warranty or
condition contained in (A) any contract, indenture, mortgage, deed of
trust, loan or credit agreement, note, lease, franchise, license, Permit or
any other agreement or instrument to which it is a party or by which it or
any of its properties may be bound, and no other party has asserted that
any of the Offerors or any of the Subsidiaries is in such violation, breach
or default, or (B) any order, decree, judgment, rule or regulation of any
court, arbitrator, government, or governmental agency or instrumentality,
domestic or foreign, having jurisdiction over the Offerors or the
Subsidiaries or any of their respective properties.

(xiv) The execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated by this
Agreement, the Trust Agreement, the Registration Statement and the
Prospectus (or, if the Prospectus in not in existence, the most recent
Preliminary Prospectus) do not and will not conflict with, result in the
creation or imposition of any material lien, claim, charge, encumbrance or
restriction upon any property or assets of the Offerors or the Subsidiaries
or the Designated Preferred Securities pursuant to, constitute a breach or
violation of, or constitute a default under, with or without notice or
lapse of time or both, any of the terms, provisions or conditions of the
charter or by-laws of the Company or the Subsidiaries, the Trust Agreement,
the Guarantee, the Indenture, any contract, indenture, mortgage, deed of
trust, loan or credit agreement, note, lease, franchise, license, Permit or
any other agreement or instrument to which any of the Offerors or any of
the Subsidiaries is a party or by which any of them or any of their
respective properties may be bound or any order, decree, judgment, rule or
regulation of any court, arbitrator, government, or governmental agency or
instrumentality, domestic or foreign, having jurisdiction over the Offerors
or the Subsidiaries or any of their respective properties. No
authorization, approval, consent or order of or filing, registration or
qualification with, any person (including, without limitation, any court,
governmental body or authority) is required

<PAGE>

in connection with the transactions contemplated by this Agreement, the
Trust Agreement, the Indenture, the Guarantee, the Registration Statement
and the Prospectus, except such as have been obtained under the 1933 Act,
the Trust Indenture Act and from the Nasdaq National Market relating to
the listing of the Designated Preferred Securities, and such as may be
required under state securities laws or Interpretations or Rules of the
National Association of Securities Dealers, Inc. ("NASD") in connection
with the purchase and distribution of the Designated Preferred Securities
by the Underwriter.

(xv) The Offerors have all requisite corporate power and
authority to enter into this Agreement and this Agreement has been duly and
validly authorized, executed and delivered by the Offerors and constitutes
the legal, valid and binding agreement of the Offerors, enforceable against
the Offerors in accordance with its terms, except as the enforcement
thereof may be limited by general principles of equity and by bankruptcy or
other laws relating to or affecting creditors' rights generally and except
as any indemnification or contribution provisions thereof may be limited
under applicable securities laws. Each of the Indenture, the Trust
Agreement, the Guarantee and the Expense Agreement has been duly authorized
by the Company, and, when executed and delivered by the Company on the
Closing Date, each of said agreements will constitute a valid and legally
binding obligation of the Company and will be enforceable against the
Company in accordance with its terms, except as the enforcement thereof may
be limited by general principles of equity and by bankruptcy or other laws
relating to or affecting creditors' rights generally and except as any
indemnification or contribution provisions thereof may be limited under
applicable securities laws. Each of the Indenture, the Trust Agreement and
the Guarantee has been duly qualified under the Trust Indenture Act and
will conform to the description thereof contained in the Prospectus.

(xvi) The Company and the Subsidiaries have good and
marketable title in fee simple to all real property and good title to all
personal property owned by them and material to their businesses, in each
case free and clear of all security interests, liens, mortgages, pledges,
encumbrances, restrictions, claims, equities and other defects; and all of
the leases under which the Company or the Subsidiaries hold real or
personal property are valid, existing and enforceable leases and in full
force and effect, and neither the Company nor any of the Subsidiaries is in
default in any material respect of any of the terms or provisions of any
leases.

(xvii) Geo. S. Olive & Co., who have certified certain of the
consolidated financial statements of the Company and the Subsidiaries
including the notes thereto, included by incorporation by reference or
otherwise in the Registration Statement and Prospectus, are independent
public accountants with respect to the Company and the Subsidiaries as
required by the 1933 Act and the 1933 Act Regulations.

(xviii) The consolidated financial statements, including the
notes thereto, included by incorporation by reference or otherwise in the
Registration Statement and the Prospectus (or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus) with respect to the
Company and the Subsidiaries, comply in all material respects with the 1933
Act and the 1933 Act Regulations and present fairly the consolidated
financial position of the Company and the Subsidiaries as of the dates
indicated and the consolidated results of operations, cash flows and
shareholders' equity of the Company and the Subsidiaries for the periods
specified and have been prepared in conformity with generally accepted
accounting principles applied on a consistent basis. The selected and
summary consolidated financial data concerning the Company and the
Subsidiaries included in the Registration Statement and the Prospectus (or
such Preliminary Prospectus) comply in all material respects with the 1933
Act and the 1933 Act Regulations, present fairly the information set forth
therein, and have been compiled on a basis consistent with that of the
consolidated financial statements

<PAGE>

of the Offerors and the Subsidiaries in the Registration Statement and the
Prospectus (or such Preliminary Prospectus). The other financial,
statistical and numerical information included in the Registration Statement
and the Prospectus (or such Preliminary Prospectus) complies in all material
respects with the 1933 Act and the 1933 Act Regulations, presents fairly
the information shown therein, and to the extent applicable has been
compiled on a basis consistent with the consolidated financial statements
of the Company and the Subsidiaries included in the Registration Statement
and the Prospectus (or such Preliminary Prospectus).

(xix) The consolidated financial statements, including the
notes thereto, included by incorporation by reference or otherwise in the
Registration Statement and the Prospectus (or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus) with respect to P.T.C.
Bancorp, an Indiana bank holding company, and its wholly owned subsidiary,
Peoples Trust Company (P.T.C. Bancorp and Peoples Trust Company are
collectively referred to herein as "PTC"), comply in all material respects
with the 1933 Act and the 1933 Act Regulations and present fairly the
consolidated financial position of PTC as of the dates indicated and the
consolidated results of operations, cash flows and shareholders' equity of
PTC for the periods specified and have been prepared in conformity with
generally accepted accounting principles applied on a consistent basis.
The selected and summary consolidated financial data concerning PTC
included in the Registration Statement and the Prospectus (or such
Preliminary Prospectus) comply in all material respects with the 1933 Act
and the 1933 Act Regulations, present fairly the information set forth
therein, and have been compiled on a basis consistent with that of the
consolidated financial statements of PTC in the Registration Statement and
the Prospectus (or such Preliminary Prospectus). The other financial,
statistical and numerical information included in the Registration
Statement and the Prospectus (or such Preliminary Prospectus) complies in
all material respects with the 1933 Act and the 1933 Act Regulations,
presents fairly the information shown therein, and to the extent applicable
has been compiled on a basis consistent with the consolidated financial
statements of PTC included in the Registration Statement and the Prospectus
(or such Preliminary Prospectus).

(xx) The pro forma condensed combining financial statements of
the Company, the Subsidiaries, and PTC and the pro forma summary
information for such entities included by incorporation by reference or
otherwise in the Registration Statement and the Prospectus (or, if the
Prospectus is not in existence, the most recent Preliminary Prospectus)
comply in form in all material respects with the applicable accounting
requirements of the 1933 Act and the 1933 Act Regulations and the pro forma
adjustments to the historical amounts in the compilation of those
statements comply with such accounting requirements and are reasonable.

(xxi) All of the representations and warranties of the
Company, and to the best knowledge and belief of the Company after due
inquiry, all of the representations and warranties of PTC, contained in
that certain Agreement and Plan of Merger by and between the Company and
PTC dated as of _______, 1997 ("Merger Agreement"), are true and correct in
all material respects, and all of the covenants and agreements of the
Company contained in the Merger Agreement which by their terms were to be
complied with as of the date hereof have been complied with by the Company
in all material respects, except to the extent that a breach of such
representations and warranties or noncompliance with such covenants and
agreements does not have a material adverse effect on the condition
(financial or otherwise), earnings, business, prospects or results of the
Company, the Subsidiaries, or PTC on a consolidated basis. The Company
does not know of any facts or circumstances inconsistent with the
consummation of the transactions contemplated by the Merger Agreement in
accordance with its terms and as described in the Registration Statement
and the Prospectus (or, if the Prospectus is not in existence the most
recent Preliminary

<PAGE>

Prospectus) or of any facts and circumstances which lead the Company to
believe that such consummation in accordance with the terms of the Merger
Agreement and as described in the Registration Statement or such Prospectus
will not occur. The Company is not aware of any material disagreements
between the Company and PTC regarding the terms of the Merger Agreement or
interpretation thereof.

(xxii) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus (or, if the
Prospectus is not in existence, the most recent Preliminary Prospectus),
except as otherwise stated therein:

(A) neither of the Offerors nor any of the Subsidiaries has
sustained any loss or interference with its business from fire,
explosion, flood or other calamity, whether or not covered by
insurance, or from any labor dispute or court or governmental action,
order or decree;

(B) there has not been any material adverse change in, or
any development which is reasonably likely to have a material adverse
effect on, the condition (financial or otherwise), earnings, business,
prospects or results of operations of the Offerors and the
Subsidiaries on a consolidated basis, whether or not arising in the
ordinary course of business;

(C) neither of the Offerors nor any of the Subsidiaries has
incurred any liabilities or obligations, direct or contingent, or
entered into any material transactions, other than in the ordinary
course of business, which are material to the condition (financial or
otherwise), earnings, business, prospects or results of operations of
the Offerors and the Subsidiaries on a consolidated basis;

(D) neither of the Offerors has declared or paid any
dividend, and neither of the Offerors nor any of the Subsidiaries has
become delinquent in the payment of principal or interest on any
outstanding borrowings; and

(E) there has not been any change in the capital stock,
equity securities, long-term debt, obligations under capital leases
or, other than in the ordinary course of business, short-term
borrowings of the Offerors or the Subsidiaries.

(xxiii) No charge, investigation, action, suit or proceeding is
pending or threatened, against or affecting the Offerors or the
Subsidiaries or any of their respective properties before or by any court
or any regulatory, administrative or governmental official, commission,
board, agency or other authority or body, or any arbitrator.

(xxiv) There are no contracts or other documents required to
be filed as exhibits to the Registration Statement by the 1933 Act or the
1933 Act Regulations or the Trust Indenture Act (or any rules or
regulations thereunder) which have not been filed as exhibits or
incorporated by reference to the Registration Statement, or that are
required to be summarized in the Prospectus (or, if the Prospectus is not
in existence, the most recent Preliminary Prospectus) that are not so
summarized.

(xxv) Neither of the Offerors has taken, directly or
indirectly, any action designed to result in or which has constituted or
which might reasonably be expected to cause or result in stabilization or
manipulation of the price of any security of the Offerors to facilitate the
sale or resale of the Designated Preferred Securities, and neither of the
Offerors is aware of any such action taken or to be taken by any affiliate
of the Offerors.

<PAGE>

(xxvi) The Offerors and the Subsidiaries own, or possess
adequate rights to use, all patents, copyrights, trademarks, service marks,
trade names and other rights necessary to conduct the businesses now
conducted by them in all material respects or as described in the
Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus) and neither the Offerors nor the Subsidiaries have
received any notice of infringement or conflict with asserted rights of
others with respect to any patents, copyrights, trademarks, service marks,
trade names or other rights, and the Offerors do not know of any basis for
any such infringement or conflict.

(xxvii) No labor dispute involving the Company or the
Subsidiaries exists or is imminent or which is required to be disclosed in
the Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus). Neither of the Company nor any of the
Subsidiaries has received notice of any existing or threatened labor
dispute by the employees of any of its principal suppliers, customers or
contractors.

(xxviii) The Offerors and the Subsidiaries have timely and
properly prepared and filed all necessary federal, state, local and foreign
tax returns which are required to be filed and have paid all taxes shown as
due thereon and have paid all other taxes and assessments to the extent
that the same shall have become due, except such as are being contested in
good faith. The Offerors have no knowledge of any tax deficiency which has
been or might be assessed against the Offerors or the Subsidiaries.

(xxix) Each of the material contracts, agreements and
instruments described or referred to in the Registration Statement or the
Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus) and each contract, agreement and instrument filed
as an exhibit to the Registration Statement is in full force and effect and
is the legal, valid and binding agreement of the Offerors or the
Subsidiaries, enforceable in accordance with its terms, except as the
enforcement thereof may be limited by general principles of equity and by
bankruptcy or other laws relating to or affecting creditors' rights
generally. No other party to any such agreement is (with or without notice
or lapse of time or both) in breach or default in any material respect
thereunder.

(xxx) No relationship, direct or indirect, exists between or
among the Offerors or the Subsidiaries, on the one hand, and the directors,
officers, trustees, shareholders, customers or suppliers of the Offerors or
the Subsidiaries, on the other hand, which is required to be described in
the Registration Statement and the Prospectus (or, if the Prospectus is not
in existence, the most recent Preliminary Prospectus) which is not
adequately described therein.

(xxxi) No person has the right to request or require the
Offerors or the Subsidiaries to register any securities for offering and
sale under the 1933 Act by reason of the filing of the Registration
Statement with the Commission or the issuance and sale of the Designated
Preferred Securities.

(xxxii) The Designated Preferred Securities have been approved
for quotation on the Nasdaq National Market subject to official notice of
issuance.

(xxxiii) There are no contractual encumbrances or restrictions
or material legal restrictions on the ability of the Subsidiaries (A) to
pay dividends or make any other distributions on its capital stock or to
pay any indebtedness owed to the Offerors, (B) to make any loans or
advances to, or investments in, the Offerors or (C) to transfer any of its
property or assets to the Offerors.

<PAGE>

(xxxiv) Neither of the Offerors is an "investment company"
within the meaning of the Investment Company Act of 1940, as amended (the
"Investment Company Act").

(xxxv) The Offerors have not distributed and will not
distribute prior to the Closing Date any prospectus in connection with the
Offering, other than a Preliminary Prospectus, the Prospectus, the
Registration Statement and the other materials permitted by the 1933 Act
and the 1933 Act Regulations and reviewed by the Underwriter.

3. OFFERING BY THE UNDERWRITER. After the Registration Statement becomes
effective or, if the Registration Statement is already effective, after this
Agreement becomes effective, the Underwriter proposes to offer the Firm
Preferred Securities for sale to the public upon the terms and conditions set
forth in the Prospectus. The Underwriter may from time to time thereafter
reduce the public offering price and change the other selling terms, provided
the proceeds to the Trust shall not be reduced as a result of such reduction or
change. Because the National Association of Securities Dealers, Inc. ("NASD")
is expected to view the Preferred Securities as interests in a direct
participation program, the offering of the Preferred Securities is being made in
compliance with the applicable provisions of Rule 2810 of the NASD's Conduct
Rules.

The Underwriter may reserve and sell such of the Designated Preferred
Securities purchased by the Underwriter as the Underwriter may elect to dealers
chosen by it (the "Selected Dealers") at the public offering price set forth in
the Prospectus less the applicable Selected Dealers' concessions set forth
therein, for re-offering by Selected Dealers to the public at the public
offering price. The Underwriter may allow, and Selected Dealers may re-allow, a
concession set forth in the Prospectus to certain other brokers and dealers.

4. CERTAIN COVENANTS OF THE OFFERORS. The Offerors jointly and
severally covenant with the Underwriter as follows:

(a) The Offerors shall use their best efforts to cause the
Registration Statement and any amendments thereto, if not effective at the time
of execution of this Agreement, to become effective as promptly as possible. If
the Registration Statement has become or becomes effective pursuant to Rule 430A
and information has been omitted therefrom in reliance on Rule 430A, then, the
Offerors will prepare and file in accordance with Rule 430A and Rule 424(b)
copies of the Prospectus or, if required by Rule 430A, a post-effective
amendment to the Registration Statement (including the Prospectus) containing
all information so omitted and will provide evidence satisfactory to the
Underwriter of such timely filing.

(b) The Offerors shall notify the Underwriter immediately, and
confirm such notice in writing:

(i) when the Registration Statement, or any post-effective
amendment to the Registration Statement, has become effective, or when the
Prospectus or any supplement to the Prospectus or any amended Prospectus
has been filed;

(ii) of the receipt of any comments or requests from the
Commission relating in any way to the Registration Statement, any
Preliminary Prospectus, the Prospectus, or any amendments or supplements to
any of the aforementioned;

(iii) of any request of the Commission to amend or supplement
the Registration Statement, any Preliminary Prospectus or the Prospectus or
for additional information; and

<PAGE>

(iv) of the issuance by the Commission or any state or other
regulatory body of any stop order or other order suspending the
effectiveness of the Registration Statement, preventing or suspending the
use of any Preliminary Prospectus or the Prospectus, or suspending the
qualification of any of the Designated Preferred Securities for offering or
sale in any jurisdiction or the institution or threat of institution of any
proceedings for any of such purposes. The Offerors shall use their best
efforts to prevent the issuance of any such stop order or of any other such
order and, if any such order is issued, to cause such order to be withdrawn
or lifted as soon as possible.

(c) The Offerors shall furnish to the Underwriter, from time to time
without charge, as soon as available, as many copies as the Underwriter may
reasonably request of (i) the registration statement as originally filed and of
all amendments thereto, in executed form, including exhibits, whether filed
before or after the Registration Statement becomes effective, (ii) all exhibits
and documents incorporated therein or filed therewith, (iii) all consents and
certificates of experts in executed form, (iv) each Preliminary Prospectus and
all amendments and supplements thereto, and (v) the Prospectus, and all
amendments and supplements thereto.

(d) During the time when a prospectus is required to be delivered
under the 1933 Act, the Offerors shall comply to the best of their ability with
the 1933 Act and the 1933 Act Regulations and the 1934 Act and the 1934 Act
Regulations so as to permit the completion of the distribution of the Designated
Preferred Securities as contemplated herein and in the Trust Agreement and the
Prospectus. The Offerors shall not file any amendment to the registration
statement as originally filed or to the Registration Statement and shall not
file any amendment thereto or make any amendment or supplement to any
Preliminary Prospectus or to the Prospectus of which the Underwriter shall not
previously have been advised in writing and provided a copy within a reasonable
time prior to the proposed filings thereof or to which the Underwriter or its
counsel shall object. If it is necessary, in the Company's reasonable opinion
or in the reasonable opinion of the Company's counsel, to amend or supplement
the Registration Statement or the Prospectus in connection with the distribution
of the Designated Preferred Securities, the Offerors shall forthwith amend or
supplement the Registration Statement or the Prospectus, as the case may be, by
preparing and filing with the Commission (provided the Underwriter or its
counsel does not reasonably object), and furnishing to the Underwriter, such
number of copies as the Underwriter may reasonably request of an amendment or
amendments of, or a supplement or supplements to, the Registration Statement or
the Prospectus, as the case may be (in form and substance reasonably
satisfactory to the Underwriter and its counsel). If any event shall occur as a
result of which it is necessary to amend or supplement the Prospectus to correct
an untrue statement of a material fact or to include a material fact necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading, or if for any reason it is necessary at any time to
amend or supplement the Prospectus to comply with the 1933 Act and the 1933 Act
Regulations, the Offerors shall, subject to the second sentence of this
subsection (d), forthwith amend or supplement the Prospectus by preparing and
filing with the Commission, and furnishing to the Underwriter, such number of
copies as the Underwriter may reasonably request of an amendment or amendments
of, or a supplement or supplements to, the Prospectus (in form and substance
satisfactory to the Underwriter and its counsel) so that, as so amended or
supplemented, the Prospectus shall not contain an untrue statement of a material
fact or omit to state a material fact necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading.

(e) The Offerors shall cooperate with the Underwriter and its counsel
in order to qualify the Designated Preferred Securities for offering and sale
under the securities or blue sky laws of such jurisdictions as the Underwriter
may reasonably request and shall continue such qualifications in effect so long
as may be advisable for distribution of the Designated Preferred Securities;
provided, however, that the Offerors shall not be required to qualify to do
business as a foreign corporation or file a general consent to service of
process in any jurisdiction in connection

<PAGE>

with the foregoing. The Offerors shall file such statements and reports as
may be required by the laws of each jurisdiction in which the Designated
Preferred Securities have been qualified as above. The Offerors will notify
the Underwriter immediately of, and confirm in writing, the suspension of
qualification of the Designated Preferred Securities or threat thereof in any
jurisdiction.

(f) The Offerors shall make generally available to their security
holders in the manner contemplated by Rule 158 of the 1933 Act Regulations and
furnish to the Underwriter as soon as practicable, but in any event not later
than 16 months after the Effective Date, a consolidated earnings statement of
the Offerors conforming with the requirements of Section 11(a) of the 1933 Act
and Rule 158.

(g) The Offerors shall use the proceeds from the sale of the
Designated Preferred Securities to be sold by the Trust hereunder in the manner
specified in the Prospectus under the caption "Use of Proceeds."

(h) For five years from the Effective Date, the Offerors shall
furnish to the Underwriter copies of all reports and communications (financial
or otherwise) furnished by the Offerors to the holders of the Designated
Preferred Securities as a class, copies of all reports and financial statements
filed with or furnished to the Commission (other than portions for which
confidential treatment has been obtained from the Commission) or with any
national securities exchange or the Nasdaq National Market and such other
documents, reports and information concerning the business and financial
conditions of the Offerors as the Underwriter may reasonably request, other than
such documents, reports and information for which the Offerors have the legal
obligation not to reveal to the Underwriter.

(i) For a period of 30 days from the Effective Date, the Offerors
shall not, directly or indirectly, offer for sale, sell or agree to sell or
otherwise dispose of any Designated Preferred Securities other than pursuant to
this Agreement, any other beneficial interests in the assets of the Trust or any
securities of the Trust or the Company that are substantially similar to the
Designated Preferred Securities or the Debentures, including any guarantee of
such beneficial interests or substantially similar securities, or securities
convertible into or exchangeable for or that represent the right to receive any
such beneficial interest or substantially similar securities without the
Underwriter's prior written consent.

(j) The Offerors shall use their best efforts to cause the Designated
Preferred Securities to become quoted on the Nasdaq National Market, or in lieu
thereof a national securities exchange, and to remain so quoted for at least
five years from the Effective Date or for such shorter period as may be
specified in a written consent of the Underwriter, provided this shall not
prevent the Company from redeeming the Designated Preferred Securities pursuant
to the terms of the Trust Agreement. If the Designated Preferred Securities are
exchanged for Debentures, the Company will use its best efforts to have the
Debentures promptly listed on the Nasdaq National Market or other organization
on which the Designated Preferred Securities are then listed, and to have the
Debentures promptly registered under the 1934 Act.

(k) Subsequent to the date of this Agreement and through the date
which is the later of (i) the day following the date on which the Underwriter's
option to purchase the Option Preferred Securities shall expire or (ii) the day
following the Option Closing Date with respect to any Option Preferred
Securities that the Underwriter shall elect to purchase, except as described in
or contemplated by the Prospectus, neither the Offerors nor any of the
Subsidiaries shall take any action (or refrain from taking any action) which
will result in the Offerors or the Subsidiaries incurring any material liability
or obligation, direct or contingent, or enter into any material transaction,
except in the ordinary course of business, and there will not be any material
change in the financial position, capital stock, or any material increase in
long-term debt, obligations under capital leases or short-term borrowings of the
Offerors and the Subsidiaries on a consolidated basis.

<PAGE>

(l) The Offerors shall not, for a period of 180 days after the date
hereof, without the prior written consent of the Underwriter, purchase, redeem
or call for redemption, or prepay or give notice of prepayment (or announce any
redemption or call for redemption, or any repayment or notice of repayment) of
any of the Offeror's securities.

(m) The Offerors shall not take, directly or indirectly, any action
designed to result in or which has constituted or which might reasonably be
expected to (i) cause or result in stabilization or manipulation of the price of
any security of the Offerors to facilitate the sale or resale of the Designated
Preferred Securities or (ii) otherwise violate the Commission's Regulation M.

(n) Prior to the Closing Date (and, if applicable, the Option Closing
Date), the Offerors will not issue any press release or other communication
directly or indirectly or hold any press conference with respect to the
Offerors, the Subsidiaries or the offering of the Designated Preferred
Securities (the "Offering") without the Underwriter's prior written consent.

5. PAYMENT OF EXPENSES. Whether or not this Agreement is terminated or
the sale of the Designated Preferred Securities to the Underwriter is
consummated, the Company covenants and agrees that it will pay or cause to be
paid (directly or by reimbursement) all costs and expenses incident to the
performance of the obligations of the Offerors under this Agreement, including:

(a) the preparation, printing, filing, delivery and shipping of the
initial registration statement, the Preliminary Prospectus or Prospectuses, the
Registration Statement and the Prospectus and any amendments or supplements
thereto, and the printing, delivery and shipping of this Agreement and any other
underwriting documents (including, without limitation, selected dealers'
agreements), the certificates for the Designated Preferred Securities and the
Preliminary and Final Blue Sky Memoranda and any legal investment surveys and
any supplements thereto;

(b) all fees, expenses and disbursements of the Offerors' counsel and
accountants;

(c) all fees and expenses incurred in connection with the
qualification of the Designated Preferred Securities, Debentures and the
Guarantee under the securities or blue sky laws of such jurisdictions as the
Underwriter may request, including all filing fees and fees and disbursements of
counsel to the Underwriter in connection therewith, including, without
limitation, in connection with the preparation of the Preliminary and Final Blue
Sky Memoranda and any legal investment surveys and any supplements thereto;

(d) all fees and expenses incurred in connection with filings made
with the NASD;

(e) any applicable fees and other expenses incurred in connection
with the listing of the Designated Preferred Securities and, if applicable, the
Guarantee and the Debentures on the Nasdaq National Market;

(f) the cost of furnishing to the Underwriter copies of the initial
registration statements, any Preliminary Prospectus, the Registration Statement
and the Prospectus and all amendments or supplements thereto;

(g) the costs and charges of any transfer agent or registrar and the
fees and disbursements of counsel to any transfer agent or registrar;

<PAGE>

(h) all costs and expenses (including stock transfer taxes) incurred
in connection with the printing, issuance and delivery of the Designated
Preferred Securities to the Underwriter;

(i) all expenses incident to the preparation, execution and delivery
of the Trust Agreement, the Indenture and the Guarantee; and

(j) all other costs and expenses incident to the performance of the
obligations of the Company hereunder and under the Trust Agreement that are not
otherwise specifically provided for in this Section 5.

If the sale of Designated Preferred Securities contemplated by this
Agreement is not completed for any reason whatsoever, whether or not such
termination is allowable hereunder, the Company will pay the Underwriter its
accountable out-of-pocket expenses in connection herewith or in contemplation of
the performance of the Underwriter's obligations hereunder, including, without
limitation, travel expenses, reasonable fees, expenses and disbursements of
counsel or other out-of-pocket expenses incurred by the Underwriter in
connection with any discussion of the Offering or the contents of the
Registration Statement, any investigation of the Offerors and the Subsidiaries,
or any preparation for the marketing, purchase, sale or delivery of the
Designated Preferred Securities, in each case following presentation of
reasonably detailed invoices therefor.

If the sale of Designated Preferred Securities contemplated by this
Agreement is completed, the Company shall not be responsible for payment of fees
or disbursements of counsel to the Underwriter other than in accordance with
paragraph (c) above, or for the reimbursement of any expenses of the
Underwriter.

6. CONDITIONS OF THE UNDERWRITER'S OBLIGATIONS. The obligations of the
Underwriter to purchase and pay for the Firm Preferred Securities and, following
exercise of the option granted by the Offerors in Section 1 of this Agreement,
the Option Preferred Securities, are subject, in the Underwriter's sole
discretion, to the accuracy of and compliance with the representations and
warranties and agreements of the Offerors herein as of the date hereof and as of
the Closing Date (or in the case of the Option Preferred Securities, if any, as
of the Option Closing Date), to the accuracy of the written statements of the
Offerors made pursuant to the provisions hereof, to the performance by the
Offerors of their covenants and obligations hereunder and to the following
additional conditions:

(a) If the Registration Statement or any amendment thereto filed
prior to the Closing Date has not been declared effective prior to the time of
execution hereof, the Registration Statement shall become effective not later
than 10:00 a.m., St. Louis time, on the first business day following the time of
execution of this Agreement, or at such later time and date as the Underwriter
may agree to in writing. If required, the Prospectus and any amendment or
supplement thereto shall have been timely filed in accordance with Rule 424(b)
and Rule 430A under the 1933 Act and Section 4(a) hereof. No stop order
suspending the effectiveness of the Registration Statement or any amendment or
supplement thereto shall have been issued under the 1933 Act or any applicable
state securities laws and no proceedings for that purpose shall have been
instituted or shall be pending, or, to the knowledge of the Offerors or the
Underwriter, shall be contemplated by the Commission or any state authority.
Any request on the part of the Commission or any state authority for additional
information (to be included in the Registration Statement or Prospectus or
otherwise) shall have been disclosed to the Underwriter and complied with to the
satisfaction of the Underwriter and its counsel.

(b) The Underwriter shall not have advised the Company at or before
the Closing Date (and, if applicable, the Option Closing Date) that the
Registration Statement or any post-effective amendment thereto, or the
Prospectus or any amendment or supplement thereto, contains an untrue statement
of a fact which, in the Underwriter's opinion, is material or omits to state a
fact

<PAGE>

which, in the Underwriter's opinion, is material and is required to be stated
therein or is necessary to make statements therein (in the case of the
Prospectus or any amendment or supplement thereto, in light of the
circumstances under which they were made) not misleading.

(c) All corporate proceedings and other legal matters incident to the
authorization, form and validity of this Agreement, the Trust Agreement, and the
Designated Preferred Securities, and the authorization and form of the
Registration Statement and Prospectus, other than financial statements and other
financial data, and all other legal matters relating to this Agreement and the
transactions contemplated hereby or by the Trust Agreement shall be satisfactory
in all material respects to counsel to the Underwriter, and the Offerors and the
Subsidiaries shall have furnished to such counsel all documents and information
relating thereto that they may reasonably request to enable them to pass upon
such matters.

(d) [GREENEBAUM, DOLL & MCDONALD] [DAVID W. HARPER, ESQ.], counsel to
the Offerors, shall have furnished to the Underwriter its signed opinion, dated
the Closing Date or the Option Closing Date, as the case may be, in form and
substance satisfactory to counsel to the Underwriter, to the effect that:

(i) The Company has been duly incorporated and is validly
existing and in good standing under the laws of the State of Indiana, and
is duly registered as a bank holding company under the BHC Act. Each of
the Subsidiaries is duly incorporated, validly existing and in good
standing under the laws of its jurisdiction of incorporation. Each of the
Company and the Subsidiaries has full corporate power and authority to own
or lease its properties and to conduct its business as such business is
described in the Prospectus and is currently conducted in all material
respects. All outstanding shares of capital stock of the Subsidiaries have
been duly authorized and validly issued and are fully paid and
nonassessable, except to the extent such shares may be deemed assessable
under 12 U.S.C. Section 1831, and to the best of such counsel's knowledge,
there are no outstanding rights, options or warrants to purchase any such
shares or securities convertible into or exchangeable for any such shares.

(ii) The capital stock, Debentures and Guarantee of the Company
and the equity securities of the Trust conform to the description thereof
contained in the Prospectus in all material respects. The capital stock of
the Company authorized and issued as of , 1997, is as set
forth under the caption "Capitalization" in the Prospectus and has been
duly authorized, validly issued, and is fully paid and nonassessable. To
the best of such counsel's knowledge, there are no outstanding rights,
options or warrants to purchase, no other outstanding securities
convertible into or exchangeable for, and no commitments, plans or
arrangements to issue, any shares of capital stock of the Company or equity
securities of the Trust, except as described in the Prospectus.

(iii) The issuance, sale and delivery of the Designated
Preferred Securities and Debentures in accordance with the terms and
conditions of this Agreement and the Indenture have been duly authorized by
all necessary actions of the Offerors. All of the Designated Preferred
Securities have been duly and validly authorized and, when delivered in
accordance with this Agreement, will be duly and validly issued, fully paid
and nonassessable, and will conform to the description thereof in the
Registration Statement, the Prospectus and the Trust Agreement. The
Designated Preferred Securities have been approved for quotation on the
Nasdaq National Market subject to official notice of issuance. There are
no preemptive or other rights to subscribe for or to purchase, and no
restrictions upon the voting or transfer of, any shares of capital stock or
equity securities of the Offerors or the Subsidiaries pursuant to the
corporate charter, by-laws or other governing documents (including, without
limitation, the Trust Agreement) of the Offerors or the Subsidiaries, or,
to the best of such counsel's knowledge, any agreement or other instrument
to which either

<PAGE>

Offeror or any of the Subsidiaries is a party or by which either Offeror or
any of the Subsidiaries may be bound.

(iv) The Offerors have all requisite corporate and trust power to
enter into and perform their obligations under this Agreement, and this
Agreement has been duly and validly authorized, executed and delivered by
the Offerors and constitutes the legal, valid and binding obligations of
the Offerors enforceable in accordance with its terms, except as the
enforcement hereof or thereof may be limited by general principles of
equity and by bankruptcy or other laws relating to or affecting creditors'
rights generally, and except as the indemnification and contribution
provisions hereof may be limited under applicable laws and certain remedies
may not be available in the case of a non-material breach.

(v) Each of the Indenture, the Trust Agreement and the Guarantee
has been duly qualified under the Trust Indenture Act, has been duly
authorized, executed and delivered by the Company, and is a valid and
legally binding obligation of the Company enforceable in accordance with
its terms, subject to the effect of bankruptcy, insolvency, reorganization,
receivership, moratorium and other laws affecting the rights and remedies
of creditors generally and of general principles of equity.

(vi) The Debentures have been duly authorized, executed,
authenticated and delivered by the Company, are entitled to the benefits of
the Indenture and are legal, valid and binding obligations of the Company
enforceable against the Company in accordance with their terms, subject to
the effect of bankruptcy, insolvency, reorganization, receivership,
moratorium and other laws affecting the rights and remedies of creditors
generally and of general principles of equity.

(vii) The Expense Agreement has been duly authorized,
executed and delivered by the Company, and is a valid and legally binding
obligation of the Company enforceable in accordance with its terms, subject
to the effect of bankruptcy, insolvency, reorganization, receivership,
moratorium and other laws affecting the rights and remedies of creditors
generally and of general principles of equity.

(viii) To the best of such counsel's knowledge, neither of the
Offerors nor any of the Subsidiaries is in breach or violation of, or
default under, with or without notice or lapse of time or both, its
corporate charter, by-laws or governing document (including, without
limitation, the Trust Agreement). The execution, delivery and performance
of this Agreement and the consummation of the transactions contemplated by
this Agreement and the Trust Agreement do not and will not conflict with,
result in the creation or imposition of any material lien, claim, charge,
encumbrance or restriction upon any property or assets of the Offerors or
the Subsidiaries or the Designated Preferred Securities pursuant to, or
constitute a material breach or violation of, or constitute a material
default under, with or without notice or lapse of time or both, any of the
terms, provisions or conditions of the charter, by-laws or governing
document (including, without limitation, the Trust Agreement) of the
Offerors or the Subsidiaries, or to the best of such counsel's knowledge,
the Guarantee, the Indenture or any material contract, indenture, mortgage,
deed of trust, loan or credit agreement, note, lease, franchise, license or
any other agreement or instrument to which either Offeror or the
Subsidiaries is a party or by which any of them or any of their respective
properties may be bound or any order, decree, judgment, franchise, license,
Permit, rule or regulation of any court, arbitrator, government, or
governmental agency or instrumentality, domestic or foreign, known to such
counsel having jurisdiction over the Offerors or the Subsidiaries or any of
their respective properties which, in each case, is material to the
Offerors and the Subsidiaries on a consolidated basis. No authorization,
approval, consent or order of, or filing, registration or qualification
with, any person

<PAGE>

(including, without limitation, any court, governmental body or authority)
is required under Indiana law in connection with the transactions
contemplated by this Agreement in connection with the purchase and
distribution of the Designated Preferred Securities by the Underwriter.

(ix) To the best of such counsel's knowledge, holders of
securities of the Offerors either do not have any right that, if exercised,
would require the Offerors to cause such securities to be included in the
Registration Statement or have waived such right. To the best of such
counsel's knowledge, neither the Offerors nor any of the Subsidiaries is a
party to any agreement or other instrument which grants rights for or
relating to the registration of any securities of the Offerors.

(x) To the best of such counsel's knowledge, (i) no action, suit
or proceeding at law or in equity is pending or threatened in writing to
which the Offerors or the Subsidiaries is or may be a party, and (ii) no
action, suit or proceeding is pending or threatened in writing against or
affecting the Offerors or the Subsidiaries or any of their properties,
before or by any court or governmental official, commission, board or other
administrative agency, authority or body, or any arbitrator.

(xi) No authorization, approval, consent or order of or filing,
registration or qualification with, any person (including, without
limitation, any court, governmental body or authority) is required in
connection with the transactions contemplated by this Agreement, the Trust
Agreement, the Registration Statement and the Prospectus, except such as
have been obtained under the 1933 Act, the Trust Indenture Act, and except
such as may be required under state securities laws or Interpretations or
Rules of the NASD in connection with the purchase and distribution of the
Designated Preferred Securities by the Underwriter.

(xii) The Registration Statement and the Prospectus and any
amendments or supplements thereto and any documents incorporated therein by
reference (other than the financial statements or other financial data
included therein or omitted therefrom) comply as to form in all material
respects with the requirements of the 1933 Act and the 1933 Act Regulations
as of their respective dates of effectiveness.

(xiii) To the best of such counsel's knowledge, there are no
contracts, agreements, leases or other documents of a character required to
be disclosed in the Registration Statement or Prospectus or to be filed as
exhibits to the Registration Statement that are not so disclosed or filed.

(xiv) The statements under the captions "Description of the
Preferred Securities," "Description of the Subordinated Debentures,"
"Description of the Guarantee," "Relationship Among the Preferred
Securities, the Subordinated Debentures and the Guarantee," "Certain
Federal Income Tax Consequences," "ERISA Considerations," "General -
Supervision and Regulation" and "Legislation" in the Prospectus or
incorporated therein by reference, insofar as such statements constitute a
summary of legal and regulatory matters, documents, instruments or
proceedings referred to therein, are accurate descriptions of the matters
summarized therein in all material respects and fairly present the
information called for with respect to such legal matters, documents and
instruments, other than financial and statistical data , as to which said
counsel shall not be required to express any opinion or belief.

(xv) Such counsel has been advised by the staff of the Commission
that the Registration Statement has become effective under the 1933 Act;
any required filing of the Prospectus pursuant to Rule 424(b) has been made
within the time period required by

<PAGE>

Rule 424(b); to the best of such counsel's knowledge, no stop order
suspending the effectiveness of the Registration Statement has been issued
and no proceedings for a stop order are pending or threatened by the
Commission.

(xvi) Except as set forth in the Prospectus, to the best of
such counsel's knowledge, there are no contractual encumbrances or
restrictions, or material legal restrictions required to be described
therein on the ability of the Subsidiaries (A) to pay dividends or make any
other distributions on its capital stock or to pay indebtedness owed to the
Offerors, (B) to make any loans or advances to, or investments in, the
Offerors or (C) to transfer any of its property or assets to the Offerors.

(xvii) To the best of such counsel's knowledge, (A) the
business and operations of the Offerors and the Subsidiaries comply in all
material respects with all statutes, ordinances, laws, rules and
regulations applicable thereto and which are material to the Offerors and
the Subsidiaries on a consolidated basis, except those instances where non-
compliance would not materially impair the ability of the Offerors and the
Subsidiaries to conduct their businesses; and (B) the Offerors and the
Subsidiaries possess and are operating in all material respects in
compliance with the terms, provisions and conditions of all Permits that
are required to conduct their businesses as described in the Prospectus and
that are material to the Offerors and the Subsidiaries on a consolidated
basis, except in those instances where the loss thereof or non-compliance
therewith would not have a material adverse effect on the condition
(financial or otherwise), earnings, affairs, business, prospects or results
of operations of the Offerors and the Subsidiaries on a consolidated basis;
and to the best of such counsel's knowledge, all such Permits are valid and
in full force and effect, and, to the best of such counsel's knowledge, no
action, suit or proceeding is pending or threatened which may lead to the
revocation, termination, suspension or non-renewal of any such Permit,
except in those instances where the loss thereof or non-compliance
therewith would not materially impair the ability of the Offerors or the
Subsidiaries to conduct their businesses.

In giving the above opinion, such counsel may state that, insofar as
such opinion involves factual matters, they have relied upon certificates of
officers of the Offerors including, without limitation, certificates as to the
identity of any and all material contracts, indentures, mortgages, deeds of
trust, loans or credit agreements, notes, leases, franchises, licenses or other
agreements or instruments, and all material permits, easements, consents,
licenses, franchises and government regulatory authorizations, for purposes of
paragraphs (viii), (xiii) and (xvii) hereof and upon certificates of public
officials. In giving such opinion, such counsel may rely upon the opinion of
Richards, Layton and Finger described herein as to matters of Delaware Law.

Such counsel shall also confirm that, in connection with the
preparation of the Registration Statement and Prospectus, such counsel has
participated in conferences with officers and representatives of the Offerors
and with their independent public accountants and with the Underwriter and its
counsel, at which conferences such counsel made inquiries of such officers,
representatives and accountants and discussed in detail the contents of the
Registration Statement and Prospectus and the documents incorporated therein by
reference (without taking further action to verify independently the statements
made in the Registration Statement and the Prospectus, and without assuming
responsibility for the accuracy or completeness of such statements, except to
the extent expressly provided above) and such counsel has no reason to believe
(A) that the Registration Statement or any amendment thereto (except for the
financial statements and related schedules and statistical data included therein
or omitted therefrom), at the time the Registration Statement or any such
amendment became effective, contained any untrue statement of a material fact or
omitted to state any material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under which they
were made, not misleading or (B) that the Prospectus or any amendment or
supplement thereto or the documents incorporated therein by

<PAGE>

reference (except for the financial statements and related schedules and
statistical data included therein or omitted therefrom), at the time the
Registration Statement became effective (or, if the term "Prospectus" refers
to the prospectus first filed pursuant to Rule 424(b) of the 1933 Act
Regulations, at the time the Prospectus was issued), at the time any such
amended or supplemented Prospectus was issued, at the Closing Date and, if
applicable, the Option Closing Date, contained or contains any untrue
statement of a material fact or omitted or omits to state any material fact
required to be stated therein or necessary to make the statements therein not
misleading, or (C) that there is any amendment to the Registration Statement
required to be filed that has not already been filed.

(e) Richards, Layton and Finger, special Delaware counsel to the
Offerors, shall have furnished to the Underwriter its signed opinion, dated as
of Closing Date or the Option Closing Date, as the case may be, in form and
substance satisfactory to such counsel, to the effect that:

(i) The Trust has been duly created and is validly existing in
good standing as a business trust under the Delaware Business Trust Act
and, under the Trust Agreement and the Delaware Business Trust Act, has the
trust power and authority to conduct its business as described in the
Prospectus.

(ii) The Trust Agreement is a legal, valid and binding agreement
of the Trust and the Trustees, and is enforceable against the Company, as
depositor, and the Trustees, in accordance with its terms.

(iii) Under the Trust Agreement and the Delaware Business
Trust Act, the execution and delivery of the Underwriting Agreement by the
Trust, and the performance by the Trust of its obligations thereunder, have
been authorized by all requisite trust action on the part of the Trust.

(iv) The Designated Preferred Securities have been duly
authorized by the Trust Agreement, and when issued and sold in accordance
with the Trust Agreement, the Designated Preferred Securities will be,
subject to the qualifications set forth in paragraph (v) below, fully paid
and nonassessable beneficial interest in the assets of the Trust and
entitled to the benefits of the Trust Agreement. The form of certificates
to evidence the Designated Preferred Securities has been approved by the
Trust and is in due and proper form and complies with all applicable
requirements of the Delaware Business Trust Act.

(v) Holders of Designated Preferred Securities, as beneficial
owners of the Trust, will be entitled to the same limitation on personal
liability extended to shareholders of private, for-profit corporations
organized under the General Corporation Law of the State of Delaware. Such
opinion may note that the holders of Designated Preferred Securities may be
obligated to make payments as set forth in the Trust Agreement.

(vi) Under the Delaware Business Trust Act and the Trust
Agreement, the issuance of the Designated Preferred Securities is not
subject to preemptive rights.

(vii) The issuance and sale by the Trust of the Designated
Preferred Securities and the Common Securities, the execution, delivery and
performance by the Trust of this Agreement, and the consummation of the
transactions contemplated by this Agreement, do not violate (a) the Trust
Agreement, or (b) any applicable Delaware law, rule or regulation.

Such opinion may state that it is limited to the laws of the State of
Delaware and that the opinion expressed in paragraph (ii) above is subject to
the effect upon the Trust Agreement of (i) bankruptcy, insolvency, moratorium,
receivership, reorganization, liquidation, fraudulent

<PAGE>

conveyance and other similar laws relating to or affecting the rights and
remedies of creditors generally, (ii) principles of equity, including
applicable law relating to fiduciary duties (regardless of whether considered
and applied in a proceeding in equity or at law), and (iii) the effect of
applicable public policy on the enforceability of provisions relating to
indemnification or contribution.

(f) Bryan Cave LLP, counsel to the Underwriter, shall have
furnished to the Underwriter its signed opinion, dated the Closing Date or
the Option Closing Date, as the case may be, with respect to the sufficiency
of all corporate procedures and other legal matters relating to this
Agreement, the validity of the Designated Preferred Securities, the
Registration Statement, the Prospectus and such other related matters as the
Underwriter may reasonably request and there shall have been furnished to
such counsel such documents and other information as it may request to enable
it to pass on such matters. In giving such opinion, Bryan Cave LLP may rely
as to matters of fact upon statements and certifications of officers of the
Offerors and of other appropriate persons and may rely as to matters of law,
other than law of the United States and the State of Missouri, upon the
opinion of [GREENEBAUM, DOLL & MCDONALD] [DAVID W. HARPER, ESQ.] and
Richards, Layton and Finger described herein.

(g) On the date of this Agreement and on the Closing Date (and, if
applicable, any Option Closing Date), the Underwriter shall have received
from Geo. S. Olive & Co. a letter, dated the date of this Agreement and the
Closing Date (and, if applicable, the Option Closing Date), respectively, in
form and substance satisfactory to the Underwriter, confirming that it is an
independent public accounting firm with respect to the Company and the
Subsidiaries (for purposes of this Section 6(g) the "Company") within the
meaning of the 1933 Act and the 1933 Act Regulations, and stating in effect
that:

(i) In its opinion, the consolidated financial statements of the
Company audited by it and included in the Registration Statement comply as
to form in all material respects with the applicable accounting
requirements of the 1933 Act and the 1933 Act Regulations.

(ii) On the basis of the procedures specified by the American
Institute of Certified Public Accountants as described in SAS No. 71,
"Interim Financial Information," inquiries of officials of the Company
responsible for financial and accounting matters, and such other inquiries
and procedures as may be specified in such letter, which procedures do not
constitute an audit in accordance with U.S. generally accepted auditing
standards, nothing came to its attention that caused it to believe that, if
applicable, the unaudited interim consolidated financial statements of the
Company included in the Registration Statement do not comply as to form in
all material respects with the applicable accounting requirements of the
1933 Act and 1933 Act Regulations or are not in conformity with U.S.
generally accepted accounting principles applied on a basis substantially
consistent, except as noted in the Registration Statement, with the basis
for the audited consolidated financial statements of the Company included
in the Registration Statement.

(iii) On the basis of limited procedures, not constituting an
audit in accordance with U.S. generally accepted auditing standards,
consisting of a reading of the unaudited interim financial statements and
other information referred to below, a reading of the latest available
unaudited condensed consolidated financial statements of the Company,
inspection of the minute books of the Company since the date of the latest
audited financial statements of the Company included or incorporated by
reference in the Registration Statement, inquiries of officials of the
Company responsible for financial and accounting matters and such other
inquiries and procedures as may be specified in such letter, nothing came
to its attention that caused it to believe that:

22
<PAGE>

(A) as of a specified date not more than five days prior to
the date of such letter, there have been any changes in the
consolidated capital stock of the Company, any increase in the
consolidated debt of the Company, any decreases in consolidated total
assets or shareholders equity of the Company, or any changes,
decreases or increases in other items specified by the Underwriter, in
each case as compared with amounts shown in the latest unaudited
interim consolidated statement of financial condition of the Company
included in the Registration Statement except in each case for
changes, increases or decreases which the Registration Statement
specifically discloses, have occurred or may occur or which are
described in such letter; and

(B) for the period from the date of the latest unaudited
interim consolidated financial statements of the Company included in
the Registration Statement to the specified date referred to in Clause
(iii)(A), there were any decreases in the consolidated interest
income, net interest income, or net income of the Company or in the
per share amount of net income of the Company, or any changes,
decreases or increases in any other items specified by the
Underwriter, in each case as compared with the comparable period of
the preceding year and with any other period of corresponding length
specified by the Underwriter, except in each case for increases or
decreases which the Registration Statement discloses have occurred or
may occur, or which are described in such letter;

(iv) In addition to the audit referred to in its report included
in the Registration Statement and the limited procedures, inspection of
minute books, inquiries and other procedures referred to in paragraphs (ii)
and (iii) above, it has carried out certain specified procedures, not
constituting an audit in accordance with U.S. generally accepted auditing
standards, with respect to certain amounts, percentages and financial
information specified by the Underwriter which are derived from the general
accounting records and consolidated financial statements of the Company
which appear in the Registration Statement, and have compared such amounts,
percentages and financial information with the accounting records and the
material derived from such records and consolidated financial statements of
the Company and have found them to be in agreement.

In the event that the letters to be delivered referred to above set
forth any such changes, decreases or increases as specified in Clauses
(iii)(A) or (iii)(B), above, or any exceptions from such agreement specified
in Clause (iv) above, it shall be a further condition to the Underwriter's
obligations that the Underwriter shall have determined, after discussions
with officers of the Company, responsible for financial and accounting
matters, that such changes, decreases, increases or exceptions as are set
forth in such letters do not (x) reflect a material adverse change in the
items specified in Clause (iii)(A) above as compared with the amounts shown
in the latest unaudited consolidated statement of financial condition of the
Company included in the Registration Statement, (y) reflect a material
adverse change in the items specified in Clause (iii)(B) above as compared
with the corresponding periods of the prior year or other period specified by
the Underwriter, or (z) reflect a material change in items specified in
Clause (iv) above from the amounts shown in the Preliminary Prospectus
distributed by the Underwriter in connection with the offering contemplated
hereby or from the amounts shown in the Prospectus.

(h) On the date of this Agreement and on the Closing Date (and, if
applicable, any Option Closing Date), the Underwriter shall have received
from Crowe, Chizek and Company LLP a letter, dated the date of this Agreement
and the Closing Date (and, if applicable, the Option Closing Date),
respectively, in form and substance satisfactory to the Underwriter,
confirming that it is an independent public accounting firm with respect to
PTC within the meaning of the 1933 Act and the 1933 Act Regulations, and
stating in effect that:

23
<PAGE>

(i) In its opinion, the consolidated financial statements of PTC
audited by it and included in the Registration Statement comply as to form
in all material respects with the applicable accounting requirements of the
1933 Act and the 1933 Act Regulations.

(ii) On the basis of the procedures specified by the American
Institute of Certified Public Accountants as described in SAS No. 71,
"Interim Financial Information," inquiries of officials of PTC responsible
for financial and accounting matters, and such other inquiries and
procedures as may be specified in such letter, which procedures do not
constitute an audit in accordance with U.S. generally accepted auditing
standards, nothing came to its attention that caused it to believe that, if
applicable, the unaudited interim consolidated financial statements of PTC
included in the Registration Statement do not comply as to form in all
material respects with the applicable accounting requirements of the 1933
Act and 1933 Act Regulations or are not in conformity with U.S. generally
accepted accounting principles applied on a basis substantially consistent,
except as noted in the Registration Statement, with the basis for the
audited consolidated financial statements of PTC included in the
Registration Statement.

(iii) On the basis of limited procedures, not constituting an
audit in accordance with U.S. generally accepted auditing standards,
consisting of a reading of the unaudited interim financial statements and
other information referred to below, a reading of the latest available
unaudited condensed consolidated financial statements of PTC, inspection of
the minute books of PTC since the date of the latest audited financial
statements of PTC included or incorporated by reference in the Registration
Statement, inquiries of officials of PTC responsible for financial and
accounting matters and such other inquiries and procedures as may be
specified in such letter, nothing came to its attention that caused it to
believe that:

(A) as of a specified date not more than five days prior to
the date of such letter, there have been any changes in the
consolidated capital stock of PTC, any increase in the consolidated
debt of PTC, any decreases in consolidated total assets or
shareholders equity of PTC, or any changes, decreases or increases in
other items specified by the Underwriter, in each case as compared
with amounts shown in the latest unaudited interim consolidated
statement of financial condition of PTC included in the Registration
Statement except in each case for changes, increases or decreases
which the Registration Statement specifically discloses, have occurred
or may occur or which are described in such letter; and

(B) for the period from the date of the latest unaudited
interim consolidated financial statements of PTC included in the
Registration Statement to the specified date referred to in Clause
(iii)(A), there were any decreases in the consolidated interest
income, net interest income, or net income of PTC or in the per share
amount of net income of PTC, or any changes, decreases or increases in
any other items specified by the Underwriter, in each case as compared
with the comparable period of the preceding year and with any other
period of corresponding length specified by the Underwriter, except in
each case for increases or decreases which the Registration Statement
discloses have occurred or may occur, or which are described in such
letter;

24
<PAGE>

consolidated financial statements of PTC which appear in the Registration
Statement, and have compared such amounts, percentages and financial
information with the accounting records and the material derived from such
records and consolidated financial statements of PTC and have found them to
be in agreement.

In the event that the letters to be delivered referred to above set
forth any such changes, decreases or increases as specified in Clauses
(iii)(A) or (iii)(B), above, or any exceptions from such agreement specified
in Clause (iv) above, it shall be a further condition to the Underwriter's
obligations that the Underwriter shall have determined, after discussions
with officers of PTC, responsible for financial and accounting matters, that
such changes, decreases, increases or exceptions as are set forth in such
letters do not (x) reflect a material adverse change in the items specified
in Clause (iii)(A) above as compared with the amounts shown in the latest
unaudited consolidated statement of financial condition of PTC included in
the Registration Statement, (y) reflect a material adverse change in the
items specified in Clause (iii)(B) above as compared with the corresponding
periods of the prior year or other period specified by the Underwriter, or
(z) reflect a material change in items specified in Clause (iv) above from
the amounts shown in the Preliminary Prospectus distributed by the
Underwriter in connection with the offering contemplated hereby or from the
amounts shown in the Prospectus.

(i) At the Closing Date and, if applicable, the Option Closing
Date, the Underwriter shall have received certificates of the chief executive
officer and the chief financial and accounting officer of the Company, which
certificates shall be deemed to be made on behalf of the Company dated as of
the Closing Date and, if applicable, the Option Closing Date, evidencing
satisfaction of the conditions of Section 6(a) and stating that (i) the
representations and warranties of the Company set forth in Section 2(a)
hereof are accurate as of the Closing Date and, if applicable, the Option
Closing Date, and that the Offerors have complied with all agreements and
satisfied all conditions on their part to be performed or satisfied at or
prior to such Closing Date; (ii) since the respective dates as of which
information is given in the Registration Statement and the Prospectus, there
has not been any material adverse change in the condition (financial or
otherwise), earnings, affairs, business, prospects or results of operations
of the Offerors and the Subsidiaries on a consolidated basis; (iii) since
such dates there has not been any material transaction entered into by the
Offerors or the Subsidiaries other than transactions in the ordinary course
of business; and (iv) each such officer has carefully examined the
Registration Statement and the Prospectus as amended or supplemented and
nothing has come to his or her attention that would lead him or her to
believe that either the Registration Statement or the Prospectus, or any
amendment or supplement thereto as of their respective effective or issue
dates, contained, and the Prospectus as amended or supplemented at such
Closing Date (and, if applicable, the Option Closing Date), contains any
untrue statement of a material fact, or omits to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading; and (v) covering such other matters as the Underwriter may
reasonably request. The officers' certificate of the Company shall further
state that no stop order affecting the Registration Statement is in effect or
threatened.

(j) At the Closing Date and, if applicable, the Option Closing
Date, the Underwriter shall have received a certificate of an authorized
representative of the Trust to the effect that to the best of his or her
knowledge based upon a reasonable investigation, the representations and
warranties of the Trust in this Agreement are true and correct as though made
on and as of the Closing Date (and, if applicable, the Option Closing Date);
the Trust has complied with all the agreements and satisfied all the
conditions required by this Agreement to be performed or satisfied by the
Trust on or prior to the Closing Date and since the most recent date as of
which information is given in the Prospectus, except as contemplated by the
Prospectus, the Trust has not incurred any material liabilities or
obligations, direct or contingent, or entered into any material transactions
not in the ordinary course of business and there has not been any material
adverse change in the condition (financial or otherwise) of the Trust.

25
<PAGE>

(k) On the Closing Date, the Underwriter shall have received duly
executed counterparts of the Trust Agreement, the Guarantee, the Indenture
and the Expense Agreement.

(l) The NASD, upon review of the terms of the public offering of
the Designated Preferred Securities, shall not have objected to the
Underwriter's participation in such offering.

(m) Prior to the Closing Date and, if applicable, the Option
Closing Date, the Offerors shall have furnished to the Underwriter and its
counsel all such other documents, certificates and opinions as they have
reasonably requested.

All opinions, certificates, letters and other documents shall be in
compliance with the provisions hereof only if they are reasonably
satisfactory in form and substance to the Underwriter and its counsel. The
Offerors shall furnish the Underwriter with conformed copies of such
opinions, certificates, letters and other documents as the Underwriter shall
reasonably request.

If any of the conditions referred to in this Section 6 shall not
have been fulfilled when and as required by this Agreement, this Agreement
and all of the Underwriter's obligations hereunder may be terminated by the
Underwriter on notice to the Company at, or at any time before, the Closing
Date or the Option Closing Date, as applicable. Any such termination shall
be without liability of the Underwriter to the Offerors.

7. INDEMNIFICATION AND CONTRIBUTION.

(a) The Offerors agree to jointly and severally indemnify and hold
harmless the Underwriter, each of its directors, officers and agents, and
each person, if any, who controls the Underwriter within the meaning of the
1933 Act, against any and all losses, claims, damages, liabilities and
expenses (including reasonable costs of investigation and reasonable
attorneys' fees and expenses), joint or several, arising out of or based (i)
upon any untrue statement or alleged untrue statement of a material fact made
by the Company or the Trust contained in Section 2(a) of this Agreement (or
any certificate delivered by the Company or the Trust pursuant to Sections
6(h), 6(i) or 6(l) hereof) or the registration statement as originally filed
or the Registration Statement, any Preliminary Prospectus or the Prospectus,
or in any amendment or supplement thereto, (ii) upon any blue sky application
or other document executed by the Company or the Trust specifically for that
purpose or based upon written information furnished by the Company or the
Trust filed in any state or other jurisdiction in order to qualify any of the
Designated Preferred Securities under the securities laws thereof (any such
application, document or information being hereinafter referred to as a "Blue
Sky Application"), (iii) any omission or alleged omission to state a material
fact in the registration statement as originally filed or the Registration
Statement, the Preliminary Prospectus or the Prospectus, or in any amendment
or supplement thereto, or in any Blue Sky Application required to be stated
therein or necessary to make the statements therein not misleading, and
against any and all losses, claims, damages, liabilities and expenses
(including reasonable costs of investigation and attorneys' fees), joint or
several, arising out of or based upon any untrue statement or alleged untrue
statement of a material fact contained in any Preliminary Prospectus or the
Prospectus, or in any amendment or supplement thereto, or arising out of or
based upon any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading or
(iv) the enforcement of this indemnification provision or the contribution
provisions of Section 7(d); and shall reimburse each such indemnified party
for any reasonable legal or other expenses as incurred, but in no event less
frequently than 30 days after each invoice is submitted, incurred by them in
connection with investigating or defending against or appearing as a
third-party witness in connection with any such loss, claim, damage,
liability or action, notwithstanding the possibility that payments for such
expenses might later be held to be improper, in which case such payments
shall be promptly refunded; provided, however, that the Offerors shall

26
<PAGE>

not be liable in any case to the extent, but only to the extent, that any
such losses, claims, damages, liabilities and expenses arise out of or are
based upon any untrue statement or omission or allegation thereof that has
been made therein or omitted therefrom in reliance upon and in conformity
with the information relating to the Underwriter furnished in writing to an
Offeror through the Underwriter by or on behalf of it expressly for use in
connection with the Registration Statement, the Preliminary Prospectus or the
Prospectus, or in any amendment or supplement thereto; provided, that the
indemnification contained in this paragraph with respect to any Preliminary
Prospectus shall not inure to the benefit of the Underwriter (or of any
person controlling the Underwriter) to the extent any such losses, claims,
damages, liabilities or expenses directly results from the fact that the
Underwriter sold Designated Preferred Securities to a person to whom there
was not sent or given, at or prior to the written confirmation of such sale,
a copy of the Prospectus (as amended or supplemented if any amendments or
supplements thereto shall have been furnished to the Underwriter in
sufficient time to distribute same with or prior to the written confirmation
of the sale involved), if required by law, and if such loss, claim, damage,
liability or expense would not have arisen but for the failure to give or
send such person such document. The foregoing indemnity agreement is in
addition to any liability the Company or the Trust may otherwise have to any
such indemnified party.

(b) The Underwriter agrees to indemnify and hold harmless each
Offeror, each of its directors, each of its officers who signed the
Registration Statement and each person, if any, who controls an Offeror
within the meaning of the 1933 Act, to the same extent as required by the
foregoing indemnity from the Company to the Underwriter, but only with
respect to the information related to the Underwriter furnished in writing to
an Offeror through the Underwriter by or on its behalf expressly for use in a
Blue Sky Application. The foregoing indemnity agreement is in addition to
any liability which the Underwriter may otherwise have to any such
indemnified party.

(c) If any action or claim shall be brought or asserted against any
indemnified party or any person controlling an indemnified party in respect
of which indemnity may be sought from the indemnifying party, such
indemnified party or controlling person shall promptly notify the
indemnifying party in writing, and the indemnifying party shall assume the
defense thereof, including the employment of counsel reasonably satisfactory
to the indemnified party and the payment of all expenses; PROVIDED, HOWEVER,
that the failure so to notify the indemnifying party shall not relieve it
from any liability which it may have to an indemnified party otherwise than
under such paragraph, and further, shall only relieve it from liability under
such paragraph to the extent prejudiced thereby. Any indemnified party or
any such controlling person shall have the right to employ separate counsel
in any such action and to participate in the defense thereof, but the fees
and expenses of such counsel shall be at the expense of such indemnified
party or such controlling person unless (i) the employment thereof has been
specifically authorized by the indemnifying party in writing, (ii) the
indemnifying party has failed to assume the defense or to employ counsel
reasonably satisfactory to the indemnified party or (iii) the named parties
to any such action (including any impleaded parties) include both such
indemnified party or such controlling person and the indemnifying party and
such indemnified party or such controlling person shall have been advised by
such counsel that there may be one or more legal defenses available to it
that are different from or in addition to those available to the indemnifying
party (in which case, if such indemnified party or controlling person
notifies the indemnifying party in writing that it elects to employ separate
counsel at the expense of the indemnifying party, the indemnifying party
shall not have the right to assume the defense of such action on behalf of
such indemnified party or such controlling person) it being understood,
however, that the indemnifying party shall not, in connection with any one
such action or separate but substantially similar or related actions in the
same jurisdiction arising out of the same general allegations or
circumstances, be liable for the reasonable fees and expenses of more than
one separate firm of attorneys at any time and for all such indemnified
parties and controlling persons, which firm shall be designated in writing by
the indemnified party. Each indemnified party and each controlling person,
as a condition of such indemnity, shall use reasonable efforts to cooperate
with the indemnifying party in

27
<PAGE>

the defense of any such action or claim. The indemnifying party shall not be
liable for any settlement of any such action effected without its written
consent, but if there be a final judgment for the plaintiff in any such
action, the indemnifying party agrees to indemnify and hold harmless any
indemnified party and any such controlling person from and against any loss,
claim, damage, liability or expense by reason of such settlement or judgment.

An indemnifying party shall not, without the prior written consent
of each indemnified party, settle, compromise or consent to the entry of any
judgment in any pending or threatened claim, action, suit or proceeding in
respect of which indemnity may be sought hereunder (whether or not such
indemnified party or any person who controls such indemnified party within
the meaning of the 1933 Act is a party to such claim, action, suit or
proceeding), unless such settlement, compromise or consent includes a release
of each such indemnified party reasonably satisfactory to each such
indemnified party and each such controlling person from all liability arising
out of such claim, action, suit or proceeding or unless the indemnifying
party shall confirm in a written agreement with each indemnified party, that
notwithstanding any federal, state or common law, such settlement, compromise
or consent shall not alter the right of any indemnified party or controlling
person to indemnification or contribution as provided in this Agreement.

(d) If the indemnification provided for in this Section 7 is
unavailable or insufficient to hold harmless an indemnified party under
paragraphs (a), (b) or (c) hereof in respect of any losses, claims, damages,
liabilities or expenses referred to therein, then each indemnifying party, in
lieu of indemnifying such indemnified party, shall contribute to the amount
paid or payable by such indemnified party as a result of such losses, claims,
damages, liabilities or expenses (i) in such proportion as is appropriate to
reflect the relative benefits received by the Offerors on the one hand and
the Underwriter on the other from the offering of the Designated Preferred
Securities or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect
not only the relative benefits referred to in clause (i) above but also the
relative fault of the Offerors on the one hand and the Underwriter on the
other in connection with the statements or omissions that resulted in such
losses, claims, damages, liabilities or expenses, as well as any other
relevant equitable considerations. The benefits received by the Underwriter
on the one hand and the Offerors on the other shall be deemed to be allocated
pro rata on the basis of the total underwriting discounts, commissions and
compensation received by the Underwriter relative to the total net proceeds
from the offering of the Designated Preferred Securities (before deducting
expenses) received by the Offerors, in each case as set forth in the table on
the cover page of the Prospectus. The relative fault of the Offerors on the
one hand and of the Underwriter on the other shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Offerors or by the Underwriter and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such untrue statement or omission. Each Offeror and the
Underwriter agree that it would not be just and equitable if contribution
pursuant to this paragraph (d) were determined by pro rata allocation or by
any other method of allocation that does not take into account the equitable
considerations referred to herein. The amount paid or payable by an
indemnified party as a result of the losses, claims, damages, liabilities and
expenses referred to in the first sentence of this paragraph (d) shall be
deemed to include, subject to the limitations set forth above, any legal or
other expenses reasonably incurred by such indemnified party in connection
with investigating or defending any such action or claim. Notwithstanding the
provisions of this paragraph (d), the Underwriter shall not be required to
contribute any amount in excess of the amount by which the total price at
which the Designated Preferred Securities underwritten by the Underwriter and
distributed to the public exceeds the amount of any damages that the
Underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No person guilty
of fraudulent misrepresentation (within the meaning of Section 11(f) of the
1933 Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation.

28
<PAGE>

For purposes of this paragraph (d), each person who controls the
Underwriter within the meaning of the 1933 Act shall have the same rights to
contribution as the Underwriter, and each person who controls an Offeror
within the meaning of the 1933 Act, each officer and trustee of an Offeror
who shall have signed the Registration Statement and each director of an
Offeror shall have the same rights to contribution as the Offerors subject in
each case to the preceding paragraph. The obligations of the Offerors under
this paragraph (d) shall be in addition to any liability which the Offerors
may otherwise have and the obligations of the Underwriter under this
paragraph (d) shall be in addition to any liability that the Underwriter may
otherwise have.

(e) The indemnity and contribution agreements contained in this
Section 7 and the representations and warranties of the Offerors set forth in
this Agreement shall remain operative and in full force and effect,
regardless of (i) any investigation made by or on behalf of the Underwriter
or any person controlling the Underwriter or by or on behalf of the Offerors,
or such directors, trustees or officers (or any person controlling an
Offeror), (ii) acceptance of any Designated Preferred Securities and payment
therefor hereunder and (iii) any termination of this Agreement. A successor
of the Underwriter or of an Offeror, such directors, trustees or officers (or
of any person controlling the Underwriter or an Offeror) shall be entitled to
the benefits of the indemnity, contribution and reimbursement agreements
contained in this Section 7.

(f) The Company agrees to indemnify the Trust against any and all
losses, claims, damages or liabilities that may become due from the Trust
under this Section 7.

8. TERMINATION. The Underwriter shall have the right to terminate this
Agreement at any time at or prior to the Closing Date or, with respect to the
Underwriter's obligation to purchase the Option Preferred Securities, at any
time at or prior to the Option Closing Date, without liability on the part of
the Underwriter to the Offerors, if:

(a) Either Offeror shall have failed, refused, or been unable to
perform any agreement on its part to be performed under this Agreement, or
any of the conditions referred to in Section 6 shall not have been fulfilled,
when and as required by this Agreement;

(b) The Offerors or any of the Subsidiaries shall have sustained
any material loss or interference with its business from fire, explosion,
flood or other calamity, whether or not covered by insurance, or from any
labor dispute or court or governmental action, order or decree which in the
judgment of the Underwriter materially impairs the investment quality of the
Designated Preferred Securities;

(c) There has been since the respective dates as of which
information is given in the Registration Statement or the Prospectus, any
materially adverse change in, or any development which is reasonably likely
to have a material adverse effect on, the condition (financial or otherwise),
earnings, affairs, business, prospects or results of operations of the
Offerors and the Subsidiaries on a consolidated basis, whether or not arising
in the ordinary course of business;

(d) There has occurred any outbreak of hostilities or other
calamity or crisis or material change in general economic, political or
financial conditions, or internal conditions, the effect of which on the
financial markets of the United States is such as to make it, in the
Underwriter's reasonable judgment, impracticable to market the Designated
Preferred Securities or enforce contracts for the sale of the Designated
Preferred Securities;

(e) Trading generally on the New York Stock Exchange, the American
Stock Exchange or the Nasdaq National Market shall have been suspended, or
minimum or maximum prices for trading shall have been fixed, or maximum
ranges for prices for securities shall have been required, by any of said
exchanges or market system or by the Commission or any other governmental
authority;

29
<PAGE>

(f) A banking moratorium shall have been declared by either federal
or Indiana authorities; or

(g) Any action shall have been taken by any government in respect
of its monetary affairs which, in the Underwriter's reasonable judgment, has
a material adverse effect on the United States securities markets.

The Offerors shall have the right to terminate this Agreement at any
time at or prior to the Closing Date or, with respect to the sale of the
Option Preferred Securities, at any time at or prior to the Option Closing
Date, if a Tax Event or a Capital Treatment Event, as such terms are defined
in the Registration Statement, shall have occurred.

If this Agreement shall be terminated pursuant to this Section 8,
the Offerors shall not then be under any liability to the Underwriter except
as provided in Sections 5 and 7 hereof.

9. EFFECTIVE DATE OF AGREEMENT. If the Registration Statement is not
effective at the time of execution of this Agreement, this Agreement shall
become effective on the Effective Date at the time the Commission declares
the Registration Statement effective. The Company shall immediately notify
the Underwriter when the Registration Statement becomes effective.

If the Registration Statement is effective at the time of execution
of this Agreement, this Agreement shall become effective at the earlier of
11:00 a.m. St. Louis time, on the first full business day following the day
on which this Agreement is executed, or at such earlier time as the
Underwriter shall release the Designated Preferred Securities for initial
public offering. The Underwriter shall notify the Offerors immediately after
it has taken any action which causes this Agreement to become effective.

Until such time as this Agreement shall have become effective, it
may be terminated by the Offerors, by notifying the Underwriter, or by the
Underwriter, by notifying either Offeror, except that the provisions of
Sections 5 and 7 shall at all times be effective.

10. REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO SURVIVE DELIVERY. The
representations, warranties, indemnities, agreements and other statements of
the Offerors and their officers and trustees set forth in or made pursuant to
this Agreement and the agreements of the Underwriter contained in Section 7
hereof shall remain operative and in full force and effect regardless of any
investigation made by or on behalf of the Offerors or controlling persons of
either Offeror, or by or on behalf of the Underwriter or controlling persons
of the Underwriter or any termination or cancellation of this Agreement and
shall survive delivery of and payment for the Designated Preferred Securities.

11. NOTICES. Except as otherwise provided in this Agreement, all
notices and other communications hereunder shall be in writing and shall be
deemed to have been duly given if delivered by hand, mailed by registered or
certified mail, return receipt requested, or transmitted by any standard form
of telecommunication and confirmed. Notices to either Offeror shall be sent
to 201 North Broadway, P.O. Box 87, Greensburg, Indiana 47240, Attention:
Chairman and President (with a copy to David W. Harper, Esq., c/o Naber,
Joyner and Schardein, 2450 Meidinger Tower, Louisville, Kentucky 40202; and
to Greenebaum, Doll & McDonald, 3300 National City Tower, Suite 2700, 101
South 5th Street, Louisville, Kentucky 40202, Attention: Ivan Diamond, Esq.);
and notices to the Underwriter shall be sent to Stifel, Nicolaus & Company,
Incorporated, 500 North Broadway, Suite 1500, St. Louis, Missouri 63102,
Attention: Rick E. Maples (with a copy to Bryan Cave LLP, One Metropolitan
Square, 211 North Broadway, Suite 3600, St. Louis, Missouri 63102, Attention:
James L. Nouss, Jr., Esq.).

30
<PAGE>

12. PARTIES. The Agreement herein set forth is made solely for the
benefit of the Underwriter and the Offerors and, to the extent expressed,
directors, trustees and officers of the Offerors, any person controlling the
Offerors or the Underwriter, and their respective successors and assigns. No
other person shall acquire or have any right under or by virtue of this
Agreement. The term "successors and assigns" shall not include any
purchaser, in its status as such purchaser, from the Underwriter of the
Designated Preferred Securities.

13. GOVERNING LAW. This Agreement shall be governed by the laws of the
State of Missouri, without giving effect to the choice of law or conflicts of
law principles thereof.

14. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, and when a counterpart has been executed by each party hereto
all such counterparts taken together shall constitute one and the same
Agreement.

31
<PAGE>

If the foregoing is in accordance with the your understanding of our
agreement, please sign and return to us a counterpart hereof, whereupon this
shall become a binding agreement between the Company, the Trust and you in
accordance with its terms.

Very truly yours,

INDIANA UNITED BANCORP

By:
---------------------------------
Robert E. Hoptry
Chairman and President

IUB CAPITAL TRUST

By:
---------------------------------

---------------------------------
Administrative Trustee

CONFIRMED AND ACCEPTED,
as of , 1997.
------------- ---

STIFEL, NICOLAUS & COMPANY, INCORPORATED

By:
------------------------------------
Rick E. Maples
Senior Vice President

<PAGE>

INDIANA UNITED BANCORP
AND
STATE STREET BANK AND TRUST COMPANY,
AS TRUSTEE

INDENTURE
____% SUBORDINATED DEBENTURES DUE 2027
DATED AS OF _______________, 1997.

<PAGE>

TABLE OF CONTENTS
Page

ARTICLE I. DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . .2
SECTION 1.1. DEFINITIONS OF TERMS. . . . . . . . . . . . . . . . . . . . .2

ARTICLE II. ISSUE, DESCRIPTION, TERMS, CONDITIONS REGISTRATION AND
EXCHANGE OF THE DEBENTURES . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 2.1 DESIGNATION AND PRINCIPAL AMOUNT . . . . . . . . . . . . . . 10
SECTION 2.2. MATURITY. . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 2.3. FORM AND PAYMENT. . . . . . . . . . . . . . . . . . . . . . 11
SECTION 2.4. [Intentionally Omitted] . . . . . . . . . . . . . . . . . . 11
SECTION 2.5. INTEREST. . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 2.6. EXECUTION AND AUTHENTICATIONS . . . . . . . . . . . . . . . 12
SECTION 2.7. REGISTRATION OF TRANSFER AND EXCHANGE.. . . . . . . . . . . 13
SECTION 2.8. TEMPORARY DEBENTURES. . . . . . . . . . . . . . . . . . . . 14
SECTION 2.9. MUTILATED, DESTROYED, LOST OR STOLEN DEBENTURES . . . . . . 14
SECTION 2.10. CANCELLATION . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 2.11. BENEFIT OF INDENTURE . . . . . . . . . . . . . . . . . . . 15
SECTION 2.12. AUTHENTICATION AGENT . . . . . . . . . . . . . . . . . . . 15

ARTICLE III. REDEMPTION OF DEBENTURES. . . . . . . . . . . . . . . . . . . . 16
SECTION 3.1. REDEMPTION. . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 3.2. SPECIAL EVENT REDEMPTION. . . . . . . . . . . . . . . . . . 16
SECTION 3.3. OPTIONAL REDEMPTION BY THE COMPANY. . . . . . . . . . . . . 17
SECTION 3.4. NOTICE OF REDEMPTION. . . . . . . . . . . . . . . . . . . . 17
SECTION 3.5. PAYMENT UPON REDEMPTION . . . . . . . . . . . . . . . . . . 18
SECTION 3.6. NO SINKING FUND . . . . . . . . . . . . . . . . . . . . . . 19

ARTICLE IV. EXTENSION OF INTEREST PAYMENT PERIOD . . . . . . . . . . . . . . 19
SECTION 4.1. EXTENSION OF INTEREST PAYMENT PERIOD. . . . . . . . . . . . 19
SECTION 4.2. NOTICE OF EXTENSION . . . . . . . . . . . . . . . . . . . . 19
SECTION 4.3. LIMITATION ON TRANSACTIONS. . . . . . . . . . . . . . . . . 20

ARTICLE V. PARTICULAR COVENANTS OF THE COMPANY . . . . . . . . . . . . . . . 20
SECTION 5.1. PAYMENT OF PRINCIPAL AND INTEREST . . . . . . . . . . . . . 20
SECTION 5.2. MAINTENANCE OF AGENCY . . . . . . . . . . . . . . . . . . . 20
SECTION 5.3. PAYING AGENTS . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 5.4. APPOINTMENT TO FILL VACANCY IN OFFICE OF THE TRUSTEE. . . . 22
SECTION 5.5. COMPLIANCE WITH CONSOLIDATION PROVISIONS. . . . . . . . . . 22

i
<PAGE>

SECTION 5.6. LIMITATION ON TRANSACTIONS. . . . . . . . . . . . . . . . . 22
SECTION 5.7. COVENANTS AS TO THE TRUST . . . . . . . . . . . . . . . . . 22
SECTION 5.8. COVENANTS AS TO PURCHASES . . . . . . . . . . . . . . . . . 23

ARTICLE VI. THE DEBENTUREHOLDERS' LISTS AND REPORTS BY THE COMPANY
AND THE TRUSTEE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 6.1. THE COMPANY TO FURNISH THE TRUSTEE NAMES AND ADDRESSES OF
THE DEBENTUREHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 6.2. PRESERVATION OF INFORMATION COMMUNICATIONS WITH THE
DEBENTUREHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 6.3. REPORTS BY THE COMPANY. . . . . . . . . . . . . . . . . . . 24
SECTION 6.4. REPORTS BY THE TRUSTEE. . . . . . . . . . . . . . . . . . . 24

ARTICLE VII. REMEDIES OF THE TRUSTEE AND DEBENTUREHOLDERS ON EVENT OF
DEFAULT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 7.1. EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . . 25
SECTION 7.2. COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT BY
THE TRUSTEE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 7.3. APPLICATION OF MONEYS COLLECTED . . . . . . . . . . . . . . 28
SECTION 7.4. LIMITATION ON SUITS . . . . . . . . . . . . . . . . . . . . 28
SECTION 7.5. RIGHTS AND REMEDIES CUMULATIVE; DELAY OR OMISSION NOT
WAIVER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 7.6. CONTROL BY THE DEBENTUREHOLDERS . . . . . . . . . . . . . . 29
SECTION 7.7. UNDERTAKING TO PAY COSTS. . . . . . . . . . . . . . . . . . 30

ARTICLE VIII.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 8.1. FORM OF DEBENTURE . . . . . . . . . . . . . . . . . . . . . 30
SECTION 8.2. ORIGINAL ISSUE OF THE DEBENTURES. . . . . . . . . . . . . . 30

ARTICLE IX. CONCERNING THE TRUSTEE . . . . . . . . . . . . . . . . . . . . . 31
SECTION 9.1. CERTAIN DUTIES AND RESPONSIBILITIES OF THE TRUSTEE. . . . . 31
SECTION 9.2. NOTICE OF DEFAULTS. . . . . . . . . . . . . . . . . . . . . 32
SECTION 9.3. CERTAIN RIGHTS OF THE TRUSTEE . . . . . . . . . . . . . . . 32
SECTION 9.4. THE TRUSTEE NOT RESPONSIBLE FOR RECITALS, ETC . . . . . . . 33
SECTION 9.5. MAY HOLD THE DEBENTURES . . . . . . . . . . . . . . . . . . 34
SECTION 9.6. MONEYS HELD IN TRUST. . . . . . . . . . . . . . . . . . . . 34
SECTION 9.7. COMPENSATION AND REIMBURSEMENT. . . . . . . . . . . . . . . 34
SECTION 9.8. RELIANCE ON OFFICERS' CERTIFICATE . . . . . . . . . . . . . 34
SECTION 9.9. DISQUALIFICATION; CONFLICTING INTERESTS . . . . . . . . . . 35
SECTION 9.10. CORPORATE TRUSTEE REQUIRED; ELIGIBILITY. . . . . . . . . . 35
SECTION 9.11. RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR. . . . . 35
SECTION 9.12. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR . . . . . . . . . . 36

ii
<PAGE>

SECTION 9.13. MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO
BUSINESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 9.14. PREFERENTIAL COLLECTION OF CLAIMS AGAINST THE COMPANY. . . 37

ARTICLE X. CONCERNING THE DEBENTUREHOLDERS . . . . . . . . . . . . . . . . . 37
SECTION 10.1. EVIDENCE OF ACTION BY THE HOLDERS. . . . . . . . . . . . . 37
SECTION 10.2. PROOF OF EXECUTION BY THE DEBENTUREHOLDERS . . . . . . . . 38
SECTION 10.3. WHO MAY BE DEEMED OWNERS . . . . . . . . . . . . . . . . . 38
SECTION 10.4. CERTAIN DEBENTURES OWNED BY COMPANY DISREGARDED. . . . . . 39
SECTION 10.5. ACTIONS BINDING ON THE FUTURE DEBENTUREHOLDERS . . . . . . 39

ARTICLE XI. SUPPLEMENTAL INDENTURES. . . . . . . . . . . . . . . . . . . . . 39
SECTION 11.1. SUPPLEMENTAL INDENTURES WITHOUT THE CONSENT OF THE
DEBENTUREHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 11.2. SUPPLEMENTAL INDENTURES WITH CONSENT OF THE
DEBENTUREHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 11.3. EFFECT OF SUPPLEMENTAL INDENTURES. . . . . . . . . . . . . 41
SECTION 11.4. THE DEBENTURES AFFECTED BY SUPPLEMENTAL INDENTURES . . . . 41
SECTION 11.5. EXECUTION OF SUPPLEMENTAL INDENTURES . . . . . . . . . . . 41

ARTICLE XII. SUCCESSOR CORPORATION . . . . . . . . . . . . . . . . . . . . . 42
SECTION 12.1. THE COMPANY MAY CONSOLIDATE, ETC.. . . . . . . . . . . . . 42
SECTION 12.2. SUCCESSOR CORPORATION SUBSTITUTED. . . . . . . . . . . . . 42
SECTION 12.3. EVIDENCE OF CONSOLIDATION, ETC. TO TRUSTEE . . . . . . . . 43

ARTICLE XIII. SATISFACTION AND DISCHARGE . . . . . . . . . . . . . . . . . . 43
SECTION 13.1. SATISFACTION AND DISCHARGE OF INDENTURE. . . . . . . . . . 43
SECTION 13.2. DISCHARGE OF OBLIGATIONS . . . . . . . . . . . . . . . . . 43
SECTION 13.3. DEPOSITED MONEYS TO BE HELD IN TRUST . . . . . . . . . . . 44
SECTION 13.4. PAYMENT OF MONIES HELD BY PAYING AGENTS. . . . . . . . . . 44
SECTION 13.5. REPAYMENT TO THE COMPANY . . . . . . . . . . . . . . . . . 44

ARTICLE XIV. IMMUNITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS AND
DIRECTORS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 14.1. NO RECOURSE. . . . . . . . . . . . . . . . . . . . . . . . 45

ARTICLE XV. MISCELLANEOUS PROVISIONS . . . . . . . . . . . . . . . . . . . . 45
SECTION 15.1. EFFECT ON SUCCESSORS AND ASSIGNS . . . . . . . . . . . . . 45
SECTION 15.2. ACTIONS BY SUCCESSOR . . . . . . . . . . . . . . . . . . . 45
SECTION 15.3. SURRENDER OF THE COMPANY POWERS. . . . . . . . . . . . . . 45
SECTION 15.4. NOTICES. . . . . . . . . . . . . . . . . . . . . . . . . . 46

iii
<PAGE>

SECTION 15.5. GOVERNING LAW. . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 15.6. TREATMENT OF THE DEBENTURES AS DEBT. . . . . . . . . . . . 46
SECTION 15.7. COMPLIANCE CERTIFICATES AND OPINIONS . . . . . . . . . . . 46
SECTION 15.8. PAYMENTS ON BUSINESS DAYS. . . . . . . . . . . . . . . . . 47
SECTION 15.9. CONFLICT WITH TRUST INDENTURE ACT. . . . . . . . . . . . . 47
SECTION 15.10. COUNTERPARTS. . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 15.11. SEPARABILITY. . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 15.12. ASSIGNMENT. . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 15.13. ACKNOWLEDGMENT OF RIGHTS; RIGHT OF SETOFF . . . . . . . . 47

ARTICLE XVI. SUBORDINATION OF THE DEBENTURES . . . . . . . . . . . . . . . . 48
SECTION 16.1. AGREEMENT TO SUBORDINATE . . . . . . . . . . . . . . . . . 48
SECTION 16.2. DEFAULT ON SENIOR DEBT, SUBORDINATED DEBT OR ADDITIONAL
SENIOR OBLIGATIONS . . . . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 16.3. LIQUIDATION; DISSOLUTION; BANKRUPTCY . . . . . . . . . . . 49
SECTION 16.4. SUBROGATION. . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 16.5. THE TRUSTEE TO EFFECTUATE SUBORDINATION. . . . . . . . . . 51
SECTION 16.6. NOTICE BY THE COMPANY. . . . . . . . . . . . . . . . . . . 51
SECTION 16.7. RIGHTS OF THE TRUSTEE; HOLDERS OF THE SENIOR
INDEBTEDNESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
SECTION 16.8. SUBORDINATION MAY NOT BE IMPAIRED. . . . . . . . . . . . . 52

iv
<PAGE>

CROSS-REFERENCE TABLE

Section of
Trust Indenture Act Section of
of 1939, as amended Indenture
- ------------------- ----------

310(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.10
310(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9.9, 9.11
310(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
311(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.14
311(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.14
311(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
312(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.1, 6.2(a)
312(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.2(c)
312(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.2(c)
313(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.4(a)
313(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.4(b)
313(c).. . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.4(a), 6.4(b)
313(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.4(c)
314(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.3(a)
314(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
314(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.7
314(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
314(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.7
314(f) . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
315(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9.1(a), 9.3
315(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9.2
315(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.1(a)
315(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.1(b)
315(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7.7
316(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1, 7.6
316(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.4(b)
316(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10.1(b)
317(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7.2
317(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5.3
318(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.9

Note: This Cross-Reference Table does not constitute part of this Indenture and
shall not affect the interpretation of any of its terms or provisions.

v
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INDENTURE

INDENTURE, dated as of __________, 1997, between INDIANA UNITED BANCORP,
an Indiana corporation (the "Company") and STATE STREET BANK AND TRUST
COMPANY, a trust company duly organized and existing under the laws of the
Commonwealth of Massachusetts, as trustee (the "Trustee");

RECITALS

WHEREAS, for its lawful corporate purposes, the Company has duly
authorized the execution and delivery of this Indenture to provide for the
issuance of securities to be known as its ____% Subordinated Debentures due
2027 (hereinafter referred to as the "Debentures"), the form and substance of
such Debentures and the terms, provisions and conditions thereof to be set
forth as provided in this Indenture;

WHEREAS, IUB Capital Trust, a Delaware statutory business trust (the
"Trust"), has offered to the public $18,500,000 aggregate liquidation amount
of its Preferred Securities (as defined herein) and proposes to invest the
proceeds from such offering, together with the proceeds of the issuance and
sale by the Trust to the Company of $572,170 aggregate liquidation amount of
its Common Securities (as defined herein), in $19,072,170 aggregate principal
amount of the Debentures; and

WHEREAS, the Company has requested that the Trustee execute and deliver
this Indenture; and

WHEREAS, all requirements necessary to make this Indenture a valid
instrument in accordance with its terms, and to make the Debentures, when
executed by the Company and authenticated and delivered by the Trustee, the
valid obligations of the Company, have been performed, and the execution and
delivery of this Indenture have been duly authorized in all respects; and

WHEREAS, to provide the terms and conditions upon which the Debentures are
to be authenticated, issued and delivered, the Company has duly authorized
the execution of this Indenture; and

WHEREAS, all things necessary to make this Indenture a valid agreement of
the Company, in accordance with its terms, have been done.

NOW, THEREFORE, in consideration of the premises and the purchase of the
Debentures by the holders thereof, it is mutually covenanted and agreed as
follows for the equal and ratable benefit of the holders of the Debentures:

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ARTICLE I.

DEFINITIONS

SECTION 1.1. DEFINITIONS OF TERMS.

The terms defined in this Section 1.1 (except as in this Indenture
otherwise expressly provided or unless the context otherwise requires) for
all purposes of this Indenture and of any indenture supplemental hereto shall
have the respective meanings specified in this Section 1.1 and shall include
the plural as well as the singular. All other terms used in this Indenture
that are defined in the Trust Indenture Act, or that are by reference in the
Trust Indenture Act defined in the Securities Act (except as herein otherwise
expressly provided or unless the context otherwise requires), shall have the
meanings assigned to such terms in the Trust Indenture Act and in the
Securities Act as in force at the date of the execution of this instrument.
All accounting terms used herein and not expressly defined shall have the
meanings assigned to such terms in accordance with Generally Accepted
Accounting Principles.

"Accelerated Maturity Date" means if the Company elects to accelerate the
Maturity Date in accordance with Section 2.2(c), the date selected by the
Company which is prior to the Scheduled Maturity Date, but is after December
30, 2002.

"Additional Payments" shall have the meaning set forth in Section 2.5.

"Additional Senior Obligations" means all indebtedness of the Company
whether incurred on or prior to the date of this Indenture or thereafter
incurred, for claims in respect of derivative products such as interest and
foreign exchange rate contracts, commodity contracts and similar
arrangements; provided, however, that Additional Senior Obligations does not
include claims in respect of Senior Debt or Subordinated Debt or obligations
which, by their terms, are expressly stated to be not superior in right of
payment to the Debentures or to rank pari passu in right of payment with the
Debentures. For purposes of this definition, "claim" shall have the meaning
assigned thereto in Section 101(4) of the United States Bankruptcy Code of
1978, as amended.

"Administrative Trustees" shall have the meaning set forth in the Trust
Agreement.

"Affiliate" means, with respect to a specified Person, (a) any Person
directly or indirectly owning, controlling or holding with power to vote 10%
or more of the outstanding voting securities or other ownership interests of
the specified Person; (b) any Person 10% or more of whose outstanding voting
securities or other ownership interests are directly or indirectly owned,
controlled or held with power to vote by the specified Person; (c) any Person
directly or indirectly controlling, controlled by, or under common control
with the specified Person; (d) a partnership in which the specified Person is
a general partner; (e) any officer or director of the specified Person; and
(f) if the specified Person is an individual, any entity of which the
specified Person is an officer, director or general partner.

"Authenticating Agent" means an authenticating agent with respect to the
Debentures appointed by the Trustee pursuant to Section 2.12.

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"Bankruptcy Law" means Title 11, U.S. Code, or any similar federal or
state law for the relief of debtors.

"Board of Directors" means the Board of Directors of the Company or any
duly authorized committee of such Board.

"Board Resolution" means a copy of a resolution certified by the Secretary
or an Assistant Secretary of the Company to have been duly adopted by the
Board of Directors and to be in full force and effect on the date of such
certification.

"Business Day" means, with respect to the Debentures, any day other than a
Saturday or a Sunday or a day on which federal or state banking institutions
in the Borough of Manhattan, the City of New York, are authorized or required
by law, executive order or regulation to close, or a day on which the
Corporate Trust Office of the Trustee or the Property Trustee is closed for
business.

"Capital Treatment Event" means the receipt by the Trust of an Opinion of
Counsel, rendered by a law firm having a recognized banking law practice, to
the effect that, as a result of any amendment to or any change (including
any announced prospective change) in the laws (or any regulations thereunder)
of the United States or any political subdivision thereof or therein, or as a
result of any official administrative pronouncement or judicial decision
interpreting or applying such laws or regulations, which amendment or change
is effective or such proposed change, pronouncement or decision is announced
on or after the date of issuance of the Preferred Securities under the Trust
Agreement, there is more than an insubstantial risk of impairment of the
Company's ability to treat the aggregate Liquidation Amount of the Preferred
Securities (or any substantial portion thereof) as "Tier 1 Capital" (or the
then equivalent thereof) for purposes of the capital adequacy guidelines of
the Federal Reserve, as then in effect and applicable to the Company,
provided, however, that the inability of the Company to treat all or any
portion of the Liquidation Amount of the Preferred Securities as Tier 1
Capital shall not constitute the basis for a Capital Treatment Event if such
inability results from the Company having cumulative preferred capital in
excess of the amount which may qualify for treatment as Tier 1 Capital under
applicable capital adequacy guidelines of the Federal Reserve.

"Certificate" means a certificate signed by the principal executive
officer, the principal financial officer, the principal accounting officer,
the treasurer or any vice president of the Company. The Certificate need not
comply with the provisions of Section 15.7.

"Change in 1940 Act Law" shall have the meaning set forth in the
definition of "Investment Company Event."

"Commission" means the Securities and Exchange Commission, as from time to
time constituted, created under the Exchange Act, or, if at any time after
the execution of this instrument such Commission is not existing and
performing the duties now assigned to it under the Trust Indenture Act, then
the body performing such duties at such time.

3
<PAGE>

"Common Securities" means undivided beneficial interests in the assets of
the Trust which rank pari passu with the Preferred Securities; provided,
however, that upon the occurrence of an Event of Default, the rights of
holders of Common Securities to payment in respect of (i) distributions, and
(ii) payments upon liquidation, redemption and otherwise, are subordinated to
the rights of holders of Preferred Securities.

"Company" means Indiana United Bancorp, a corporation duly organized and
existing under the laws of the State of Indiana, and, subject to the
provisions of Article XII, shall also include its successors and assigns.

"Compounded Interest" shall have the meaning set forth in Section 4.1.

"Corporate Trust Office" means the office of the Trustee at which, at any
particular time, its corporate trust business shall be principally
administered, which office at the date hereof is located at Two International
Place, 4th Floor, Boston, Massachusetts 02110, Attention: Corporate Trust
Department.

"Coupon Rate" shall have the meaning set forth in Section 2.5.

"Custodian" means any receiver, trustee, assignee, liquidator, or similar
official under any Bankruptcy Law.

"Debentures" shall have the meaning set forth in the Recitals hereto.

"Debentureholder," "holder of Debentures," "registered holder," or other
similar term, means the Person or Persons in whose name or names a particular
Debenture shall be registered on the books of the Company or the Trustee kept
for that purpose in accordance with the terms of this Indenture.

"Debenture Register" shall have the meaning set forth in Section 2.7(b).

"Debenture Registrar" shall have the meaning set forth in Section 2.7(b).

"Debt" means with respect to any Person, whether recourse is to all or a
portion of the assets of such Person and whether or not contingent, (i) every
obligation of such Person for money borrowed; (ii) every obligation of such
Person evidenced by bonds, debentures, notes or other similar instruments,
including obligations incurred in connection with the acquisition of
property, assets or businesses; (iii) every reimbursement obligation of such
Person with respect to letters of credit, bankers' acceptances or similar
facilities issued for the account of such Person; (iv) every obligation of
such Person issued or assumed as the deferred purchase price of property or
services (but excluding trade accounts payable or accrued liabilities arising
in the ordinary course of business); (v) every capital lease obligation of
such Person; and (vi) and every obligation of the type referred to in clauses
(i) through (v) of another Person and all dividends of another Person the
payment of which, in either case, such Person has guaranteed or is
responsible or liable, directly or indirectly, as obligor or otherwise.

4
<PAGE>

"Default" means any event, act or condition that with notice or lapse of
time, or both, would constitute an Event of Default.

"Deferred Payments" shall have the meaning set forth in Section 4.1.

"Dissolution Event" means that as a result of the occurrence and
continuation of a Special Event, the Trust is to be dissolved in accordance
with the Trust Agreement and the Debentures held by the Property Trustee are
to be distributed to the holders of the Trust Securities issued by the Trust
pro rata in accordance with the Trust Agreement.

"Distribution" shall have the meaning set forth in the Trust Agreement.

"Event of Default" means, with respect to the Debentures, any event
specified in Section 7.1, which has continued for the period of time, if any,
and after the giving of the notice, if any, therein designated.

"Exchange Act," means the Securities Exchange Act of 1934, as amended, as
in effect at the date of execution of this instrument.

"Extended Maturity Date" means if the Company elects to extend the
Maturity Date in accordance with Section 2.2(b), the date selected by the
Company which is after the Scheduled Maturity Date but before December 30,
2036.

"Extension Period" shall have the meaning set forth in Section 4.1.

"Federal Reserve" means the Board of Governors of the Federal Reserve
System.

"Generally Accepted Accounting Principles" means such accounting
principles as are generally accepted at the time of any computation required
hereunder.

"Governmental Obligations" means securities that are (i) direct
obligations of the United States of America for the payment of which its full
faith and credit is pledged; or (ii) obligations of a Person controlled or
supervised by and acting as an agency or instrumentality of the United States
of America, the payment of which is unconditionally guaranteed as a full
faith and credit obligation by the United States of America that, in either
case, are not callable or redeemable at the option of the issuer thereof, and
shall also include a depositary receipt issued by a bank (as defined in
Section 3(a)(2) of the Securities Act) as custodian with respect to any such
Governmental Obligation or a specific payment of principal of or interest on
any such Governmental Obligation held by such custodian for the account of
the holder of such depositary receipt; provided, however, that (except as
required by law) such custodian is not authorized to make any deduction from
the amount payable to the holder of such depositary receipt from any amount
received by the custodian in respect of the Governmental Obligation or the
specific payment of principal of or interest on the Governmental Obligation
evidenced by such depositary receipt.

5
<PAGE>

"Herein," "hereof," and "hereunder," and other words of similar import,
refer to this Indenture as a whole and not to any particular Article, Section
or other subdivision.

"Indenture" means this instrument as originally executed or as it may from
time to time be supplemented or amended by one or more indentures
supplemental hereto entered into in accordance with the terms hereof.

"Interest Payment Date" shall have the meaning set forth in Section 2.5.

"Investment Company Act," means the Investment Company Act of 1940, as
amended, as in effect at the date of execution of this instrument.

"Investment Company Event" means the receipt by the Trust of an Opinion of
Counsel, rendered by a law firm having a recognized tax and securities law
practice, to the effect that, as a result of the occurrence of a change in
law or regulation or a change in interpretation or application of law or
regulation by any legislative body, court, governmental agency or regulatory
authority (a "Change in 1940 Act Law"), the Trust is or shall be considered
an "investment company" that is required to be registered under the
Investment Company Act, which Change in 1940 Act Law becomes effective on or
after the date of original issuance of the Preferred Securities under the
Trust Agreement.

"Maturity Date" means the date on which the Debentures mature and on which
the principal shall be due and payable together with all accrued and unpaid
interest thereon including Compounded Interest and Additional Payments, if
any.

"Ministerial Action" shall have the meaning set forth in Section 3.2.

"Officers' Certificate" means a certificate signed by the President or a
Vice President and by the Treasurer or an Assistant Treasurer or the
Controller or an Assistant Controller or the Secretary or an Assistant
Secretary of the Company that is delivered to the Trustee in accordance with
the terms hereof. Each such certificate shall include the statements provided
for in Section 15.7, if and to the extent required by the provisions thereof.

"Opinion of Counsel" means an opinion in writing of legal counsel, who may
be an employee of or counsel for the Company, that is delivered to the
Trustee in accordance with the terms hereof. Each such opinion shall include
the statements provided for in Section 15.7, if and to the extent required by
the provisions thereof.

"Outstanding," when used with respect to the Debentures, means, as of the
date of determination, all of the Debentures theretofore executed and
delivered by the Trustee under this Indenture, except:

(a) the Debentures theretofore canceled by the Trustee or any Paying
Agent, or delivered to the Trustee or any Paying Agent for cancellation;

6
<PAGE>

(b) the Debentures for whose payment or redemption money in the
necessary amount has been theretofore deposited with the Trustee or any
Paying Agent (other than the Company) for the holders of such Debentures;
provided that, if such Debentures are to be redeemed, notice of such
redemption has been duly given pursuant to Article III hereof; and

(c) the Debentures which have been paid or in exchange for or in lieu of
which other Debentures have been executed and delivered pursuant to Section
2.7; provided, however, that in determining whether the holders of a majority
or specified percentage in aggregate principal amount of the Debentures have
given any request, demand, authorization, direction, notice, consent or
waiver hereunder, the Debentures owned by the Company or any other obligor on
the Debentures or by any Person directly or indirectly controlling or
controlled by or under common control with the Company or any other obligor
on the Debentures shall be disregarded and deemed not to be Outstanding,
except that (a) in determining whether any Trustee shall be protected in
relying upon any such request, demand, authorization, direction, notice,
consent or waiver, only the Debentures that such Trustee knows to be so owned
shall be so disregarded; and (b) for purposes hereof, the Trust shall be
deemed not to be controlled by the Company. The Debentures so owned which
have been pledged in good faith may be regarded as Outstanding if the pledgee
establishes to the satisfaction of the Trustee the pledgee's right so to act
with respect to such Debentures and the pledgee is not a Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with the Company or any such other obligor.

"Paying Agent" means any paying agent or co-paying agent appointed
pursuant to Section 5.3.

"Person" means any individual, corporation, partnership, joint-venture,
trust, limited liability company, joint-stock company, unincorporated
organization or government or any agency or political subdivision thereof.

"Predecessor Debenture" means every previous Debenture evidencing all or a
portion of the same debt as that evidenced by such particular Debenture; and,
for the purposes of this definition, any Debenture authenticated and
delivered under Section 2.9 in lieu of a lost, destroyed or stolen Debenture
shall be deemed to evidence the same debt as the lost, destroyed or stolen
Debenture.

"Preferred Securities" means undivided beneficial interests in the assets
of the Trust which rank pari passu with Common Securities issued by the
Trust; provided, however, that upon the occurrence of an Event of Default,
the rights of holders of Common Securities to payment in respect of (i)
distributions, and (ii) payments upon liquidation, redemption and otherwise,
are subordinated to the rights of holders of Preferred Securities.

"Preferred Securities Guarantee" means any guarantee that the Company may
enter into with the Trustee or other Persons that operates directly or
indirectly for the benefit of holders of Preferred Securities.

"Property Trustee" has the meaning set forth in the Trust Agreement.

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<PAGE>

"Responsible Officer" when used with respect to the Trustee means the
Chairman of the Board of Directors, the President, any Vice President, the
Secretary, the Treasurer, any trust officer, any corporate trust officer or
any other officer or assistant officer of the Trustee customarily performing
functions similar to those performed by the Persons who at the time shall be
such officers, respectively, or to whom any corporate trust matter is
referred because of his or her knowledge of and familiarity with the
particular subject.

"Scheduled Maturity Date" means December 30, 2027.

"Securities Act," means the Securities Act of 1933, as amended, as in
effect at the date of execution of this instrument.

"Senior Debt" means the principal of (and premium, if any) and interest,
if any (including interest accruing on or after the filing of any petition in
bankruptcy or for reorganization relating to the Company whether or not such
claim for post-petition interest is allowed in such proceeding), on Debt,
whether incurred on or prior to the date of this Indenture or thereafter
incurred, unless, in the instrument creating or evidencing the same or
pursuant to which the same is outstanding, it is provided that such
obligations are not superior in right of payment to the Debentures or to
other Debt which is pari passu with, or subordinated to, the Debentures;
provided, however, that Senior Debt shall not be deemed to include (i) any
Debt of the Company which when incurred and without respect to any election
under section 1111(b) of the United States Bankruptcy Code of 1978, as
amended, was without recourse to the Company; (ii) any Debt of the Company to
any of its subsidiaries; (iii) Debt to any employee of the Company; (iv) Debt
which by its terms is subordinated to trade accounts payable or accrued
liabilities arising in the ordinary course of business to the extent that
payments made to the holders of such Debt by the holders of the Debentures as
a result of the subordination provisions of this Indenture would be greater
than they otherwise would have been as a result of any obligation of such
holders to pay amounts over to the obligees on such trade accounts payable or
accrued liabilities arising in the ordinary course of business as a result of
subordination provisions to which such Debt is subject; and (v) Debt which
constitutes Subordinated Debt.

"Senior Indebtedness" shall have the meaning set forth in Section 16.1.

"Special Event" means a Tax Event, a Capital Treatment Event or an
Investment Company Event.

"Subordinated Debt" means the principal of (and premium, if any) and
interest, if any (including interest accruing on or after the filing of any
petition in bankruptcy or for reorganization relating to the Company whether
or not such claim for post-petition interest is allowed in such proceeding),
on Debt (other than the Debentures), whether incurred on or prior to the date
of this Indenture or thereafter incurred, which is by its terms expressly
provided to be junior and subordinate to other Debt of the Company.

"Subsidiary" means, with respect to any Person, (i) any corporation at
least a majority of whose outstanding Voting Stock shall at the time be
owned, directly or indirectly, by such Person or by one or more of its
Subsidiaries or by such Person and one or more of its Subsidiaries; (ii)

8
<PAGE>

any general partnership, joint venture, trust or similar entity, at least a
majority of whose outstanding partnership or similar interests shall at the
time be owned by such Person, or by one or more of its Subsidiaries, or by
such Person and one or more of its Subsidiaries; and (iii) any limited
partnership of which such Person or any of its Subsidiaries is a general
partner.

"Tax Event" means the receipt by the Trust of an Opinion of Counsel,
rendered by a law firm having a recognized tax and securities practice, to
the effect that, as a result of any amendment to, or change (including any
announced prospective change) in, the laws (or any regulations thereunder) of
the United States or any political subdivision or taxing authority thereof or
therein, or as a result of any official administrative pronouncement or
judicial decision interpreting or applying such laws or regulations, which
amendment or change is effective or which pronouncement or decision is
announced on or after the date of issuance of the Preferred Securities under
the Trust Agreement, there is more than an insubstantial risk that (i) the
Trust is, or shall be within 90 days after the date of such Opinion of
Counsel, subject to United States federal income tax with respect to income
received or accrued on the Debentures; (ii) interest payable by the Company
on the Debentures is not, or within 90 days after the date of such Opinion of
Counsel, shall not be, deductible by the Company, in whole or in part, for
United States federal income tax purposes; or (iii) the Trust is, or shall be
within 90 days after the date of such Opinion of Counsel, subject to more
than a de minimis amount of other taxes, duties, assessments or other
governmental charges. The Trust or the Company shall request and receive such
Opinion of Counsel with regard to such matters within a reasonable period of
time after the Trust or the Company shall have become aware of the possible
occurrence of any of the events described in clauses (i) through (iii) above.

"Trust" means IUB Capital Trust, a Delaware statutory business trust.

"Trust Agreement" means the Amended and Restated Trust Agreement, dated
____________, 1997, of the Trust.

"Trustee" means State Street Bank and Trust Company and, subject to the
provisions of Article IX, shall also include its successors and assigns, and,
if at any time there is more than one Person acting in such capacity
hereunder, "Trustee" shall mean each such Person.

"Trust Indenture Act," means the Trust Indenture Act of 1939, as amended,
subject to the provisions of Sections 11.1, 11.2, and 12.1, as in effect at
the date of execution of this instrument.

"Trust Securities" means the Common Securities and Preferred Securities,
collectively.

"Voting Stock," as applied to stock of any Person, means shares,
interests, participations or other equivalents in the equity interest
(however designated) in such Person having ordinary voting power for the
election of a majority of the directors (or the equivalent) of such Person,
other than shares, interests, participations or other equivalents having such
power only by reason of the occurrence of a contingency.

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<PAGE>

ARTICLE II.
ISSUE, DESCRIPTION, TERMS, CONDITIONS
REGISTRATION AND EXCHANGE OF THE DEBENTURES

SECTION 2.1 DESIGNATION AND PRINCIPAL AMOUNT.

There is hereby authorized Debentures designated the "___% Subordinated
Debentures due 2027," limited in aggregate principal amount up to
$21,932,990, which amount shall be as set forth in any written order of the
Company for the authentication and delivery of Debentures pursuant to Section
2.6.

SECTION 2.2. MATURITY.

(a) The Maturity Date shall be either:

(i) the Scheduled Maturity Date; or

(ii) if the Company elects to extend the Maturity Date beyond the
Scheduled Maturity Date in accordance with Section 2.2(b), the
Extended Maturity Date; or

(iii) if the Company elects to accelerate the Maturity Date to be a
date prior to the Scheduled Maturity Date in accordance with
Section 2.2(c), the Accelerated Maturity Date.

(b) The Company may at any time before the day which is 90 days before the
Scheduled Maturity Date, elect to extend the Maturity Date to the
Extended Maturity Date, provided that the Company has received the prior
approval of the Federal Reserve if then required under applicable
capital guidelines or policies of the Federal Reserve and further
provided that the following conditions in this Section 2.2(b) are
satisfied both at the date the Company gives notice in accordance with
Section 2.2(d) of its election to extend the Maturity Date and at the
Scheduled Maturity Date:

(i) the Company is not in bankruptcy, otherwise insolvent or in
liquidation;

(ii) the Company is not in default in the payment of interest or
principal on the Debentures;

(iii) the Trust is not in arrears on payments of Distributions on the
Trust Securities issued by it and no deferred Distributions are
accumulated; and

(iv) the Company has a rating on its Senior Debt of investment grade.

(c) The Company may, on one occasion, at any time before the day which is
90 days before the Scheduled Maturity Date and after December 30, 2002,
elect to shorten the Maturity Date to the Accelerated Maturity Date
provided that the Company has received the prior approval of the Federal
Reserve if then required under applicable capital guidelines or policies
of the Federal Reserve.

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(d) If the Company elects to extend the Maturity Date in accordance with
Section 2.2(b), the Company shall give notice to the registered holders
of the Debentures, the Property Trustee and the Trust of the extension
of the Maturity Date and the Extended Maturity Date at least 90 days and
no more than 180 days before the Scheduled Maturity Date.

(e) If the Company elects to accelerate the Maturity Date in accordance with
Section 2.2(c), the Company shall give notice to the registered holders
of the Debentures, the Property Trustee and the Trust of the acceleration
of the Maturity Date and the Accelerated Maturity Date at least 90 days
and no more than 180 days before the Accelerated Maturity Date.

SECTION 2.3. FORM AND PAYMENT.

The Debentures shall be issued in fully registered certificated form
without interest coupons. Principal and interest on the Debentures issued in
certificated form shall be payable, the transfer of such Debentures shall be
registrable and such Debentures shall be exchangeable for Debentures bearing
identical terms and provisions at the office or agency of the Trustee;
provided, however, that payment of interest may be made at the option of the
Company by check mailed to the holder at such address as shall appear in the
Debenture Register or by wire transfer to an account maintained by the holder
as specified in the Debenture Register, provided that the holder provides
proper transfer instructions by the regular record date. Notwithstanding the
foregoing, so long as the holder of any Debentures is the Property Trustee,
the payment of the principal of and interest (including Compounded Interest
and Additional Payments, if any) on such Debentures held by the Property
Trustee shall be made at such place and to such account as may be designated
by the Property Trustee.

SECTION 2.4. [Intentionally Omitted]

SECTION 2.5. INTEREST.

(a) Each Debenture shall bear interest at a rate of ___% per annum (the
"Coupon Rate") from the original date of issuance until the principal thereof
becomes due and payable, and on any overdue principal and (to the extent that
payment of such interest is enforceable under applicable law) on any overdue
installment of interest at the Coupon Rate, compounded quarterly, payable
(subject to the provisions of Article IV) quarterly in arrears on March 31,
June 30, September 30, and December 31 of each year (each, an "Interest
Payment Date," commencing on December 31, 1997), to the Person in whose name
such Debenture or any Predecessor Debenture is registered, at the close of
business on the regular record date for such interest installment, which
shall be the fifteenth day of the last month of the calendar quarter.

(b) The amount of interest payable for any period shall be computed on the
basis of a 360-day year of twelve 30-day months. The amount of interest
payable for any period shorter than a full quarterly period for which
interest is computed shall be computed on the basis of the number of days
elapsed in a 360-day year of twelve 30-day months. In the event that any date
on which interest is payable on the Debentures is not a Business Day, then
payment of interest payable on such date shall be made on the next succeeding
day which is a Business Day (and without any

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interest or other payment in respect of any such delay) with the same force
and effect as if made on the date such payment was originally payable.

(c) If, at any time while the Property Trustee is the holder of any
Debentures, the Trust or the Property Trustee is required to pay any taxes,
duties, assessments or governmental charges of whatever nature (other than
withholding taxes) imposed by the United States, or any other taxing
authority, then, in any case, the Company shall pay as additional payments
("Additional Payments") on the Debentures held by the Property Trustee, such
additional amounts as shall be required so that the net amounts received and
retained by the Trust and the Property Trustee after paying such taxes,
duties, assessments or other governmental charges shall be equal to the
amounts the Trust and the Property Trustee would have received had no such
taxes, duties, assessments or other government charges been imposed.

SECTION 2.6. EXECUTION AND AUTHENTICATIONS.

(a) The Debentures shall be signed on behalf of the Company by its Chief
Executive Officer, President or one of its Vice Presidents, under its
corporate seal attested by its Secretary or one of its Assistant Secretaries.
Signatures may be in the form of a manual or facsimile signature. The Company
may use the facsimile signature of any Person who shall have been a Chief
Executive Officer, President or Vice President thereof, or of any Person who
shall have been a Secretary or Assistant Secretary thereof, notwithstanding
the fact that at the time the Debentures shall be authenticated and delivered
or disposed of such Person shall have ceased to be the Chief Executive
Officer, President or a Vice President, or the Secretary or an Assistant
Secretary, of the Company. The seal of the Company may be in the form of a
facsimile of such seal and may be impressed, affixed, imprinted or otherwise
reproduced on the Debentures. The Debentures may contain such notations,
legends or endorsements required by law, stock exchange rule or usage. Each
Debenture shall be dated the date of its authentication by the Trustee.

(b) A Debenture shall not be valid until manually authenticated by an
authorized signatory of the Trustee, or by an Authenticating Agent. Such
signature shall be conclusive evidence that the Debenture so authenticated
has been duly authenticated and delivered hereunder and that the holder is
entitled to the benefits of this Indenture.

(c) At any time and from time to time after the execution and delivery of
this Indenture, the Company may deliver Debentures executed by the Company to
the Trustee for authentication, together with a written order of the Company
for the authentication and delivery of such Debentures signed by its Chief
Executive Officer, President or any Vice President and its Treasurer or any
Assistant Treasurer, and the Trustee in accordance with such written order
shall authenticate and deliver such Debentures.

(d) In authenticating such Debentures and accepting the additional
responsibilities under this Indenture in relation to such Debentures, the
Trustee shall be entitled to receive, and (subject to Section 9.1) shall be
fully protected in relying upon, an Opinion of Counsel stating that the form
and terms thereof have been established in conformity with the provisions of
this Indenture.

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(e) The Trustee shall not be required to authenticate such Debentures if
the issue of such Debentures pursuant to this Indenture shall affect the
Trustee's own rights, duties or immunities under the Debentures and this
Indenture or otherwise in a manner that is not reasonably acceptable to the
Trustee.

SECTION 2.7. REGISTRATION OF TRANSFER AND EXCHANGE.

(a) Debentures may be exchanged upon presentation thereof at the office or
agency of the Company designated for such purpose in the Borough of
Manhattan, the City of New York, or at the office of the Debenture Registrar,
for other Debentures and for a like aggregate principal amount, upon payment
of a sum sufficient to cover any tax or other governmental charge in relation
thereto, all as provided in this Section 2.7. In respect of any Debentures so
surrendered for exchange, the Company shall execute, the Trustee shall
authenticate and such office or agency shall deliver in exchange therefor the
Debenture or Debentures that the Debentureholder making the exchange shall be
entitled to receive, bearing numbers not contemporaneously outstanding.

(b) The Company shall keep, or cause to be kept, at its office or agency
designated for such purpose in the Borough of Manhattan, the City of New
York, or at the office of the Debenture Registrar, or such other location
designated by the Company a register or registers (herein referred to as the
"Debenture Register") in which, the Company shall register the Debentures and
the transfers of Debentures as in this Article II provided and which at all
reasonable times shall be open for inspection by the Trustee. The registrar
for the purpose of registering Debentures and transfer of Debentures as
herein provided shall initially be the Trustee and thereafter as may be
appointed by the Company as authorized by Board Resolution (the "Debenture
Registrar"). Upon surrender for transfer of any Debenture at the office or
agency of the Company designated for such purpose, the Company shall execute,
the Trustee shall authenticate and such office or agency shall deliver in the
name of the transferee or transferees a new Debenture or Debentures for a
like aggregate principal amount. All Debentures presented or surrendered for
exchange or registration of transfer, as provided in this Section 2.7, shall
be accompanied (if so required by the Company or the Debenture Registrar) by
a written instrument or instruments of transfer, in form satisfactory to the
Company or the Debenture Registrar, duly executed by the registered holder or
by such holder's duly authorized attorney in writing.

(c) No service charge shall be made for any exchange or registration of
transfer of Debentures, or issue of new Debentures in case of partial
redemption, but the Company may require payment of a sum sufficient to cover
any tax or other governmental charge in relation thereto, other than
exchanges pursuant to Section 2.8, Section 3.5(b) and Section 11.4 not
involving any transfer.

(d) The Company shall not be required (i) to issue, exchange or register
the transfer of any Debentures during a period beginning at the opening of
business 15 days before the day of the mailing of a notice of redemption of
less than all the Outstanding Debentures and ending at the close of business
on the day of such mailing; nor (ii) to register the transfer of or exchange
any Debentures or portions thereof called for redemption.

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SECTION 2.8. TEMPORARY DEBENTURES.

Pending the preparation of definitive Debentures, the Company may execute,
and the Trustee shall authenticate and deliver, temporary Debentures
(printed, lithographed, or typewritten). Such temporary Debentures shall be
substantially in the form of the definitive Debentures in lieu of which they
are issued, but with such omissions, insertions and variations as may be
appropriate for temporary Debentures, all as may be determined by the
Company. Every temporary Debenture shall be executed by the Company and be
authenticated by the Trustee upon the same conditions and in substantially
the same manner, and with like effect, as the definitive Debentures. Without
unnecessary delay the Company shall execute and shall furnish definitive
Debentures and thereupon any or all temporary Debentures may be surrendered
in exchange therefor (without charge to the holders), at the office or agency
of the Company designated for the purpose in the Borough of Manhattan, the
City of New York, and the Trustee shall authenticate and such office or
agency shall deliver in exchange for such temporary Debentures an equal
aggregate principal amount of definitive Debentures, unless the Company
advises the Trustee to the effect that definitive Debentures need not be
executed and furnished until further notice from the Company. Until so
exchanged, the temporary Debentures shall be entitled to the same benefits
under this Indenture as definitive Debentures authenticated and delivered
hereunder.

SECTION 2.9. MUTILATED, DESTROYED, LOST OR STOLEN DEBENTURES.

(a) In case any temporary or definitive Debenture shall become mutilated
or be destroyed, lost or stolen, the Company (subject to the next succeeding
sentence) shall execute, and upon the Company's request the Trustee (subject
as aforesaid) shall authenticate and deliver, a new Debenture bearing a
number not contemporaneously outstanding, in exchange and substitution for
the mutilated Debenture, or in lieu of and in substitution for the Debenture
so destroyed, lost or stolen. In every case the applicant for a substituted
Debenture shall furnish to the Company and the Trustee such security or
indemnity as may be required by them to save each of them harmless, and, in
every case of destruction, loss or theft, the applicant shall also furnish to
the Company and the Trustee evidence to their satisfaction of the
destruction, loss or theft of the applicant's Debenture and of the ownership
thereof. The Trustee shall authenticate any such substituted Debenture and
deliver the same upon the written request or authorization of the Chairman,
President or any Vice President and the Treasurer or any Assistant Treasurer
of the Company. Upon the issuance of any substituted Debenture, the Company
may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee) connected
therewith. In case any Debenture that has matured or is about to mature shall
become mutilated or be destroyed, lost or stolen, the Company may, instead of
issuing a substitute Debenture, pay or authorize the payment of the same
(without surrender thereof except in the case of a mutilated Debenture) if
the applicant for such payment shall furnish to the Company and the Trustee
such security or indemnity as they may require to save them harmless, and, in
case of destruction, loss or theft, evidence to the satisfaction of the
Company and the Trustee of the destruction, loss or theft of such Debenture
and of the ownership thereof.

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(b) Every replacement Debenture issued pursuant to the provisions of this
Section 2.9 shall constitute an additional contractual obligation of the
Company whether or not the mutilated, destroyed, lost or stolen Debenture
shall be found at any time, or be enforceable by anyone, and shall be
entitled to all the benefits of this Indenture equally and proportionately
with any and all other Debentures duly issued hereunder. All Debentures shall
be held and owned upon the express condition that the foregoing provisions
are exclusive with respect to the replacement or payment of mutilated,
destroyed, lost or stolen Debentures, and shall preclude (to the extent
lawful) any and all other rights or remedies, notwithstanding any law or
statute existing or hereafter enacted to the contrary with respect to the
replacement or payment of negotiable instruments or other securities without
their surrender.

SECTION 2.10. CANCELLATION.

All Debentures surrendered for the purpose of payment, redemption,
exchange or registration of transfer shall, if surrendered to the Company or
any Paying Agent, be delivered to the Trustee for cancellation, or, if
surrendered to the Trustee, shall be canceled by it, and no Debentures shall
be issued in lieu thereof except as expressly required or permitted by any of
the provisions of this Indenture. On request of the Company at the time of
such surrender, the Trustee shall deliver to the Company canceled Debentures
held by the Trustee. In the absence of such request the Trustee may dispose
of canceled Debentures in accordance with its standard procedures and deliver
a certificate of disposition to the Company. If the Company shall otherwise
acquire any of the Debentures, however, such acquisition shall not operate as
a redemption or satisfaction of the indebtedness represented by such
Debentures unless and until the same are delivered to the Trustee for
cancellation.

SECTION 2.11. BENEFIT OF INDENTURE.

Nothing in this Indenture or in the Debentures, express or implied, shall
give or be construed to give to any Person, other than the parties hereto and
the holders of the Debentures (and, with respect to the provisions of Article
XVI, the holders of the Senior Indebtedness) any legal or equitable right,
remedy or claim under or in respect of this Indenture, or under any covenant,
condition or provision herein contained; all such covenants, conditions and
provisions being for the sole benefit of the parties hereto and of the
holders of the Debentures (and, with respect to the provisions of Article
XVI, the holders of the Senior Indebtedness).

SECTION 2.12. AUTHENTICATION AGENT.

(a) So long as any of the Debentures remain Outstanding there may be an
Authenticating Agent for any or all such Debentures, which the Trustee shall
have the right to appoint. Said Authenticating Agent shall be authorized to
act on behalf of the Trustee to authenticate Debentures issued upon exchange,
transfer or partial redemption thereof, and Debentures so authenticated shall
be entitled to the benefits of this Indenture and shall be valid and
obligatory for all purposes as if authenticated by the Trustee hereunder. All
references in this Indenture to the authentication of Debentures by the
Trustee shall be deemed to include authentication by an Authenticating Agent.
Each Authenticating Agent shall be acceptable to the Company and shall be a
corporation that has a combined capital and surplus, as most recently
reported or determined

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<PAGE>

by it, sufficient under the laws of any jurisdiction under which it is
organized or in which it is doing business to conduct a trust business, and
that is otherwise authorized under such laws to conduct such business and is
subject to supervision or examination by federal or state authorities. If at
any time any Authenticating Agent shall cease to be eligible in accordance
with these provisions, it shall resign immediately.

(b) Any Authenticating Agent may at any time resign by giving written
notice of resignation to the Trustee and to the Company. The Trustee may at
any time (and upon request by the Company shall) terminate the agency of any
Authenticating Agent by giving written notice of termination to such
Authenticating Agent and to the Company. Upon resignation, termination or
cessation of eligibility of any Authenticating Agent, the Trustee may appoint
an eligible successor Authenticating Agent acceptable to the Company. Any
successor Authenticating Agent, upon acceptance of its appointment hereunder,
shall become vested with all the rights, powers and duties of its predecessor
hereunder as if originally named as an Authenticating Agent pursuant hereto.

ARTICLE III.
REDEMPTION OF DEBENTURES

SECTION 3.1. REDEMPTION.

Subject to the Company having received prior approval of the Federal
Reserve, if then required under the applicable capital guidelines or policies
of the Federal Reserve, the Company may redeem the Debentures issued
hereunder on and after the dates set forth in and in accordance with the
terms of this Article III.

SECTION 3.2. SPECIAL EVENT REDEMPTION.

Subject to the Company having received the prior approval of the Federal
Reserve, if then required under the applicable capital guidelines or policies
of the Federal Reserve, if a Special Event has occurred and is continuing,
then, notwithstanding Section 3.3(a) but subject to Section 3.3(b), the
Company shall have the right upon not less than 30 days' nor more than 60
days' notice to the holders of the Debentures to redeem the Debentures, in
whole but not in part, for cash within 180 days following the occurrence of
such Special Event (the "180-Day Period") at a redemption price equal to 100%
of the principal amount to be redeemed plus any accrued and unpaid interest
thereon to the date of such redemption (the "Redemption Price"), provided
that if at the time there is available to the Company the opportunity to
eliminate, within the 180-Day Period, a Tax Event by taking some ministerial
action (a "Ministerial Action"), such as filing a form or making an election,
or pursuing some other similar reasonable measure which has no adverse effect
on the Company, the Trust or the holders of the Trust Securities issued by
the Trust, the Company shall pursue such Ministerial Action in lieu of
redemption, and, provided further, that the Company shall have no right to
redeem the Debentures while it is pursuing any Ministerial Action pursuant to
its obligations hereunder. The Redemption Price shall be paid prior to 12:00
noon, New York time, on the date of such redemption or such earlier time as
the Company determines, provided that the Company shall deposit with the
Trustee an amount

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sufficient to pay the Redemption Price by 10:00 a.m., New York time, on the
date such Redemption Price is to be paid.

SECTION 3.3. OPTIONAL REDEMPTION BY THE COMPANY.

(a) Subject to the provisions of Section 3.3(b), except as otherwise may
be specified in this Indenture, the Company shall have the right to redeem
the Debentures, in whole or in part, from time to time, on or after December
30, 2002, at a Redemption Price equal to 100% of the principal amount to be
redeemed plus any accrued and unpaid interest thereon to the date of such
redemption, plus Deferred Payments, if any. Any redemption pursuant to this
Section 3.3(a) shall be made upon not less than 30 days' nor more than 60
days' notice to the holder of the Debentures, at the Redemption Price. If the
Debentures are only partially redeemed pursuant to this Section 3.3, the
Debentures shall be redeemed pro rata or by lot or in such other manner as
the Trustee shall deem appropriate and fair in its discretion. The Redemption
Price shall be paid prior to 12:00 noon, New York time, on the date of such
redemption or at such earlier time as the Company determines provided that
the Company shall deposit with the Trustee an amount sufficient to pay the
Redemption Price by 10:00 a.m., New York time, on the date such Redemption
Price is to be paid.

(b) If a partial redemption of the Debentures would result in the
delisting of the Preferred Securities issued by the Trust from the Nasdaq
National Market or any national securities exchange or other organization on
which the Preferred Securities are then listed or quoted, the Company shall
not be permitted to effect such partial redemption and may only redeem the
Debentures in whole.

SECTION 3.4. NOTICE OF REDEMPTION.

(a) In case the Company shall desire to exercise such right to redeem all
or, as the case may be, a portion of the Debentures in accordance with the
right reserved so to do, the Company shall, or shall cause the Trustee to
upon receipt of 45 days' written notice from the Company (which notice shall,
in the event of a partial redemption, include a representation to the effect
that such partial redemption shall not result in the delisting of the
Preferred Securities as described in Section 3.3(b) above), give notice of
such redemption to holders of the Debentures to be redeemed by mailing, first
class postage prepaid, a notice of such redemption not less than 30 days' and
not more than 60 days' before the date fixed for redemption to such holders
at their last addresses as they shall appear upon the Debenture Register
unless a shorter period is specified in the Debentures to be redeemed. Any
notice that is mailed in the manner herein provided shall be conclusively
presumed to have been duly given, whether or not the registered holder
receives the notice. In any case, failure duly to give such notice to the
holder of any Debenture designated for redemption in whole or in part, or any
defect in the notice, shall not affect the validity of the proceedings for
the redemption of any other Debentures. In the case of any redemption of
Debentures prior to the expiration of any restriction on such redemption
provided in the terms of such Debentures or elsewhere in this Indenture, the
Company shall furnish the Trustee with an Officers' Certificate evidencing
compliance with any such restriction. Each such notice of redemption shall
specify the date fixed for redemption and the Redemption Price and shall
state

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<PAGE>

that payment of the Redemption Price shall be made at the office or agency of
the Company in the Borough of Manhattan, the City of New York or at the
Corporate Trust Office, upon presentation and surrender of such Debentures,
that interest accrued to the date fixed for redemption shall be paid as
specified in said notice and that from and after said date interest shall
cease to accrue. If less than all the Debentures are to be redeemed, the
notice to the holders of the Debentures shall specify the particular
Debentures to be redeemed. If the Debentures are to be redeemed in part only,
the notice shall state the portion of the principal amount thereof to be
redeemed and shall state that on and after the redemption date, upon
surrender of such Debenture, a new Debenture or Debentures in principal
amount equal to the unredeemed portion thereof shall be issued.

(b) If less than all the Debentures are to be redeemed, the Company shall
give the Trustee at least 45 days' written notice in advance of the date
fixed for redemption as to the aggregate principal amount of Debentures to be
redeemed, and thereupon the Trustee shall select, by lot or in such other
manner as it shall deem appropriate and fair in its discretion, the portion
or portions (equal to $10 or any integral multiple thereof) of the Debentures
to be redeemed and shall thereafter promptly notify the Company in writing of
the numbers of the Debentures to be redeemed, in whole or in part. The
Company may, if and whenever it shall so elect pursuant to the terms hereof,
by delivery of instructions signed on its behalf by its President or any Vice
President, instruct the Trustee or any Paying Agent to call all or any part
of the Debentures for redemption and to give notice of redemption in the
manner set forth in this Section 3.4, such notice to be in the name of the
Company or its own name as the Trustee or such Paying Agent may deem
advisable. In any case in which notice of redemption is to be given by the
Trustee or any such Paying Agent, the Company shall deliver or cause to be
delivered to, or permit to remain with, the Trustee or such Paying Agent, as
the case may be, such Debenture Register, transfer books or other records, or
suitable copies or extracts therefrom, sufficient to enable the Trustee or
such Paying Agent to give any notice by mail that may be required under the
provisions of this Section 3.4.

SECTION 3.5. PAYMENT UPON REDEMPTION.

(a) If the giving of notice of redemption shall have been completed as
above provided, the Debentures or portions of Debentures to be redeemed
specified in such notice shall become due and payable on the date and at the
place stated in such notice at the applicable Redemption Price, and interest
on such Debentures or portions of Debentures shall cease to accrue on and
after the date fixed for redemption, unless the Company shall default in the
payment of such Redemption Price with respect to any such Debenture or
portion thereof. On presentation and surrender of such Debentures on or after
the date fixed for redemption at the place of payment specified in the
notice, said Debentures shall be paid and redeemed at the Redemption Price
(but if the date fixed for redemption is an Interest Payment Date, the
interest installment payable on such date shall be payable to the registered
holder at the close of business on the applicable record date pursuant to
Section 3.3).

(b) Upon presentation of any Debenture that is to be redeemed in part
only, the Company shall execute and the Trustee shall authenticate and the
office or agency where the Debenture is

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<PAGE>

presented shall deliver to the holder thereof, at the expense of the Company,
a new Debenture of authorized denomination in principal amount equal to the
unredeemed portion of the Debenture so presented.

SECTION 3.6. NO SINKING FUND.

The Debentures are not entitled to the benefit of any sinking fund.

ARTICLE IV.
EXTENSION OF INTEREST PAYMENT PERIOD

SECTION 4.1. EXTENSION OF INTEREST PAYMENT PERIOD.

So long as no Event of Default has occurred and is continuing, the Company
shall have the right, at any time and from time to time during the term of
the Debentures, to defer payments of interest by extending the interest
payment period of such Debentures for a period not exceeding 20 consecutive
quarters (the "Extension Period"), during which Extension Period no interest
shall be due and payable; provided that no Extension Period may extend beyond
the Maturity Date. Interest, the payment of which has been deferred because
of the extension of the interest payment period pursuant to this Section 4.1,
shall bear interest thereon at the Coupon Rate compounded quarterly for each
quarter of the Extension Period ("Compounded Interest"). At the end of the
Extension Period, the Company shall calculate (and deliver such calculation
to the Trustee) and pay all interest accrued and unpaid on the Debentures,
including any Additional Payments and Compounded Interest (together,
"Deferred Payments") that shall be payable to the holders of the Debentures
in whose names the Debentures are registered in the Debenture Register on the
first record date after the end of the Extension Period. Before the
termination of any Extension Period, the Company may further extend such
period, provided that such period together with all such further extensions
thereof shall not exceed 20 consecutive quarters, or extend beyond the
Maturity Date of the Debentures. Upon the termination of any Extension Period
and upon the payment of all Deferred Payments then due, the Company may
commence a new Extension Period, subject to the foregoing requirements. No
interest shall be due and payable during an Extension Period, except at the
end thereof, but the Company may prepay at any time all or any portion of the
interest accrued during an Extension Period.

SECTION 4.2. NOTICE OF EXTENSION.

(a) If the Property Trustee is the only registered holder of the
Debentures at the time the Company selects an Extension Period, the Company
shall give written notice to the Administrative Trustees, the Property
Trustee and the Trustee of its selection of such Extension Period 2 Business
Days before the earlier of (i) the next succeeding date on which
Distributions on the Trust Securities issued by the Trust are payable; or
(ii) the date the Trust is required to give notice of the record date, or the
date such Distributions are payable, to the Nasdaq National Market or other
applicable self-regulatory organization or to holders of the Preferred
Securities issued by the Trust, but in any event at least 1 Business Day
before such record date.

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<PAGE>

(b) If the Property Trustee is not the only holder of the Debentures at
the time the Company selects an Extension Period, the Company shall give the
holders of the Debentures and the Trustee written notice of its selection of
such Extension Period at least 2 Business Days before the earlier of (i) the
next succeeding Interest Payment Date; or (ii) the date the Company is
required to give notice of the record or payment date of such interest
payment to the Nasdaq National Market or other applicable self-regulatory
organization or to holders of the Debentures.

(c) The quarter in which any notice is given pursuant to paragraphs (a) or
(b) of this Section 4.2 shall be counted as one of the 20 quarters permitted
in the maximum Extension Period permitted under Section 4.1.

SECTION 4.3. LIMITATION ON TRANSACTIONS.

If (i) the Company shall exercise its right to defer payment of interest
as provided in Section 4.1; or (ii) there shall have occurred any Event of
Default, then (a) the Company shall not declare or pay any dividend on, make
any distributions with respect to, or redeem, purchase, acquire or make a
liquidation payment with respect to, any of its capital stock; (b) the
Company shall not make any payment of interest, principal or premium, if any,
or repay, repurchase or redeem any debt securities issued by the Company
which rank pari passu with or junior to the Debentures or make any guarantee
payments with respect to any guarantee by the Company of the debt securities
of any subsidiary of the Company if such guarantee ranks pari passu with or
junior in interest to the Debenture; provided, however, that notwithstanding
the foregoing the Company may make payments pursuant to its obligations under
the Preferred Securities Guarantee; and (c) the Company shall not redeem,
purchase or acquire less than all of the Outstanding Debentures or any of the
Preferred Securities.

ARTICLE V.
PARTICULAR COVENANTS OF THE COMPANY

SECTION 5.1. PAYMENT OF PRINCIPAL AND INTEREST.

The Company shall duly and punctually pay or cause to be paid the
principal of and interest on the Debentures at the time and place and in the
manner provided herein. Each such payment of the principal of and interest on
the Debentures shall relate only to the Debentures, shall not be combined
with any other payment of the principal of or interest on any other
obligation of the Company, and shall be clearly and unmistakably identified
as pertaining to the Debentures.

SECTION 5.2. MAINTENANCE OF AGENCY.

So long as any of the Debentures remain Outstanding, the Company shall
maintain an office or agency in the Borough of Manhattan, the City of New
York, and at such other location or locations as may be designated as
provided in this Section 5.2, where (i) Debentures may be presented for
payment; (ii) Debentures may be presented as hereinabove authorized for
registration of transfer and exchange; and (iii) notices and demands to or
upon the Company in respect of the Debentures and this Indenture may be given
or served, such designation to continue with respect to such office or agency
until the Company shall, by written notice signed by its President or a Vice
President and delivered to the Trustee, designate some other office or agency
for such purposes or any of them. If at any time the Company shall fail to
maintain any

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<PAGE>

such required office or agency or shall fail to furnish the Trustee with the
address thereof, such presentations, notices and demands may be made or
served at the Corporate Trust Office of the Trustee, and the Company hereby
appoints the Trustee as its agent to receive all such presentations, notices
and demands. The Company shall give the Trustee prompt written notice of any
such designation or rescission thereof.

SECTION 5.3. PAYING AGENTS.

(a) The Trustee shall initially act as the Paying Agent. If the Company
shall appoint one or more Paying Agents for the Debentures, other than the
Trustee, the Company shall cause each such Paying Agent to execute and
deliver to the Trustee an instrument in which such agent shall agree with the
Trustee, subject to the provisions of this Section 5.3:

(i) that it shall hold all sums held by it as such agent for the payment
of the principal of or interest on the Debentures (whether such sums have
been paid to it by the Company or by any other obligor of such Debentures) in
trust for the benefit of the Persons entitled thereto;

(ii) that it shall give the Trustee notice of any failure by the Company
(or by any other obligor of such Debentures) to make any payment of the
principal of or interest on the Debentures when the same shall be due and
payable;

(iii) that it shall, at any time during the continuance of any failure
referred to in the preceding paragraph (a)(ii) above, upon the written
request of the Trustee, forthwith pay to the Trustee all sums so held in
trust by such Paying Agent; and

(iv) that it shall perform all other duties of Paying Agent as set forth
in this Indenture.

(b) If the Company shall act as its own Paying Agent with respect to the
Debentures, it shall on or before each due date of the principal of or
interest on such Debentures, set aside, segregate and hold in trust for the
benefit of the Persons entitled thereto a sum sufficient to pay such
principal or interest so becoming due on Debentures until such sums shall be
paid to such Persons or otherwise disposed of as herein provided and shall
promptly notify the Trustee of such action, or any failure (by it or any
other obligor on such Debentures) to take such action. Whenever the Company
shall have one or more Paying Agents for the Debentures, it shall, prior to
each due date of the principal of or interest on any Debentures, deposit with
the Paying Agent a sum sufficient to pay the principal or interest so
becoming due, such sum to be held in trust for the benefit of the Persons
entitled to such principal or interest, and (unless such Paying Agent is the
Trustee) the Company shall promptly notify the Trustee of this action or
failure so to act.

(c) Notwithstanding anything in this Section 5.3 to the contrary, (i) the
agreement to hold sums in trust as provided in this Section 5.3 is subject to
the provisions of Section 13.3 and 13.4; and (ii) the Company may at any
time, for the purpose of obtaining the satisfaction and discharge of this
Indenture or for any other purpose, pay, or direct any Paying Agent to pay,
to the Trustee all sums held in trust by the Company or such Paying Agent,
such sums to be held by the Trustee upon the same terms and conditions as
those upon which such sums were held by the Company

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or such Paying Agent; and, upon such payment by any Paying Agent to the
Trustee, such Paying Agent shall be released from all further liability with
respect to such money.

SECTION 5.4. APPOINTMENT TO FILL VACANCY IN OFFICE OF THE TRUSTEE.

The Company, whenever necessary to avoid or fill a vacancy in the office
of Trustee, shall appoint, in the manner provided in Section 9.11, a Trustee,
so that there shall at all times be a Trustee hereunder.

SECTION 5.5. COMPLIANCE WITH CONSOLIDATION PROVISIONS.

The Company shall not, while any of the Debentures remain Outstanding,
consolidate with, or merge into, or merge into itself, or sell or convey all
or substantially all of its property to any other company unless the
provisions of Article XII hereof are complied with.

SECTION 5.6. LIMITATION ON TRANSACTIONS.

If Debentures are issued to the Trust or a trustee of the Trust in
connection with the issuance of Trust Securities by the Trust and (i) there
shall have occurred any event that would constitute an Event of Default; (ii)
the Company shall be in default with respect to its payment of any
obligations under the Preferred Securities Guarantee relating to the Trust;
or (iii) if the Company shall have given notice of its election to defer
payments of interest on such Debentures by extending the interest payment
period as provided in this Indenture and such Extension Period, or any
extension thereof, then (a) the Company shall not declare or pay any dividend
on, make any distributions with respect to, or redeem, purchase, acquire or
make a liquidation payment with respect to, any of its capital stock; (b) the
Company shall not make any payment of principal, interest or premium, if
any, or repay, repurchase or redeem any debt securities issued by the Company
which rank pari passu with or junior to the Debentures; provided, however,
that the Company may make payments pursuant to its obligations under the
Preferred Securities Guarantee; and (c) the Company shall not redeem,
purchase or acquire less than all of the Outstanding Debentures or any of the
Preferred Securities.

SECTION 5.7. COVENANTS AS TO THE TRUST.

For so long as the Trust Securities of the Trust remain outstanding, the
Company shall (i) maintain 100% direct or indirect ownership of the Common
Securities of the Trust; provided, however, that any permitted successor of
the Company under this Indenture may succeed to the Company's ownership of
the Common Securities; (ii) not voluntarily terminate, wind up or liquidate
the Trust, except upon prior approval of the Federal Reserve if then so
required under applicable capital guidelines or policies of the Federal
Reserve; (iii) use its reasonable efforts to cause the Trust (a) to remain a
business trust, except in connection with a distribution of Debentures, the
redemption of all of the Trust Securities of the Trust or certain mergers,
consolidations or amalgamations, each as permitted by the Trust Agreement;
and (b) to otherwise continue not to be treated as an association taxable as
a corporation or partnership for United States federal income tax purposes;
and (iv) use its reasonable efforts to cause each holder of Trust Securities
to be treated as owning an individual beneficial interest in the Debentures.
In

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connection with the distribution of the Debentures to the holders of the
Preferred Securities issued by the Trust upon a Dissolution Event, the
Company shall use its best efforts to list such Debentures on the Nasdaq
National Market or on such other exchange as the Preferred Securities are
then listed.

SECTION 5.8. COVENANTS AS TO PURCHASES.

Except upon the exercise by the Company of its right to redeem the
Debentures pursuant to Section 3.2 upon the occurrence and continuation of a
Special Event, the Company shall not purchase any Debentures, in whole or in
part, from the Trust prior to December 30, 2002.

ARTICLE VI.
THE DEBENTUREHOLDERS' LISTS AND REPORTS
BY THE COMPANY AND THE TRUSTEE

SECTION 6.1. THE COMPANY TO FURNISH THE TRUSTEE NAMES AND ADDRESSES OF THE
DEBENTUREHOLDERS.

The Company shall furnish or cause to be furnished to the Trustee (a) on a
quarterly basis on each regular record date (as described in Section 2.5) a
list, in such form as the Trustee may reasonably require, of the names and
addresses of the holders of the Debentures as of such regular record date,
provided that the Company shall not be obligated to furnish or cause to
furnish such list at any time that the list shall not differ in any respect
from the most recent list furnished to the Trustee by the Company (in the
event the Company fails to provide such list on a monthly basis, the Trustee
shall be entitled to rely on the most recent list provided by the Company);
and (b) at such other times as the Trustee may request in writing within 30
days after the receipt by the Company of any such request, a list of similar
form and content as of a date not more than 15 days prior to the time such
list is furnished; provided, however, that, in either case, no such list need
be furnished if the Trustee shall be the Debenture Registrar.

SECTION 6.2. PRESERVATION OF INFORMATION COMMUNICATIONS WITH THE
DEBENTUREHOLDERS.

(a) The Trustee shall preserve, in as current a form as is reasonably
practicable, all information as to the names and addresses of the holders of
Debentures contained in the most recent list furnished to it as provided in
Section 6.1 and as to the names and addresses of holders of Debentures
received by the Trustee in its capacity as Debenture Registrar for the
Debentures (if acting in such capacity).

(b) The Trustee may destroy any list furnished to it as provided in
Section 6.1 upon receipt of a new list so furnished.

(c) Debentureholders may communicate as provided in Section 312(b) of the
Trust Indenture Act with other Debentureholders with respect to their rights
under this Indenture or under the Debentures.

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SECTION 6.3. REPORTS BY THE COMPANY.

(a) The Company covenants and agrees to file with the Trustee, within 15
days after the Company is required to file the same with the Commission,
copies of the annual reports and of the information, documents and other
reports (or copies of such portions of any of the foregoing as the Commission
may from time to time by rules and regulations prescribe) that the Company
may be required to file with the Commission pursuant to Section 13 or Section
15(d) of the Exchange Act; or, if the Company is not required to file
information, documents or reports pursuant to either of such sections, then
to file with the Trustee and the Commission, in accordance with the rules and
regulations prescribed from time to time by the Commission, such of the
supplementary and periodic information, documents and reports that may be
required pursuant to Section 13 of the Exchange Act in respect of a security
listed and registered on a national securities exchange as may be prescribed
from time to time in such rules and regulations.

(b) The Company covenants and agrees to file with the Trustee and the
Commission, in accordance with the rules and regulations prescribed from to
time by the Commission, such additional information, documents and reports
with respect to compliance by the Company with the conditions and covenants
provided for in this Indenture as may be required from time to time by such
rules and regulations.

(c) The Company covenants and agrees to transmit by mail, first class
postage prepaid, or reputable overnight delivery service that provides for
evidence of receipt, to the Debentureholders, as their names and addresses
appear upon the Debenture Register, within 30 days after the filing thereof
with the Trustee, such summaries of any information, documents and reports
required to be filed by the Company pursuant to subsections (a) and (b) of
this Section 6.3 as may be required by rules and regulations prescribed from
time to time by the Commission.

SECTION 6.4. REPORTS BY THE TRUSTEE.

(a) On or before July 15 in each year in which any of the Debentures are
Outstanding, the Trustee shall transmit by mail, first class postage prepaid,
to the Debentureholders, as their names and addresses appear upon the
Debenture Register, a brief report dated as of the preceding May 15, if and
to the extent required under Section 313(a) of the Trust Indenture Act.

(b) The Trustee shall comply with Section 313(b) and 313(c) of the Trust
Indenture Act.

(c) A copy of each such report shall, at the time of such transmission to
Debentureholders, be filed by the Trustee with the Company, with each stock
exchange upon which any Debentures are listed (if so listed) and also with
the Commission. The Company agrees to notify the Trustee when any Debentures
become listed on any stock exchange.

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ARTICLE VII.
REMEDIES OF THE TRUSTEE AND DEBENTUREHOLDERS
ON EVENT OF DEFAULT

SECTION 7.1. EVENTS OF DEFAULT.

(a) Whenever used herein with respect to the Debentures, "Event of
Default" means any one or more of the following events that has occurred and
is continuing:

(i) the Company defaults in the payment of any installment of interest
upon any of the Debentures, as and when the same shall become due and
payable, and continuance of such default for a period of 30 days; provided,
however, that a valid extension of an interest payment period by the
Company in accordance with the terms of this Indenture shall not constitute
a default in the payment of interest for this purpose;

(ii) the Company defaults in the payment of the principal on the
Debentures as and when the same shall become due and payable whether at
maturity, upon redemption, by declaration or otherwise; provided, however,
that a valid extension of the maturity of such Debentures in accordance
with the terms of this Indenture shall not constitute a default in the
payment of principal;

(iii) the Company fails to observe or perform any other of its
covenants or agreements with respect to the Debentures for a period of 90
days after the date on which written notice of such failure, requiring the
same to be remedied and stating that such notice is a "Notice of Default"
hereunder, shall have been given to the Company by the Trustee, by
registered or certified mail, or to the Company and the Trustee by the
holders of at least 25% in principal amount of the Debentures at the time
Outstanding;

(iv) the Company pursuant to or within the meaning of any Bankruptcy
Law (i) commences a voluntary case; (ii) consents to the entry of an order
for relief against it in an involuntary case; (iii) consents to the
appointment of a Custodian of it or for all or substantially all of its
property; or (iv) makes a general assignment for the benefit of its
creditors;

(v) a court of competent jurisdiction enters an order under any
Bankruptcy Law that (i) is for relief against the Company in an involuntary
case; (ii) appoints a Custodian of the Company for all or substantially all
of its property; or (iii) orders the liquidation of the Company, and the
order or decree remains unstayed and in effect for 90 days; or

(vi) the Trust shall have voluntarily or involuntarily dissolved,
wound-up its business or otherwise terminated its existence except in
connection with (i) the distribution of Debentures to holders of Trust
Securities in liquidation of their interests in the Trust; (ii) the
redemption of all of the outstanding Trust Securities of the Trust; or
(iii) certain mergers, consolidations or amalgamations, each as permitted
by the Trust Agreement.

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(b) In each and every such case, unless the principal of all the
Debentures shall have already become due and payable, either the Trustee or
the holders of not less than 25% in aggregate principal amount of the
Debentures then Outstanding hereunder, by notice in writing to the Company
(and to the Trustee if given by such Debentureholders) may declare the
principal of all the Debentures to be due and payable immediately, and upon
any such declaration the same shall become and shall be immediately due and
payable, notwithstanding anything contained in this Indenture or in the
Debentures.

(c) At any time after the principal of the Debentures shall have been so
declared due and payable, and before any judgment or decree for the payment
of the moneys due shall have been obtained or entered as hereinafter
provided, the holders of a majority in aggregate principal amount of the
Debentures then Outstanding hereunder, by written notice to the Company and
the Trustee, may rescind and annul such declaration and its consequences if:
(i) the Company has paid or deposited with the Trustee a sum sufficient to
pay all matured installments of interest upon all the Debentures and the
principal of any and all Debentures that shall have become due otherwise than
by acceleration (with interest upon such principal, and upon overdue
installments of interest, at the rate per annum expressed in the Debentures
to the date of such payment or deposit) and the amount payable to the Trustee
under Section 9.7; and (ii) any and all Events of Default under this
Indenture, other than the nonpayment of principal on Debentures that shall
not have become due by their terms, shall have been remedied or waived as
provided in Section 7.6. No such rescission and annulment shall extend to or
shall affect any subsequent default or impair any right consequent thereon.

(d) In case the Trustee shall have proceeded to enforce any right with
respect to Debentures under this Indenture and such proceedings shall have
been discontinued or abandoned because of such rescission or annulment or for
any other reason or shall have been determined adversely to the Trustee, then
and in every such case the Company and the Trustee shall be restored
respectively to their former positions and rights hereunder, and all rights,
remedies and powers of the Company and the Trustee shall continue as though
no such proceedings had been taken.

SECTION 7.2. COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT BY THE
TRUSTEE.

(a) The Company covenants that (1) in case it shall default in the payment
of any installment of interest on any of the Debentures, and such default
shall have continued for a period of 90 Business Days; or (2) in case it
shall default in the payment of the principal of any of the Debentures when
the same shall have become due and payable, whether upon maturity of the
Debentures or upon redemption or upon declaration or otherwise, then, upon
demand of the Trustee, the Company shall pay to the Trustee, for the benefit
of the holders of the Debentures, the whole amount that then shall have been
become due and payable on all such Debentures for principal or interest, or
both, as the case may be, with interest upon the overdue principal and upon
overdue installments of interest at the rate per annum expressed in the
Debentures; and (if the Debentures are held by the Trust or a trustee of the
Trust, without duplication of any other amounts paid by the Trust or trustee
in respect thereof) upon overdue installments of interest at the rate per
annum expressed in the Debentures; and, in addition thereto, such further
amount as

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<PAGE>

shall be sufficient to cover the costs and expenses of collection, and the
amount payable to the Trustee under Section 9.7.

(b) If the Company shall fail to pay such amounts set forth in Section
7.2(a) forthwith upon such demand, the Trustee, in its own name and as
trustee of an express trust, shall be entitled and empowered to institute any
action or proceedings at law or in equity for the collection of the sums so
due and unpaid, and may prosecute any such action or proceeding to judgment
or final decree, and may enforce any such judgment or final decree against
the Company or other obligor upon the Debentures and collect the moneys
adjudged or decreed to be payable in the manner provided by law out of the
property of the Company or other obligor upon the Debentures, wherever
situated.

(c) In case of any receivership, insolvency, liquidation, bankruptcy,
reorganization, readjustment, arrangement, composition or judicial
proceedings affecting the Company or the creditors or property thereof, the
Trustee shall have power to intervene in such proceedings and take any action
therein that may be permitted by the court and shall (except as may be
otherwise provided by law) be entitled to file such proofs of claim and other
papers and documents as may be necessary or advisable in order to have the
claims of the Trustee and of the holders of the Debentures allowed for the
entire amount due and payable by the Company under this Indenture at the date
of institution of such proceedings and for any additional amount that may
become due and payable by the Company after such date, and to collect and
receive any moneys or other property payable or deliverable on any such
claim, and to distribute the same after the deduction of the amount payable
to the Trustee under Section 9.7; and any receiver, assignee or trustee in
bankruptcy or reorganization is hereby authorized by each of the holders of
the Debentures to make such payments to the Trustee, and, in the event that
the Trustee shall consent to the making of such payments directly to such
Debentureholders, to pay to the Trustee any amount due it under Section 9.7.

(d) All rights of action and of asserting claims under this Indenture, or
under any of the terms established with respect to the Debentures, may be
enforced by the Trustee without the possession of any of such Debentures, or
the production thereof at any trial or other proceeding relative thereto, and
any such suit or proceeding instituted by the Trustee shall be brought in its
own name as trustee of an express trust, and any recovery of judgment shall,
after provision for payment to the Trustee of any amounts due under Section
9.7, be for the ratable benefit of the holders of the Debentures. In case of
an Event of Default hereunder, the Trustee may in its discretion proceed to
protect and enforce the rights vested in it by this Indenture by such
appropriate judicial proceedings as the Trustee shall deem most effectual to
protect and enforce any of such rights, either at law or in equity or in
bankruptcy or otherwise, whether for the specific enforcement of any covenant
or agreement contained in this Indenture or in aid of the exercise of any
power granted in this Indenture, or to enforce any other legal or equitable
right vested in the Trustee by this Indenture or by law. Nothing contained
herein shall be deemed to authorize the Trustee to authorize or consent to or
accept or adopt on behalf of any Debentureholder any plan of reorganization,
arrangement, adjustment or composition affecting the Debentures or the rights
of any holder thereof or to authorize the Trustee to vote in respect of the
claim of any Debentureholder in any such proceeding.

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<PAGE>

SECTION 7.3. APPLICATION OF MONEYS COLLECTED.

Any moneys collected by the Trustee pursuant to this Article VII with
respect to the Debentures shall be applied in the following order, at the
date or dates fixed by the Trustee and, in case of the distribution of such
moneys on account of principal or interest, upon presentation of the
Debentures, and notation thereon of the payment, if only partially paid, and
upon surrender thereof if fully paid:

FIRST: To the payment of costs and expenses of collection and of all
amounts payable to the Trustee under Section 9.7;

SECOND: To the payment of all Senior Indebtedness if and to the
extent required by Article XVI; and

THIRD: To the payment of the amounts then due and unpaid upon the
Debentures for principal and interest, in respect of which or for the
benefit of which such money has been collected, ratably, without preference
or priority of any kind, according to the amounts due and payable on such
Debentures for principal and interest, respectively.

SECTION 7.4. LIMITATION ON SUITS.

(a) Except as provided in Section 15.13 hereof, no holder of any Debenture
shall have any right by virtue or by availing of any provision of this
Indenture to institute any suit, action or proceeding in equity or at law
upon or under or with respect to this Indenture or for the appointment of a
receiver or trustee, or for any other remedy hereunder, unless (i) such
holder previously shall have given to the Trustee written notice of an Event
of Default and of the continuance thereof with respect to the Debentures
specifying such Event of Default, as hereinbefore provided; (ii) the holders
of not less than 25% in aggregate principal amount of the Debentures then
Outstanding shall have made written request upon the Trustee to institute
such action, suit or proceeding in its own name as trustee hereunder; (iii)
such holder or holders shall have offered to the Trustee such reasonable
indemnity as it may require against the costs, expenses and liabilities to be
incurred therein or thereby; and (iv) the Trustee for 60 days after its
receipt of such notice, request and offer of indemnity shall have failed to
institute any such action, suit or proceeding and during such 60 day period,
the holders of a majority in principal amount of the Debentures do not give
the Trustee a direction inconsistent with the request.

(b) Notwithstanding anything contained herein to the contrary or any other
provisions of this Indenture, the right of any holder of the Debentures to
receive payment of the principal of and interest on the Debentures, as
therein provided, on or after the respective due dates expressed in such
Debenture (or in the case of redemption, on the redemption date), or to
institute suit for the enforcement of any such payment on or after such
respective dates or redemption date, shall not be impaired or affected
without the consent of such holder and by accepting a Debenture hereunder it
is expressly understood, intended and covenanted by the taker and holder of
every Debenture with every other such taker and holder and the Trustee that
no one or more holders of the Debentures shall have any right in any manner
whatsoever by virtue or by availing of any provision of this Indenture to
affect, disturb or prejudice the rights of the holders of any other of

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such Debentures, or to obtain or seek to obtain priority over or preference
to any other such holder, or to enforce any right under this Indenture,
except in the manner herein provided and for the equal, ratable and common
benefit of all holders of the Debentures. For the protection and enforcement
of the provisions of this Section 7.4, each and every Debentureholder and the
Trustee shall be entitled to such relief as can be given either at law or in
equity.

SECTION 7.5. RIGHTS AND REMEDIES CUMULATIVE; DELAY OR OMISSION NOT WAIVER.

(a) All powers and remedies given by this Article VII to the Trustee or to
the Debentureholders shall, to the extent permitted by law, be deemed
cumulative and not exclusive of any other powers and remedies available to
the Trustee or the holders of the Debentures, by judicial proceedings or
otherwise, to enforce the performance or observance of the covenants and
agreements contained in this Indenture or otherwise established with respect
to such Debentures.

(b) No delay or omission of the Trustee or of any holder of any of the
Debentures to exercise any right or power accruing upon any Event of Default
occurring and continuing as aforesaid shall impair any such right or power,
or shall be construed to be a waiver of any such default or an acquiescence
therein; and, subject to the provisions of Section 7.4, every power and
remedy given by this Article VII or by law to the Trustee or the
Debentureholders may be exercised from time to time, and as often as shall be
deemed expedient, by the Trustee or by the Debentureholders.

SECTION 7.6. CONTROL BY THE DEBENTUREHOLDERS.

The holders of a majority in aggregate principal amount of the Debentures
at the time Outstanding, determined in accordance with Section 10.4, shall
have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee, or exercising any trust
or power conferred on the Trustee; provided, however, that such direction
shall not be in conflict with any rule of law or with this Indenture. Subject
to the provisions of Section 9.1, the Trustee shall have the right to decline
to follow any such direction if the Trustee in good faith shall, by a
Responsible Officer or Officers of the Trustee, determine that the proceeding
so directed would involve the Trustee in personal liability. The holders of a
majority in aggregate principal amount of the Debentures at the time
Outstanding affected thereby, determined in accordance with Section 10.4, may
on behalf of the holders of all of the Debentures waive any past default in
the performance of any of the covenants contained herein and its
consequences, except (i) a default in the payment of the principal of or
interest on any of the Debentures as and when the same shall become due by
the terms of such Debentures otherwise than by acceleration (unless such
default has been cured and a sum sufficient to pay all matured installments
of principal and interest has been deposited with the Trustee (in accordance
with Section 7.1(c)); (ii) a default in the covenants contained in Section
5.6; or (iii) in respect of a covenant or provision hereof which cannot be
modified or amended without the consent of the holder of each Outstanding
Debenture affected; provided, however, that if the Debentures are held by the
Trust or a trustee of the Trust, such waiver or modification to such waiver
shall not be effective until the holders of a majority in liquidation
preference of Trust Securities of the

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Trust shall have consented to such waiver or modification to such waiver;
provided further, that if the Debentures are held by the Trust or a trustee
of the Trust, and if the consent of the holder of each Outstanding Debenture
is required, such waiver shall not be effective until each holder of the
Trust Securities of the Trust shall have consented to such waiver. Upon any
such waiver, the default covered thereby shall be deemed to be cured for all
purposes of this Indenture and the Company, the Trustee and the holders of
the Debentures shall be restored to their former positions and rights
hereunder, respectively; but no such waiver shall extend to any subsequent or
other default or impair any right consequent thereon.

SECTION 7.7. UNDERTAKING TO PAY COSTS.

All parties to this Indenture agree, and each holder of any Debentures by
such holder's acceptance thereof shall be deemed to have agreed, that any
court may in its discretion require, in any suit for the enforcement of any
right or remedy under this Indenture, or in any suit against the Trustee for
any action taken or omitted by it as the Trustee, the filing by any party
litigant in such suit of an undertaking to pay the costs of such suit, and
that such court may in its discretion assess reasonable costs, including
reasonable attorneys' fees, against any party litigant in such suit, having
due regard to the merits and good faith of the claims or defenses made by
such party litigant; but the provisions of this Section 7.7 shall not apply
to any suit instituted by the Trustee, to any suit instituted by any
Debentureholder, or group of the Debentureholders holding more than 10% in
aggregate principal amount of the Outstanding Debentures, or to any suit
instituted by any Debentureholder for the enforcement of the payment of the
principal of or interest on the Debentures, on or after the respective due
dates expressed in such Debenture or established pursuant to this Indenture.

ARTICLE VIII.
FORM OF THE DEBENTURE AND ORIGINAL ISSUE

SECTION 8.1. FORM OF DEBENTURE.

The Debenture and the Trustee's Certificate of Authentication to be
endorsed thereon are to be substantially in the forms contained as Exhibit A
attached hereto and incorporated herein by reference.

SECTION 8.2. ORIGINAL ISSUE OF THE DEBENTURES.

Debentures in the aggregate principal amount of $19,072,170 may, upon
execution of this Indenture, be executed by the Company and delivered to the
Trustee for authentication. If the Underwriters exercise their Option and
there is an Option Closing Date (as such terms are defined in Underwriting
Agreement, dated ______________, 1997, by and among the Company, the Trust
and Stifel, Nicolaus & Company, Incorporated, for itself and as
representative of the Underwriters named therein) then, on such Option
Closing Date, Debentures in the additional aggregate principal amount of
$2,860,820 may be executed by the Company and delivered to the Trustee for
authentication. In either such event, the Trustee shall thereupon
authenticate and deliver said Debentures to or upon the written order of the
Company, signed by its Chairman, its

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Vice Chairman, its President, or any Vice President and its Treasurer or an
Assistant Treasurer, without any further action by the Company.

ARTICLE IX. CONCERNING THE TRUSTEE

SECTION 9.1. CERTAIN DUTIES AND RESPONSIBILITIES OF THE TRUSTEE.

(a) The Trustee, prior to the occurrence of an Event of Default and
after the curing of all Events of Default that may have occurred, shall
undertake to perform with respect to the Debentures such duties and only such
duties as are specifically set forth in this Indenture, and no implied
covenants shall be read into this Indenture against the Trustee. In case an
Event of Default has occurred that has not been cured or waived, the Trustee
shall exercise such of the rights and powers vested in it by this Indenture,
and use the same degree of care and skill in its exercise, as a prudent man
would exercise or use under the circumstances in the conduct of his own
affairs.

(b) No provision of this Indenture shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent
failure to act, or its own willful misconduct, except that:

(1) prior to the occurrence of an Event of Default and after the
curing or waiving of all such Events of Default that may have occurred:

(i) the duties and obligations of the Trustee shall with respect
to the Debentures be determined solely by the express provisions of
this Indenture, and the Trustee shall not be liable with respect to
the Debentures except for the performance of such duties and
obligations as are specifically set forth in this Indenture, and no
implied covenants or obligations shall be read into this Indenture
against the Trustee; and

(ii) in the absence of bad faith on the part of the Trustee, the
Trustee may with respect to the Debentures conclusively rely, as to
the truth of the statements and the correctness of the opinions
expressed therein, upon any certificates or opinions furnished to the
Trustee and conforming to the requirements of this Indenture; but in
the case of any such certificates or opinions that by any provision
hereof are specifically required to be furnished to the Trustee, the
Trustee shall be under a duty to examine the same to determine
whether or not they conform to the requirements of this Indenture;

(2) the Trustee shall not be liable for any error of judgment made in
good faith by a Responsible Officer or Responsible Officers of the Trustee,
unless it shall be proved that the Trustee was negligent in ascertaining
the pertinent facts;

(3) the Trustee shall not be liable with respect to any action taken
or omitted to be taken by it in good faith in accordance with the direction
of the holders of not less than a majority in principal amount of the
Debentures at the time Outstanding relating to the time, method and place
of conducting any proceeding for any remedy available to the Trustee, or

<PAGE>

exercising any trust or power conferred upon the Trustee under this
Indenture with respect to the Debentures; and

(4) none of the provisions contained in this Indenture shall require
the Trustee to expend or risk its own funds or otherwise incur personal
financial liability in the performance of any of its duties or in the
exercise of any of its rights or powers, if there is reasonable ground for
believing that the repayment of such funds or liability is not reasonably
assured to it under the terms of this Indenture or adequate indemnity
against such risk is not reasonably assured to it.

SECTION 9.2. NOTICE OF DEFAULTS.

Within 90 days after actual knowledge by a Responsible Officer of the
Trustee of the occurrence of any default hereunder with respect to the
Debentures, the Trustee shall transmit by mail to all holders of the
Debentures, as their names and addresses appear in the Debenture Register,
notice of such default, unless such default shall have been cured or waived;
provided, however, that, except in the case of a default in the payment of
the principal or interest (including any Additional Payments) on any
Debenture, the Trustee shall be protected in withholding such notice if and
so long as the board of directors, the executive committee or a trust
committee of the directors and/or Responsible Officers of the Trustee
determines in good faith that the withholding of such notice is in the
interests of the holders of such Debentures; and provided, further, that in
the case of any default of the character specified in section 7.1(a)(iii), no
such notice to holders of Debentures need be sent until at least 30 days
after the occurrence thereof. For the purposes of this Section 9.2, the term
"default" means any event which is, or after notice or lapse of time or both,
would become, an Event of Default with respect to the Debentures.

SECTION 9.3. CERTAIN RIGHTS OF THE TRUSTEE.

Except as otherwise provided in Section 9.1:

(a) The Trustee may rely and shall be protected in acting or refraining from
acting upon any resolution, certificate, statement, instrument, opinion, report,
notice, request, consent, order, approval, bond, security or other paper or
document believed by it to be genuine and to have been signed or presented by
the proper party or parties;

(b) Any request, direction, order or demand of the Company mentioned herein
shall be sufficiently evidenced by a Board Resolution or an instrument signed in
the name of the Company by the President or any Vice President and by the
Secretary or an Assistant Secretary or the Treasurer or an Assistant Treasurer
thereof (unless other evidence in respect thereof is specifically prescribed
herein);

(c) The Trustee shall not be deemed to have knowledge of a default or an
Event of Default, other than an Event of Default specified in Section 7.1(a)(i)
or (ii), unless and until it receives written notification of such Event of
Default from the Company or by holders of at least 25% of the aggregate
principal amount of the Debentures at the time Outstanding (determined as
provided in Section 10.4);

<PAGE>

(d) The Trustee may consult with counsel and the written advice of such
counsel or any Opinion of Counsel shall be full and complete authorization and
protection in respect of any action taken or suffered or omitted hereunder in
good faith and in reliance thereon;

(e) The Trustee shall be under no obligation to exercise any of the rights or
powers vested in it by this Indenture at the request, order or direction of any
of the Debentureholders, pursuant to the provisions of this Indenture, unless
such Debentureholders shall have offered to the Trustee reasonable security or
indemnity against the costs, expenses and liabilities that may be incurred
therein or thereby; nothing contained herein shall, however, relieve the Trustee
of the obligation, upon the occurrence of an Event of Default (that has not been
cured or waived) to exercise with respect to the Debentures such of the rights
and powers vested in it by this Indenture, and to use the same degree of care
and skill in its exercise, as a prudent man would exercise or use under the
circumstances in the conduct of his own affairs;

(f) The Trustee shall not be liable for any action taken or omitted to be
taken by it in good faith and believed by it to be authorized or within the
discretion or rights or powers conferred upon it by this Indenture;

(g) The Trustee shall not be bound to make any investigation into the facts
or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, consent, order, approval, bond, security, or
other papers or documents, unless requested in writing so to do by the holders
of not less than a majority in principal amount of the Outstanding Debentures
(determined as provided in Section 10.4); provided, however, that if the payment
within a reasonable time to the Trustee of the costs, expenses or liabilities
likely to be incurred by it in the making of such investigation is, in the
opinion of the Trustee, not reasonably assured to the Trustee by the security
afforded to it by the terms of this Indenture, the Trustee may require
reasonable indemnity against such costs, expenses or liabilities as a condition
to so proceeding, and the reasonable expense of every such examination shall be
paid by the Company or, if paid by the Trustee, shall be repaid by the Company
upon demand; and

(h) The Trustee may execute any of the trusts or powers hereunder or perform
any duties hereunder either directly or by or through agents or attorneys and
the Trustee shall not be responsible for any misconduct or negligence on the
part of any agent or attorney appointed with due care by it hereunder.

SECTION 9.4. THE TRUSTEE NOT RESPONSIBLE FOR RECITALS, ETC.

(a) The Recitals contained herein and in the Debentures shall be taken as the
statements of the Company, and the Trustee assumes no responsibility for the
correctness of the same.

(b) The Trustee makes no representations as to the validity or sufficiency of
this Indenture or of the Debentures.

(c) The Trustee shall not be accountable for the use or application by the
Company of any of the Debentures or of the proceeds of such Debentures, or for
the use or application of any

<PAGE>

moneys paid over by the Trustee in accordance with any provision of this
Indenture, or for the use or application of any moneys received by any Paying
Agent other than the Trustee.

SECTION 9.5. MAY HOLD THE DEBENTURES.

The Trustee or any Paying Agent or Debenture Registrar for the Debentures, in
its individual or any other capacity, may become the owner or pledgee of the
Debentures with the same rights it would have if it were not Trustee, Paying
Agent or Debenture Registrar.

SECTION 9.6. MONEYS HELD IN TRUST.

Subject to the provisions of Section 13.5, all moneys received by the Trustee
shall, until used or applied as herein provided, be held in trust for the
purposes for which they were received, but need not be segregated from other
funds except to the extent required by law. The Trustee shall be under no
liability for interest on any moneys received by it hereunder except such as it
may agree with the Company to pay thereon.

SECTION 9.7. COMPENSATION AND REIMBURSEMENT.

(a) The Company covenants and agrees to pay to the Trustee, and the Trustee
shall be entitled to, such reasonable compensation (which shall not be limited
by any provision of law in regard to the compensation of a trustee of an express
trust), as the Company and the Trustee may from time to time agree in writing,
for all services rendered by it in the execution of the trusts hereby created
and in the exercise and performance of any of the powers and duties hereunder of
the Trustee, and, except as otherwise expressly provided herein, the Company
shall pay or reimburse the Trustee upon its request for all reasonable expenses,
disbursements and advances incurred or made by the Trustee in accordance with
any of the provisions of this Indenture (including the reasonable compensation
and the expenses and disbursements of its counsel and of all Persons not
regularly in its employ) except any such expense, disbursement or advance as may
arise from its negligence or bad faith. The Company also covenants to indemnify
the Trustee (and its officers, agents, directors and employees) for, and to hold
it harmless against, any loss, liability or expense incurred without negligence
or bad faith on the part of the Trustee and arising out of or in connection with
the acceptance or administration of this trust, including the costs and expenses
of defending itself against any claim of liability in the premises.

(b) The obligations of the Company under this Section 9.7 to compensate and
indemnify the Trustee and to pay or reimburse the Trustee for expenses,
disbursements and advances shall constitute additional indebtedness hereunder.
Such additional indebtedness shall be secured by a lien prior to that of the
Debentures upon all property and funds held or collected by the Trustee as such,
except funds held in trust for the benefit of the holders of particular
Debentures.

SECTION 9.8. RELIANCE ON OFFICERS' CERTIFICATE.

Except as otherwise provided in Section 9.1, whenever in the administration
of the provisions of this Indenture the Trustee shall deem it necessary or
desirable that a matter be proved or established prior to taking or suffering or
omitting to take any action hereunder, such matter

<PAGE>

(unless other evidence in respect thereof be herein specifically prescribed)
may, in the absence of negligence or bad faith on the part of the Trustee, be
deemed to be conclusively proved and established by an Officers' Certificate
delivered to the Trustee and such certificate, in the absence of negligence
or bad faith on the part of the Trustee, shall be full warrant to the Trustee
for any action taken, suffered or omitted to be taken by it under the
provisions of this Indenture upon the faith thereof.

SECTION 9.9. DISQUALIFICATION; CONFLICTING INTERESTS.

If the Trustee has or shall acquire any "conflicting interest" within the
meaning of Section 310(b) of the Trust Indenture Act, the Trustee and the
Company shall in all respects comply with the provisions of Section 310(b) of
the Trust Indenture Act.

SECTION 9.10. CORPORATE TRUSTEE REQUIRED; ELIGIBILITY.

There shall at all times be a Trustee with respect to the Debentures issued
hereunder which shall at all times be a corporation organized and doing business
under the laws of the United States or any state or territory thereof or of the
District of Columbia, or a corporation or other Person permitted to act as
trustee by the Commission, authorized under such laws to exercise corporate
trust powers, having a combined capital and surplus of at least $50,000,000, and
subject to supervision or examination by federal, state, territorial, or
District of Columbia authority. If such corporation publishes reports of
condition at least annually, pursuant to law or to the requirements of the
aforesaid supervising or examining authority, then for the purposes of this
Section 9.10, the combined capital and surplus of such corporation shall be
deemed to be its combined capital and surplus as set forth in its most recent
report of condition so published. The Company may not, nor may any Person
directly or indirectly controlling, controlled by, or under common control with
the Company, serve as Trustee. In case at any time the Trustee shall cease to be
eligible in accordance with the provisions of this Section 9.10, the Trustee
shall resign immediately in the manner and with the effect specified in
Section 9.11.

SECTION 9.11. RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR.

(a) The Trustee or any successor hereafter appointed, may at any time resign
by giving written notice thereof to the Company and by transmitting notice of
resignation by mail, first class postage prepaid, to the Debentureholders, as
their names and addresses appear upon the Debenture Register. Upon receiving
such notice of resignation, the Company shall promptly appoint a successor
trustee with respect to Debentures by written instrument, in duplicate, executed
by order of the Board of Directors, one copy of which instrument shall be
delivered to the resigning Trustee and one copy to the successor trustee. If no
successor trustee shall have been so appointed and have accepted appointment
within 30 days after the mailing of such notice of resignation, the resigning
Trustee may petition any court of competent jurisdiction for the appointment of
a successor trustee with respect to Debentures, or any Debentureholder who has
been a bona fide holder of a Debenture or Debentures for at least six months
may, subject to the provisions of Section 9.10, on behalf of himself and all
others similarly situated, petition any such court for the appointment of a
successor trustee. Such court may thereupon after such notice, if any, as it may
deem proper and prescribe, appoint a successor trustee.

<PAGE>

(b) In case at any time any one of the following shall occur:

(i) the Trustee shall fail to comply with the provisions of Section
9.9 after written request therefor by the Company or by any Debentureholder
who has been a bona fide holder of a Debenture or Debentures for at least
six months; or

(ii) the Trustee shall cease to be eligible in accordance with the
provisions of Section 9.10 and shall fail to resign after written request
therefor by the Company or by any such Debentureholder; or

(iii) the Trustee shall become incapable of acting, or shall be
adjudged a bankrupt or insolvent, or commence a voluntary bankruptcy
proceeding, or a receiver of the Trustee or of its property shall be
appointed or consented to, or any public officer shall take charge or
control of the Trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation;

then, in any such case, the Company may remove the Trustee with respect to all
Debentures and appoint a successor trustee by written instrument, in duplicate,
executed by order of the Board of Directors, one copy of which instrument shall
be delivered to the Trustee so removed and one copy to the successor trustee,
or, subject to the provisions of Section 9.10, unless the Trustee's duty to
resign is stayed as provided herein, any Debentureholder who has been a bona
fide holder of a Debenture or Debentures for at least six months may, on behalf
of that holder and all others similarly situated, petition any court of
competent jurisdiction for the removal of the Trustee and the appointment of a
successor trustee. Such court may thereupon after such notice, if any, as it may
deem proper and prescribe, remove the Trustee and appoint a successor trustee.

(c) The holders of a majority in aggregate principal amount of the Debentures
at the time Outstanding may at any time remove the Trustee by so notifying the
Trustee and the Company and may appoint a successor Trustee with the consent of
the Company.

(d) Any resignation or removal of the Trustee and appointment of a successor
trustee with respect to the Debentures pursuant to any of the provisions of this
Section 9.11 shall become effective upon acceptance of appointment by the
successor trustee as provided in Section 9.12.

SECTION 9.12. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR.

(a) In case of the appointment hereunder of a successor trustee with respect
to the Debentures, every successor trustee so appointed shall execute,
acknowledge and deliver to the Company and to the retiring Trustee an instrument
accepting such appointment, and thereupon the resignation or removal of the
retiring Trustee shall become effective and such successor trustee, without any
further act, deed or conveyance, shall become vested with all the rights,
powers, trusts and duties of the retiring Trustee; but, on the request of the
Company or the successor trustee, such retiring Trustee shall, upon payment of
its charges, execute and deliver an instrument transferring to such successor
trustee all the rights, powers, and trusts of the retiring Trustee and shall
duly assign, transfer and deliver to such successor trustee all property and
money held by such retiring Trustee hereunder.

<PAGE>

(b) Upon request of any successor trustee, the Company shall execute any and
all instruments for more fully and certainly vesting in and confirming to such
successor trustee all such rights, powers and trusts referred to in paragraph
(a) of this Section 9.12.

(c) No successor trustee shall accept its appointment unless at the time of
such acceptance such successor trustee shall be qualified and eligible under
this Article IX.

(d) Upon acceptance of appointment by a successor trustee as provided in this
Section 9.12, the Company shall transmit notice of the succession of such
trustee hereunder by mail, first class postage prepaid, to the Debentureholders,
as their names and addresses appear upon the Debenture Register. If the Company
fails to transmit such notice within ten days after acceptance of appointment by
the successor trustee, the successor trustee shall cause such notice to be
transmitted at the expense of the Company.

SECTION 9.13. MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO BUSINESS.

Any corporation into which the Trustee may be merged or converted or with
which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to the corporate trust business of the Trustee, shall be
the successor of the Trustee hereunder, provided that such corporation shall be
qualified under the provisions of Section 9.9 and eligible under the provisions
of Section 9.10, without the execution or filing of any paper or any further act
on the part of any of the parties hereto, anything herein to the contrary
notwithstanding. In case any Debentures shall have been authenticated, but not
delivered, by the Trustee then in office, any successor by merger, conversion or
consolidation to such authenticating Trustee may adopt such authentication and
deliver the Debentures so authenticated with the same effect as if such
successor Trustee had itself authenticated such Debentures.

SECTION 9.14. PREFERENTIAL COLLECTION OF CLAIMS AGAINST THE COMPANY.

The Trustee shall comply with Section 311(a) of the Trust Indenture Act,
excluding any creditor relationship described in Section 311(b) of the Trust
Indenture Act. A Trustee who has resigned or been removed shall be subject to
Section 311(a) of the Trust Indenture Act to the extent included therein.

ARTICLE X.

CONCERNING THE DEBENTUREHOLDERS

SECTION 10.1. EVIDENCE OF ACTION BY THE HOLDERS.

(a) Whenever in this Indenture it is provided that the holders of a majority
or specified percentage in aggregate principal amount of the Debentures may take
any action (including the making of any demand or request, the giving of any
notice, consent or waiver or the taking of any other action), the fact that at
the time of taking any such action the holders of such majority

<PAGE>

or specified percentage have joined therein may be evidenced by any
instrument or any number of instruments of similar tenor executed by such
holders of Debentures in Person or by agent or proxy appointed in writing.

(b) If the Company shall solicit from the Debentureholders any request,
demand, authorization, direction, notice, consent, waiver or other action, the
Company may, at its option, as evidenced by an Officers' Certificate, fix in
advance a record date for the determination of Debentureholders entitled to give
such request, demand, authorization, direction, notice, consent, waiver or other
action, but the Company shall have no obligation to do so. If such a record date
is fixed, such request, demand, authorization, direction, notice, consent,
waiver or other action may be given before or after the record date, but only
the Debentureholders of record at the close of business on the record date shall
be deemed to be Debentureholders for the purposes of determining whether
Debentureholders of the requisite proportion of Outstanding Debentures have
authorized or agreed or consented to such request, demand, authorization,
direction, notice, consent, waiver or other action, and for that purpose the
Outstanding Debentures shall be computed as of the record date; provided,
however, that no such authorization, agreement or consent by such
Debentureholders on the record date shall be deemed effective unless it shall
become effective pursuant to the provisions of this Indenture not later than 6
months after the record date.

SECTION 10.2. PROOF OF EXECUTION BY THE DEBENTUREHOLDERS.

Subject to the provisions of Section 9.1, proof of the execution of any
instrument by a Debentureholder (such proof shall not require notarization) or
such Debentureholder's agent or proxy and proof of the holding by any Person of
any of the Debentures shall be sufficient if made in the following manner:

(a) The fact and date of the execution by any such Person of any instrument
may be proved in any reasonable manner acceptable to the Trustee.

(b) The ownership of Debentures shall be proved by the Debenture Register of
such Debentures or by a certificate of the Debenture Registrar thereof.

(c) The Trustee may require such additional proof of any matter referred to
in this Section 10.2 as it shall deem necessary.

SECTION 10.3. WHO MAY BE DEEMED OWNERS.

Prior to the due presentment for registration of transfer of any Debenture,
the Company, the Trustee, any Paying Agent, any Authenticating Agent and any
Debenture Registrar may deem and treat the Person in whose name such Debenture
shall be registered upon the books of the Company as the absolute owner of such
Debenture (whether or not such Debenture shall be overdue and notwithstanding
any notice of ownership or writing thereon made by anyone other than the
Debenture Registrar) for the purpose of receiving payment of or on account of
the principal of and interest on such Debenture (subject to Section 2.3) and for
all other purposes;

<PAGE>

and neither the Company nor the Trustee nor any Paying Agent nor any
Authenticating Agent nor any Debenture Registrar shall be affected by any
notice to the contrary.

SECTION 10.4. CERTAIN DEBENTURES OWNED BY COMPANY DISREGARDED.

In determining whether the holders of the requisite aggregate principal
amount of the Debentures have concurred in any direction, consent or waiver
under this Indenture, the Debentures that are owned by the Company or any other
obligor on the Debentures or by any Person directly or indirectly controlling or
controlled by or under common control with the Company or any other obligor on
the Debentures shall be disregarded and deemed not to be Outstanding for the
purpose of any such determination, except that (i) for the purpose of
determining whether the Trustee shall be protected in relying on any such
direction, consent or waiver, only Debentures that the Trustee actually knows
are so owned shall be so disregarded; and (ii) for purposes of this Section
10.4, the Trust shall be deemed not to be controlled by the Company. The
Debentures so owned that have been pledged in good faith may be regarded as
Outstanding for the purposes of this Section 10.4, if the pledgee shall
establish to the satisfaction of the Trustee the pledgee's right so to act with
respect to such Debentures and that the pledgee is not a Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with the Company or any such other obligor. In case of a dispute as to
such right, any decision by the Trustee taken upon the advice of counsel shall
be full protection to the Trustee.

SECTION 10.5. ACTIONS BINDING ON THE FUTURE DEBENTUREHOLDERS.

At any time prior to (but not after) the evidencing to the Trustee, as
provided in Section 10.1, of the taking of any action by the holders of the
majority or percentage in aggregate principal amount of the Debentures specified
in this Indenture in connection with such action, any holder of a Debenture that
is shown by the evidence to be included in the Debentures the holders of which
have consented to such action may, by filing written notice with the Trustee,
and upon proof of holding as provided in Section 10.2, revoke such action so far
as concerns such Debenture. Except as aforesaid any such action taken by the
holder of any Debenture shall be conclusive and binding upon such holder and
upon all future holders and owners of such Debenture, and of any Debenture
issued in exchange therefor, on registration of transfer thereof or in place
thereof, irrespective of whether or not any notation in regard thereto is made
upon such Debenture. Any action taken by the holders of the majority or
percentage in aggregate principal amount of the Debentures specified in this
Indenture in connection with such action shall be conclusively binding upon the
Company, the Trustee and the holders of all the Debentures.

ARTICLE XI.
SUPPLEMENTAL INDENTURES

SECTION 11.1. SUPPLEMENTAL INDENTURES WITHOUT THE CONSENT OF THE
DEBENTUREHOLDERS.

In addition to any supplemental indenture otherwise authorized by this
Indenture, the Company and the Trustee may from time to time and at any time
enter into an indenture or

<PAGE>

indentures supplemental hereto (which shall conform to the provisions of the
Trust Indenture Act as then in effect), without the consent of the
Debentureholders, for one or more of the following purposes:

(a) to cure any ambiguity, defect, or inconsistency herein, or in the
Debentures;

(b) to provide for uncertificated Debentures in addition to or in place of
certificated Debentures;

(c) to add to the covenants of the Company for the benefit of the holders of
all or any of the Debentures or to surrender any right or power herein conferred
upon the Company;

(d) to make any change that does not adversely affect the rights of any
Debentureholder in any material respect;

(e) to qualify or maintain the qualification of this Indenture under the
Trust Indenture Act; or

(f) to evidence a consolidation or merger involving the Company as permitted
under Section 12.1.

The Trustee is hereby authorized to join with the Company in the execution of
any such supplemental indenture, and to make any further appropriate agreements
and stipulations that may be therein contained, but the Trustee shall not be
obligated to enter into any such supplemental indenture that affects the
Trustee's own rights, duties or immunities under this Indenture or otherwise.
Any supplemental indenture authorized by the provisions of this Section 11.1 may
be executed by the Company and the Trustee without the consent of the holders of
any of the Debentures at the time Outstanding, notwithstanding any of the
provisions of Section 11.2.

SECTION 11.2. SUPPLEMENTAL INDENTURES WITH CONSENT OF THE DEBENTUREHOLDERS.

With the consent (evidenced as provided in Section 10.1) of the holders of
not less than a majority in aggregate principal amount of the Debentures at the
time Outstanding, the Company, when authorized by Board Resolutions, and the
Trustee may from time to time and at any time enter into an indenture or
indentures supplemental hereto (which shall conform to the provisions of the
Trust Indenture Act as then in effect) for the purpose of adding any provisions
to or changing in any manner or eliminating any of the provisions of this
Indenture or of any supplemental indenture or of modifying in any manner not
covered by Section 11.1 the rights of the holders of the Debentures under this
Indenture; provided, however, that no such supplemental indenture shall without
the consent of the holders of each Debenture then Outstanding and affected
thereby, (i) extend the fixed maturity of any Debentures, reduce the principal
amount thereof, or reduce the rate or extend the time of payment of interest
thereon; or (ii) reduce the aforesaid percentage of Debentures, the holders of
which are required to consent to any such supplemental

<PAGE>

indenture; provided further, that if the Debentures are held by the Trust or
a trustee of the Trust, such supplemental indenture shall not be effective
until the holders of a majority in liquidation preference of Trust Securities
of the Trust shall have consented to such supplemental indenture; provided
further, that if the Debentures are held by the Trust or a trustee of the
Trust and if the consent of the holder of each Outstanding Debenture is
required, such supplemental indenture shall not be effective until each
holder of the Trust Securities of the Trust shall have consented to such
supplemental indenture. It shall not be necessary for the consent of the
Debentureholders affected thereby under this Section 11.2 to approve the
particular form of any proposed supplemental indenture, but it shall be
sufficient if such consent shall approve the substance thereof.

SECTION 11.3. EFFECT OF SUPPLEMENTAL INDENTURES.

Upon the execution of any supplemental indenture pursuant to the provisions
of this Article XI, this Indenture shall be and be deemed to be modified and
amended in accordance therewith and the respective rights, limitations of
rights, obligations, duties and immunities under this Indenture of the Trustee,
the Company and the holders of Debentures shall thereafter be determined,
exercised and enforced hereunder subject in all respects to such modifications
and amendments, and all the terms and conditions of any such supplemental
indenture shall be and be deemed to be part of the terms and conditions of this
Indenture for any and all purposes.

SECTION 11.4. THE DEBENTURES AFFECTED BY SUPPLEMENTAL INDENTURES.

The Debentures affected by a supplemental indenture, authenticated and
delivered after the execution of such supplemental indenture pursuant to the
provisions of this Article XI, may bear a notation in form approved by the
Company, provided such form meets the requirements of any exchange upon which
the Debentures may be listed, as to any matter provided for in such supplemental
indenture. If the Company shall so determine, new Debentures so modified as to
conform, in the opinion of the Board of Directors of the Company, to any
modification of this Indenture contained in any such supplemental indenture may
be prepared by the Company, authenticated by the Trustee and delivered in
exchange for the Debentures then Outstanding.

SECTION 11.5. EXECUTION OF SUPPLEMENTAL INDENTURES.

(a) Upon the request of the Company, accompanied by its Board Resolutions
authorizing the execution of any such supplemental indenture, and upon the
filing with the Trustee of evidence of the consent of the Debentureholders
required to consent thereto as aforesaid, the Trustee shall join with the
Company in the execution of such supplemental indenture unless such supplemental
indenture affects the Trustee's own rights, duties or immunities under this
Indenture or otherwise, in which case the Trustee may in its discretion but
shall not be obligated to enter into such supplemental indenture. The Trustee,
subject to the provisions of Sections 9.1, may receive an Opinion of Counsel as
conclusive evidence that any supplemental indenture executed pursuant to this
Article XI is authorized or permitted by, and conforms to, the terms of this
Article XI and that it is proper for the Trustee under the provisions of this
Article XI to join in the execution thereof.

(b) Promptly after the execution by the Company and the Trustee of any
supplemental indenture pursuant to the provisions of this Section 11.5, the
Trustee shall transmit by mail, first class postage prepaid, a notice, setting
forth in general terms the substance of such supplemental

<PAGE>

indenture, to the Debentureholders as their names and addresses appear upon
the Debenture Register. Any failure of the Trustee to mail such notice, or
any defect therein, shall not, however, in any way impair or affect the
validity of any such supplemental indenture.

ARTICLE XII.
SUCCESSOR CORPORATION

SECTION 12.1. THE COMPANY MAY CONSOLIDATE, ETC.

Nothing contained in this Indenture or in any of the Debentures shall prevent
any consolidation or merger of the Company with or into any other corporation or
corporations (whether or not affiliated with the Company, as the case may be),
or successive consolidations or mergers in which the Company, as the case may
be, or its successor or successors shall be a party or parties, or shall prevent
any sale, conveyance, transfer or other disposition of the property of the
Company, as the case may be, or its successor or successors as an entirety, or
substantially as an entirety, to any other corporation (whether or not
affiliated with the Company, as the case may be, or its successor or successors)
authorized to acquire and operate the same; provided, however, that the Company
hereby covenants and agrees that (i) upon any such consolidation, merger, sale,
conveyance, transfer or other disposition, the due and punctual payment, in the
case of the Company, of the principal of and interest on all of the Debentures,
according to their tenor and the due and punctual performance and observance of
all the covenants and conditions of this Indenture to be kept or performed by
the Company as the case may be, shall be expressly assumed, by supplemental
indenture (which shall conform to the provisions of the Trust Indenture Act, as
then in effect) satisfactory in form to the Trustee executed and delivered to
the Trustee by the entity formed by such consolidation, or into which the
Company, as the case may be, shall have been merged, or by the entity which
shall have acquired such property; (ii) in case the Company consolidates with or
merges into another Person or conveys or transfers its properties and assets
substantially as an entirety to any Person, the successor Person is organized
under the laws of the United States or any state or the District of Columbia;
and (iii) immediately after giving effect thereto, an Event of Default, and no
event which, after notice or lapse of time or both, would become an Event of
Default, shall have occurred and be continuing.

SECTION 12.2. SUCCESSOR CORPORATION SUBSTITUTED.

(a) In case of any such consolidation, merger, sale, conveyance, transfer or
other disposition and upon the assumption by the successor corporation, by
supplemental indenture, executed and delivered to the Trustee and satisfactory
in form to the Trustee, of the due and punctual payment of the principal of and
interest on all of the Debentures Outstanding and the due and punctual
performance of all of the covenants and conditions of this Indenture to be
performed by the Company, such successor corporation shall succeed to and be
substituted for the Company, with the same effect as if it had been named as the
Company herein and thereupon the predecessor corporation shall be relieved of
all obligations and covenants under this Indenture and the Debentures.

<PAGE>

(b) In case of any such consolidation, merger, sale, conveyance, transfer or
other disposition such changes in phraseology and form (but not in substance)
may be made in the Debentures thereafter to be issued as may be appropriate.

(c) Nothing contained in this Indenture or in any of the Debentures shall
prevent the Company from merging into itself or acquiring by purchase or
otherwise, all or any part of, the property of any other Person (whether or not
affiliated with the Company).

SECTION 12.3. EVIDENCE OF CONSOLIDATION, ETC. TO TRUSTEE.

The Trustee, subject to the provisions of Section 9.1, may receive an Opinion
of Counsel as conclusive evidence that any such consolidation, merger, sale,
conveyance, transfer or other disposition, and any such assumption, comply with
the provisions of this Article XII.

ARTICLE XIII.
SATISFACTION AND DISCHARGE

SECTION 13.1. SATISFACTION AND DISCHARGE OF INDENTURE.

If at any time: (a) the Company shall have delivered to the Trustee for
cancellation all Debentures theretofore authenticated (other than any Debentures
that shall have been destroyed, lost or stolen and that shall have been replaced
or paid as provided in Section 2.9) and all Debentures for whose payment money
or Governmental Obligations have theretofore been deposited in trust or
segregated and held in trust by the Company (and thereupon repaid to the Company
or discharged from such trust, as provided in Section 13.5); or (b) all such
Debentures not theretofore delivered to the Trustee for cancellation shall have
become due and payable, or are by their terms to become due and payable within
one year or are to be called for redemption within one year under arrangements
satisfactory to the Trustee for the giving of notice of redemption, and the
Company shall deposit or cause to be deposited with the Trustee as trust funds
the entire amount in moneys or Governmental Obligations sufficient, or a
combination thereof sufficient, in the opinion of a nationally recognized firm
of independent public accountants expressed in a written certification thereof
delivered to the Trustee, to pay at maturity or upon redemption all Debentures
not theretofore delivered to the Trustee for cancellation, including principal
and interest due or to become due to such date of maturity or date fixed for
redemption, as the case may be, and if the Company shall also pay or cause to be
paid all other sums payable hereunder by the Company; then this Indenture shall
thereupon cease to be of further effect except for the provisions of Sections
2.3, 2.7, 2.9, 5.1, 5.2, 5.3, 9.7 and 9.10, that shall survive until the date of
maturity or redemption date, as the case may be, and Sections 9.6 and 13.5, that
shall survive to such date and thereafter, and the Trustee, on demand of the
Company and at the cost and expense of the Company, shall execute proper
instruments acknowledging satisfaction of and discharging this Indenture.

SECTION 13.2. DISCHARGE OF OBLIGATIONS.

If at any time all Debentures not heretofore delivered to the Trustee for
cancellation or that have not become due and payable as described in Section
13.1 shall have been paid by the

<PAGE>

Company by depositing irrevocably with the Trustee as trust funds moneys or
an amount of Governmental Obligations sufficient in the opinion of a
nationally recognized certified public accounting firm to pay at maturity or
upon redemption all Debentures not theretofore delivered to the Trustee for
cancellation, including principal and interest due or to become due to such
date of maturity or date fixed for redemption, as the case may be, and if the
Company shall also pay or cause to be paid all other sums payable hereunder
by the Company, then after the date such moneys or Governmental Obligations,
as the case may be, are deposited with the Trustee, the obligations of the
Company under this Indenture shall cease to be of further effect except for
the provisions of Sections 2.3, 2.7, 2.9, 5.1, 5.2, 5.3, 9.6, 9.7, 9.10 and
13.5 hereof that shall survive until such Debentures shall mature and be
paid. Thereafter, Sections 9.6 and 13.5 shall survive.

SECTION 13.3. DEPOSITED MONEYS TO BE HELD IN TRUST.

All monies or Governmental Obligations deposited with the Trustee pursuant to
Sections 13.1 or 13.2 shall be held in trust and shall be available for payment
as due, either directly or through any Paying Agent (including the Company
acting as its own Paying Agent), to the holders of the Debentures for the
payment or redemption of which such moneys or Governmental Obligations have been
deposited with the Trustee.

SECTION 13.4. PAYMENT OF MONIES HELD BY PAYING AGENTS.

In connection with the satisfaction and discharge of this Indenture, all
moneys or Governmental Obligations then held by any Paying Agent under the
provisions of this Indenture shall, upon demand of the Company, be paid to the
Trustee and thereupon such Paying Agent shall be released from all further
liability with respect to such moneys or Governmental Obligations.

SECTION 13.5. REPAYMENT TO THE COMPANY.

Any monies or Governmental Obligations deposited with any Paying Agent or the
Trustee, or then held by the Company in trust, for payment of principal of or
interest on the Debentures that are not applied but remain unclaimed by the
holders of such Debentures for at least two years after the date upon which the
principal of or interest on such Debentures shall have respectively become due
and payable, shall be repaid to the Company, as the case may be, on May 31 of
each year or (if then held by the Company) shall be discharged from such trust;
and thereupon the Paying Agent and the Trustee shall be released from all
further liability with respect to such moneys or Governmental Obligations, and
the holder of any of the Debentures entitled to receive such payment shall
thereafter, as an unsecured general creditor, look only to the Company for the
payment thereof.

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ARTICLE XIV.
IMMUNITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS
AND DIRECTORS

SECTION 14.1. NO RECOURSE

No recourse under or upon any obligation, covenant or agreement of this
Indenture, or of the Debentures, or for any claim based thereon or otherwise in
respect thereof, shall be had against any incorporator, stockholder, officer or
director, past, present or future, as such, of the Company or of any predecessor
or successor corporation, either directly or through the Company or any such
predecessor or successor corporation, whether by virtue of any constitution,
statute or rule of law, or by the enforcement of any assessment or penalty or
otherwise; it being expressly understood that this Indenture and the obligations
issued hereunder are solely corporate obligations, and that no such personal
liability whatever, shall attach to, or is or shall be incurred by, the
incorporators, stockholders, officers or directors as such, of the Company or of
any predecessor or successor corporation, or any of them, because of the
creation of the indebtedness hereby authorized, or under or by reason of the
obligations, covenants or agreements contained in this Indenture or in any of
the Debentures or implied therefrom; and that any and all such personal
liability of every name and nature, either at common law or in equity or by
constitution or statute, and any and all such rights and claims against, every
such incorporator, stockholder, officer or director as such, because of the
creation of the indebtedness hereby authorized, or under or by reason of the
obligations, covenants or agreements contained in this Indenture or in any of
the Debentures or implied therefrom, are hereby expressly waived and released as
a condition of, and as a consideration for, the execution of this Indenture and
the issuance of such Debentures.

ARTICLE XV. MISCELLANEOUS PROVISIONS

SECTION 15.1. EFFECT ON SUCCESSORS AND ASSIGNS.

All the covenants, stipulations, promises and agreements in this Indenture
contained by or on behalf of the Company shall bind its respective successors
and assigns, whether so expressed or not.

SECTION 15.2. ACTIONS BY SUCCESSOR.

Any act or proceeding by any provision of this Indenture authorized or
required to be done or performed by any board, committee or officer of the
Company shall and may be done and performed with like force and effect by the
corresponding board, committee or officer of any corporation that shall at the
time be the lawful sole successor of the Company.

SECTION 15.3. SURRENDER OF THE COMPANY POWERS.

The Company by instrument in writing executed by appropriate authority of its
Board of Directors and delivered to the Trustee may surrender any of the powers
reserved to the Company,

<PAGE>

and thereupon such power so surrendered shall terminate both as to the
Company, as the case may be, and as to any successor corporation.

SECTION 15.4. NOTICES.

Except as otherwise expressly provided herein any notice or demand that by
any provision of this Indenture is required or permitted to be given or served
by the Trustee or by the holders of Debentures to or on the Company may be given
or served by being deposited first class postage prepaid in a post-office
letterbox addressed (until another address is filed in writing by the Company
with the Trustee), as follows: c/o Indiana United Bancorp, 201 North Broadway,
P.O. Box 87, Greensburg, Indiana 47240, Attention: Chairman and President. Any
notice, election, request or demand by the Company or any Debentureholder to or
upon the Trustee shall be deemed to have been sufficiently given or made, for
all purposes, if given or made in writing at the Corporate Trust Office of the
Trustee.

SECTION 15.5. GOVERNING LAW.

This Indenture and each Debenture shall be deemed to be a contract made under
the internal laws of the State of Missouri and for all purposes shall be
construed in accordance with the laws of said State.

SECTION 15.6. TREATMENT OF THE DEBENTURES AS DEBT.

It is intended that the Debentures shall be treated as indebtedness and not
as equity for federal income tax purposes. The provisions of this Indenture
shall be interpreted to further this intention.

SECTION 15.7. COMPLIANCE CERTIFICATES AND OPINIONS.

(a) Upon any application or demand by the Company to the Trustee to take any
action under any of the provisions of this Indenture, the Company shall furnish
to the Trustee an Officers' Certificate stating that all conditions precedent
provided for in this Indenture relating to the proposed action have been
complied with and an Opinion of Counsel stating that in the opinion of such
counsel all such conditions precedent have been complied with, except that in
the case of any such application or demand as to which the furnishing of such
documents is specifically required by any provision of this Indenture relating
to such particular application or demand, no additional certificate or opinion
need be furnished.

(b) Each certificate or opinion of the Company provided for in this Indenture
and delivered to the Trustee with respect to compliance with a condition or
covenant in this Indenture shall include (1) a statement that the Person making
such certificate or opinion has read such covenant or condition; (2) a brief
statement as to the nature and scope of the examination or investigation upon
which the statements or opinions contained in such certificate or opinion are
based; (3) a statement that, in the opinion of such Person, he has made such
examination or investigation as, in the opinion of such Person, is necessary to
enable him to express an informed opinion as to whether or not such covenant or
condition has been complied with; and (4) a statement as to

<PAGE>

whether or not, in the opinion of such Person, such condition or covenant has
been complied with.

SECTION 15.8. PAYMENTS ON BUSINESS DAYS.

In any case where the date of maturity of interest or principal of any
Debenture or the date of redemption of any Debenture shall not be a Business
Day, then payment of interest or principal may (subject to Section 2.5) be made
on the next succeeding Business Day with the same force and effect as if made on
the nominal date of maturity or redemption, and no interest shall accrue for the
period after such nominal date.

SECTION 15.9. CONFLICT WITH TRUST INDENTURE ACT.

If and to the extent that any provision of this Indenture limits, qualifies
or conflicts with the duties imposed by Sections 310 to 317, inclusive, of the
Trust Indenture Act, such imposed duties shall control.

SECTION 15.10. COUNTERPARTS.

This Indenture may be executed in any number of counterparts, each of which
shall be an original, but such counterparts shall together constitute but one
and the same instrument.

SECTION 15.11. SEPARABILITY.

In case any one or more of the provisions contained in this Indenture or in
the Debentures shall for any reason be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provisions of this Indenture or of the Debentures,
but this Indenture and the Debentures shall be construed as if such invalid or
illegal or unenforceable provision had never been contained herein or therein.

SECTION 15.12. ASSIGNMENT.

This Indenture is binding upon and inures to the benefit of the parties
thereto and their respective successors and assigns. This Indenture may not
otherwise be assigned by the parties thereto.

SECTION 15.13. ACKNOWLEDGMENT OF RIGHTS; RIGHT OF SETOFF.

(a) The Company acknowledges that, with respect to any Debentures held by the
Trust or a trustee of the Trust, if the Property Trustee fails to enforce its
rights under this Indenture as the holder of the Debentures held as the assets
of the Trust, any holder of Preferred Securities may institute legal proceedings
directly against the Company to enforce such Property Trustee's rights under
this Indenture without first instituting any legal proceedings against such
Property Trustee or any other person or entity. Notwithstanding the foregoing,
and notwithstanding the provisions of Section 7.4(a) hereof, if an Event of
Default has occurred and is continuing and such event is attributable to the
failure of the Company to pay principal or interest on the Debentures on the
date such principal or interest is otherwise payable (or in the case of
redemption, on the

<PAGE>

redemption date), the Company acknowledges that a holder of Preferred
Securities may directly institute a proceeding for enforcement of payment to
such holder of the principal of or interest on the Debentures having a
principal amount equal to the aggregate liquidation amount of the Preferred
Securities of such holder on or after the respective due date specified in
the Debentures.

(b) Notwithstanding anything to the contrary contained in this Indenture, the
Company shall have the right to setoff any payment it is otherwise required to
make hereunder in respect of any Trust Securities to the extent that the Company
has previously made, or is concurrently making, a payment to the holder of such
Trust Securities under the Preferred Securities Guarantee or in connection with
a proceeding for enforcement of payment of the principal of or interest on the
Debentures directly brought by holders of any Trust Securities.

(c) For so long as any of the Preferred Securities remain outstanding, if,
upon an Event of Default, the Property Trustee fails or the holders of not less
than 25% in principal amount of the Outstanding Debentures fail to declare the
principal of all of the Debentures to be immediately due and payable, the
holders of at least 25% in liquidation amount of the Preferred Securities then
outstanding shall have the right to make such declaration by a notice in writing
to the Depositor and the Property Trustee; and upon any such declaration such
principal amount of and the accrued interest on all of the Debentures shall
become immediately due and payable, provided that the payment of principal and
interest on such Debentures shall remain subordinated to the extent provided in
this Indenture.

ARTICLE XVI.
SUBORDINATION OF THE DEBENTURES

SECTION 16.1. AGREEMENT TO SUBORDINATE.

The Company covenants and agrees, and each holder of the Debentures issued
hereunder by such holder's acceptance thereof likewise covenants and agrees,
that all the Debentures shall be issued subject to the provisions of this
Article XVI; and each holder of a Debenture, whether upon original issue or upon
transfer or assignment thereof, accepts and agrees to be bound by such
provisions. The payment by the Company of the principal of and interest on all
the Debentures issued hereunder shall, to the extent and in the manner
hereinafter set forth, be subordinated and junior in right of payment to the
prior payment in full of all Senior Debt, Subordinated Debt and Additional
Senior Obligations of the Company (collectively, "Senior Indebtedness") to the
extent provided herein, whether outstanding at the date of this Indenture or
thereafter incurred. No provision of this Article XVI shall prevent the
occurrence of any default or Event of Default hereunder.

SECTION 16.2. DEFAULT ON SENIOR DEBT, SUBORDINATED DEBT OR ADDITIONAL SENIOR
OBLIGATIONS.

In the event and during the continuation of any default by the Company in the
payment of principal, premium, interest or any other payment due on any Senior
Indebtedness, or in the event that the maturity of any Senior Indebtedness has
been accelerated because of a default, then, in either case, no payment shall be
made by the Company with respect to the principal

<PAGE>

(including redemption payments) of or interest on the Debentures. In the
event that, notwithstanding the foregoing, any payment shall be received by
the Trustee when such payment is prohibited by the preceding sentence of this
Section 16.2, such payment shall be held in trust for the benefit of, and
shall be paid over or delivered to, the holders of Senior Indebtedness or
their respective representatives, or to the trustee or trustees under any
indenture pursuant to which any of such Senior Indebtedness may have been
issued, as their respective interests may appear, but only to the extent that
the holders of the Senior Indebtedness (or their representative or
representatives or a trustee) notify the Trustee in writing within 90 days of
such payment of the amounts then due and owing on the Senior Indebtedness and
only the amounts specified in such notice to the Trustee shall be paid to the
holders of the Senior Indebtedness.

SECTION 16.3. LIQUIDATION; DISSOLUTION; BANKRUPTCY.

(a) Upon any payment by the Company or distribution of assets of the
Company of any kind or character, whether in cash, property or securities, to
creditors upon any dissolution or winding-up or liquidation or reorganization
of the Company, whether voluntary or involuntary or in bankruptcy,
insolvency, receivership or other proceedings, all amounts due upon all
Senior Indebtedness shall first be paid in full, or payment thereof provided
for in money in accordance with its terms, before any payment is made by the
Company on account of the principal or interest on the Debentures; and upon
any such dissolution or winding-up or liquidation or reorganization, any
payment by the Company, or distribution of assets of the Company of any kind
or character, whether in cash, property or securities, to which the holders
of the Debentures or the Trustee would be entitled to receive from the
Company, except for the provisions of this Article XVI, shall be paid by the
Company or by any receiver, trustee in bankruptcy, liquidating trustee, agent
or other Person making such payment or distribution, or by the holders of the
Debentures or by the Trustee under this Indenture if received by them or it,
directly to the holders of Senior Indebtedness (pro rata to such holders on
the basis of the respective amounts of Senior Indebtedness held by such
holders, as calculated by the Company) or their representative or
representatives, or to the trustee or trustees under any indenture pursuant
to which any instruments evidencing such Senior Indebtedness may have been
issued, as their respective interests may appear, to the extent necessary to
pay such Senior Indebtedness in full, in money or money's worth, after giving
effect to any concurrent payment or distribution to or for the holders of
such Senior Indebtedness, before any payment or distribution is made to the
holders of the Debentures or to the Trustee.

(b) In the event that, notwithstanding the foregoing, any payment or
distribution of assets of the Company of any kind or character, whether in
cash, property or securities, prohibited by the foregoing, shall be received
by the Trustee before all Senior Indebtedness is paid in full, or provision
is made for such payment in money in accordance with its terms, such payment
or distribution shall be held in trust for the benefit of and shall be paid
over or delivered to the holders of such Senior Indebtedness or their
representative or representatives, or to the trustee or trustees under any
indenture pursuant to which any instruments evidencing such Senior
Indebtedness may have been issued, as their respective interests may appear,
as calculated by the Company, for application to the payment of all Senior
Indebtedness, as the case may be, remaining unpaid to the extent necessary to
pay such Senior Indebtedness in full in money in

49
<PAGE>

accordance with its terms, after giving effect to any concurrent payment or
distribution to or for the benefit of the holders of such Senior Indebtedness.

(c) For purposes of this Article XVI, the words "cash, property or
securities" shall not be deemed to include shares of stock of the Company as
reorganized or readjusted, or securities of the Company or any other
corporation provided for by a plan of reorganization or readjustment, the
payment of which is subordinated at least to the extent provided in this
Article XVI with respect to the Debentures to the payment of all Senior
Indebtedness, as the case may be, that may at the time be outstanding,
provided that (i) such Senior Indebtedness is assumed by the new corporation,
if any, resulting from any such reorganization or readjustment; and (ii) the
rights of the holders of such Senior Indebtedness are not, without the
consent of such holders, altered by such reorganization or readjustment. The
consolidation of the Company with, or the merger of the Company into, another
corporation or the liquidation or dissolution of the Company following the
conveyance or transfer of its property as an entirety, or substantially as an
entirety, to another corporation upon the terms and conditions provided for
in Article XII shall not be deemed a dissolution, winding-up, liquidation or
reorganization for the purposes of this Section 16.3 if such other
corporation shall, as a part of such consolidation, merger, conveyance or
transfer, comply with the conditions stated in Article XII. Nothing in
Section 16.2 or in this Section 16.3 shall apply to claims of, or payments
to, the Trustee under or pursuant to Section 9.7.

SECTION 16.4. SUBROGATION.

(a) Subject to the payment in full of all Senior Indebtedness, the rights
of the holders of the Debentures shall be subrogated to the rights of the
holders of such Senior Indebtedness to receive payments or distributions of
cash, property or securities of the Company, as the case may be, applicable
to such Senior Indebtedness until the principal of and interest on the
Debentures shall be paid in full; and, for the purposes of such subrogation,
no payments or distributions to the holders of such Senior Indebtedness of
any cash, property or securities to which the holders of the Debentures or
the Trustee would be entitled except for the provisions of this Article XVI,
and no payment over pursuant to the provisions of this Article XVI to or for
the benefit of the holders of such Senior Indebtedness by holders of the
Debentures or the Trustee, shall, as between the Company, its creditors other
than holders of Senior Indebtedness of the Company, and the holders of the
Debentures, be deemed to be a payment by the Company to or on account of such
Senior Indebtedness. It is understood that the provisions of this Article XVI
are and are intended solely for the purposes of defining the relative rights
of the holders of the Debentures, on the one hand, and the holders of such
Senior Indebtedness on the other hand.

(b) Nothing contained in this Article XVI or elsewhere in this Indenture
or in the Debentures is intended to or shall impair, as between the Company,
its creditors (other than the holders of Senior Indebtedness), and the
holders of the Debentures, the obligation of the Company, which is absolute
and unconditional, to pay to the holders of the Debentures the principal of
and interest on the Debentures as and when the same shall become due and
payable in accordance with their terms, or is intended to or shall affect the
relative rights of the holders of the Debentures and creditors of the
Company, as the case may be, other than the holders of Senior Indebtedness,
as

50
<PAGE>

the case may be, nor shall anything herein or therein prevent the Trustee or
the holder of any Debenture from exercising all remedies otherwise permitted
by applicable law upon default under this Indenture, subject to the rights,
if any, under this Article XVI of the holders of such Senior Indebtedness in
respect of cash, property or securities of the Company, as the case may be,
received upon the exercise of any such remedy.

(c) Upon any payment or distribution of assets of the Company referred to
in this Article XVI, the Trustee, subject to the provisions of Article IX,
and the holders of the Debentures shall be entitled to conclusively rely upon
any order or decree made by any court of competent jurisdiction in which such
dissolution, winding-up, liquidation or reorganization proceedings are
pending, or a certificate of the receiver, trustee in bankruptcy, liquidation
trustee, agent or other Person making such payment or distribution, delivered
to the Trustee or to the holders of the Debentures, for the purposes of
ascertaining the Persons entitled to participate in such distribution, the
holders of Senior Indebtedness and other indebtedness of the Company, as the
case may be, the amount thereof or payable thereon, the amount or amounts
paid or distributed thereon and all other facts pertinent thereto or to this
Article XVI.

SECTION 16.5. THE TRUSTEE TO EFFECTUATE SUBORDINATION.

Each holder of Debentures by such holder's acceptance thereof authorizes
and directs the Trustee on such holder's behalf to take such action as may be
necessary or appropriate to effectuate the subordination provided in this
Article XVI and appoints the Trustee such holder's attorney-in-fact for any
and all such purposes.

SECTION 16.6. NOTICE BY THE COMPANY.

(a) The Company shall give prompt written notice to a Responsible Officer
of the Trustee of any fact known to the Company that would prohibit the
making of any payment of monies to or by the Trustee in respect of the
Debentures pursuant to the provisions of this Article XVI. Notwithstanding
the provisions of this Article XVI or any other provision of this Indenture,
the Trustee shall not be charged with knowledge of the existence of any facts
that would prohibit the making of any payment of monies to or by the Trustee
in respect of the Debentures pursuant to the provisions of this Article XVI,
unless and until a Responsible Officer of the Trustee shall have received
written notice thereof from the Company or a holder or holders of Senior
Indebtedness or from any trustee therefor; and before the receipt of any such
written notice, the Trustee, subject to the provisions of Section 9.1, shall
be entitled in all respects to assume that no such facts exist; provided,
however, that if the Trustee shall not have received the notice provided for
in this Section 16.6 at least 2 Business Days prior to the date upon which by
the terms hereof any money may become payable for any purpose (including,
without limitation, the payment of the principal of or interest on any
Debenture), then, anything herein contained to the contrary notwithstanding,
the Trustee shall have full power and authority to receive such money and to
apply the same to the purposes for which they were received, and shall not be
affected by any notice to the contrary that may be received by it within 2
Business Days prior to such date.

(b) The Trustee, subject to the provisions of Section 9.1, shall be
entitled to conclusively rely on the delivery to it of a written notice by a
Person representing himself to be a holder of Senior

51
<PAGE>

Indebtedness (or a trustee on behalf of such holder) to establish that such
notice has been given by a holder of such Senior Indebtedness or a trustee on
behalf of any such holder or holders. In the event that the Trustee
determines in good faith that further evidence is required with respect to
the right of any Person as a holder of such Senior Indebtedness to
participate in any payment or distribution pursuant to this Article XVI, the
Trustee may request such Person to furnish evidence to the reasonable
satisfaction of the Trustee as to the amount of such Senior Indebtedness held
by such Person, the extent to which such Person is entitled to participate in
such payment or distribution and any other facts pertinent to the rights of
such Person under this Article XVI, and, if such evidence is not furnished,
the Trustee may defer any payment to such Person pending judicial
determination as to the right of such Person to receive such payment.

SECTION 16.7. RIGHTS OF THE TRUSTEE; HOLDERS OF THE SENIOR INDEBTEDNESS.

(a) The Trustee in its individual capacity shall be entitled to all the
rights set forth in this Article XVI in respect of any Senior Indebtedness at
any time held by it, to the same extent as any other holder of Senior
Indebtedness, and nothing in this Indenture shall deprive the Trustee of any
of its rights as such holder. The Trustee's right to compensation and
reimbursement of expenses as set forth in Section 9.7 shall not be subject to
the subordination provisions of the Article XVI.

(b) With respect to the holders of the Senior Indebtedness, the Trustee
undertakes to perform or to observe only such of its covenants and
obligations as are specifically set forth in this Article XVI, and no implied
covenants or obligations with respect to the holders of such Senior
Indebtedness shall be read into this Indenture against the Trustee. The
Trustee shall not be deemed to owe any fiduciary duty to the holders of such
Senior Indebtedness and, subject to the provisions of Section 9.1, the
Trustee shall not be liable to any holder of such Senior Indebtedness if it
shall pay over or deliver to holders of Debentures, the Company or any other
Person money or assets to which any holder of such Senior Indebtedness shall
be entitled by virtue of this Article XVI or otherwise.

SECTION 16.8. SUBORDINATION MAY NOT BE IMPAIRED.

(a) No right of any present or future holder of any Senior Indebtedness to
enforce subordination as herein provided shall at any time in any way be
prejudiced or impaired by any act or failure to act on the part of the
Company or by any act or failure to act, in good faith, by any such holder,
or by any noncompliance by the Company with the terms, provisions and
covenants of this Indenture, regardless of any knowledge thereof that any
such holder may have or otherwise be charged with.

(b) Without in any way limiting the generality of Section 16.8(a), the
holders of Senior Indebtedness may, at any time and from time to time,
without the consent of or notice to the Trustee or the holders of the
Debentures, without incurring responsibility to the holders of the Debentures
and without impairing or releasing the subordination provided in this Article
XVI or the obligations hereunder of the holders of the Debentures to the
holders of such Senior Indebtedness, do any one or more of the following: (i)
change the manner, place or terms of

52
<PAGE>

payment or extend the time of payment of, or renew or alter, such Senior
Indebtedness, or otherwise amend or supplement in any manner such Senior
Indebtedness or any instrument evidencing the same or any agreement under
which such Senior Indebtedness is outstanding; (ii) sell, exchange, release
or otherwise deal with any property pledged, mortgaged or otherwise securing
such Senior Indebtedness; (iii) release any Person liable in any manner for
the collection of such Senior Indebtedness; and (iv) exercise or refrain from
exercising any rights against the Company and any other Person.

IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed, and their respective corporate seals to be hereunto affixed
and attested, all as of the day and year first above written.

INDIANA UNITED BANCORP

By:
--------------------------------------
Robert E. Hoptry
Chairman and President

Attest:

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

STATE STREET BANK AND TRUST
COMPANY, as trustee

By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------

Attest:

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

53
<PAGE>

STATE OF INDIANA )
) ss
COUNTY OF __________ )

On this ______ day of ______________________, 1997, before me appeared
Robert E. Hoptry, to me personally known, who, being by me duly sworn, did
say that he is the Chairman and President of INDIANA UNITED BANCORP, and that
the seal affixed to said instrument is the corporate seal of said
corporation, and that said instrument was signed and sealed in behalf of said
corporation by authority of its board of directors and said Chairman and
President acknowledged said instrument to be the free act and deed of said
corporation.

In testimony whereof I have hereunto set my hand and affixed my official
seal at my office in said county and state the day and year last above
written.

----------------------------------------
Notary Public

My term expires:
------------------------

[seal]

COMMONWEALTH OF MASSACHUSETTS )
) ss
COUNTY OF SUFFOLK )

On this ______ day of ______________________, 1997, before me appeared
___________________, to me personally known, who, being by me duly sworn, did
say that he is the _____________________ of STATE STREET BANK AND TRUST, and
that the seal affixed to said instrument is the corporate seal of said
corporation, and that said instrument was signed and sealed in behalf of said
corporation by authority of its board of directors and said
_____________________________, acknowledged said instrument to be the free
act and deed of said corporation.

In testimony whereof I have hereunto set my hand and affixed my official
seal at my office in said county and commonwealth the day and year last above
written.

----------------------------------------
Notary Public

My term expires:
------------------------

[seal]

<PAGE>

EXHIBIT A

(FORM OF FACE OF DEBENTURE)

No. $
----------------------------- -----------
CUSIP No.
-----------------------

INDIANA UNITED BANCORP

____% SUBORDINATED DEBENTURE

DUE DECEMBER 30, 2027

Indiana United Bancorp, an Indiana corporation (the "Company," which
term includes any successor corporation under the Indenture hereinafter
referred to), for value received, hereby promises to pay to State Street Bank
and Trust Company as Property Trustee for IUB Capital Trust, or registered
assigns, the principal sum of ____________________________ Dollars
($__________) on December 30, 2027 (the "Stated Maturity"), and to pay
interest on said principal sum from ____________, 1997, or from the most
recent interest payment date (each such date, an "Interest Payment Date") to
which interest has been paid or duly provided for, quarterly (subject to
deferral as set forth herein) in arrears on March 31, June 30, September 30
and December 31 of each year commencing December 31, 1997, at the rate of
____% per annum until the principal hereof shall have become due and payable,
and on any overdue principal and (without duplication) on any overdue
installment of interest at the same rate per annum compounded quarterly. The
amount of interest payable on any Interest Payment Date shall be computed on
the basis of a 360-day year of twelve 30-day months. The amount of interest
for any partial period shall be computed on the basis of the number of days
elapsed in a 360-day year of twelve 30-day months. In the event that any
date on which interest is payable on this Debenture is not a business day,
then payment of interest payable on such date shall be made on the next
succeeding day that is a Business Day (as defined in the Indenture) (and
without any interest or other payment in respect of any such delay) with the
same force and effect as if made on such date. The interest installment so
payable, and punctually paid or duly provided for, on any Interest Payment
Date shall, as provided in the Indenture, be paid to the person in whose name
this Debenture (or one or more Predecessor Debentures, as defined in said
Indenture) is registered at the close of business on the regular record date
for such interest installment, which shall be the close of business on the
fifteenth day of the last month of the calendar quarter in which the Interest
Payment Date occurs unless otherwise provided in the Indenture. The principal
of and the interest on this Debenture shall be payable at the office or
agency of the Trustee maintained for that purpose in any coin or currency of
the United States of America that at the time of payment is legal tender for
payment of public and private debts; provided, however, that payment of
interest may be made at the option of the Company by check mailed to the
registered holder at such address as shall appear in the Debenture Register.
Notwithstanding the foregoing, so long as the holder of this Debenture is the
Property Trustee, the payment of the principal of

A-1
<PAGE>

and interest on this Debenture shall be made at such place and to such
account as may be designated by the Trustee.

This Debenture may be redeemed at any time by the Company on any
date not earlier than December 30, 2002, subject to the Company having
received prior approval of the Federal Reserve if then required under
applicable capital guidelines or policies of the Federal Reserve. Such date
may also be extended at any time at the election of the Company for one or
more periods, but in no event to a date later than December 30, 2036, subject
to certain limitations described in the Indenture.

The indebtedness evidenced by this Debenture is, to the extent
provided in the Indenture, subordinate and junior in right of payment to the
prior payment in full of all Senior Indebtedness (as defined in the
Indenture). This Debenture is issued subject to the provisions of the
Indenture with respect thereto. Each holder of this Debenture, by accepting
the same, (a) agrees to and shall be bound by such provisions; (b) authorizes
and directs the Trustee on his or her behalf to take such action as may be
necessary or appropriate to acknowledge or effectuate the subordination so
provided; and (c) appoints the Trustee his or her attorney-in-fact for any
and all such purposes. Each holder hereof, by his or her acceptance hereof,
hereby waives all notice of the acceptance of the subordination provisions
contained herein and in the Indenture by each holder of Senior Indebtedness,
whether now outstanding or hereafter incurred, and waives reliance by each
such holder upon said provisions.

This Debenture shall not be entitled to any benefit under the
Indenture hereinafter referred to, be valid or become obligatory for any
purpose until the Certificate of Authentication hereon shall have been signed
by or on behalf of the Trustee.

The provisions of this Debenture are continued on the reverse side
hereof and such continued provisions shall for all purposes have the same
effect as though fully set forth at this place.

A-2
<PAGE>

IN WITNESS WHEREOF, the Company has caused this instrument to be
executed.

Dated: , 1997
---------------

INDIANA UNITED BANCORP

By:
-----------------------------------------
Robert E. Hoptry
Chairman and President
Attest:

By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------

A-3
<PAGE>

[FORM OF CERTIFICATE OF AUTHENTICATION]

CERTIFICATE OF AUTHENTICATION

This is one of the Debentures described in the within-mentioned
Indenture.

Dated:

STATE STREET BANK AND TRUST COMPANY,
as Trustee -----------------------------
or Authenticating Agent

By: By:
------------------------------- -------------------------
Authorized Signatory

A-4
<PAGE>

[FORM OF REVERSE OF DEBENTURE]

____% SUBORDINATED DEBENTURE

(CONTINUED)

This Debenture is one of the subordinated debentures of the Company
(herein sometimes referred to as the "Debentures"), all issued or to be
issued under and pursuant to an Indenture dated as of ___________, 1997 (the
"Indenture") duly executed and delivered between the Company and State Street
Bank and Trust Company, as Trustee (the "Trustee"), to which Indenture
reference is hereby made for a description of the rights, limitations of
rights, obligations, duties and immunities thereunder of the Trustee, the
Company and the holders of the Debentures. The Debentures are limited in
aggregate principal amount as specified in the Indenture.

The Company shall have the right to redeem this Debenture at the
option of the Company, without premium or penalty, in whole or in part at any
time on or after December 30, 2002 (an "Optional Redemption"), or at any time
in certain circumstances upon the occurrence of a Special Event (as defined
in the Indenture), at a redemption price (the "Redemption Price") equal to
100% of the principal amount hereof plus any accrued but unpaid interest
hereon, to the date of such redemption, plus Additional Payments, if any. Any
redemption pursuant to this paragraph shall be made upon not less than 30
days nor more than 60 days notice, at the Redemption Price. If the Debentures
are only partially redeemed by the Company pursuant to an Optional
Redemption, the Debentures shall be redeemed pro rata or by lot or by any
other method utilized by the Trustee as described in the Indenture. In the
event of an Optional Redemption of this Debenture in part only, a new
Debenture or Debentures for the unredeemed portion hereof shall be issued in
the name of the holder hereof upon the cancellation hereof.

In case an Event of Default (as defined in the Indenture) shall have
occurred and be continuing, the principal of all of the Debentures may be
declared, and upon such declaration shall become, due and payable, in the
manner, with the effect and subject to the conditions provided in the
Indenture.

The Indenture contains provisions permitting the Company and the
Trustee, with the consent of the holders of not less than a majority in
aggregate principal amount of the Debentures at the time Outstanding (as
defined in the Indenture), to execute supplemental indentures for the purpose
of adding any provisions to or changing in any manner or eliminating any of
the provisions of the Indenture or of any supplemental indenture or of
modifying in any manner the rights of the holders of the Debentures;
provided, however, that no such supplemental indenture shall without the
consent of the holders of each Debenture then Outstanding and affected
thereby, (i) extend the fixed maturity of the Debentures, reduce the
principal amount thereof, or reduce the rate or extend the time of payment of
interest thereon; or (ii) reduce the aforesaid percentage of the Debentures,
the holders of which are required to consent to any such supplemental
indenture. The Indenture also contains provisions permitting the holders of a
majority in aggregate principal amount of the Debentures at the time
Outstanding, on behalf of all of the holders of the Debentures, to waive any
past default in the performance of any of the

A-5
<PAGE>

covenants contained in the Indenture, or established pursuant to the
Indenture, and its consequences, except a default in the payment of the
principal of or interest on any of the Debentures. Any such consent or waiver
by the registered holder of this Debenture (unless revoked as provided in the
Indenture) shall be conclusive and binding upon such holder and upon all
future holders and owners of this Debenture and of any Debenture issued in
exchange herefor or in place hereof (whether by registration of transfer or
otherwise), irrespective of whether or not any notation of such consent or
waiver is made upon this Debenture.

No reference herein to the Indenture and no provision of this
Debenture or of the Indenture shall alter or impair the obligation of the
Company, which is absolute and unconditional, to pay the principal and
interest on this Debenture at the time and place and at the rate and in the
money herein prescribed.

The Company, as further described in the Indenture, shall have the
right at any time during the term of the Debentures and from time to time to
defer payments of interest by extending the interest payment period of such
Debentures for up to 20 consecutive quarters (each, an "Extension Period"),
at the end of which period the Company shall calculate (and deliver such
calculation to the Trustee) and pay all interest then accrued and unpaid on
the Debentures, including any Additional Payments and Compounded Interest (as
defined in the Indenture and together, the "Deferred Payments") that shall be
payable to the holders of the Debentures in whose names the Debentures are
registered in the Debenture Register on the first record date after the end
of the Extension Period. Before the termination of any such Extension Period,
the Company may further extend such Extension Period, provided that such
Extension Period together with all such further extensions thereof shall not
exceed 20 consecutive quarters. At the termination of any such Extension
Period and upon the payment of all Deferred Payments then due, the Company
may commence a new Extension Period.

As provided in the Indenture and subject to certain limitations
therein set forth, this Debenture is transferable by the registered holder
hereof on the Debenture Register (as defined in the Indenture) of the
Company, upon surrender of this Debenture for registration of transfer at the
office or agency of the Trustee accompanied by a written instrument or
instruments of transfer in form satisfactory to the Company or the Trustee
duly executed by the registered holder hereof or his attorney duly authorized
in writing, and thereupon one or more new Debentures of authorized
denominations and for the same aggregate principal amount shall be issued to
the designated transferee or transferees. No service charge shall be made for
any such transfer, but the Company may require payment of a sum sufficient to
cover any tax or other governmental charge payable in relation thereto.

Prior to due presentment for registration of transfer of this
Debenture, the Company, the Trustee, any Paying Agent (as defined in the
Indenture) and the Debenture Registrar may deem and treat the registered
holder hereof as the absolute owner hereof (whether or not this Debenture
shall be overdue and notwithstanding any notice of ownership or writing
hereon made by anyone other than the Debenture Registrar) for the purpose of
receiving payment of or on account of the principal hereof and interest due
hereon and for all other purposes, and

A-6
<PAGE>

neither the Company nor the Trustee nor any Paying Agent nor any Debenture
Registrar shall be affected by any notice to the contrary.

No recourse shall be had for the payment of the principal of or the
interest on this Debenture, or for any claim based hereon, or otherwise in
respect hereof, or based on or in respect of the Indenture, against any
incorporator, stockholder, officer or director, past, present or future, as
such, of the Company or of any predecessor or successor corporation, whether
by virtue of any constitution, statute or rule of law, or by the enforcement
of any assessment or penalty or otherwise, all such liability being, by the
acceptance hereof and as part of the consideration for the issuance hereof,
expressly waived and released.

The Debentures are issuable only in registered form without coupons
in denominations of $10 and any integral multiple thereof (or such other
denominations and any integral multiple thereof as may be deemed necessary by
the Company for the purpose of maintaining the eligibility of the Debentures
for quotation on the Nasdaq National Market or any successor thereto).

All terms used in this Debenture that are defined in the Indenture
shall have the meanings assigned to them in the Indenture.

A-7

<PAGE>

EXHIBIT 4.3

CERTIFICATE OF TRUST
OF
IUB CAPITAL TRUST

THIS CERTIFICATE OF TRUST OF IUB CAPITAL TRUST (the "Trust"), dated as of
November 10, 1997, is being duly executed and filed by WILMINGTON TRUST
COMPANY, a Delaware banking corporation, and ROBERT E. HOPTRY, JAY B. FAGER
and DARYL R. TRESSLER, each an individual, as trustees, to form a business
trust under the Delaware Business Trust Act (12 Del. C. Section 3801 et seq.).

1. NAME. The name of the business trust formed hereby is IUB Capital
Trust.

2. DELAWARE TRUSTEE. The name and business address of the trustee of the
Trust in the State of Delaware is Wilmington Trust Company, Rodney Square
North, 1100 North Market Street, Wilmington, Delaware 19890-0001, Attention:
Corporate Trust Administration.

3. EFFECTIVE DATE. This Certificate of Trust shall be effective on
November 14, 1997.

IN WITNESS WHEREOF, each of the undersigned, being a trustee of the
Trust, has executed this Certificate of Trust as of the date first above
written.

WILMINGTON TRUST COMPANY, as trustee

By: /s/ Patricia A. Evans
---------------------------------

Name: Patricia A. Evans
-------------------------------

Title: Financial Services Officer
------------------------------

/s/ Robert E. Hoptry
---------------------------------
Robert E. Hoptry, as trustee

/s/ Jay B. Fager
---------------------------------
Jay B. Fager, as trustee

/s/ Daryl R. Tressler
---------------------------------
Daryl R. Tressler, as trustee

<PAGE>

TRUST AGREEMENT

This TRUST AGREEMENT, dated as of November 14, 1997 (this "Trust
Agreement"), among (i) INDIANA UNITED BANCORP, an Indiana corporation (the
"Depositor"), (ii) WILMINGTON TRUST COMPANY, a Delaware banking corporation,
as trustee, and (iii) ROBERT E. HOPTRY, JAY B. FAGER and DARYL R. TRESSLER,
each an individual, as trustees (each of such trustees in (ii) and (iii) a
"Trustee" and collectively, the "Trustees"). The Depositor and the Trustees
hereby agree as follows:

1. The trust created hereby (the "Trust") shall be known as "IUB
Capital Trust" in which name the Trustees, or the Depositor to the extent
provided herein, may engage in the transactions contemplated hereby, make and
execute contracts, and sue and be sued.

2. The Depositor hereby assigns, transfers, conveys and sets over
the Trustees the sum of $10.00. The Trustees hereby acknowledge receipt of such
amount in trust from the Depositor, which amount shall constitute the initial
trust estate. The Trustees hereby declare that they will hold the trust estate
in trust for the Depositor. It is the intention of the parties hereto that the
Trust created hereby constitute a business trust under Chapter 38 of Title 12 of
the Delaware Code, 12 Del. C. Section 3801, et seq. (the "Business Trust Act"),
and that this document constitutes the governing instrument of the Trust. The
Trustees are hereby authorized and directed to execute and file a certificate of
trust with the Delaware Secretary of State in accordance with the provisions of
the Business Trust Act.

3. The Depositor and the Trustees will enter into an amended and
restated Trust Agreement, satisfactory to each such party and substantially in
the form included as an exhibit to the 1933 Act Registration Statement (as
defined below), to provide for the contemplated operation of the Trust created
hereby and the issuance of the Preferred Securities and Common Securities
referred to therein. Prior to the execution and delivery of such amended and
restated Trust Agreement, the Trustees shall not have any duty or obligation
hereunder or with respect to the trust estate, except as otherwise required by
applicable law or as may be necessary to obtain prior to such execution and
delivery of any licenses, consents or approvals required by applicable law or
otherwise.

4. The Depositor and the Trustees hereby authorize and direct the
Depositor, as the sponsor of the Trust, (i) to file with the Securities and
Exchange Commission (the "Commission") and execute, in each case on behalf of
the Trust, (a) the Registration Statement on Form S-2 (the "1933 Act
Registration Statement"), including any pre-effective or post-effective
amendments to the 1933 Act Registration Statement, relating to the registration
under the Securities Act of 1933, as amended, of the Preferred Securities of the
Trust and possibly certain other securities and (b) a Registration Statement on
Form 8-A (the "1934 Act Registration Statement") (including all pre-effective
and post-effective amendments thereto) relating to the registration of the
Preferred Securities of the Trust under the Securities Exchange Act of 1934, as
amended; (ii) to file with the Nasdaq National Market or a national stock
exchange (each, an "Exchange") and execute on behalf of the Trust one or more
listing applications and all other

<PAGE>

applications, statements, certificates, agreements and other instruments as
shall be necessary or desirable to cause the Preferred Securities to be
listed on any of the Exchanges; (iii) to file and execute on behalf of the
Trust such applications, reports, surety bonds, irrevocable consents,
appointments of attorney for service of process and other papers and
documents as shall be necessary or desirable to register the Preferred
Securities under the securities or blue sky laws of such jurisdictions as the
Depositor, on behalf of the Trust, may deem necessary or desirable; and (iv)
to execute on behalf of the Trust that certain Underwriting Agreement
relating to the Preferred Securities, among the Trust, the Depositor and the
several Underwriters named therein, substantially in the form included as an
exhibit to the 1933 Act Registration Statement. In the event that any filing
referred to in clauses (i), (ii) and (iii) above is required by the rules and
regulations of the Commission, an Exchange or state securities or blue sky
laws, to be executed on behalf of the Trust by one or more of the Trustees,
each of the Trustees, in its or his capacity as a Trustee of the Trust, is
hereby authorized and, to the extent so required, directed to join in any
such filing and to execute on behalf of the Trust any and all of the
foregoing, it being understood that Wilmington Trust Company in its capacity
as a Trustee of the Trust shall not be required to join in any such filing or
execute on behalf of the Trust any such document unless required by the rules
and regulations of the Commission, the Exchange or state securities or blue
sky laws. In connection with the filings referred to above, the Depositor and
Robert E. Hoptry, Jay B. Fager and Daryl R. Tressler, each as Trustees
and not in their individual capacities, hereby constitutes and appoints
Robert E. Hoptry, Jay B. Fager and Daryl R. Tressler, and each of them,
as its true and lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution, for the Depositor or such Trustee or in the
Depositor's or such Trustees' name, place and stead, in any and all capacities,
to sign any and all amendments (including post-effective amendments) to the
1933 Act Registration Statement and the 1934 Act Registration Statement and
to file the same, with all exhibits thereto, and other documents in
connection therewith, with the Commission, the Exchange and administrators of
the state securities or blue sky laws, granting unto said attorneys-in-fact
and agents full power and authority to do and perform each and every act and
thing requisite and necessary to be done in connection therewith, as fully to
all intents and purposes as the Depositor or such Trustee might or could to
in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents or any of them, or their respective substitute or substitutes,
shall do or cause to be done by virtue hereof.

5. This Trust Agreement may be executed in one or more counterparts.

6. The number of Trustees initially shall be four and thereafter the
number of Trustees shall be such number as shall be fixed from time to time by a
written instrument signed by the Depositor which may increase or decrease the
number of Trustees; provided, however, that to the extent required by the
Business Trust Act, one Trustee shall either be a natural person who is a
resident of the State of Delaware or, if not a natural person, an entity which
has its principal place of business in the State of Delaware and otherwise meets
the requirements of applicable Delaware law. Subject to the foregoing, the
Depositor is entitled to appoint or remove without cause any Trustee at any
time. The Trustees may resign upon 30 days' prior notice to the Depositor.

<PAGE>

7. This Trust Agreement shall be governed by, and construed in
accordance with, the laws of the State of Delaware (without regard to conflict
of laws of principles).

IN WITNESS WHEREOF, the parties hereto have caused this Trust
Agreement to be duly executed as of the day and year first above written.

INDIANA UNITED BANCORP
as Depositor

By: /s/ Robert E. Hoptry
-----------------------------------
Name: Robert E. Hoptry
Title: Chairman, President and
Chief Executive Officer

WILMINGTON TRUST COMPANY
as Trustee

By: /s/ Patricia A. Evans
-----------------------------------
Name: Patricia A. Evans
Title: Financial Services Officer

/s/ Robert E. Hoptry
--------------------------------------
ROBERT E. HOPTRY
--------------------------------------
as Trustee

/s/ Jay B. Fager
--------------------------------------
JAY B. FAGER
--------------------------------------
as Trustee

/s/ Daryl R. Tressler
--------------------------------------
DARYL R. TRESSLER
--------------------------------------
as Trustee

<PAGE>

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

IUB CAPITAL TRUST

AMENDED AND RESTATED

TRUST AGREEMENT

AMONG

INDIANA UNITED BANCORP, AS DEPOSITOR

STATE STREET BANK AND TRUST COMPANY, AS PROPERTY TRUSTEE

WILMINGTON TRUST COMPANY, AS DELAWARE TRUSTEE,

AND

THE ADMINISTRATIVE TRUSTEES NAMED HEREIN

DATED AS OF _______________ ____, 1997

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

<PAGE>

TABLE OF CONTENTS

PAGE
----

ARTICLE I. DEFINED TERMS . . . . . . . . . . . . . . . . . . . . . . . . . .2
SECTION 101. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . .2
ARTICLE II ESTABLISHMENT OF THE TRUST. . . . . . . . . . . . . . . . . . . .9
SECTION 201. NAME. . . . . . . . . . . . . . . . . . . . . . . . . . . .9
SECTION 202. OFFICE OF THE DELAWARE TRUSTEE; PRINCIPAL
PLACE OF BUSINESS.. . . . . . . . . . . . . . . . . . . . 10
SECTION 203. INITIAL CONTRIBUTION OF TRUST PROPERTY;
ORGANIZATIONAL EXPENSES.. . . . . . . . . . . . . . . . . 10
SECTION 204. ISSUANCE OF THE PREFERRED SECURITIES. . . . . . . . . . . 10
SECTION 205. ISSUANCE OF THE COMMON SECURITIES; SUBSCRIPTION AND
PURCHASE OF THE DEBENTURES. . . . . . . . . . . . . . . . 11
SECTION 206. DECLARATION OF TRUST. . . . . . . . . . . . . . . . . . . 11
SECTION 207. AUTHORIZATION TO ENTER INTO CERTAIN TRANSACTIONS. . . . . 12
SECTION 208. ASSETS OF TRUST . . . . . . . . . . . . . . . . . . . . . 15
SECTION 209. TITLE TO TRUST PROPERTY . . . . . . . . . . . . . . . . . 15

ARTICLE III. PAYMENT ACCOUNT . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 301. PAYMENT ACCOUNT . . . . . . . . . . . . . . . . . . . . . 15

ARTICLE IV. DISTRIBUTIONS; REDEMPTION. . . . . . . . . . . . . . . . . . . 16
SECTION 401. DISTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 402. REDEMPTION. . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 403. SUBORDINATION OF THE COMMON SECURITIES. . . . . . . . . . 18
SECTION 404. PAYMENT PROCEDURES. . . . . . . . . . . . . . . . . . . . 19
SECTION 405. TAX RETURNS AND REPORTS . . . . . . . . . . . . . . . . . 19
SECTION 406. PAYMENT OF TAXES, DUTIES, ETC. OF THE TRUST . . . . . . . 19
SECTION 407. PAYMENTS UNDER THE INDENTURE. . . . . . . . . . . . . . . 19

ARTICLE V. THE TRUST SECURITIES CERTIFICATES . . . . . . . . . . . . . . . 20
SECTION 501. INITIAL OWNERSHIP . . . . . . . . . . . . . . . . . . . . 20
SECTION 502. THE TRUST SECURITIES CERTIFICATES . . . . . . . . . . . . 20
SECTION 503. EXECUTION, AUTHENTICATION AND DELIVERY OF THE TRUST
SECURITIES CERTIFICATES . . . . . . . . . . . . . . . . . 20
SECTION 504. REGISTRATION OF TRANSFER AND EXCHANGE OF THE PREFERRED
SECURITIES CERTIFICATES . . . . . . . . . . . . . . . . . 21
SECTION 505. MUTILATED, DESTROYED, LOST OR STOLEN TRUST SECURITIES
CERTIFICATES. . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 506. PERSONS DEEMED THE SECURITYHOLDERS. . . . . . . . . . . . 22

<PAGE>

SECTION 507. ACCESS TO LIST OF THE SECURITYHOLDERS' NAMES AND
ADDRESSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 508. MAINTENANCE OF OFFICE OR AGENCY . . . . . . . . . . . . . 23
SECTION 509. APPOINTMENT OF THE PAYING AGENT . . . . . . . . . . . . . 23
SECTION 510. OWNERSHIP OF THE COMMON SECURITIES BY THE DEPOSITOR . . . 24
SECTION 511. THE PREFERRED SECURITIES CERTIFICATES . . . . . . . . . . 24
SECTION 512. [Intentionally Omitted] . . . . . . . . . . . . . . . . . 24
SECTION 513. [Intentionally Omitted] . . . . . . . . . . . . . . . . . 24
SECTION 514. RIGHTS OF THE SECURITYHOLDERS.. . . . . . . . . . . . . . 25

ARTICLE VI. ACTS OF THE SECURITYHOLDERS; MEETINGS; VOTING. . . . . . . . . 25
SECTION 601. LIMITATIONS ON VOTING RIGHTS. . . . . . . . . . . . . . . 25
SECTION 602. NOTICE OF MEETINGS. . . . . . . . . . . . . . . . . . . . 26
SECTION 603. MEETINGS OF THE PREFERRED SECURITYHOLDERS . . . . . . . . 27
SECTION 604. VOTING RIGHTS . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 605. PROXIES, ETC. . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 606. SECURITYHOLDER ACTION BY WRITTEN CONSENT. . . . . . . . . 28
SECTION 607. RECORD DATE FOR VOTING AND OTHER PURPOSES . . . . . . . . 28
SECTION 608. ACTS OF THE SECURITYHOLDERS . . . . . . . . . . . . . . . 28
SECTION 609. INSPECTION OF RECORDS . . . . . . . . . . . . . . . . . . 29

ARTICLE VII. REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . . . . . . 29
SECTION 701. REPRESENTATIONS AND WARRANTIES OF THE BANK AND THE
PROPERTY TRUSTEE. . . . . . . . . . . . . . . . . . . . . 29
SECTION 702. REPRESENTATIONS AND WARRANTIES OF THE DELAWARE BANK AND
THE DELAWARE TRUSTEE. . . . . . . . . . . . . . . . . . . 30
SECTION 703. REPRESENTATIONS AND WARRANTIES OF THE DEPOSITOR . . . . . 31

ARTICLE VIII TRUSTEES . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 801. CERTAIN DUTIES AND RESPONSIBILITIES . . . . . . . . . . . 32
SECTION 802. CERTAIN NOTICES . . . . . . . . . . . . . . . . . . . . . 33
SECTION 803. CERTAIN RIGHTS OF THE PROPERTY TRUSTEE. . . . . . . . . . 34
SECTION 804. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF SECURITIES. . 36
SECTION 805. MAY HOLD SECURITIES . . . . . . . . . . . . . . . . . . . 36
SECTION 806. COMPENSATION; INDEMNITY; FEES . . . . . . . . . . . . . . 36
SECTION 807. CORPORATE PROPERTY TRUSTEE REQUIRED; ELIGIBILITY
OF TRUSTEES . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 808. CONFLICTING INTERESTS . . . . . . . . . . . . . . . . . . 38
SECTION 809. CO-TRUSTEES AND SEPARATE TRUSTEE. . . . . . . . . . . . . 38
SECTION 810. RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR . . . . 39

<PAGE>

SECTION 811. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR. . . . . . . . . . 41
SECTION 812. MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION
TO BUSINESS . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 813. PREFERENTIAL COLLECTION OF CLAIMS AGAINST DEPOSITOR
OR TRUST. . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 814. REPORTS BY THE PROPERTY TRUSTEE . . . . . . . . . . . . . 42
SECTION 815. REPORTS TO THE PROPERTY TRUSTEE . . . . . . . . . . . . . 42
SECTION 816. EVIDENCE OF COMPLIANCE WITH CONDITIONS PRECEDENT. . . . . 42
SECTION 817. NUMBER OF TRUSTEES. . . . . . . . . . . . . . . . . . . . 42
SECTION 818. DELEGATION OF POWER . . . . . . . . . . . . . . . . . . . 43
SECTION 819. VOTING. . . . . . . . . . . . . . . . . . . . . . . . . . 43

ARTICLE IX. TERMINATION, LIQUIDATION AND MERGER. . . . . . . . . . . . . . 43
SECTION 901 TERMINATION UPON EXPIRATION DATE . . . . . . . . . . . . . 43
SECTION 902. EARLY TERMINATION . . . . . . . . . . . . . . . . . . . . 43
SECTION 903. TERMINATION . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 904. LIQUIDATION . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 905. MERGERS, CONSOLIDATIONS, AMALGAMATIONS OR
REPLACEMENTS OF THE TRUST . . . . . . . . . . . . . . . . 46

ARTICLE X. MISCELLANEOUS PROVISIONS. . . . . . . . . . . . . . . . . . . . 47
SECTION 1001. LIMITATION OF RIGHTS OF THE SECURITYHOLDERS. . . . . . . 47
SECTION 1002. AMENDMENT. . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 1003. SEPARABILITY . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 1004. GOVERNING LAW. . . . . . . . . . . . . . . . . . . . . . 49
SECTION 1005. PAYMENTS DUE ON NON-BUSINESS DAY . . . . . . . . . . . . 49
SECTION 1006. SUCCESSORS . . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 1007. HEADINGS . . . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 1008. REPORTS, NOTICES AND DEMANDS . . . . . . . . . . . . . . 49
SECTION 1009. AGREEMENT NOT TO PETITION. . . . . . . . . . . . . . . . 50
SECTION 1010. TRUST INDENTURE ACT; CONFLICT WITH TRUST INDENTURE ACT . 51
SECTION 1011. ACCEPTANCE OF TERMS OF THE TRUST AGREEMENT,
THE GUARANTEE AND THE INDENTURE. . . . . . . . . . . . . 51

EXHIBITS
Exhibit A Certificate of Trust
Exhibit B [Intentionally Omitted]
Exhibit C Form of Common Securities Certificate
Exhibit D Form of Expense Agreement
Exhibit E Form of Preferred Securities Certificate

iii

<PAGE>

CROSS-REFERENCE TABLE

Section of Section of Amended
Trust Indenture Act and Restated
of 1939, as amended Trust Agreement
- ------------------- ------------------

310(a)(1). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .807
310(a)(2). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .807
310(a)(3). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .807
310(a)(4). . . . . . . . . . . . . . . . . . . . . . . . . . . . . 207(a)(ii)
310(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .808
311(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .813
311(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .813
312(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .507
312(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .507
312(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .507
313(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 814(a)
313(a)(4). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 814(b)
313(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 814(b)
313(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1008
313(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 814(c)
314(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .815
314(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
314(c)(1). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .816
314(c)(2). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .816
314(c)(3). . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
314(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
314(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101, 816
315(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 801(a), 803(a)
315(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .802, 1008
315(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 801(a)
315(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 801, 803
316(a)(2). . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
316(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
316(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .607
317(a)(1). . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
317(a)(2). . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
317(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .509
318(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1010

Note: This Cross-Reference Table does not constitute part of this Agreement
and shall not affect any interpretation of any of its terms or
provisions.

<PAGE>

AMENDED AND RESTATED TRUST AGREEMENT

AMENDED AND RESTATED TRUST AGREEMENT, dated as of _________, 1997, among
(i) INDIANA UNITED BANCORP, an Indiana corporation (including any successors
or assigns, the "Depositor"), (ii) STATE STREET BANK AND TRUST COMPANY, a
trust company duly organized and existing under the laws of the Commonwealth
of Massachusetts, as property trustee (the "Property Trustee" and, in its
separate corporate capacity and not in its capacity as Property Trustee, the
"Bank"), (iii) WILMINGTON TRUST COMPANY, a Delaware banking corporation duly
organized and existing under the laws of the State of Delaware, as Delaware
trustee (the "Delaware Trustee," and, in its separate corporate capacity and
not in its capacity as Delaware Trustee, the "Delaware Bank") (iv) ROBERT E.
HOPTRY, an individual, JAY B. FAGER, an individual, and DARYL R. TRESSLER, an
individual, each of whose address is c/o Indiana United Bancorp, 201 North
Broadway, P.O. Box 87, Greensburg, Indiana 47240, (each an "Administrative
Trustee" and collectively the "Administrative Trustees") (the Property
Trustee, the Delaware Trustee and the Administrative Trustees referred to
collectively as the "Trustees"), and (v) the several Holders (as hereinafter
defined).

RECITALS

WHEREAS, the Depositor, the Delaware Trustee, and ROBERT E. HOPTRY, JAY B.
FAGER and DARYL R. TRESSLER, each as an Administrative Trustee, have
heretofore duly declared and established a business trust pursuant to the
Delaware Business Trust Act (as hereinafter defined) by the entering into of
that certain Trust Agreement, dated as of November 10, 1997 (the "Original
Trust Agreement"), and by the execution and filing by the Delaware Trustee,
the Depositor and the Administrative Trustees with the Secretary of State of
the State of Delaware of the Certificate of Trust, filed on November 12,
1997, the form of which is attached as Exhibit A; and

WHEREAS, the Depositor, the Delaware Trustee, the Property Trustee and the
Administrative Trustees desire to amend and restate the Original Trust
Agreement in its entirety as set forth herein to provide for, among other
things, (i) the issuance of the Common Securities (as defined herein) by the
Trust (as defined herein) to the Depositor; (ii) the issuance and sale of the
Preferred Securities (as defined herein) by the Trust pursuant to the
Underwriting Agreement (as defined herein); (iii) the acquisition by the
Trust from the Depositor of all of the right, title and interest in the
Debentures (as defined herein); and (iv) the appointment of the Trustees;

NOW THEREFORE, in consideration of the agreements and obligations set
forth herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, each party, for the benefit of
the other parties and for the benefit of the Securityholders (as defined
herein), hereby amends and restates the Original Trust Agreement in its
entirety and agrees as follows:

<PAGE>

ARTICLE I
DEFINED TERMS

SECTION 101. DEFINITIONS.

For all purposes of this Trust Agreement, except as otherwise expressly
provided or unless the context otherwise requires:

(a) the terms defined in this Article I have the meanings assigned to them
in this Article I and include the plural as well as the singular;

(b) all other terms used herein that are defined in the Trust Indenture
Act, either directly or by reference therein, have the meanings assigned to
them therein;

(c) unless the context otherwise requires, any reference to an "Article"
or a "Section" refers to an Article or a Section, as the case may be, of this
Trust Agreement; and

(d) the words "herein", "hereof" and "hereunder" and other words of
similar import refer to this Trust Agreement as a whole and not to any
particular Article, Section or other subdivision.

"Act" has the meaning specified in Section 608.

"Additional Amount" means, with respect to Trust Securities of a given
Liquidation Amount and/or a given period, the amount of additional interest
accrued on interest in arrears and paid by the Depositor on a Like Amount of
Debentures for such period.

"Additional Payments" has the meaning specified in Section 1.1 of the
Indenture.

"Administrative Trustee" means each of ROBERT E. HOPTRY, JAY B. FAGER and
DARYL R. TRESSLER, solely in his capacity as Administrative Trustee of the Trust
formed and continued hereunder and not in his individual capacity, or such
Administrative Trustee's successor in interest in such capacity, or any
successor trustee appointed as herein provided.

"Authenticating Agent" means an authenticating agent with respect to the
Preferred Securities appointed by the Property Trustee pursuant to Section
503.

"Bank" has the meaning specified in the Preamble to this Trust Agreement.

2
<PAGE>

"Bankruptcy Event" means, with respect to any Person:

(a) the entry of a decree or order by a court having jurisdiction in the
premises adjudging such Person a bankrupt or insolvent, or approving as
properly filed a petition seeking liquidation or reorganization of or in
respect of such Person under the United States Bankruptcy Code of 1978, as
amended, or any other similar applicable federal or state law, and the
continuance of any such decree or order unvacated and unstayed for a period
of 90 days; or the commencement of an involuntary case under the United
States Bankruptcy Code of 1978, as amended, in respect of such Person, which
shall continue undismissed for a period of 90 days or entry of an order for
relief in such case; or the entry of a decree or order of a court having
jurisdiction in the premises for the appointment on the ground of insolvency
or bankruptcy of a receiver, custodian, liquidator, trustee or assignee in
bankruptcy or insolvency of such Person or of its property, or for the
winding up or liquidation of its affairs, and such decree or order shall have
remained in force unvacated and unstayed for a period of 90 days; or

(b) the institution by such Person of proceedings to be adjudicated a
voluntary bankrupt, or the consent by such Person to the filing of a
bankruptcy proceeding against it, or the filing by such Person of a petition
or answer or consent seeking liquidation or reorganization under the United
States Bankruptcy Code of 1978, as amended, or other similar applicable
Federal or State law, or the consent by such Person to the filing of any such
petition or to the appointment on the ground of insolvency or bankruptcy of a
receiver or custodian or liquidator or trustee or assignee in bankruptcy or
insolvency of such Person or of its property, or shall make a general
assignment for the benefit of creditors.

"Bankruptcy Laws" has the meaning specified in Section 1009.

"Board Resolution" means a copy of a resolution certified by the Secretary
or an Assistant Secretary of the Depositor to have been duly adopted by the
Depositor's Board of Directors, or such committee of the Board of Directors
or officers of the Depositor to which authority to act on behalf of the Board
of Directors has been delegated, and to be in full force and effect on the
date of such certification, and delivered to the appropriate Trustee.

"Business Day" means any day other than a Saturday or Sunday or a day on
which federal or state banking institutions in the Borough of Manhattan, the
City of New York are authorized or required by law, executive order or
regulation to close, or a day on which the Corporate Trust Office of the
Property Trustee or the Corporate Trust Office of the Debenture Trustee is
closed for business.

"Certificate of Trust" means the certificate of trust filed with the
Secretary of State of the State of Delaware with respect to the Trust, as
amended or restated from time to time.

"Closing Date" means the date of execution and delivery of this Trust
Agreement.

"Code" means the Internal Revenue Code of 1986, as amended.

3
<PAGE>

"Common Security" means an undivided beneficial interest in the assets of
the Trust, having a Liquidation Amount of $10 and having the rights provided
therefor in this Trust Agreement, including the right to receive
Distributions and a Liquidation Distribution as provided herein.

"Common Securities Certificate" means a certificate evidencing ownership
of Common Securities, substantially in the form attached as Exhibit C.

"Corporate Trust Office" means the office at which, at any particular
time, the corporate trust business of the Property Trustee or the Debenture
Trustee, as the case may be, shall be principally administered, which office
at the date hereof, in each such case, is located at Two International Place,
4th Floor, Boston, Massachusetts 02110, Attention: Corporate Trust Department.

"Debenture Event of Default" means an "Event of Default" as defined in
Section 7.1 of the Indenture.

"Debenture Redemption Date" means, with respect to any Debentures to be
redeemed under the Indenture, the date fixed for redemption under the
Indenture.

"Debenture Trustee" means State Street Bank and Trust Company, a banking
corporation organized under the laws of the Commonwealth of Massachusetts and
any successor thereto, as trustee under the Indenture.

"Debentures" means the $19,072,170 aggregate principal amount (or up to
$21,932,990 aggregate principal amount if the Underwriter exercises its
Option and there is an Option Closing Date) of the Depositor's ____%
Subordinated Debentures due 2027, issued pursuant to the Indenture.

"Delaware Bank" has the meaning specified in the Preamble to this Trust
Agreement.

"Delaware Business Trust Act" means Chapter 38 of Title 12 of the Delaware
Code, 12 Delaware Code Sections 3801 et seq. as it may be amended from time
to time.

"Delaware Trustee" means the commercial bank or trust company identified
as the "Delaware Trustee" in the Preamble to this Trust Agreement solely in
its capacity as Delaware Trustee of the Trust formed and continued hereunder
and not in its individual capacity, or its successor in interest in such
capacity, or any successor trustee appointed as herein provided.

"Depositor" has the meaning specified in the Preamble to this Trust
Agreement.

"Distribution Date" has the meaning specified in Section 401(a).

4
<PAGE>

"Distributions" means amounts payable in respect of the Trust Securities
as provided in Section 401.

"Early Termination Event" has the meaning specified in Section 902.

"Event of Default" means any one of the following events (whatever the
reason for such Event of Default and whether it shall be voluntary or
involuntary or be effected by operation of law or pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body):

(a) the occurrence of a Debenture Event of Default; or

(b) default by the Trust or the Property Trustee in the payment of any
Distribution when it becomes due and payable, and continuation of such
default for a period of 30 days; or

(c) default by the Trust or the Property Trustee in the payment of any
Redemption Price of any Trust Security when it becomes due and payable; or

(d) default in the performance, or breach, in any material respect, of
any covenant or warranty of the Trustees in this Trust Agreement (other than
a covenant or warranty a default in the performance of which or the breach of
which is dealt with in clause (b) or (c), above) and continuation of such
default or breach for a period of 60 days after there has been given, by
registered or certified mail, to the defaulting Trustee or Trustees by the
Holders of at least 25% in aggregate Liquidation Amount of the Outstanding
Preferred Securities a written notice specifying such default or breach and
requiring it to be remedied and stating that such notice is a "Notice of
Default" hereunder; or

(e) the occurrence of a Bankruptcy Event with respect to the Property
Trustee and the failure by the Depositor to appoint a successor Property
Trustee within 60 days thereof.

"Exchange Act" means the Securities Exchange Act of 1934, as amended.

"Expense Agreement" means the Agreement as to Expenses and Liabilities
between the Depositor and the Trust, substantially in the form attached as
Exhibit D, as amended from time to time.

"Expiration Date" has the meaning specified in Section 901.

"Extension Period" has the meaning specified in Section 4.1 of the
Indenture.

"Guarantee" means the Preferred Securities Guarantee Agreement executed
and delivered by the Depositor and State Street Bank and Trust Company, as
trustee, contemporaneously with the execution and delivery of this Trust
Agreement, for the benefit of the Holders of the Preferred Securities, as
amended from time to time.

5
<PAGE>

"Indenture" means the Indenture, dated as of _______________, 1997,
between the Depositor and the Debenture Trustee, as trustee, as amended or
supplemented from time to time pertaining to the Debentures of the Depositor.

"Investment Company Act," means the Investment Company Act of 1940, as
amended, as in effect at the date of execution of this instrument.

"Lien" means any lien, pledge, charge, encumbrance, mortgage, deed of
trust, adverse ownership interest, hypothecation, assignment, security
interest or preference, priority or other security agreement or preferential
arrangement of any kind or nature whatsoever.

"Like Amount" means (a) with respect to a redemption of Trust Securities,
Trust Securities having a Liquidation Amount equal to the principal amount of
Debentures to be contemporaneously redeemed in accordance with the Indenture
and the proceeds of which shall be used to pay the Redemption Price of such
Trust Securities; and (b) with respect to a distribution of Debentures to
Holders of Trust Securities in connection with a termination or liquidation
of the Trust, Debentures having a principal amount equal to the Liquidation
Amount of the Trust Securities of the Holder to whom such Debentures are
distributed. Each Debenture distributed pursuant to clause (b) above shall
carry with it accumulated interest in an amount equal to the accumulated and
unpaid interest then due on such Debenture.

"Liquidation Amount" means the stated amount of $10 per Trust Security.

"Liquidation Date" means the date on which Debentures are to be
distributed to Holders of Trust Securities in connection with a termination
and liquidation of the Trust pursuant to Section 904(a).

"Liquidation Distribution" has the meaning specified in Section 904(d).

"Officers' Certificate" means a certificate signed by the President or a
Vice President and by the Treasurer or an Assistant Treasurer or the
Controller or an Assistant Controller or the Secretary or an Assistant
Secretary, of the Depositor, and delivered to the appropriate Trustee. One of
the officers signing an Officers' Certificate given pursuant to Section 816
shall be the principal executive, financial or accounting officer of the
Depositor. Any Officers' Certificate delivered with respect to compliance
with a condition or covenant provided for in this Trust Agreement shall
include:

(a) a statement that each officer signing the Officers' Certificate has
read the covenant or condition and the definitions relating thereto;

(b) a brief statement of the nature and scope of the examination or
investigation undertaken by each officer in rendering the Officers'
Certificate;

(c) a statement that each such officer has made such examination or
investigation as, in such Officers' opinion, is necessary to enable such
officer to express an informed opinion as to whether or not such covenant or
condition has been complied with; and

6
<PAGE>

(d) a statement as to whether, in the opinion of each such officer, such
condition or covenant has been complied with.

"Opinion of Counsel" means an opinion in writing of legal counsel, who may
be counsel for the Trust, the Property Trustee, the Delaware Trustee or the
Depositor, but not an employee of any thereof, and who shall be reasonably
acceptable to the Property Trustee.

"Option" means the grant by the Trust to the Underwriter of an option to
purchase all or any portion of an additional 277,500 Preferred Securities,
pursuant to the terms of the Underwriting Agreement.

"Option Closing Date" means the time, date of payment and delivery of the
Preferred Securities Certificates purchased pursuant to the Underwriter's
exercise of the Option, as more particularly described in the Underwriting
Agreement.

"Original Trust Agreement" has the meaning specified in the Recitals to
this Trust Agreement.

"Outstanding", when used with respect to the Preferred Securities, means,
as of the date of determination, all of the Preferred Securities theretofore
executed and delivered under this Trust Agreement, except:

(a) the Preferred Securities theretofore canceled by the Property
Trustee or delivered to the Property Trustee for cancellation;

(b) the Preferred Securities for whose payment or redemption money in
the necessary amount has been theretofore deposited with the Property Trustee
or any Paying Agent for the Holders of such Preferred Securities; provided
that, if such Preferred Securities are to be redeemed, notice of such
redemption has been duly given pursuant to this Trust Agreement; and

(c) the Preferred Securities which have been paid or in exchange for or
in lieu of which other Preferred Securities have been executed and delivered
pursuant to Sections 504, 505 and 511; provided, however, that in determining
whether the Holders of the requisite Liquidation Amount of the Outstanding
Preferred Securities have given any request, demand, authorization,
direction, notice, consent or waiver hereunder, the Preferred Securities
owned by the Depositor, any Trustee or any Affiliate of the Depositor or any
Trustee shall be disregarded and deemed not to be Outstanding, except that
(a) in determining whether any Trustee shall be protected in relying upon any
such request, demand, authorization, direction, notice, consent or waiver,
only the Preferred Securities that such Trustee knows to be so owned shall be
so disregarded; and (b) the foregoing shall not apply at any time when all of
the Outstanding Preferred Securities are owned by the Depositor, one or more
of the Trustees and/or any such Affiliate. The Preferred Securities so owned
which have been pledged in good faith may be regarded as Outstanding if the
pledgee establishes to the satisfaction of the Administrative Trustees the
pledgee's right so to act with respect to such Preferred Securities and the
pledgee is not the Depositor or any other Obligor upon the Preferred
Securities or a Person directly or indirectly controlling or controlled by or
under direct or indirect common control with the Depositor or any Affiliate
of the Depositor.

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"Paying Agent" means any paying agent or co-paying agent appointed
pursuant to Section 509 and shall initially be the Bank.

"Payment Account" means a segregated non-interest-bearing corporate trust
account maintained by the Property Trustee with the Bank in its trust
department for the benefit of the Securityholders in which all amounts paid
in respect of the Debentures shall be held and from which the Property
Trustee shall make payments to the Securityholders in accordance with
Sections 401 and 402.

"Person" means any individual, corporation, partnership, joint venture,
trust, limited liability company or corporation, unincorporated organization
or government or any agency or political subdivision thereof.

"Preferred Security" means an undivided beneficial interest in the assets
of the Trust, having a Liquidation Amount of $10 and having the rights
provided therefor in this Trust Agreement, including the right to receive
Distributions and a Liquidation Distribution as provided herein.

"Preferred Securities Certificate", means a certificate evidencing
ownership of Preferred Securities, substantially in the form attached as
Exhibit E.

"Property Trustee" means the commercial bank or trust company identified
as the "Property Trustee," in the Preamble to this Trust Agreement solely in
its capacity as Property Trustee of the Trust heretofore formed and continued
hereunder and not in its individual capacity, or its successor in interest in
such capacity, or any successor property trustee appointed as herein provided.

"Redemption Date" means, with respect to any Trust Security to be
redeemed, the date fixed for such redemption by or pursuant to this Trust
Agreement; provided that each Debenture Redemption Date and the stated
maturity of the Debentures shall be a Redemption Date for a Like Amount of
Trust Securities.

"Redemption Price" means, with respect to any Trust Security, the
Liquidation Amount of such Trust Security, plus accumulated and unpaid
Distributions to the Redemption Date, paid by the Depositor upon the
concurrent redemption of a Like Amount of Debentures, allocated on a pro rata
basis (based on Liquidation Amounts) among the Trust Securities.

"Relevant Trustee" shall have the meaning specified in Section 810.

"Securities Register" and "Securities Registrar" have the respective
meanings specified in Section 504.

"Securityholder" or "Holder" means a Person in whose name a Trust Security
is or Trust Securities are registered in the Securities Register; any such
Person is a beneficial owner within the meaning of the Delaware Business
Trust Act.

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"Trust" means the Delaware business trust created and continued hereby and
identified on the cover page to this Trust Agreement.

"Trust Agreement" means this Amended and Restated Trust Agreement, as the
same may be modified, amended or supplemented in accordance with the
applicable provisions hereof, including all exhibits hereto, including, for
all purposes of this Trust Agreement and any such modification, amendment or
supplement, the provisions of the Trust Indenture Act that are deemed to be a
part of and govern this Trust Agreement and any such modification, amendment
or supplement, respectively.

"Trust Indenture Act" means the Trust Indenture Act of 1939, as amended,
as in force at the date as of which this instrument was executed; provided,
however, that in the event the Trust Indenture Act of 1939, as amended, is
amended after such date, "Trust Indenture Act" means, to the extent required
by any such amendment, the Trust Indenture Act of 1939 as so amended.

"Trust Property" means (a) the Debentures; (b) the rights of the Property
Trustee under the Guarantee; (c) any cash on deposit in, or owing to, the
Payment Account; and (d) all proceeds and rights in respect of the foregoing
and any other property and assets for the time being held or deemed to be
held by the Property Trustee pursuant to the trusts of this Trust Agreement.

"Trust Security" means any one of the Common Securities or the Preferred
Securities.

"Trust Securities Certificate" means any one of the Common Securities
Certificates or the Preferred Securities Certificates.

"Trustees" means, collectively, the Property Trustee, the Delaware Trustee
and the Administrative Trustees.

"Underwriter" means Stifel, Nicolaus & Company, Incorporated having its
business address at 500 North Broadway, St. Louis, Missouri 63102.

"Underwriting Agreement" means the Underwriting Agreement, dated as of
____________, 1997, among the Trust, the Depositor and the Underwriter.

ARTICLE II
ESTABLISHMENT OF THE TRUST

SECTION 201. NAME.

The Trust created and continued hereby shall be known as "IUB Capital
Trust," as such name may be modified from time to time by the Administrative
Trustees following written notice to the Holders of Trust Securities and the
other Trustees, in which name the Trustees may engage in the transactions
contemplated hereby, make and execute contracts and other instruments on
behalf of the Trust and sue and be sued.

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SECTION 202. OFFICE OF THE DELAWARE TRUSTEE; PRINCIPAL PLACE OF BUSINESS.

The address of the Delaware Trustee in the State of Delaware is c/o
Wilmington Trust Company, Rodney Square North, 1100 North Market Street,
Wilmington, Delaware 19890-0001, Attention: Corporate Trust Administration,
or such other address in the State of Delaware as the Delaware Trustee may
designate by written notice to the Securityholders and the Depositor. The
principal executive office of the Trust is c/o Indiana United Bancorp, 201
North Broadway, P.O. Box 87, Greensburg, Indiana 47240, Attention: Chairman
and President.

SECTION 203. INITIAL CONTRIBUTION OF TRUST PROPERTY; ORGANIZATIONAL
EXPENSES.

The Trustees acknowledge receipt in trust from the Depositor in connection
with the Original Trust Agreement of the sum of $10, which constituted the
initial Trust Property. The Depositor shall pay organizational expenses of
the Trust as they arise or shall, upon request of any Trustee, promptly
reimburse such Trustee for any such expenses paid by such Trustee. The
Depositor shall make no claim upon the Trust Property for the payment of such
expenses.

SECTION 204. ISSUANCE OF THE PREFERRED SECURITIES.

On __________, 1997, the Depositor and an Administrative Trustee, on
behalf of the Trust and pursuant to the Original Trust Agreement, executed
and delivered the Underwriting Agreement. Contemporaneously with the
execution and delivery of this Trust Agreement, an Administrative Trustee, on
behalf of the Trust, shall execute in accordance with Section 502, and
deliver in accordance with the Underwriting Agreement, Preferred Securities
Certificates, registered in the name of the Persons entitled thereto, in an
aggregate amount of 1,850,000 Preferred Securities having an aggregate
Liquidation Amount of $18,500,000 against receipt of the aggregate purchase
price of such Preferred Securities of $18,500,000, which amount such
Administrative Trustee shall promptly deliver to the Property Trustee. If the
Underwriter exercises its Option and there is an Option Closing, then an
Administrative Trustee, on behalf of the Trust, shall execute in accordance
with Section 502, and deliver in accordance with the Underwriting Agreement,
additional Preferred Securities Certificates, registered in the name of the
Persons entitled thereto, in an aggregate amount of up to 277,500 Preferred
Securities having an aggregate Liquidation Amount of up to $2,775,000 against
receipt of the aggregate purchase price of such Preferred Securities equal to
the product of $10 multiplied by the number of the Preferred Securities
purchased pursuant to the Option, which amount such Administrative Trustee
shall promptly deliver to the Property Trustee.

SECTION 205. ISSUANCE OF THE COMMON SECURITIES; SUBSCRIPTION AND PURCHASE
OF THE DEBENTURES.

(a) Contemporaneously with the execution and delivery of this Trust
Agreement, an Administrative Trustee, on behalf of the Trust, shall execute
in accordance with Section 502 and deliver to the Depositor, Common
Securities Certificates, registered in the name of the Depositor, in an
aggregate amount of 57,217 Common Securities having an aggregate

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<PAGE>

Liquidation Amount of $572,170 against payment by the Depositor of such
amount. Contemporaneously therewith, an Administrative Trustee, on behalf of
the Trust, shall subscribe to and purchase from the Depositor Debentures,
registered in the name of the Property Trustee on behalf of the Trust and
having an aggregate principal amount equal to $19,072,170, and, in
satisfaction of the purchase price for such Debentures, the Property Trustee,
on behalf of the Trust, shall deliver to the Depositor the sum of $19,072,170.

(b) If the Underwriter exercises the Option and there is an Option
Closing Date, then an Administrative Trustee, on behalf of the Trust, shall
execute in accordance with Section 502, and deliver to the Depositor, Common
Securities Certificates, registered in the name of the Depositor, in an
aggregate amount of up to 8,582 Common Securities having an aggregate
Liquidation Amount of up to $85,820 against payment by the Depositor of an
amount equal to the product of $10 multiplied by number of additional Common
Securities purchased by the Depositor. Contemporaneously therewith, an
Administrative Trustee, on behalf of the Trust, shall subscribe to and
purchase from the Depositor, Debentures, registered in the name of the
Property Trustee on behalf of the Trust and having an aggregate principal
amount of up to $2,860,820, and, in satisfaction of the purchase price of
such Debentures, the Property Trustee, on behalf of the Trust, shall deliver
to the Depositor an amount equal to the sum of the amounts received from one
of the Administrative Trustees pursuant to the first sentence of this Section
205(b) and to the last sentence of Section 204.

SECTION 206. DECLARATION OF TRUST.

The exclusive purposes and functions of the Trust are (a) to issue and
sell Trust Securities and use the proceeds from such sale to acquire the
Debentures; and (b) to engage in those activities necessary, convenient or
incidental thereto. The Depositor hereby appoints the Trustees as trustees of
the Trust, to have all the rights, powers and duties to the extent set forth
herein, and the Trustees hereby accept such appointment. The Property Trustee
hereby declares that it shall hold the Trust Property in trust upon and
subject to the conditions set forth herein for the benefit of the
Securityholders. The Administrative Trustees shall have all rights, powers
and duties set forth herein and in accordance with applicable law with
respect to accomplishing the purposes of the Trust. The Delaware Trustee
shall not be entitled to exercise any powers, nor shall the Delaware Trustee
have any of the duties and responsibilities, of the Property Trustee or the
Administrative Trustees set forth herein. The Delaware Trustee shall be one
of the Trustees of the Trust for the sole and limited purpose of fulfilling
the requirements of Section 3807 of the Delaware Business Trust Act.

SECTION 207. AUTHORIZATION TO ENTER INTO CERTAIN TRANSACTIONS.

(a) The Trustees shall conduct the affairs of the Trust in accordance
with the terms of this Trust Agreement. Subject to the limitations set forth
in paragraph (b) of this Section 207 and Article VIII, and in accordance with
the following provisions (i) and (ii), the Administrative Trustees shall have
the authority to enter into all transactions and agreements determined by the
Administrative Trustees to be appropriate in exercising the authority,
express or implied,

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otherwise granted to the Administrative Trustees under this Trust Agreement,
and to perform all acts in furtherance thereof, including without limitation,
the following:

(i) As among the Trustees, each Administrative Trustee, acting singly or
jointly, shall have the power and authority to act on behalf of the Trust
with respect to the following matters:

(A) the issuance and sale of the Trust Securities;

(B) to cause the Trust to enter into, and to execute, deliver and
perform on behalf of the Trust, the Expense Agreement and such other
agreements or documents as may be necessary or desirable in connection with
the purposes and function of the Trust;

(C) assisting in the registration of the Preferred Securities under the
Securities Act of 1933, as amended, and under state securities or blue sky
laws, and the qualification of this Trust Agreement as a trust indenture
under the Trust Indenture Act;

(D) assisting in the listing of the Preferred Securities upon the
Nasdaq National Market or such securities exchange or exchanges as shall be
determined by the Depositor and the registration of the Preferred Securities
under the Exchange Act, and the preparation and filing of all periodic and
other reports and other documents pursuant to the foregoing;

(E) the sending of notices (other than notices of default) and other
information regarding the Trust Securities and the Debentures to the
Securityholders in accordance with this Trust Agreement;

(F) the appointment of a Paying Agent, Authenticating Agent and
Securities Registrar in accordance with this Trust Agreement;

(G) to the extent provided in this Trust Agreement, the winding up of
the affairs of and liquidation of the Trust and the preparation, execution
and filing of the certificate of cancellation with the Secretary of State of
the State of Delaware;

(H) to take all action that may be necessary or appropriate for the
preservation and the continuation of the Trust's valid existence, rights,
franchises and privileges as a statutory business trust under the laws of the
State of Delaware and of each other jurisdiction in which such existence is
necessary to protect the limited liability of the Holders of the Preferred
Securities or to enable the Trust to effect the purposes for which the Trust
was created; and

(I) the taking of any action incidental to the foregoing as the
Administrative Trustees may from time to time determine is necessary or
advisable to give effect to the terms of this Trust Agreement for the benefit
of the Securityholders (without consideration of the effect of any such
action on any particular Securityholder).

(ii) As among the Trustees, the Property Trustee shall have the power,
duty and authority to act on behalf of the Trust with respect to the
following matters:

(A) the establishment of the Payment Account;

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(B) the receipt of the Debentures;

(C) the collection of interest, principal and any other payments made
in respect of the Debentures in the Payment Account;

(D) the distribution of amounts owed to the Securityholders in respect
of the Trust Securities in accordance with the terms of this Trust Agreement;

(E) the exercise of all of the rights, powers and privileges of a
holder of the Debentures;

(F) the sending of notices of default and other information regarding
the Trust Securities and the Debentures to the Securityholders in accordance
with this Trust Agreement;

(G) the distribution of the Trust Property in accordance with the terms
of this Trust Agreement;

(H) to the extent provided in this Trust Agreement, the winding up of
the affairs of and liquidation of the Trust;

(I) after an Event of Default, the taking of any action incidental to
the foregoing as the Property Trustee may from time to time determine is
necessary or advisable to give effect to the terms of this Trust Agreement
and protect and conserve the Trust Property for the benefit of the
Securityholders (without consideration of the effect of any such action on
any particular Securityholder);

(J) registering transfers of the Trust Securities in accordance with
this Trust Agreement; and

(K) except as otherwise provided in this Section 207(a)(ii), the
Property Trustee shall have none of the duties, liabilities, powers or the
authority of the Administrative Trustees set forth in Section 207(a)(i).

(b) So long as this Trust Agreement remains in effect, the Trust (or the
Trustees acting on behalf of the Trust) shall not undertake any business,
activities or transaction except as expressly provided herein or contemplated
hereby. In particular, the Trustees shall not (i) acquire any investments or
engage in any activities not authorized by this Trust Agreement; (ii) sell,
assign, transfer, exchange, mortgage, pledge, set-off or otherwise dispose of
any of the Trust Property or interests therein, including to Securityholders,
except as expressly provided herein; (iii) take any action that would cause
the Trust to fail or cease to qualify as a "grantor trust" for United States
federal income tax purposes; (iv) incur any indebtedness for borrowed money
or issue any other debt; or (v) take or consent to any action that would
result in the placement of a Lien on any of the Trust Property. The
Administrative Trustees shall defend all claims and demands of all Persons at
any time claiming any Lien on any of the Trust Property adverse to the
interest of the Trust or the Securityholders in their capacity as
Securityholders.

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<PAGE>

(c) In connection with the issue and sale of the Preferred Securities, the
Depositor shall have the right and responsibility to assist the Trust with
respect to, or effect on behalf of the Trust, the following (and any actions
taken by the Depositor in furtherance of the following prior to the date of
this Trust Agreement are hereby ratified and confirmed in all respects):

(i) the preparation and filing by the Trust with the Commission and the
execution on behalf of the Trust of a registration statement on the
appropriate form in relation to the Preferred Securities and the Debentures,
including any amendments thereto;

(ii) the determination of the States in which to take appropriate action
to qualify or register for sale all or part of the Preferred Securities and
to do any and all such acts, other than actions which must be taken by or on
behalf of the Trust, and advise the Trustees of actions they must take on
behalf of the Trust, and prepare for execution and filing any documents to be
executed and filed by the Trust or on behalf of the Trust, as the Depositor
deems necessary or advisable in order to comply with the applicable laws of
any such States;

(iii) the preparation for filing by the Trust and execution on behalf of
the Trust of an application to the Nasdaq National Market or a national stock
exchange or other organizations for listing upon notice of issuance of any
Preferred Securities and to file or cause an Administrative Trustee to file
thereafter with such exchange or organization such notifications and
documents as may be necessary from time to time;

(iv) the preparation for filing by the Trust with the Commission and the
execution on behalf of the Trust of a registration statement on Form 8-A
relating to the registration of the Preferred Securities under Section 12(b)
or 12(g) of the Exchange Act, including any amendments thereto;

(v) the negotiation of the terms of, and the execution and delivery of,
the Underwriting Agreement providing for the sale of the Preferred
Securities; and

(vi) the taking of any other actions necessary or desirable to carry out
any of the foregoing activities.

(d) Notwithstanding anything herein to the contrary, the Administrative
Trustees are authorized and directed to conduct the affairs of the Trust and
to operate the Trust so that the Trust shall not be deemed to be an
"investment company" required to be registered under the Investment Company
Act, shall be classified as a "grantor trust" and not as an association
taxable as a corporation for United States federal income tax purposes and so
that the Debentures shall be treated as indebtedness of the Depositor for
United States federal income tax purposes. In this connection, subject to
Section 1002, the Depositor and the Administrative Trustees are authorized to
take any action, not inconsistent with applicable law or this Trust
Agreement, that each of the Depositor and the Administrative Trustees
determines in their discretion to be necessary or desirable for such purposes.

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SECTION 208. ASSETS OF TRUST.

The assets of the Trust shall consist of the Trust Property.

SECTION 209. TITLE TO TRUST PROPERTY.

Legal title to all Trust Property shall be vested at all times in the
Property Trustee (in its capacity as such) and shall be held and administered
by the Property Trustee for the benefit of the Securityholders in accordance
with this Trust Agreement.

ARTICLE III
PAYMENT ACCOUNT

SECTION 301. PAYMENT ACCOUNT.

(a) On or prior to the Closing Date, the Property Trustee shall establish
the Payment Account. The Property Trustee and any agent of the Property
Trustee shall have exclusive control and sole right of withdrawal with
respect to the Payment Account for the purpose of making deposits and
withdrawals from the Payment Account in accordance with this Trust Agreement.
All monies and other property deposited or held from time to time in the
Payment Account shall be held by the Property Trustee in the Payment Account
for the exclusive benefit of the Securityholders and for distribution as
herein provided, including (and subject to) any priority of payments provided
for herein.

(b) The Property Trustee shall deposit in the Payment Account, promptly
upon receipt, all payments of principal of or interest on, and any other
payments or proceeds with respect to, the Debentures. Amounts held in the
Payment Account shall not be invested by the Property Trustee pending
distribution thereof.

ARTICLE IV
DISTRIBUTIONS; REDEMPTION

SECTION 401. DISTRIBUTIONS.

(a) Distributions on the Trust Securities shall be cumulative, and shall
accumulate whether or not there are funds of the Trust available for the
payment of Distributions. Distributions shall accumulate from __________,
1997, and, except during any Extension Period with respect to the Debentures,
shall be payable quarterly in arrears on March 31, June 30, September 30 and
December 31 of each year, commencing on December 31, 1997. If any date on
which a Distribution is otherwise payable on the Trust Securities is not a
Business Day, then the payment of such Distribution shall be made on the next
succeeding day that is a Business Day (and without any interest or other
payment in respect of any such delay) with the same force and effect as if
made on such date (each date on which distributions are payable in accordance
with this Section 401(a), a "Distribution Date").

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<PAGE>

(b) The Trust Securities represent undivided beneficial interests in the
Trust Property. Distributions on the Trust Securities shall be payable at a
rate of ___% per annum of the Liquidation Amount of the Trust Securities. The
amount of Distributions payable for any full period shall be computed on the
basis of a 360-day year of twelve 30-day months. The amount of Distributions
for any partial period shall be computed on the basis of the number of days
elapsed in a 360-day year of twelve 30-day months. During any Extension
Period with respect to the Debentures, Distributions on the Preferred
Securities shall be deferred for a period equal to the Extension Period. The
amount of Distributions payable for any period shall include the Additional
Amounts, if any.

(c) Distributions on the Trust Securities shall be made by the Property
Trustee solely from the Payment Account and shall be payable on each
Distribution Date only to the extent that the Trust has funds then on hand
and immediately available by 12:30 p.m. on each Distribution Date in the
Payment Account for the payment of such Distributions.

(d) Distributions on the Trust Securities with respect to a Distribution
Date shall be payable to the Holders thereof as they appear on the Securities
Register for the Trust Securities on the relevant record date, which shall be
15th day of the month in which the Distribution is payable.

SECTION 402. REDEMPTION.

(a) On each Debenture Redemption Date and at maturity of the Debentures,
the Trust shall be required to redeem a Like Amount of Trust Securities at
the Redemption Price.

(b) Notice of redemption shall be given by the Property Trustee by
first-class mail, postage prepaid, mailed not less than 30 nor more than 60
days prior to the Redemption Date to each Holder of Trust Securities to be
redeemed, at such Holder's address appearing in the Securities Register. The
Property Trustee shall have no responsibility for the accuracy of any CUSIP
number contained in such notice. All notices of redemption shall state:

(i) the Redemption Date;

(ii) the Redemption Price;

(iii) the CUSIP number;

(iv) if less than all the outstanding Trust Securities are to be
redeemed, the identification and the aggregate Liquidation Amount of the
particular Trust Securities to be redeemed; and

(v) that, on the Redemption Date, the Redemption Price shall become due
and payable upon each such Trust Security to be redeemed and that
Distributions thereon shall cease to accumulate on and after said date.

(c) The Trust Securities redeemed on each Redemption Date shall be
redeemed at the Redemption Price with the proceeds from the contemporaneous
redemption of the Debentures.

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Redemptions of the Trust Securities shall be made and the Redemption Price
shall be payable on each Redemption Date only to the extent that the Trust
has immediately available funds then on hand and available in the Payment
Account for the payment of such Redemption Price.

(d) If the Property Trustee gives a notice of redemption in respect of any
of the Preferred Securities, then, by 12:00 noon, New York City time, on the
Redemption Date, subject to Section 402(c), the Property Trustee shall
deposit with the Paying Agent funds sufficient to pay the applicable
Redemption Price and shall give the Paying Agent irrevocable instructions and
authority to pay the Redemption Price to the Holders thereof upon surrender
of their Preferred Securities Certificates. Notwithstanding the foregoing,
Distributions payable on or prior to the Redemption Date for any Trust
Securities called for redemption shall be payable to the Holders of such
Trust Securities as they appear on the Securities Register for the Trust
Securities on the relevant record dates for the related Distribution Dates.
If notice of redemption shall have been given and funds deposited as
required, then upon the date of such deposit, all rights of Securityholders
holding Trust Securities so called for redemption shall cease, except the
right of such Securityholders to receive the Redemption Price and any
Distribution payable on or prior to the Redemption Date, but without
interest, and such Trust Securities shall cease to be Outstanding. In the
event that any date on which any Redemption Price is payable is not a
Business Day, then payment of the Redemption Price payable on such date shall
be made on the next succeeding day that is a Business Day (and without any
interest or other payment in respect of any such delay) with the same force
and effect as if made on such date. In the event that payment of the
Redemption Price in respect of any Trust Securities called for redemption is
improperly withheld or refused and not paid either by the Trust or by the
Depositor pursuant to the Guarantee, Distributions on such Trust Securities
shall continue to accumulate, at the then applicable rate, from the
Redemption Date originally established by the Trust for such Trust Securities
to the date such Redemption Price is actually paid, in which case the actual
payment date shall be the date fixed for redemption for purposes of
calculating the Redemption Price.

(e) Payment of the Redemption Price on the Trust Securities shall be made
to the record holders thereof as they appear on the Securities Register for
the Trust Securities on the relevant record date, which shall be the date 15
days prior to the relevant Redemption Date.

(f) Subject to Section 403(a), if less than all the Outstanding Trust
Securities are to be redeemed on a Redemption Date, then the aggregate
Liquidation Amount of Trust Securities to be redeemed shall be allocated on a
pro rata basis (based on Liquidation Amounts) among the Common Securities and
the Preferred Securities. The particular Preferred Securities to be redeemed
shall be selected not more than 60 days prior to the Redemption Date by the
Property Trustee from the Outstanding Preferred Securities not previously
called for redemption, by such method (including, without limitation, by lot)
as the Property Trustee shall deem fair and appropriate and which may provide
for the selection for redemption of portions (equal to the Liquidation Amount
or an integral multiple of such Liquidation Amount in excess thereof) of the
Liquidation Amount of the Preferred Securities of a denomination larger than
such Liquidation Amount. The Property Trustee shall promptly notify the
Securities Registrar in writing of the Preferred Securities selected for
redemption and, in the case of any Preferred Securities selected for partial
redemption, the Liquidation Amount thereof to be redeemed. For all purposes
of this

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Trust Agreement, unless the context otherwise requires, all provisions
relating to the redemption of the Preferred Securities shall relate, in the
case of any Preferred Securities redeemed or to be redeemed only in part, to
the portion of the Liquidation Amount of the Preferred Securities which has
been or is to be redeemed.

SECTION 403. SUBORDINATION OF THE COMMON SECURITIES.

(a) Payment of Distributions (including Additional Amounts, if applicable)
on, and the Redemption Price of, the Trust Securities, as applicable, shall
be made, subject to Section 402(f), pro rata among the Common Securities and
the Preferred Securities based on the Liquidation Amount of the Trust
Securities; provided, however, that if on any Distribution Date or Redemption
Date any Event of Default resulting from a Debenture Event of Default shall
have occurred and be continuing, no payment of any Distribution (including
Additional Amounts, if applicable) on, or Redemption Price of, any Common
Security, and no other payment on account of the redemption, liquidation or
other acquisition of the Common Securities, shall be made unless payment in
full in cash of all accumulated and unpaid Distributions (including
Additional Amounts, if applicable) on all Outstanding Preferred Securities
for all Distribution periods terminating on or prior thereto, or in the case
of payment of the Redemption Price the full amount of such Redemption Price
on all Outstanding Preferred Securities then called for redemption, shall
have been made or provided for, and all funds immediately available to the
Property Trustee shall first be applied to the payment in full in cash of all
Distributions (including Additional Amounts, if applicable) on, or the
Redemption Price of, the Preferred Securities then due and payable.

(b) In the case of the occurrence of any Event of Default resulting from a
Debenture Event of Default, the Holder of the Common Securities shall be
deemed to have waived any right to act with respect to any such Event of
Default under this Trust Agreement until the effect of all such Events of
Default with respect to the Preferred Securities shall have been cured,
waived or otherwise eliminated. Until any such Event of Default under this
Trust Agreement with respect to the Preferred Securities shall have been so
cured, waived or otherwise eliminated, the Property Trustee shall act solely
on behalf of the Holders of the Preferred Securities and not the Holder of
the Common Securities, and only the Holders of the Preferred Securities shall
have the right to direct the Property Trustee to act on their behalf.

SECTION 404. PAYMENT PROCEDURES.

Payments of Distributions (including Additional Amounts, if applicable) in
respect of the Preferred Securities shall be made by check mailed to the
address of the Person entitled thereto as such address shall appear on the
Securities Register. Payments in respect of the Common Securities shall be
made in such manner as shall be mutually agreed between the Property Trustee
and the Common Securityholder.

SECTION 405. TAX RETURNS AND REPORTS.

The Administrative Trustees shall prepare (or cause to be prepared), at
the Depositor's expense, and file all United States federal, state and local
tax and information returns and reports

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<PAGE>

required to be filed by or in respect of the Trust. In this regard, the
Administrative Trustees shall (a) prepare and file (or cause to be prepared
and filed) the appropriate Internal Revenue Service form required to be filed
in respect of the Trust in each taxable year of the Trust; and (b) prepare
and furnish (or cause to be prepared and furnished) to each Securityholder
the appropriate Internal Revenue Service form required to be furnished to
such Securityholder or the information required to be provided on such form.
The Administrative Trustees shall provide the Depositor with a copy of all
such returns and reports promptly after such filing or furnishing. The
Property Trustee shall comply with United States federal withholding and
backup withholding tax laws and information reporting requirements with
respect to any payments to the Securityholders under the Trust Securities.

SECTION 406. PAYMENT OF TAXES, DUTIES, ETC. OF THE TRUST.

Upon receipt under the Debentures of Additional Payments, the Property
Trustee, at the direction of an Administrative Trustee or the Depositor,
shall promptly pay any taxes, duties or governmental charges of whatsoever
nature (other than withholding taxes) imposed on the Trust by the United
States or any other taxing authority.

SECTION 407. PAYMENTS UNDER THE INDENTURE.

Any amount payable hereunder to any Holder of Preferred Securities shall
be reduced by the amount of any corresponding payment such Holder has
directly received under the Indenture pursuant to Section 514(b) or (c)
hereof.

ARTICLE V
THE TRUST SECURITIES CERTIFICATES

SECTION 501. INITIAL OWNERSHIP.

Upon the creation of the Trust and the contribution by the Depositor
pursuant to Section 203 and until the issuance of the Trust Securities, and
at any time during which no Trust Securities are outstanding, the Depositor
shall be the sole beneficial owner of the Trust.

SECTION 502. THE TRUST SECURITIES CERTIFICATES.

The Preferred Securities Certificates shall be issued in minimum
denominations of the Liquidation Amount and integral multiples of such
Liquidation Amount in excess thereof, and the Common Securities Certificates
shall be issued in denominations of the Liquidation Amount and integral
multiples thereof. The Trust Securities Certificates shall be executed on
behalf of the Trust by manual or facsimile signature of at least one
Administrative Trustee. The Trust Securities Certificates bearing the manual
or facsimile signatures of individuals who were, at the time when such
signatures shall have been affixed, authorized to sign on behalf of the
Trust, shall be validly issued and entitled to the benefits of this Trust
Agreement, notwithstanding that such individuals or any of them shall have
ceased to be so authorized prior to the delivery of such Trust Securities
Certificates or did not hold such offices at the date of delivery of such
Trust Securities Certificates. A transferee of a Trust Securities Certificate
shall become a

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<PAGE>

Securityholder, and shall be entitled to the rights and subject to the
obligations of a Securityholder hereunder, upon due registration of such
Trust Securities Certificate in such transferee's name pursuant to Sections
504 and 511.

SECTION 503. EXECUTION, AUTHENTICATION AND DELIVERY OF THE TRUST
SECURITIES CERTIFICATES.

(a) On the Closing Date and on the date on which the Underwriter exercises
the Option, as applicable, the Administrative Trustees shall cause the Trust
Securities Certificates, in an aggregate Liquidation Amount as provided in
Sections 204 and 205, to be executed on behalf of the Trust by the manual or
facsimile signature of at least one of the Administrative Trustees and
delivered to or upon the written order of the Depositor, signed by its Chief
Executive Officer, President, any Vice President, the Treasurer or any
Assistant Treasurer without further corporate action by the Depositor, in
authorized denominations.

(b) A Preferred Securities Certificate shall not be valid until
authenticated by the manual signature of an authorized signatory of the
Property Trustee. The signature shall be conclusive evidence that the
Preferred Securities Certificate has been authenticated under this Trust
Agreement. Each Preferred Security Certificate shall be dated the date of
its authentication.

(c) Upon the written order of the Trust signed by an Administrative
Trustee, the Property Trustee shall authenticate and make available for
delivery the Preferred Securities Certificates.

(d) The Property Trustee may appoint an Authenticating Agent acceptable to
the Trust to authenticate the Preferred Securities. An Authenticating Agent
may authenticate the Preferred Securities whenever the Property Trustee may
do so. Each reference in this Trust Agreement to authentication by the
Property Trustee includes authentication by such agent. An Authenticating
Agent has the same rights as the Property Trustee to deal with the Depositor
or the Trust.

SECTION 504. REGISTRATION OF TRANSFER AND EXCHANGE OF THE PREFERRED
SECURITIES CERTIFICATES.

(a) The Depositor shall keep or cause to be kept, at the office or agency
maintained pursuant to Section 508, a register or registers for the purpose
of registering the Trust Securities Certificates and transfers and exchanges
of the Preferred Securities Certificates (herein referred to as the
"Securities Register") in which the registrar designated by the Depositor
(the "Securities Registrar"), subject to such reasonable regulations as it
may prescribe, shall provide for the registration of the Preferred Securities
Certificates and the Common Securities Certificates (subject to Section 510
in the case of the Common Securities Certificates) and registration of
transfers and exchanges of the Preferred Securities Certificates as herein
provided. The Property Trustee shall be the initial Securities Registrar.

(b) Upon surrender for registration of transfer of any Preferred
Securities Certificate at the office or agency maintained pursuant to Section
508, the Administrative Trustees or any one of them shall execute and
deliver, in the name of the designated transferee or transferees, one or more
new Preferred Securities Certificates in authorized denominations of a like
aggregate

20
<PAGE>

Liquidation Amount dated the date of execution by the manual or facsimile
signature of such Administrative Trustee or Trustees. The Securities
Registrar shall not be required to register the transfer of any of the
Preferred Securities that have been called for redemption. At the option of a
Holder, the Preferred Securities Certificates may be exchanged for other
Preferred Securities Certificates in authorized denominations of the same
class and of a like aggregate Liquidation Amount upon surrender of the
Preferred Securities Certificates to be exchanged at the office or agency
maintained pursuant to Section 508.

(c) Every Preferred Securities Certificate presented or surrendered for
registration of transfer or exchange shall be accompanied by a written
instrument of transfer in form satisfactory to the Property Trustee and the
Securities Registrar duly executed by the Holder or his attorney duly
authorized in writing. Each Preferred Securities Certificate surrendered for
registration of transfer or exchange shall be canceled and subsequently
disposed of by the Property Trustee in accordance with its customary
practice. The Trust shall not be required to (i) issue, register the transfer
of, or exchange any of the Preferred Securities during a period beginning at
the opening of business 15 calendar days before the date of mailing of a
notice of redemption of any of the Preferred Securities called for redemption
and ending at the close of business on the day of such mailing; or (ii)
register the transfer of or exchange any of the Preferred Securities so
selected for redemption, in whole or in part, except the unredeemed portion
of any such Preferred Securities being redeemed in part.

(d) No service charge shall be made for any registration of transfer or
exchange of Preferred Securities Certificates, but the Securities Registrar
may require payment of a sum sufficient to cover any tax or governmental
charge that may be imposed in connection with any transfer or exchange of the
Preferred Securities Certificates.

SECTION 505. MUTILATED, DESTROYED, LOST OR STOLEN TRUST SECURITIES
CERTIFICATES.

If (a) any mutilated Trust Securities Certificate shall be surrendered to
the Securities Registrar, or if the Securities Registrar shall receive
evidence to its satisfaction of the destruction, loss or theft of any Trust
Securities Certificate; and (b) there shall be delivered to the Securities
Registrar, the Property Trustee and the Administrative Trustees such security
or indemnity as may be required by them to save each of them harmless, then
in the absence of notice that such Trust Securities Certificate shall have
been acquired by a bona fide purchaser, the Administrative Trustees, or any
one of them, on behalf of the Trust shall execute and make available for
delivery, in exchange for or in lieu of any such mutilated, destroyed, lost
or stolen Trust Securities Certificate, a new Trust Securities Certificate of
like class, tenor and denomination. In connection with the issuance of any
new Trust Securities Certificate under this Section 505, the Administrative
Trustees or the Securities Registrar may require the payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed
in connection therewith. Any duplicate Trust Securities Certificate issued
pursuant to this Section 505 shall constitute conclusive evidence of an
undivided beneficial interest in the assets of the Trust, as if originally
issued, whether or not the lost, stolen or destroyed Trust Securities
Certificate shall be found at any time.

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<PAGE>

SECTION 506. PERSONS DEEMED THE SECURITYHOLDERS.

The Trustees, the Paying Agent and the Securities Registrar shall treat
the Person in whose name any Trust Securities Certificate shall be registered
in the Securities Register as the owner of such Trust Securities Certificate
for the purpose of receiving Distributions and for all other purposes
whatsoever, and neither the Trustees nor the Securities Registrar shall be
bound by any notice to the contrary.

SECTION 507. ACCESS TO LIST OF THE SECURITYHOLDERS' NAMES AND ADDRESSES.

At any time when the Property Trustee is not also acting as the Securities
Registrar, the Administrative Trustees or the Depositor shall furnish or
cause to be furnished to the Property Trustee (a) semi-annually on or before
January 15 and July 15 in each year, a list, in such form as the Property
Trustee may reasonably require, of the names and addresses of the
Securityholders as of the most recent record date; and (b) promptly after
receipt by any Administrative Trustee or the Depositor of a request therefor
from the Property Trustee in order to enable the Property Trustee to
discharge its obligations under this Trust Agreement, in each case to the
extent such information is in the possession or control of the Administrative
Trustees or the Depositor and is not identical to a previously supplied list
or has not otherwise been received by the Property Trustee in its capacity as
Securities Registrar. The rights of the Securityholders to communicate with
other Securityholders with respect to their rights under this Trust Agreement
or under the Trust Securities, and the corresponding rights of the Trustee
shall be as provided in the Trust Indenture Act. Each Holder, by receiving
and holding a Trust Securities Certificate, and each owner shall be deemed to
have agreed not to hold the Depositor, the Property Trustee or the
Administrative Trustees accountable by reason of the disclosure of its name
and address, regardless of the source from which such information was derived.

SECTION 508. MAINTENANCE OF OFFICE OR AGENCY.

The Administrative Trustees shall maintain in a location or locations
designated by the Administrative Trustees, an office or offices or agency or
agencies where the Preferred Securities Certificates may be surrendered for
registration of transfer or exchange and where notices and demands to or upon
the Trustees in respect of the Trust Securities Certificates may be served.
The Administrative Trustees initially designate the Corporate Trust Office of
the Property Trustee, Two International Place, 4th Floor, Boston,
Massachusetts 02110, as the principal corporate trust office for such
purposes. The Administrative Trustees shall give prompt written notice to the
Depositor and to the Securityholders of any change in the location of the
Securities Register or any such office or agency.

SECTION 509. APPOINTMENT OF THE PAYING AGENT.

The Paying Agent shall initially be the Property Trustee, and any
co-paying agent chosen by the Property Trustee must be acceptable to the
Administrative Trustees and the Depositor. The Paying Agent shall make
Distributions to the Securityholders from the Payment Account and shall
report the amounts of such Distributions to the Property Trustee and the
Administrative

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<PAGE>

Trustees. Any Paying Agent shall have the revocable power to withdraw funds
from the Payment Account for the purpose of making the Distributions referred
to above. The Administrative Trustees may revoke such power and remove the
Paying Agent if such Trustees determine in their sole discretion that the
Paying Agent shall have failed to perform its obligations under this Trust
Agreement in any material respect. Any Person acting as Paying Agent shall be
permitted to resign as Paying Agent upon 30 days' written notice to the
Administrative Trustees, the Property Trustee and the Depositor. In the event
that the Property Trustee shall no longer be the Paying Agent or a successor
Paying Agent shall resign or its authority to act be revoked, the
Administrative Trustees shall appoint a successor that is acceptable to the
Property Trustee and the Depositor to act as the Paying Agent (which shall be
a bank or trust company). The Administrative Trustees shall cause such
successor Paying Agent or any additional Paying Agent appointed by the
Administrative Trustees to execute and deliver to the Trustees an instrument
in which such successor Paying Agent or additional Paying Agent shall agree
with the Trustees that as Paying Agent, such successor Paying Agent or
additional Paying Agent shall hold all sums, if any, held by it for payment
to the Securityholders in trust for the benefit of the Securityholders
entitled thereto until such sums shall be paid to such Securityholders. The
Paying Agent shall return all unclaimed funds to the Property Trustee and,
upon removal of a Paying Agent, such Paying Agent shall also return all funds
in its possession to the Property Trustee. The provisions of Sections 801,
803 and 806 shall apply to the Property Trustee also in its role as the
Paying Agent, for so long as the Property Trustee shall act as Paying Agent
and, to the extent applicable, to any other Paying Agent appointed hereunder.
Any reference in this Trust Agreement to the Paying Agent shall include any
co-paying agent unless the context requires otherwise.

SECTION 510. OWNERSHIP OF THE COMMON SECURITIES BY THE DEPOSITOR.

On the Closing Date, the Depositor shall acquire and retain beneficial and
record ownership of the Common Securities. To the fullest extent permitted by
law, any attempted transfer of the Common Securities (other than a transfer
in connection with a merger or consolidation of the Depositor into another
corporation pursuant to Section 12.1 of the Indenture) shall be void. The
Administrative Trustees shall cause each Common Securities Certificate issued
to the Depositor to contain a legend stating "THIS CERTIFICATE IS NOT
TRANSFERABLE".

SECTION 511. THE PREFERRED SECURITIES CERTIFICATES.

(a) Each owner shall receive a Preferred Securities Certificate
representing such owner's interest in such Preferred Securities. Upon the
issuance of the Preferred Securities Certificates, the Trustees shall
recognize the record holders of the Preferred Securities Certificates as the
Securityholders. The Preferred Securities Certificates shall be printed,
lithographed or engraved or may be produced in any other manner as is
reasonably acceptable to the Administrative Trustees, as evidenced by the
execution thereof by the Administrative Trustees or any one of them.

(b) A single Common Securities Certificate representing the Common
Securities shall be issued to the Depositor in the form of a definitive
Common Securities Certificate.

SECTION 512. [Intentionally Omitted]

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<PAGE>

SECTION 513. [Intentionally Omitted]

SECTION 514. RIGHTS OF THE SECURITYHOLDERS.

(a) The legal title to the Trust Property is vested exclusively in the
Property Trustee (in its capacity as such) in accordance with Section 209, and
the Securityholders shall not have any right or title therein other than the
undivided beneficial interest in the assets of the Trust conferred by their
Trust Securities and they shall have no right to call for any partition or
division of property, profits or rights of the Trust except as described below.
The Trust Securities shall be personal property giving only the rights
specifically set forth therein and in this Trust Agreement. The Trust Securities
shall have no preemptive or similar rights. When issued and delivered to Holders
of the Preferred Securities against payment of the purchase price therefor, the
Preferred Securities shall be fully paid and nonassessable interests in the
Trust. The Holders of the Preferred Securities, in their capacities as such,
shall be entitled to the same limitation of personal liability extended to
stockholders of private corporations for profit organized under the General
Corporation Law of the State of Delaware.

(b) For so long as any of the Preferred Securities remain Outstanding, if,
upon a Debenture Event of Default, the Debenture Trustee fails or the holders of
not less than 25% in principal amount of the outstanding Debentures fail to
declare the principal of all of the Debentures to be immediately due and
payable, the Holders of at least 25% in Liquidation Amount of the Preferred
Securities then Outstanding shall have such right by a notice in writing to the
Depositor and the Debenture Trustee; and upon any such declaration such
principal amount of and the accrued interest on all of the Debentures shall
become immediately due and payable, provided that the payment of principal and
interest on such Debentures shall remain subordinated to the extent provided in
the Indenture.

(c) For so long as any of the Preferred Securities remain Outstanding,
upon a Debenture Event of Default arising from the failure to pay interest or
principal on the Debentures, the Holders of any of the Preferred Securities then
Outstanding shall, to the fullest extent permitted by law, have the right to
directly institute proceedings for enforcement of payment to such Holders of
principal of or interest on the Debentures having a principal amount equal to
the Liquidation Amount of the Preferred Securities of such Holders.

ARTICLE VI
ACTS OF THE SECURITYHOLDERS; MEETINGS; VOTING

SECTION 601. LIMITATIONS ON VOTING RIGHTS.

(a) Except as provided in this Section 601, in Sections 514, 810 and 1002
and in the Indenture and as otherwise required by law, no Holder of Preferred
Securities shall have any right to vote or in any manner otherwise control the
administration, operation and management of the Trust or the obligations of the
parties hereto; nor shall anything herein set forth, or contained in the terms
of the Trust Securities Certificates, be construed so as to constitute the
Securityholders from time to time as partners or members of an association.

<PAGE>

(b) So long as any Debentures are held by the Property Trustee, the
Trustees shall not (i) direct the time, method and place of conducting any
proceeding for any remedy available to the Debenture Trustee, or executing any
trust or power conferred on the Debenture Trustee with respect to such
Debentures; (ii) waive any past default which is waivable under Article VII of
the Indenture; (iii) exercise any right to rescind or annul a declaration that
the principal of all the Debentures shall be due and payable; or (iv) consent to
any amendment, modification or termination of the Indenture or the Debentures,
where such consent shall be required, without, in each case, obtaining the prior
approval of the Holders of at least a majority in Liquidation Amount of all the
Outstanding Preferred Securities; provided, however, that where a consent under
the Indenture would require the consent of each holder of outstanding Debentures
affected thereby, no such consent shall be given by the Property Trustee without
the prior written consent of each Holder of the Preferred Securities. The
Trustees shall not revoke any action previously authorized or approved by a vote
of the Holders of the Outstanding Preferred Securities, except when authorized
by a subsequent vote of the Holders of the Outstanding Preferred Securities. The
Property Trustee shall notify each Holder of the Outstanding Preferred
Securities of any notice of default received from the Debenture Trustee with
respect to the Debentures. In addition to obtaining the foregoing approvals of
the Holders of the Preferred Securities, prior to taking any of the foregoing
actions, the Trustees shall, at the expense of the Depositor, obtain an Opinion
of Counsel experienced in such matters to the effect that the Trust shall
continue to be classified as a grantor trust and not as an association taxable
as a corporation for United States federal income tax purposes on account of
such action.

(c) If any proposed amendment to the Trust Agreement provides for, or the
Trustees otherwise propose to effect, (i) any action that would adversely affect
in any material respect the powers, preferences or special rights of the
Preferred Securities, whether by way of amendment to the Trust Agreement or
otherwise; or (ii) the dissolution, winding-up or termination of the Trust,
other than pursuant to the terms of this Trust Agreement, then the Holders of
the Outstanding Preferred Securities as a class shall be entitled to vote on
such amendment or proposal and such amendment or proposal shall not be effective
except with the approval of the Holders of at least a majority in Liquidation
Amount of the Outstanding Preferred Securities. No amendment to this Trust
Agreement may be made if, as a result of such amendment, the Trust would cease
to be classified as a grantor trust or would be classified as an association
taxable as a corporation for United States federal income tax purposes.

SECTION 602. NOTICE OF MEETINGS.

Notice of all meetings of the Preferred Securityholders, stating the time,
place and purpose of the meeting, shall be given by the Property Trustee
pursuant to Section 1008 to each Preferred Securityholder of record, at his
registered address, at least 15 days and not more than 90 days before the
meeting. At any such meeting, any business properly before the meeting may be so
considered whether or not stated in the notice of the meeting. Any adjourned
meeting may be held as adjourned without further notice.

<PAGE>

SECTION 603. MEETINGS OF THE PREFERRED SECURITYHOLDERS.

(a) No annual meeting of the Securityholders is required to be held. The
Administrative Trustees, however, shall call a meeting of the Securityholders to
vote on any matter in respect of which the Preferred Securityholders are
entitled to vote upon the written request of the Preferred Securityholders of
25% of the Outstanding Preferred Securities (based upon their aggregate
Liquidation Amount) and the Administrative Trustees or the Property Trustee may,
at any time in their discretion, call a meeting of the Preferred Securityholders
to vote on any matters as to which the Preferred Securityholders are entitled to
vote.

(b) The Preferred Securityholders of record of 50% of the Outstanding
Preferred Securities (based upon their aggregate Liquidation Amount), present in
person or by proxy, shall constitute a quorum at any meeting of the
Securityholders.

(c) If a quorum is present at a meeting, an affirmative vote by the
Preferred Securityholders of record present, in person or by proxy, holding more
than a majority of the Preferred Securities (based upon their aggregate
Liquidation Amount) held by the Preferred Securityholders of record present,
either in person or by proxy, at such meeting shall constitute the action of the
Securityholders, unless this Trust Agreement requires a greater number of
affirmative votes.

SECTION 604. VOTING RIGHTS.

The Securityholders shall be entitled to one vote for each dollar value of
Liquidation Amount represented by their Trust Securities in respect of any
matter as to which such Securityholders are entitled to vote (and such dollar
value shall be $10 per Preferred Security until such time, if any, as the
Liquidation Amount is changed as provided herein).

SECTION 605. PROXIES, ETC.

At any meeting of the Securityholders, any Securityholder entitled to vote
thereat may vote by proxy, provided that no proxy, shall be voted at any meeting
unless it shall have been placed on file with the Administrative Trustees, or
with such other officer or agent of the Trust as the Administrative Trustees may
direct, for verification prior to the time at which such vote shall be taken.
When Trust Securities are held jointly by several persons, any one of them may
vote at any meeting in person or by proxy in respect of such Trust Securities,
but if more than one of them shall be present at such meeting in person or by
proxy, and such joint owners or their proxies so present disagree as to any vote
to be cast, such vote shall not be received in respect of such Trust Securities.
A proxy purporting to be executed by or on behalf of a Securityholder shall be
deemed valid unless challenged at or prior to its exercise, and, the burden of
proving invalidity shall rest on the challenger. No proxy shall be valid more
than three years after its date of execution.

SECTION 606. SECURITYHOLDER ACTION BY WRITTEN CONSENT.

Any action which may be taken by the Securityholders at a meeting may be
taken without a meeting if the Securityholders holding more than a majority of
all of the Outstanding Trust

<PAGE>

Securities (based upon their aggregate Liquidation Amount) entitled to vote
in respect of such action (or such larger proportion thereof as shall be
required by any express provision of this Trust Agreement) shall consent to
the action in writing.

SECTION 607. RECORD DATE FOR VOTING AND OTHER PURPOSES.

For the purposes of determining the Securityholders who are entitled to
notice of and to vote at any meeting or by written consent, or to participate in
any Distribution on the Trust Securities in respect of which a record date is
not otherwise provided for in this Trust Agreement, or for the purpose of any
other action, the Administrative Trustees may from time to time fix a date, not
more than 90 days prior to the date of any meeting of the Securityholders or the
payment of Distribution or other action, as the case may be, as a record date
for the determination of the identity of the Securityholders of record for such
purposes.

SECTION 608. ACTS OF THE SECURITYHOLDERS.

(a) Any request, demand, authorization, direction, notice, consent, waiver
or other action provided or permitted by this Trust Agreement to be given, made
or taken by the Securityholders may be embodied in and evidenced by one or more
instruments of substantially similar tenor signed by such Securityholders in
person or by an agent duly appointed in writing; and, except as otherwise
expressly provided herein, such action shall become effective when such
instrument or instruments are delivered to an Administrative Trustee. Such
instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "Act" of the Securityholders
signing such instrument or instruments. Proof of execution of any such
instrument or of a writing appointing any such agent shall be sufficient for any
purpose of this Trust Agreement and (subject to Section 801) conclusive in favor
of the Trustees, if made in the manner provided in this Section 608.

(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized by
law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Where such
execution is by a signer acting in a capacity other than his individual
capacity, such certificate or affidavit shall also constitute sufficient proof
of his authority. The fact and date of the execution of any such instrument or
writing, or the authority of the Person executing the same, may also be proved
in any other manner which any Trustee receiving the same deems sufficient.

(d) Any request, demand, authorization, direction, notice, consent, waiver
or other Act of the Securityholder of any Trust Security shall bind every future
Securityholder of the same Trust Security and the Securityholder of every Trust
Security issued upon the registration of transfer thereof or in exchange
therefor or in lieu thereof in respect of anything done, omitted or suffered to
be done by the Trustees or the Trust in reliance thereon, whether or not
notation of such action is made upon such Trust Security.

<PAGE>

(e) Without limiting the foregoing, a Securityholder entitled hereunder to
take any action hereunder with regard to any particular Trust Security may do so
with regard to all or any part of the Liquidation Amount of such Trust Security
or by one or more duly appointed agents each of which may do so pursuant to such
appointment with regard to all or any part of such Liquidation Amount.

(f) A Securityholder may institute a legal proceeding directly against the
Depositor under the Guarantee to enforce its rights under the Guarantee without
first instituting a legal proceeding against the Guarantee Trustee (as defined
in the Guarantee), the Trust or any Person.

SECTION 609. INSPECTION OF RECORDS.

Upon reasonable notice to the Administrative Trustees and the Property
Trustee, the records of the Trust shall be open to inspection and copying by any
Securityholder and its authorized representatives during normal business hours
for any purpose reasonably related to such Securityholder's interest as a
Securityholder.

ARTICLE VII
REPRESENTATIONS AND WARRANTIES

SECTION 701. REPRESENTATIONS AND WARRANTIES OF THE BANK AND THE PROPERTY
TRUSTEE.

The Bank and the Property Trustee, each severally on behalf of and as to
itself, as of the date hereof, and each successor Property Trustee at the time
of the successor Property Trustee's acceptance of its appointment as Property
Trustee hereunder (the term "Bank" being used to refer to such successor
Property Trustee in its separate corporate capacity) hereby represents and
warrants (as applicable) for the benefit of the Depositor and the
Securityholders that:

(a) the Bank is a trust company duly organized, validly existing and in
good standing under the laws of its jurisdiction of incorporation;

(b) the Bank has full corporate power, authority and legal right to
execute, deliver and perform its obligations under this Trust Agreement and has
taken all necessary action to authorize the execution, delivery and performance
by it of this Trust Agreement;

(c) this Trust Agreement has been duly authorized, executed and delivered
by the Property Trustee and constitutes the valid and legally binding agreement
of the Property Trustee enforceable against it in accordance with its terms,
subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or affecting
creditors, rights and to general equity principles;

(d) the execution, delivery and performance by the Property Trustee of
this Trust Agreement has been duly authorized by all necessary corporate or
other action on the part of the Property Trustee and does not require any
approval of stockholders of the Bank and such execution, delivery and
performance shall not (i) violate the Bank's charter or by-laws; (ii) violate
any

<PAGE>

provision of, or constitute, with or without notice or lapse of time, a
default under, or result in the creation or imposition of, any Lien on any
properties included in the Trust Property pursuant to the provisions of, any
indenture, mortgage, credit agreement, license or other agreement or
instrument to which the Property Trustee or the Bank is a party or by which
it is bound; or (iii) violate any law, governmental rule or regulation of the
United States or its jurisdiction of incorporation, as the case may be,
governing the banking or trust powers of the Bank or the Property Trustee (as
appropriate in context) or any order, judgment or decree applicable to the
Property Trustee or the Bank;

(e) neither the authorization, execution or delivery by the Property
Trustee of this Trust Agreement nor the consummation of any of the transactions
by the Property Trustee contemplated herein requires the consent or approval of,
the giving of notice to, the registration with or the taking of any other action
with respect to any governmental authority or agency under any existing federal
law governing the banking or trust powers of the Bank or the Property Trustee,
as the case may be, under the laws of the United States or its jurisdiction of
incorporation; and

(f) there are no proceedings pending or, to the best of the Property
Trustee's knowledge, threatened against or affecting the Bank or the Property
Trustee in any court or before any governmental authority, agency or arbitration
board or tribunal which, individually or in the aggregate, would materially and
adversely affect the Trust or would question the right, power and authority of
the Property Trustee to enter into or perform its obligations as one of the
Trustees under this Trust Agreement.

SECTION 702. REPRESENTATIONS AND WARRANTIES OF THE DELAWARE BANK AND THE
DELAWARE TRUSTEE.

The Delaware Bank and the Delaware Trustee, each severally on behalf of and
as to itself, as of the date hereof, and each successor Delaware Trustee at the
time of the successor Delaware Trustee's acceptance of appointment as Delaware
Trustee hereunder (the term "Delaware Bank" being used to refer to such
successor Delaware Trustee in its separate corporate capacity), hereby
represents and warrants (as applicable) for the benefit of the Depositor and the
Securityholders that:

(a) the Delaware Bank is a Delaware banking corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware;

(b) the Delaware Bank has full corporate power, authority and legal right
to execute, deliver and perform its obligations under this Trust Agreement and
has taken all necessary action to authorize the execution, delivery and
performance by it of this Trust Agreement;

(c) this Trust Agreement has been duly authorized, executed and delivered
by the Delaware Trustee and constitutes the valid and legally binding agreement
of the Delaware Trustee enforceable against it in accordance with its terms,
subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or affecting
creditors, rights and to general equity principles;

<PAGE>

(d) the execution, delivery and performance by the Delaware Trustee of
this Trust Agreement has been duly authorized by all necessary corporate or
other action on the part of the Delaware Trustee and does not require any
approval of stockholders of the Delaware Bank and such execution, delivery and
performance shall not (i) violate the Delaware Bank's charter or by-laws; (ii)
violate any provision of, or constitute, with or without notice or lapse of
time, a default under, or result in the creation or imposition of, any Lien on
any properties included in the Trust Property pursuant to the provisions of, any
indenture, mortgage, credit agreement, license or other agreement or instrument
to which the Delaware Bank or the Delaware Trustee is a party or by which it is
bound; or (iii) violate any law, governmental rule or regulation of the United
States or the State of Delaware, as the case may be, governing the banking or
trust powers of the Delaware Bank or the Delaware Trustee (as appropriate in
context) or any order, judgment or decree applicable to the Delaware Bank or the
Delaware Trustee;

(e) neither the authorization, execution or delivery by the Delaware
Trustee of this Trust Agreement nor the consummation of any of the transactions
by the Delaware Trustee contemplated herein or therein requires the consent or
approval of, the giving of notice to, the registration with or the taking of any
other action with respect to any governmental authority or agency under any
existing federal law governing the banking or trust powers of the Delaware Bank
or the Delaware Trustee, as the case may be, under the laws of the United States
or the State of Delaware; and

(f) there are no proceedings pending or, to the best of the Delaware
Trustee's knowledge, threatened against or affecting the Delaware Bank or the
Delaware Trustee in any court or before any governmental authority, agency or
arbitration board or tribunal which, individually or in the aggregate, would
materially and adversely affect the Trust or would question the right, power and
authority of the Delaware Trustee to enter into or perform its obligations as
one of the Trustees under this Trust Agreement.

SECTION 703. REPRESENTATIONS AND WARRANTIES OF THE DEPOSITOR.

The Depositor hereby represents and warrants for the benefit of the
Securityholders that:

(a) the Trust Securities Certificates issued on the Closing Date or the
Option Closing Date, if applicable, on behalf of the Trust have been duly
authorized and, shall be, as of such date or dates, if applicable, duly and
validly executed, issued and delivered by the Administrative Trustees pursuant
to the terms and provisions of, and in accordance with the requirements of, this
Trust Agreement and the Securityholders shall be, as of such date or dates, if
applicable, entitled to the benefits of this Trust Agreement; and

(b) there are no taxes, fees or other governmental charges payable by the
Trust (or the Trustees on behalf of the Trust) under the laws of the State of
Delaware or any political subdivision thereof in connection with the execution,
delivery and performance by the Bank, the Property Trustee or the Delaware
Trustee, as the case may be, of this Trust Agreement.

<PAGE>

ARTICLE VIII
TRUSTEES

SECTION 801. CERTAIN DUTIES AND RESPONSIBILITIES.

(a) The duties and responsibilities of the Trustees shall be as provided
by this Trust Agreement and, in the case of the Property Trustee, by the Trust
Indenture Act. Notwithstanding the foregoing, no provision of this Trust
Agreement shall require the Trustees to expend or risk their own funds or
otherwise incur any financial liability in the performance of any of their
duties hereunder, or in the exercise of any of their rights or powers, if they
shall have reasonable grounds for believing that repayment of such funds or
adequate indemnity against such risk or liability is not reasonably assured to
it. No Administrative Trustee nor the Delaware Trustee shall be liable for its
act or omissions hereunder except as a result of its own gross negligence or
willful misconduct. The Property Trustee's liability shall be determined under
the Trust Indenture Act. Whether or not therein expressly so provided, every
provision of this Trust Agreement relating to the conduct or affecting the
liability of or affording protection to the Trustees shall be subject to the
provisions of this Section 801. To the extent that, at law or in equity, the
Delaware Trustee or an Administrative Trustee has duties (including fiduciary
duties) and liabilities relating thereto to the Trust or to the Securityholders,
the Delaware Trustee or such Administrative Trustee shall not be liable to the
Trust or to any Securityholder for such Trustee's good faith reliance on the
provisions of this Trust Agreement. The provisions of this Trust Agreement, to
the extent that they restrict the duties and liabilities of the Delaware Trustee
or the Administrative Trustees otherwise existing at law or in equity, are
agreed by the Depositor and the Securityholders to replace such other duties and
liabilities of the Delaware Trustee and the Administrative Trustees, as the case
may be.

(b) All payments made by the Property Trustee or a Paying Agent in respect
of the Trust Securities shall be made only from the revenue and proceeds from
the Trust Property and only to the extent that there shall be sufficient revenue
or proceeds from the Trust Property to enable the Property Trustee or a Paying
Agent to make payments in accordance with the terms hereof. With respect to the
relationship of each Securityholder and the Trustee, each Securityholder, by its
acceptance of a Trust Security, agrees that it shall look solely to the revenue
and proceeds from the Trust Property to the extent legally available for
distribution to it as herein provided and that the Trustees are not personally
liable to it for any amount distributable in respect of any Trust Security or
for any other liability in respect of any Trust Security. This Section 801(b)
does not limit the liability of the Trustees expressly set forth elsewhere in
this Trust Agreement or, in the case of the Property Trustee, in the Trust
Indenture Act.

(c) No provision of this Trust Agreement shall be construed to relieve the
Property Trustee from liability for its own negligent action, its own negligent
failure to act, or its own willful misconduct, except that:

(i) the Property Trustee shall not be liable for any error of judgment
made in good faith by an authorized officer of the Property Trustee, unless it
shall be proved that the Property Trustee was negligent in ascertaining the
pertinent facts;

<PAGE>

(ii) the Property Trustee shall not be liable with respect to any action
taken or omitted to be taken by it in good faith in accordance with the
direction of the Holders of not less than a majority in Liquidation Amount of
the Trust Securities relating to the time, method and place of conducting any
proceeding for any remedy available to the Property Trustee, or exercising any
trust or power conferred upon the Property Trustee under this Trust Agreement;

(iii) the Property Trustee's sole duty with respect to the custody,
safe keeping and physical preservation of the Debentures and the Payment Account
shall be to deal with such property in a similar manner as the Property Trustee
deals with similar property for its own account, subject to the protections and
limitations on liability afforded to the Property Trustee under this Trust
Agreement and the Trust Indenture Act;

(iv) the Property Trustee shall not be liable for any interest on any money
received by it except as it may otherwise agree with the Depositor and money
held by the Property Trustee need not be segregated from other funds held by it
except in relation to the Payment Account maintained by the Property Trustee
pursuant to Section 301 and except to the extent otherwise required by law; and

(v) the Property Trustee shall not be responsible for monitoring the
compliance by the Administrative Trustees or the Depositor with their respective
duties under this Trust Agreement, nor shall the Property Trustee be liable for
the negligence, default or misconduct of the Administrative Trustees or the
Depositor.

SECTION 802. CERTAIN NOTICES.

(a) Within 5 Business Days after the occurrence of any Event of Default
actually known to the Property Trustee, the Property Trustee shall transmit, in
the manner and to the extent provided in Section 1008, notice of such Event of
Default to the Securityholders, the Administrative Trustees and the Depositor,
unless such Event of Default shall have been cured or waived. For purposes of
this Section 802, the term "Event of Default" means any event that is, or after
notice or lapse of time or both would become, an Event of Default.

(b) The Administrative Trustees shall transmit, to the Securityholders in
the manner and to the extent provided in Section 1008, notice of the Depositor's
election to begin or further extend an Extension Period on the Debentures
(unless such election shall have been revoked), and of any election by the
Depositor to extend or accelerate the Maturity Date of the Debentures within the
time specified for transmitting such notice to the holders of the Debentures
pursuant to the Indenture as originally executed.

SECTION 803. CERTAIN RIGHTS OF THE PROPERTY TRUSTEE.

Subject to the provisions of Section 801:

(a) the Property Trustee may rely and shall be protected in acting or
refraining from acting in good faith upon any resolution, Opinion of Counsel,
certificate, written representation of a Holder or transferee, certificate of
auditors or any other certificate, statement, instrument,

<PAGE>

opinion, report, notice, request, consent, order, appraisal, bond, debenture,
note, other evidence of indebtedness or other paper or document believed by
it to be genuine and to have been signed or presented by the proper party or
parties;

(b) if (i) in performing its duties under this Trust Agreement the
Property Trustee is required to decide between alternative courses of action; or
(ii) in construing any of the provisions of this Trust Agreement, the Property
Trustee finds the same ambiguous or inconsistent with other provisions contained
herein; or (iii) the Property Trustee is unsure of the application of any
provision of this Trust Agreement, then, except as to any matter as to which the
Preferred Securityholders are entitled to vote under the terms of this Trust
Agreement, the Property Trustee shall deliver a notice to the Depositor
requesting written instructions of the Depositor as to the course of action to
be taken and the Property Trustee shall take such action, or refrain from taking
such action, as the Property Trustee shall be instructed in writing to take, or
to refrain from taking, by the Depositor; provided, however, that if the
Property Trustee does not receive such instructions of the Depositor within 10
Business Days after it has delivered such notice, or such reasonably shorter
period of time set forth in such notice (which to the extent practicable shall
not be less than 2 Business Days), it may, but shall be under no duty to, take
or refrain from taking such action not inconsistent with this Trust Agreement as
it shall deem advisable and in the best interests of the Securityholders, in
which event the Property Trustee shall have no liability except for its own bad
faith, negligence or willful misconduct;

(c) any direction or act of the Depositor or the Administrative Trustees
contemplated by this Trust Agreement shall be sufficiently evidenced by an
Officers' Certificate;

(d) whenever in the administration of this Trust Agreement, the Property
Trustee shall deem it desirable that a matter be established before undertaking,
suffering or omitting any action hereunder, the Property Trustee (unless other
evidence is herein specifically prescribed) may, in the absence of bad faith on
its part, request and conclusively rely upon an Officers' Certificate which,
upon receipt of such request, shall be promptly delivered by the Depositor or
the Administrative Trustees;

(e) the Property Trustee shall have no duty to see to any recording,
filing or registration of any instrument (including any financing or
continuation statement, any filing under tax or securities laws or any filing
under tax or securities laws) or any rerecording, refiling or reregistration
thereof;

(f) the Property Trustee may consult with counsel of its choice (which
counsel may be counsel to the Depositor or any of its Affiliates) and the advice
of such counsel shall be full and complete authorization and protection in
respect of any action taken, suffered or omitted by it hereunder in good faith
and in reliance thereon and, in accordance with such advice, such counsel may be
counsel to the Depositor or any of its Affiliates, and may include any of its
employees; the Property Trustee shall have the right at any time to seek
instructions concerning the administration of this Trust Agreement from any
court of competent jurisdiction;

(g) the Property Trustee shall be under no obligation to exercise any of
the rights or powers vested in it by this Trust Agreement at the request, order
or direction of any of the

<PAGE>

Securityholders, pursuant to this Trust Agreement, unless such
Securityholders shall have offered to the Property Trustee reasonable
security or indemnity against the costs, expenses and liabilities that may be
incurred therein or thereby; nothing contained herein shall, however, relieve
the Property Trustee of the obligation, upon the occurrence of an Event of
Default (that has not been cured or waived) to exercise with respect to the
Debentures, such of the rights and powers vested in it by this Trust
Agreement, and to use the same degree of care and skill in their exercise as
a prudent man would exercise or use under the circumstances in the conduct of
his own affairs;

(h) the Property Trustee shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, approval, bond,
debenture, note or other evidence of indebtedness or other paper or document,
unless requested in writing to do so by the Holders of not less than a majority
in Liquidation Amount of the Securities, but the Property Trustee may make such
further inquiry or investigation into such facts or matters as it may see fit;

(i) the Property Trustee may execute any of the trusts or powers hereunder
or perform any duties hereunder either directly or by or through its agents or
attorneys, provided that the Property Trustee shall be responsible for its own
negligence or recklessness with respect to selection of any agent or attorney
appointed by it hereunder;

(j) whenever in the administration of this Trust Agreement the Property
Trustee shall deem it desirable to receive instructions with respect to
enforcing any remedy or right or taking any other action hereunder the Property
Trustee (i) may request instructions from the Holders of the Trust Securities
which instructions may only be given by the Holders of the same proportion in
Liquidation Amount of the Trust Securities as would be entitled to direct the
Property Trustee under the terms of the Trust Securities in respect of such
remedy, right or action; (ii) may refrain from enforcing such remedy or right or
taking such other action until such instructions are received; and (iii) shall
be protected in acting in accordance with such instructions; and

(k) except as otherwise expressly provided by this Trust Agreement, the
Property Trustee shall not be under any obligation to take any action that is
discretionary under the provisions of this Trust Agreement. No provision of this
Trust Agreement shall be deemed to impose any duty or obligation on the Property
Trustee to perform any act or acts or exercise any right, power, duty or
obligation conferred or imposed on it, in any jurisdiction in which it shall be
illegal, or in which the Property Trustee shall be unqualified or incompetent in
accordance with applicable law, to perform any such act or acts, or to exercise
any such right, power, duty or obligation. No permissive power or authority
available to the Property Trustee shall be construed to be a duty.

SECTION 804. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF SECURITIES.

The Recitals contained herein and in the Trust Securities Certificates shall
be taken as the statements of the Trust, and the Trustees do not assume any
responsibility for their correctness. The Trustees shall not be accountable for
the use or application by the Depositor of the proceeds of the Debentures.

<PAGE>

SECTION 805. MAY HOLD SECURITIES.

Any Trustee or any other agent of any Trustee or the Trust, in its individual
or any other capacity, may become the owner or pledgee of the Trust Securities
and, subject to Sections 808 and 813 and except as provided in the definition of
the term "Outstanding" in Article I, may otherwise deal with the Trust with the
same rights it would have if it were not a Trustee or such other agent.

SECTION 806. COMPENSATION; INDEMNITY; FEES.

The Depositor agrees:

(a) to pay to the Trustees from time to time reasonable compensation for
all services rendered by them hereunder (which compensation shall not be limited
by any provision of law in regard to the compensation of a trustee of an express
trust);

(b) except as otherwise expressly provided herein, to reimburse the
Trustees upon request for all reasonable expenses, disbursements and advances
incurred or made by the Trustees in accordance with any provision of this Trust
Agreement (including the reasonable compensation and the expenses and
disbursements of its agents and counsel), except any such expense, disbursement
or advance as may be attributable to such Trustee's negligence, bad faith or
willful misconduct (or, in the case of the Administrative Trustees or the
Delaware Trustee, any such expense, disbursement or advance as may be
attributable to its, his or her gross negligence, bad faith or willful
misconduct); and

(c) to indemnify each of the Trustees or any predecessor Trustee for, and
to hold the Trustees harmless against, any loss, damage, claims, liability,
penalty or expense incurred without negligence or bad faith on its part, arising
out of or in connection with the acceptance or administration of this Trust
Agreement, including the costs and expenses of defending itself against any
claim or liability in connection with the exercise or performance of any of its
powers or duties hereunder, except any such expense, disbursement or advance as
may be attributable to such Trustee's negligence, bad faith or willful
misconduct (or, in the case of the Administrative Trustees or the Delaware
Trustee, any such expense, disbursement or advance as may be attributable to
its, his or her gross negligence, bad faith or willful misconduct).

No Trustee may claim any Lien or charge on any Trust Property as a result of
any amount due pursuant to this Section 806.

SECTION 807. CORPORATE PROPERTY TRUSTEE REQUIRED; ELIGIBILITY OF TRUSTEES.

(a) There shall at all times be a Property Trustee hereunder with respect
to the Trust Securities. The Property Trustee shall be a Person that is eligible
pursuant to the Trust Indenture Act to act as such and has a combined capital
and surplus of at least $50,000,000. If any such Person publishes reports of
condition at least annually, pursuant to law or to the requirements of its
supervising or examining authority, then for the purposes of this Section 807,
the combined

<PAGE>

capital and surplus of such Person shall be deemed to be its combined capital
and surplus as set forth in its most recent report of condition so published.
If at any time the Property Trustee with respect to the Trust Securities
shall cease to be eligible in accordance with the provisions of this Section
807, it shall resign immediately in the manner and with the effect
hereinafter specified in this Article VIII.

(b) There shall at all times be one or more Administrative Trustees
hereunder with respect to the Trust Securities. Each Administrative Trustee
shall be either a natural person who is at least 21 years of age or a legal
entity that shall act through one or more persons authorized to bind that
entity.

(c) There shall at all times be a Delaware Trustee with respect to the
Trust Securities. The Delaware Trustee shall either be (i) a natural person
who is at least 21 years of age and a resident of the State of Delaware; or
(ii) a legal entity with its principal place of business in the State of
Delaware and that otherwise meets the requirements of applicable Delaware law
that shall act through one or more persons authorized to bind such entity.

SECTION 808. CONFLICTING INTERESTS.

If the Property Trustee has or shall acquire a conflicting interest within
the meaning of the Trust Indenture Act, the Property Trustee shall either
eliminate such interest or resign, to the extent and in the manner provided
by, and subject to the provisions of, the Trust Indenture Act and this Trust
Agreement.

SECTION 809. CO-TRUSTEES AND SEPARATE TRUSTEE.

(a) Unless an Event of Default shall have occurred and be continuing, at
any time or times, for the purpose of meeting the legal requirements of the
Trust Indenture Act or of any jurisdiction in which any part of the Trust
Property may at the time be located, the Depositor shall have power to
appoint, and upon the written request of the Property Trustee, the Depositor
shall for such purpose join with the Property Trustee in the execution,
delivery and performance of all instruments and agreements necessary or
proper to appoint, one or more Persons approved by the Property Trustee
either to act as co-trustee, jointly with the Property Trustee, of all or any
part of such Trust Property, or to the extent required by law to act as
separate trustee of any such property, in either case with such powers as may
be provided in the instrument of appointment, and to vest in such Person or
Persons in the capacity aforesaid, any property, title, right or power deemed
necessary or desirable, subject to the other provisions of this Section 809.
If the Depositor does not join in such appointment within 15 days after the
receipt by it of a request so to do, or in case a Debenture Event of Default
has occurred and is continuing, the Property Trustee alone shall have power
to make such appointment. Any co-trustee or separate trustee appointed
pursuant to this Section 809 shall either be (i) a natural person who is at
least 21 years of age and a resident of the United States; or (ii) a legal
entity with its principal place of business in the United States that shall
act through one or more persons authorized to bind such entity.

(b) Should any written instrument from the Depositor be required by any
co-trustee or separate trustee so appointed for more fully confirming to such
co-trustee or separate trustee such

36
<PAGE>

property, title, right, or power, any and all such instruments shall, on
request, be executed, acknowledged, and delivered by the Depositor.

(c) Every co-trustee or separate trustee shall, to the extent permitted by
law, but to such extent only, be appointed subject to the following terms,
namely:

(i) The Trust Securities shall be executed and delivered and all
rights, powers, duties and obligations hereunder in respect of the custody of
securities, cash and other personal property held by, or required to be
deposited or pledged with, the Trustees specified hereunder, shall be
exercised, solely by such Trustees and not by such co-trustee or separate
trustee.

(ii) The rights, powers, duties and obligations hereby conferred or
imposed upon the Property Trustee in respect of any property covered by such
appointment shall be conferred or imposed upon and exercised or performed by
the Property Trustee or by the Property Trustee and such co-trustee or
separate trustee jointly, as shall be provided in the instrument appointing
such co-trustee or separate trustee, except to the extent that under any law
of any jurisdiction in which any particular act is to be performed, the
Property Trustee shall be incompetent or unqualified to perform such act, in
which event such rights, powers, duties and obligations shall be exercised
and performed by such co-trustee or separate trustee.

(iii) The Property Trustee at any time, by an instrument in writing
executed by it, with the written concurrence of the Depositor, may accept the
resignation of or remove any co-trustee or separate trustee appointed under
this Section 809, and, in case a Debenture Event of Default has occurred and
is continuing, the Property Trustee shall have the power to accept the
resignation of, or remove, any such co-trustee or separate trustee without
the concurrence of the Depositor. Upon the written request of the Property
Trustee, the Depositor shall join with the Property Trustee in the execution,
delivery and performance of all instruments and agreements necessary or
proper to effectuate such resignation or removal. A successor to any
co-trustee or separate trustee so resigned or removed may be appointed in the
manner provided in this Section 809.

(iv) No co-trustee or separate trustee hereunder shall be personally
liable by reason of any act or omission of the Property Trustee or any other
trustee hereunder.

(v) The Property Trustee shall not be liable by reason of any act of a
co-trustee or separate trustee.

(vi) Any Act of the Holders delivered to the Property Trustee shall be
deemed to have been delivered to each such co-trustee and separate trustee.

SECTION 810. RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR.

(a) No resignation or removal of any Trustee (the "Relevant Trustee") and
no appointment of a successor Trustee pursuant to this Article VIII shall
become effective until the acceptance of appointment by the successor Trustee
in accordance with the applicable requirements of Section 811.

37
<PAGE>

(b) Subject to the immediately preceding paragraph, the Relevant Trustee
may resign at any time with respect to the Trust Securities by giving written
notice thereof to the Securityholders. If the instrument of acceptance by the
successor Trustee required by Section 811 shall not have been delivered to
the Relevant Trustee within 30 days after the giving of such notice of
resignation, the Relevant Trustee may petition, at the expense of the
Depositor, any court of competent jurisdiction for the appointment of a
successor Relevant Trustee with respect to the Trust Securities.

(c) Unless a Debenture Event of Default shall have occurred and be
continuing, any Trustee may be removed at any time by an Act of the Common
Securityholder. If a Debenture Event of Default shall have occurred and be
continuing, the Property Trustee or the Delaware Trustee, or both of them,
may be removed at such time by an Act of the Holders of a majority in
Liquidation Amount of the Preferred Securities, delivered to the Relevant
Trustee (in its individual capacity and on behalf of the Trust). An
Administrative Trustee may be removed by the Common Securityholder at any
time.

(d) If any Trustee shall resign, be removed or become incapable of acting
as Trustee, or if a vacancy shall occur in the office of any Trustee for any
cause, at a time when no Debenture Event of Default shall have occurred and
be continuing, the Common Securityholder, by an Act of the Common
Securityholder delivered to the retiring Trustee, shall promptly appoint a
successor Trustee or Trustees with respect to the Trust Securities and the
Trust, and the successor Trustee shall comply with the applicable
requirements of Section 811. If the Property Trustee or the Delaware Trustee
shall resign, be removed or become incapable of continuing to act as the
Property Trustee or the Delaware Trustee, as the case may be, at a time when
a Debenture Event of Default shall have occurred and is continuing, the
Preferred Securityholders, by an Act of the Securityholders of a majority in
Liquidation Amount of the Preferred Securities then Outstanding delivered to
the retiring Relevant Trustee, shall promptly appoint a successor Relevant
Trustee or Trustees with respect to the Trust Securities and the Trust, and
such successor Trustee shall comply with the applicable requirements of
Section 811. If an Administrative Trustee shall resign, be removed or become
incapable of acting as an Administrative Trustee, at a time when a Debenture
Event of Default shall have occurred and be continuing, the Common
Securityholder, by an Act of the Common Securityholder delivered to an
Administrative Trustee, shall promptly appoint a successor Administrative
Trustee or Administrative Trustees with respect to the Trust Securities and
the Trust, and such successor Administrative Trustee or Administrative
Trustees shall comply with the applicable requirements of Section 811. If no
successor Relevant Trustee with respect to the Trust Securities shall have
been so appointed by the Common Securityholder or the Preferred
Securityholders and accepted appointment in the manner required by Section
811, any Securityholder who has been a Securityholder of Trust Securities for
six consecutive months on behalf of himself and all others similarly situated
may petition a court of competent jurisdiction for the appointment of a
successor Relevant Trustee with respect to the Trust Securities.

(e) The Property Trustee shall give notice of each resignation and each
removal of a Trustee and each appointment of a successor Trustee to all the
Securityholders in the manner provided in Section 1008 and shall give notice
to the Depositor. Each notice shall include the name of the

38
<PAGE>

successor Relevant Trustee and the address of its Corporate Trust Office if
it is the Property Trustee.

(f) Notwithstanding the foregoing or any other provision of this Trust
Agreement, in the event any Administrative Trustee or a Delaware Trustee who
is a natural person dies or becomes, in the opinion of the Depositor,
incompetent or incapacitated, the vacancy created by such death, incompetence
or incapacity may be filled by (a) the unanimous act of the remaining
Administrative Trustees if there are at least two of them; or (b) otherwise
by the Depositor (with the successor in each case being a Person who
satisfies the eligibility requirement for Administrative Trustees set forth
in Section 807).

SECTION 811. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR.

(a) In case of the appointment hereunder of a successor Relevant Trustee
with respect to the Trust Securities and the Trust, the retiring Relevant
Trustee and each successor Relevant Trustee with respect to the Trust
Securities shall execute and deliver an instrument hereto wherein each
successor Relevant Trustee shall accept such appointment and which shall
contain such provisions as shall be necessary or desirable to transfer and
confirm to, and to vest in, each successor Relevant Trustee all the rights,
powers, trusts and duties of the retiring Relevant Trustee with respect to
the Trust Securities and the Trust and upon the execution and delivery of
such instrument the resignation or removal of the retiring Relevant Trustee
shall become effective to the extent provided therein and each such successor
Relevant Trustee, without any further act, deed or conveyance, shall become
vested with all the rights, powers, trusts and duties of the retiring
Relevant Trustee with respect to the Trust Securities and the Trust; but, on
request of the Trust or any successor Relevant Trustee such retiring Relevant
Trustee shall duly assign, transfer and deliver to such successor Relevant
Trustee all the Trust Property, all proceeds thereof and money held by such
retiring Relevant Trustee hereunder with respect to the Trust Securities and
the Trust.

(b) Upon request of any such successor Relevant Trustee, the Trust shall
execute any and all instruments for more fully and certainly vesting in and
confirming to such successor Relevant Trustee all such rights, powers and
trusts referred to in the immediately preceding paragraph, as the case may be.

(c) No successor Relevant Trustee shall accept its appointment unless at
the time of such acceptance such successor Relevant Trustee shall be
qualified and eligible under this Article VIII.

SECTION 812. MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO BUSINESS.

Any Person into which the Property Trustee, the Delaware Trustee or any
Administrative Trustee may be merged or converted or with which it may be
consolidated, or any Person resulting from any merger, conversion or
consolidation to which such Relevant Trustee shall be a party, or any
corporation succeeding to all or substantially all the corporate trust
business of such Relevant Trustee, shall be the successor of such Relevant
Trustee hereunder, provided such

39
<PAGE>

Person shall be otherwise qualified and eligible under this Article VIII,
without the execution or filing of any paper or any further act on the part
of any of the parties hereto.

SECTION 813. PREFERENTIAL COLLECTION OF CLAIMS AGAINST THE DEPOSITOR OR
THE TRUST.

If and when the Property Trustee or the Delaware Trustee shall be or
become a creditor of the Depositor or the Trust (or any other obligor upon
the Debentures or the Trust Securities), the Property Trustee or the Delaware
Trustee, as the case may be, shall be subject to and shall take all actions
necessary in order to comply with the provisions of the Trust Indenture Act
regarding the collection of claims against the Depositor or the Trust (or any
such other obligor).

SECTION 814. REPORTS BY THE PROPERTY TRUSTEE.

(a) The Property Trustee shall transmit to the Securityholders such
reports concerning the Property Trustee, its actions under this Trust
Agreement and the property and funds in its possession as the Property
Trustee as may be required pursuant to the Trust Indenture Act at the times
and in the manner provided pursuant thereto.

(b) A copy of each such report shall, at the time of such transmission to
the Holders, be filed by the Property Trustee with the Nasdaq National
Market, and each national securities exchange or other organization upon
which the Trust Securities are listed, and also with the Commission and the
Depositor.

SECTION 815. REPORTS TO THE PROPERTY TRUSTEE.

The Depositor and the Administrative Trustees on behalf of the Trust shall
provide to the Property Trustee such documents, reports and information as
required by Section 314 of the Trust Indenture Act (if any) and the
compliance certificate required by Section 314(a) of the Trust Indenture Act
in the form, in the manner and at the times required by Section 314 of the
Trust Indenture Act.

SECTION 816. EVIDENCE OF COMPLIANCE WITH CONDITIONS PRECEDENT.

Each of the Depositor and the Administrative Trustees on behalf of the
Trust shall provide to the Property Trustee such evidence of compliance with
any conditions precedent, if any, provided for in this Trust Agreement that
relate to any of the matters set forth in Section 314(c) of the Trust
Indenture Act. Any certificate or opinion required to be given by an officer
pursuant to Section 314(c)(1) of the Trust Indenture Act shall be given in
the form of an Officers' Certificate.

SECTION 817. NUMBER OF TRUSTEES.

(a) The number of Trustees shall be five, provided that the Holder of all
of the Common Securities by written instrument may increase or decrease the
number of the Administrative Trustees. The Property Trustee and the Delaware
Trustee may be the same Person.

40
<PAGE>

(b) If a Trustee ceases to hold office for any reason and the number of
the Administrative Trustees is not reduced pursuant to Section 817(a), or if
the number of the Trustees is increased pursuant to Section 817(a), a vacancy
shall occur. The vacancy shall be filled with a Trustee appointed in
accordance with Section 810.

(c) The death, resignation, retirement, removal, bankruptcy, incompetence
or incapacity to perform the duties of a Trustee shall not operate to annul
the Trust. Whenever a vacancy in the number of the Administrative Trustees
shall occur, until such vacancy is filled by the appointment of an
Administrative Trustee in accordance with Section 810, the Administrative
Trustees in office, regardless of their number (and notwithstanding any other
provision of this Agreement), shall have all the powers granted to the
Administrative Trustees and shall discharge all the duties imposed upon the
Administrative Trustees by this Trust Agreement.

SECTION 818. DELEGATION OF POWER.

(a) Any Administrative Trustee may, by power of attorney consistent with
applicable law, delegate to any other natural person over the age of 21 his
or her power for the purpose of executing any documents contemplated in
Section 207(a); and

(b) The Administrative Trustees shall have power to delegate from time to
time to such of their number or to the Depositor the doing of such things and
the execution of such instruments either in the name of the Trust or the
names of the Administrative Trustees or otherwise as the Administrative
Trustees may deem expedient, to the extent such delegation is not prohibited
by applicable law or contrary to the provisions of the Trust, as set forth
herein.

SECTION 819. VOTING.

Except as otherwise provided in this Trust Agreement, the consent or
approval of the Administrative Trustees shall require consent or approval by
not less than a majority of the Administrative Trustees, unless there are
only two, in which case both must consent.

ARTICLE IX
TERMINATION, LIQUIDATION AND MERGER

SECTION 901. TERMINATION UPON EXPIRATION DATE.

Unless earlier dissolved, the Trust shall automatically dissolve
_______________, 2052 (the "Expiration Date") subject to distribution of the
Trust Property in accordance with Section 904.

SECTION 902. EARLY TERMINATION.

The first to occur of any of the following events is an "Early Termination
Event:"

(a) the occurrence of a Bankruptcy Event in respect of, or the dissolution
or liquidation of, the Depositor;

41
<PAGE>

(b) delivery of written direction to the Property Trustee by the Depositor
at any time (which direction is wholly optional and within the discretion of
the Depositor) to dissolve the Trust and distribute the Debentures to the
Securityholders in exchange for the Preferred Securities in accordance with
Section 904;

(d) the entrance of an order for dissolution of the Trust by a court of
competent jurisdiction.

SECTION 903. TERMINATION.

The respective obligations and responsibilities of the Trustees and the
Trust created and continued hereby shall terminate upon the latest to occur
of the following: (a) the distribution by the Property Trustee to the
Securityholders upon the liquidation of the Trust pursuant to Section 904, or
upon the redemption of all of the Trust Securities pursuant to Section 402,
of all amounts required to be distributed hereunder upon the final payment of
the Trust Securities; (b) the payment of any expenses owed by the Trust; (c)
the discharge of all administrative duties of the Administrative Trustees,
including the performance of any tax reporting obligations with respect to
the Trust or the Securityholders; and (d) the filing of a Certificate of
Cancellation by the Administrative Trustee under the Delaware Business Trust
Act.

SECTION 904. LIQUIDATION.

(a) If an Early Termination Event specified in clause (a), (b), or (d) of
Section 902 occurs or upon the Expiration Date, the Trust shall be liquidated
by the Trustees as expeditiously as the Trustees determine to be possible by
distributing, after satisfaction of liabilities to creditors of the Trust as
provided by applicable law, to each Securityholder a Like Amount of
Debentures, subject to Section 904(d). Notice of liquidation shall be given
by the Property Trustee by first-class mail, postage prepaid, mailed not
later than 30 nor more than 60 days prior to the Liquidation Date to each
Holder of Trust Securities at such Holder's address appearing in the
Securities Register. All notices of liquidation shall:

(i) state the Liquidation Date;

(ii) state that from and after the Liquidation Date, the Trust
Securities shall no longer be deemed to be Outstanding and any Trust
Securities Certificates not surrendered for exchange shall be deemed to
represent a Like Amount of Debentures; and

(iii) provide such information with respect to the mechanics by which the
Holders may exchange the Trust Securities Certificates for the Debentures,
or, if Section 904(d) applies, receive a Liquidation Distribution, as the
Administrative Trustees or the Property Trustee shall deem appropriate.

(b) Except where Section 902(c) or 904(d) applies, in order to effect the
liquidation of the Trust and distribution of the Debentures to the
Securityholders, the Property Trustee shall

42
<PAGE>

establish a record date for such distribution (which shall be not more than
45 days prior to the Liquidation Date) and, either itself acting as exchange
agent or through the appointment of a separate exchange agent, shall
establish such procedures as it shall deem appropriate to effect the
distribution of Debentures in exchange for the Outstanding Trust Securities
Certificates.

(c) Except where Section 902(c) or 904(d) applies, after the Liquidation
Date, (i) the Trust Securities shall no longer be deemed to be outstanding;
(ii) certificates representing a Like Amount of the Debentures shall be
issued to the Holders of Trust Securities Certificates upon surrender of such
certificates to the Administrative Trustees or their agent for exchange;
(iii) the Depositor shall use its reasonable efforts to have the Debentures
listed on the Nasdaq National Market or on such other securities exchange or
other organization as the Preferred Securities are then listed or traded;
(iv) any Trust Securities Certificates not so surrendered for exchange shall
be deemed to represent a Like Amount of Debentures, accruing interest at the
rate provided for in the Debentures from the last Distribution Date on which
a Distribution was made on such Trust Securities Certificates until such
certificates are so surrendered (and until such certificates are so
surrendered, no payments of interest or principal shall be made to Holders of
the Trust Securities Certificates with respect to such Debentures); and (v)
all rights of the Securityholders holding the Trust Securities shall cease,
except the right of such Securityholders to receive the Debentures upon
surrender of the Trust Securities Certificates.

(d) In the event that, notwithstanding the other provisions of this
Section 904, whether because of an order for dissolution entered by a court
of competent jurisdiction or otherwise, distribution of the Debentures in the
manner provided herein is determined by the Property Trustee not to be
practical, the Trust Property shall be liquidated, and the Trust shall be
dissolved, wound-up or terminated, by the Property Trustee in such manner as
the Property Trustee determines. In such event, on the date of the
dissolution, winding-up or other termination of the Trust, the
Securityholders shall be entitled to receive out of the assets of the Trust
available for distribution to the Securityholders, after satisfaction of
liabilities to creditors of the Trust as provided by applicable law, an
amount equal to the Liquidation Amount per Trust Security plus accumulated
and unpaid Distributions thereon to the date of payment (such amount being
the "Liquidation Distribution"). If, upon any such dissolution, winding-up or
termination, the Liquidation Distribution can be paid only in part because
the Trust has insufficient assets available to pay in full the aggregate
Liquidation Distribution, then, subject to the next succeeding sentence, the
amounts payable by the Trust on the Trust Securities shall be paid on a pro
rata basis (based upon Liquidation Amounts, subject to Section 407). The
Holder of the Common Securities shall be entitled to receive the Liquidation
Distributions upon any such dissolution, winding-up or termination pro rata
(determined as aforesaid) with the Holders of the Preferred Securities,
except that, if a Debenture Event of Default has occurred and is continuing,
the Preferred Securities shall have a priority over the Common Securities.

SECTION 905. MERGERS, CONSOLIDATIONS, AMALGAMATIONS OR REPLACEMENTS OF
THE TRUST.

The Trust may not merge with or into, consolidate, amalgamate, or be
replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to any corporation or

43
<PAGE>

other Person, except pursuant to this Section 905. At the request of the
Depositor, with the consent of the Administrative Trustees and without the
consent of the Holders of the Preferred Securities, the Property Trustee or
the Delaware Trustee, the Trust may merge with or into, consolidate,
amalgamate, be replaced by or convey, transfer or lease its properties and
assets substantially as an entirety to a trust organized as such under the
laws of any State; provided, that (i) such successor entity either (a)
expressly assumes all of the obligations of the Trust with respect to the
Preferred Securities; or (b) substitutes for the Preferred Securities other
securities having substantially the same terms as the Preferred Securities
(the "Successor Securities") so long as the Successor Securities rank the
same as the Preferred Securities rank in priority with respect to
distributions and payments upon liquidation, redemption and otherwise; (ii)
the Depositor expressly appoints a trustee of such successor entity
possessing substantially the same powers and duties as the Property Trustee
as the holder of the Debentures; (iii) the Successor Securities are listed or
traded, or any Successor Securities shall be listed or traded upon
notification of issuance, on any national securities exchange or other
organization on which the Preferred Securities are then listed, if any; (iv)
such merger, consolidation, amalgamation, replacement, conveyance, transfer
or lease does not adversely affect the rights, preferences and privileges of
the Holders of the Preferred Securities (including any Successor Securities)
in any material respect; (v) prior to such merger, consolidation,
amalgamation, replacement, conveyance, transfer or lease, the Depositor has
received an Opinion of Counsel to the effect that (a) such merger,
consolidation, amalgamation, replacement, conveyance, transfer or lease does
not adversely affect the rights, preferences and privileges of the Holders of
the Preferred Securities (including any Successor Securities) in any material
respect; and (b) following such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease, neither the Trust nor such
successor entity shall be required to register as an "investment company"
under the Investment Company Act; and (vi) the Depositor owns all of the
Common Securities of such successor entity and guarantees the obligations of
such successor entity under the Successor Securities at least to the extent
provided by the Guarantee, the Debentures, the Indenture, this Trust
Agreement and the Expense Agreement. Notwithstanding the foregoing, the Trust
shall not, except with the consent of the Holders of 100% in Liquidation
Amount of the Preferred Securities, consolidate, amalgamate, merge with or
into, or be replaced by or convey, transfer or lease its properties and
assets substantially as an entirety to any other Person or permit any other
Person to consolidate, amalgamate, merge with or into, or replace it if such
consolidation, amalgamation, merger or replacement would cause the Trust or
the successor entity to be classified as other than a grantor trust for
United States federal income tax purposes.

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<PAGE>

ARTICLE X
MISCELLANEOUS PROVISIONS

SECTION 1001. LIMITATION OF RIGHTS OF THE SECURITYHOLDERS.

The death or incapacity of any Person having an interest, beneficial or
otherwise, in the Trust Securities shall not operate to terminate this Trust
Agreement, nor entitle the legal representatives or heirs of such Person or
any Securityholder for such Person to claim an accounting, take any action or
bring any proceeding in any court for a partition or winding-up of the
arrangements contemplated hereby, nor otherwise affect the rights,
obligations and liabilities of the parties hereto or any of them.

SECTION 1002. AMENDMENT.

(a) This Trust Agreement may be amended from time to time by the Trustees
and the Depositor, without the consent of any Securityholders, (i) as
provided in Section 811 with respect to acceptance of appointment by a
successor Trustee; (ii) to cure any ambiguity, correct or supplement any
provision herein or therein which may be inconsistent with any other
provision herein or therein, or to make any other provisions with respect to
matters or questions arising under this Trust Agreement, that shall not be
inconsistent with the other provisions of this Trust Agreement; (iii) to
modify, eliminate or add to any provisions of this Trust Agreement to such
extent as shall be necessary to ensure that the Trust shall be classified for
United States federal income tax purposes as a grantor trust at all times
that any of the Trust Securities are outstanding or to ensure that the Trust
shall not be required to register as an "investment company" under the
Investment Company Act; or (iv) to reduce or increase the Liquidation Amount
per Trust Security and simultaneously to correspondingly increase or decrease
the number of Trust Securities issued and outstanding solely for the purpose
of maintaining the eligibility of the Preferred Securities for quotation or
listing on any national securities exchange or other organization on which
the Preferred Securities are then quoted or listed (including, if applicable,
the Nasdaq National Market); provided, however, that in the case of clause
(ii), such action shall not adversely affect in any material respect the
interests of any Securityholder, and provided further, that in the case of
clause (iv) the aggregate Liquidation Amount of the Trust Securities
outstanding upon completion of any such reduction must be the same as the
aggregate Liquidation Amount of the Trust Securities outstanding immediately
prior to such reduction or increase, and any amendments of this Trust
Agreement shall become effective when notice thereof is given to the
Securityholders (or, in the case of an amendment pursuant to clause (iv), as
of the date specified in the notice).

(b) Except as provided in Section 601(c) or Section 1002(c) hereof, any
provision of this Trust Agreement may be amended by the Trustees and the
Depositor (i) with the consent of the Trust Securityholders representing not
less than a majority (based upon Liquidation Amounts) of the Trust Securities
then Outstanding; and (ii) upon receipt by the Trustees of an Opinion of
Counsel to the effect that such amendment or the exercise of any power
granted to the Trustees in accordance with such amendment shall not affect
the Trust's status as a grantor trust for United

45
<PAGE>

States federal income tax purposes or the Trust's exemption from status of an
"investment company" under the Investment Company Act.

(c) In addition to and notwithstanding any other provision in this Trust
Agreement, without the consent of each affected Securityholder (such consent
being obtained in accordance with Section 603 or 606 hereof), this Trust
Agreement may not be amended to (i) change the amount or timing of any
Distribution on the Trust Securities or otherwise adversely affect the amount
of any Distribution required to be made in respect of the Trust Securities as
of a specified date; or (ii) restrict the right of a Securityholder to
institute suit for the enforcement of any such payment on or after such date;
notwithstanding any other provision herein, without the unanimous consent of
the Securityholders (such consent being obtained in accordance with Section
603 or 606 hereof), this paragraph (c) of this Section 1002 may not be
amended.

(d) Notwithstanding any other provisions of this Trust Agreement, no
Trustee shall enter into or consent to any amendment to this Trust Agreement
which would cause the Trust to fail or cease to qualify for the exemption
from status of an "investment company" under the Investment Company Act or to
fail or cease to be classified as a grantor trust for United States federal
income tax purposes.

(e) Notwithstanding anything in this Trust Agreement to the contrary,
without the consent of the Depositor, this Trust Agreement may not be amended
in a manner which imposes any additional obligation on the Depositor.

(f) In the event that any amendment to this Trust Agreement is made, the
Administrative Trustees shall promptly provide to the Depositor a copy of
such amendment.

(g) Upon the request of the Depositor, accompanied by its board
resolutions authorizing the execution of any such amendments to this Trust
Agreement, and upon the filing with the Property Trustee and the Delaware
Trustee of evidence of the consent of the Securityholders required to consent
thereto as aforesaid, the Property Trustee and the Delaware Trustee shall
join with the Depositor in the execution of such amendment to this Trust
Agreement unless such amendment affects the Property Trustee's or the
Delaware Trustee's own rights, duties, immunities under this Trust Agreement
or otherwise in which case the Property Trustee and Delaware Trustee may in
their own discretion but shall not be obligated to enter into such amendment
to this Trust Agreement. The Property Trustee and Delaware Trustee, subject
to the provisions of Section 801, may receive an Opinion of Counsel as
conclusive evidence that any amendment to this Trust Agreement executed
pursuant to this Article X is authorized or permitted by, and conforms to,
the terms of this Article X and that it is proper for the Property Trustee
and Delaware Trustee under the provisions of this Article X to join in the
execution thereof.

SECTION 1003. SEPARABILITY.

In case any provision in this Trust Agreement or in the Trust Securities
Certificates shall be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions shall not in any way
be affected or impaired thereby.

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<PAGE>

SECTION 1004. GOVERNING LAW.

THIS TRUST AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF EACH OF THE
SECURITYHOLDERS, THE TRUST AND THE TRUSTEES WITH RESPECT TO THIS TRUST
AGREEMENT AND THE TRUST SECURITIES SHALL BE CONSTRUED IN ACCORDANCE WITH AND
GOVERNED BY THE LAWS OF THE STATE OF DELAWARE (WITHOUT REGARD TO CONFLICT OF
LAWS PRINCIPLES).

SECTION 1005. PAYMENTS DUE ON NON-BUSINESS DAY.

If the date fixed for any payment on any Trust Security shall be a day
that is not a Business Day, then such payment need not be made on such date
but may be made on the next succeeding day which is a Business Day, with the
same force and effect as though made on the date fixed for such payment, and
no distribution shall accumulate thereon for the period after such date.

SECTION 1006. SUCCESSORS.

This Trust Agreement shall be binding upon and shall inure to the benefit
of any successor to the Depositor, the Trust or the Relevant Trustee(s),
including any successor by operation of law. Except in connection with a
consolidation, merger or sale involving the Depositor that is permitted under
Article XII of the Indenture and pursuant to which the assignee agrees in
writing to perform the Depositor's obligations hereunder, the Depositor shall
not assign its obligations hereunder.

SECTION 1007. HEADINGS.

The Article and Section headings are for convenience only and shall not
affect the construction of this Trust Agreement.

SECTION 1008. REPORTS, NOTICES AND DEMANDS.

Any report, notice, demand or other communication which by any provision
of this Trust Agreement is required or permitted to be given or served to or
upon any Securityholder or the Depositor may be given or served in writing by
deposit thereof, first-class postage prepaid, in the United States mail, hand
delivery or facsimile transmission, in each case, addressed, (a) in the case
of a Preferred Securityholder, to such Preferred Securityholder as such
Securityholder's name and address may appear on the Securities Register; and
(b) in the case of the Common Securityholder or the Depositor, to Indiana
United Bancorp, 201 North Broadway, P.O. Box 87, Greensburg, Indiana 47240
Attention: Chairman and President, facsimile no.: (812) 663-4812. Any notice
to the Preferred Securityholders shall also be given to such owners as have,
within two years preceding the giving of such notice, filed their names and
addresses with the Property Trustee for that purpose. Such notice, demand or
other communication to or upon a Securityholder shall be deemed to have been
sufficiently given or made, for all purposes, upon hand delivery, mailing or
transmission.

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<PAGE>

Any notice, demand or other communication which by any provision of this
Trust Agreement is required or permitted to be given or served to or upon the
Trust, the Property Trustee or the Administrative Trustees shall be given in
writing addressed (until another address is published by the Trust) as
follows: (a) with respect to the Property Trustee to State Street Bank and
Trust Company, Two International Place, 4th Floor, Boston, Massachusetts
02110, Attention: Corporate Trust Department; (b) with respect to the
Delaware Trustee, to Wilmington Trust Company, Rodney Square North, 1100
North Market Street, Wilmington, Delaware 19890-0001, Attention: Corporate
Trust Administration; and (c) with respect to the Administrative Trustees, to
them at the address above for notices to the Depositor, marked "Attention:
Administrative Trustees of IUB Capital Trust, c/o Chairman and President,
Indiana United Bancorp." Such notice, demand or other communication to or
upon the Trust or the Property Trustee shall be deemed to have been
sufficiently given or made only upon actual receipt of the writing by the
Trust or the Property Trustee.

SECTION 1009. AGREEMENT NOT TO PETITION.

Each of the Trustees and the Depositor agrees for the benefit of the
Securityholders that, until at least one year and 1 day after the Trust has
been terminated in accordance with Article IX, they shall not file, or join
in the filing of, a petition against the Trust under any bankruptcy,
insolvency, reorganization or other similar law (including, without
limitation, the United States Bankruptcy Code of 1978, as amended)
(collectively, "Bankruptcy Laws") or otherwise join in the commencement of
any proceeding against the Trust under any Bankruptcy Law. In the event the
Depositor takes action in violation of this Section 1009, the Property
Trustee agrees, for the benefit of the Securityholders, that at the expense
of the Depositor (which expense shall be paid prior to the filing), it shall
file an answer with the bankruptcy court or otherwise properly contest the
filing of such petition by the Depositor against the Trust or the
commencement of such action and raise the defense that the Depositor has
agreed in writing not to take such action and should be stopped and precluded
therefrom. The provisions of this Section 1009 shall survive the termination
of this Trust Agreement.

SECTION 1010. TRUST INDENTURE ACT; CONFLICT WITH TRUST INDENTURE ACT.

(a) This Trust Agreement is subject to the provisions of the Trust
Indenture Act that are required to be part of this Trust Agreement and shall,
to the extent applicable, be governed by such provisions.

(b) The Property Trustee shall be the only Trustee which is a trustee for
the purposes of the Trust Indenture Act.

(c) If any provision hereof limits, qualifies or conflicts with another
provision hereof which is required to be included in this Trust Agreement by
any of the provisions of the Trust Indenture Act, such required provision
shall control. If any provision of this Trust Agreement modifies or excludes
any provision of the Trust Indenture Act which may be so modified or
excluded, the latter provision shall be deemed to apply to this Trust
Agreement as so modified or to be excluded, as the case may be.

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<PAGE>

(d) The application of the Trust Indenture Act to this Trust Agreement
shall not affect the nature of the Trust Securities as equity securities
representing undivided beneficial interests in the assets of the Trust.

SECTION 1011. ACCEPTANCE OF TERMS OF THE TRUST AGREEMENT, THE GUARANTEE
AND THE INDENTURE.

THE RECEIPT AND ACCEPTANCE OF A TRUST SECURITY OR ANY INTEREST THEREIN BY
OR ON BEHALF OF A SECURITYHOLDER OR ANY BENEFICIAL OWNER, WITHOUT ANY
SIGNATURE OR FURTHER MANIFESTATION OF ASSENT, SHALL CONSTITUTE THE
UNCONDITIONAL ACCEPTANCE BY THE SECURITYHOLDER AND ALL OTHERS HAVING A
BENEFICIAL INTEREST IN SUCH TRUST SECURITY OF ALL THE TERMS AND PROVISIONS OF
THIS TRUST AGREEMENT AND AGREEMENT TO THE SUBORDINATION PROVISIONS AND OTHER
TERMS OF THE GUARANTEE AND THE INDENTURE, AND SHALL CONSTITUTE THE AGREEMENT
OF THE TRUST, SUCH SECURITYHOLDER AND SUCH OTHERS THAT THE TERMS AND
PROVISIONS OF THIS TRUST AGREEMENT SHALL BE BINDING, OPERATIVE AND EFFECTIVE
AS BETWEEN THE TRUST AND SUCH SECURITYHOLDER AND SUCH OTHERS.

INDIANA UNITED BANCORP,
as Depositor

By:
----------------------------------------
Robert E. Hoptry
Chairman and President

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<PAGE>

STATE STREET BANK AND TRUST COMPANY,
as Property Trustee

By:
----------------------------------------
Name:
Title:

WILMINGTON TRUST COMPANY,
as Delaware Trustee

By:
----------------------------------------
Name:
Title:

---------------------------------------------
Robert E. Hoptry, as Administrative Trustee

---------------------------------------------
Jay B. Fager, as Administrative Trustee

---------------------------------------------
Daryl R. Tressler, as Administrative Trustee

50
<PAGE>

EXHIBIT A

CERTIFICATE OF TRUST
OF
IUB CAPITAL TRUST

THIS CERTIFICATE OF TRUST OF IUB CAPITAL TRUST (the "Trust"), dated as of
___________, 1997, is being duly executed and filed by WILMINGTON TRUST
COMPANY, a Delaware banking corporation, _____________________,
_________________ and ____________________________, each an individual, as
trustees, to form a business trust under the Delaware Business Trust Act
(12 Del. C. Section 3801 et seq.).

1. NAME. The name of the business trust formed hereby is IUB CAPITAL
TRUST.

2. DELAWARE TRUSTEE. The name and business address of the trustee of
the Trust in the State of Delaware is Wilmington Trust Company, Rodney
Square North, 1100 North Market Street, Wilmington, Delaware 19890-0001,
Attention: Corporate Trust Administration.

3. EFFECTIVE DATE. This Certificate of Trust shall be effective on
___________, 1997.

IN WITNESS WHEREOF, each of the undersigned, being a trustee of the
Trust, has executed this Certificate of Trust as of the date first above
written.

WILMINGTON TRUST COMPANY, as trustee
By:
------------------------------------
Name:
-------------------------------
Title:
------------------------------

---------------------------------------------
_______________, as Trustee

A-1
<PAGE>

EXHIBIT B

[Intentionally Omitted]

B-1
<PAGE>

EXHIBIT C
THIS CERTIFICATE IS NOT TRANSFERABLE
CERTIFICATE NUMBER C-1 NUMBER OF COMMON SECURITIES

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

CERTIFICATE EVIDENCING COMMON SECURITIES
OF
IUB CAPITAL TRUST

COMMON SECURITIES
LIQUIDATION AMOUNT $10 PER COMMON SECURITY

IUB CAPITAL TRUST, a statutory business trust created under the laws of
the State of Delaware (the "Trust"), hereby certifies that INDIANA UNITED
BANCORP (the "Holder") is the registered owner of
___________________________________________ common securities of the Trust
representing undivided beneficial interests in the assets of the Trust and
designated the ____% Common Securities (liquidation amount $10 per Common
Security) (the "Common Securities"). In accordance with Section 510 of the
Trust Agreement (as defined below), the Common Securities are not
transferable and any attempted transfer hereof shall be void. The
designations, rights, privileges, restrictions, preferences, and other terms
and provisions of the Common Securities are set forth in, and this
certificate and the Common Securities represented hereby are issued and shall
in all respects be subject to the terms and provisions of, the Amended and
Restated Trust Agreement of the Trust dated as of ____________, 1997, as the
same may be amended from time to time (the "Trust Agreement"), including the
designation of the terms of the Common Securities as set forth therein. The
Trust shall furnish a copy of the Trust Agreement to the Holder without
charge upon written request to the Trust at its principal place of business
or registered office.

Upon receipt of this certificate, the Holder is bound by the Trust
Agreement and is entitled to the benefits thereunder.

IN WITNESS WHEREOF, one of the Administrative Trustees of the Trust has
executed this certificate this _____ day of _____________, 1997.

IUB CAPITAL TRUST

By:
------------------------------------
Name:
Administrative Trustee

C-1
<PAGE>

EXHIBIT D
AGREEMENT AS TO EXPENSES AND LIABILITIES

AGREEMENT AS TO EXPENSES AND LIABILITIES (this "Agreement") dated as of
____________, 1997, between INDIANA UNITED BANCORP, an Indiana corporation
(the "Company"), and IUB CAPITAL TRUST, a Delaware business trust (the
"Trust").

RECITALS

WHEREAS, the Trust intends to issue its common securities (the "Common
Securities") to, and receive the Debentures from, the Company and to issue
and sell up to 2,127,500 ____% Cumulative Trust Preferred Securities (the
"Preferred Securities") with such powers, preferences and special rights and
restrictions as are set forth in the Amended and Restated Trust Agreement of
the Trust dated as of ____________, 1997, as the same may be amended from
time to time (the "Trust Agreement");

WHEREAS, the Company shall directly or indirectly own all of the Common
Securities of the Trust and shall issue the Debentures;

NOW, THEREFORE, in consideration of the purchase by each holder of the
Preferred Securities, which purchase the Company hereby agrees shall benefit
the Company and which purchase the Company acknowledges shall be made in
reliance upon the execution and delivery of this Agreement, the Company,
including in its capacity as holder of the Common Securities, and the Trust
hereby agree as follows:

ARTICLE I

SECTION 1.1. GUARANTEE BY THE COMPANY

Subject to the terms and conditions hereof, the Company, including in its
capacity as holder of the Common Securities, hereby irrevocably and
unconditionally guarantees to each person or entity to whom the Trust is now
or hereafter becomes indebted or liable (the "Beneficiaries") the full
payment when and as due, of any and all Obligations (as hereinafter defined)
to such Beneficiaries. As used herein, "Obligations" means any costs,
expenses or liabilities of the Trust other than obligations of the Trust to
pay to the holders of any Preferred Securities or other similar interests in
the Trust the amounts due such holders pursuant to the terms of the Preferred
Securities or such other similar interests, as the case may be. This
Agreement is intended to be for the benefit of, and to be enforceable by, all
such Beneficiaries, whether or not such Beneficiaries have received notice
hereof.

SECTION 1.2. TERM OF AGREEMENT

This Agreement shall terminate and be of no further force and effect upon
the later of (a) the date on which full payment has been made of all amounts
payable to all holders of all the Preferred Securities (whether upon
redemption, liquidation, exchange or otherwise); and (b) the

D-1
<PAGE>

date on which there are no Beneficiaries remaining; provided, however, that
this Agreement shall continue to be effective or shall be reinstated, as the
case may be, if at any time any holder of the Preferred Securities or any
Beneficiary must restore payment of any sums paid under the Preferred
Securities, under any obligation under the Preferred Securities Guarantee
Agreement dated the date hereof by the Company and State Street Bank and
Trust Company as guarantee trustee, or under this Agreement for any reason
whatsoever. This Agreement is continuing, irrevocable, unconditional and
absolute.

SECTION 1.3. WAIVER OF NOTICE

The Company hereby waives notice of acceptance of this Agreement and of
any obligation to which it applies or may apply, and the Company hereby
waives presentment, demand for payment, protest, notice of nonpayment, notice
of dishonor, notice of redemption and all other notices and demands.

SECTION 1.4. NO IMPAIRMENT

The obligations, covenants, agreements and duties of the Company under
this Agreement shall in no way be affected or impaired by reason of the
happening from time to time of any of the following:

(a) the extension of time for the payment by the Trust of all or any
portion of the Obligations or for the performance of any other obligation
under, arising out of, or in connection with, the Obligations;

(b) any failure, omission, delay or lack of diligence on the part of
the Beneficiaries to enforce, assert or exercise any right, privilege, power
or remedy conferred on the Beneficiaries with respect to the Obligations or
any action on the part of the Trust granting indulgence or extension of any
kind; or

(c) the voluntary or involuntary liquidation, dissolution, sale of
any collateral, receivership, insolvency, bankruptcy, assignment for the
benefit of creditors, reorganization, arrangement, composition or
readjustment of debt of, or other similar proceedings affecting, the Trust or
any of the assets of the Trust.

There shall be no obligation of the Beneficiaries to give notice to, or
obtain the consent of, the Company with respect to the happening of any of
the foregoing.

SECTION 1.5. ENFORCEMENT

A Beneficiary may enforce this Agreement directly against the Company,
and the Company waives any right or remedy to require that any action be
brought against the Trust or any other person or entity before proceeding
against the Company.

D-2
<PAGE>

ARTICLE II

SECTION 2.1. BINDING EFFECT

All guarantees and agreements contained in this Agreement shall bind the
successors, assigns, receivers, trustees and representatives of the Company
and shall inure to the benefit of the Beneficiaries.

SECTION 2.2. AMENDMENT

So long as there remains any Beneficiary or any Preferred Securities of
any series are outstanding, this Agreement shall not be modified or amended
in any manner adverse to such Beneficiary or to the holders of the Preferred
Securities.

SECTION 2.3. NOTICES

Any notice, request or other communication required or permitted to be
given hereunder shall be given in writing by delivering the same by facsimile
transmission (confirmed by mail), telex, or by registered or certified mail,
addressed as follows (and if so given, shall be deemed given when mailed or
upon receipt of an answer back, if sent by telex):

IUB Capital Trust c/o Indiana United Bancorp, 201 North Broadway, P.O.
Box 87, Greensburg, Indiana 47240. Facsimile No.: (812) 663-4812.
Attention: Chairman and President.

Indiana United Bancorp, 201 North Broadway, P.O. Box 87, Greensburg,
Indiana 47240. Facsimile No.: (812) 663-4812. Attention: Chairman and
President.

SECTION 2.4 This agreement shall be governed by and construed and
interpreted in accordance with the laws of the State of [INDIANA] (without
regard to conflict of laws principles).

[The remainder of this page has been left blank intentionally]

D-3
<PAGE>

THIS AGREEMENT is executed as of the day and year first above written.

INDIANA UNITED BANCORP

By:
-------------------------------------
Robert E. Hoptry
Chairman and President

IUB CAPITAL TRUST

By:
-------------------------------------
Name:
Administrative Trustee

D-4
<PAGE>

EXHIBIT E

Certificate Number Number of Preferred Securities
P-

Certificate Evidencing Preferred Securities
of
IUB Capital Trust

____% Cumulative Trust Preferred Securities
(Liquidation Amount $10 per Preferred Security)

IUB CAPITAL TRUST, a statutory business trust created under the laws of
the State of Delaware (the "Trust"), hereby certifies that ______________
(the "Holder") is the registered owner of _____ preferred securities of the
Trust representing undivided beneficial interests in the assets of the Trust
and designated the __________% Cumulative Trust Preferred Securities
(Liquidation Amount $10 per Preferred Security) (the "Preferred Securities").
The Preferred Securities are transferable on the books and records of the
Trust, in person or by a duly authorized attorney, upon surrender of this
certificate duly endorsed and in proper form for transfer as provided in
Section 504 of the Trust Agreement (as defined herein). The designations,
rights, privileges, restrictions, preferences, and other terms and provisions
of the Preferred Securities are set forth in, and this Certificate and the
Preferred Securities represented hereby are issued and shall in all respects
be subject to the terms and provisions of, the Amended and Restated Trust
Agreement of the Trust dated as of _____________, 1997, as the same may be
amended from time to time (the "Trust Agreement"), including the designation
of the terms of the Preferred Securities as set forth therein. The Holder is
entitled to the benefits of the Preferred Securities Guarantee Agreement
entered into by Indiana United Bancorp, an Indiana corporation, and State
Street Bank and Trust Company, as guarantee trustee, dated as of
_______________, 1997 (the "Guarantee"), to the extent provided therein. The
Trust shall furnish a copy of the Trust Agreement and the Guarantee to the
Holder without charge upon written request to the Trust at its principal
place of business or registered office.

Upon receipt of this certificate, the Holder is bound by the Trust
Agreement and is entitled to the benefits thereunder.

Unless the Certificate of Authentication has been manually executed by
the Authentication Agent, this Certificate is not valid or effective.

IN WITNESS WHEREOF, one of the Administrative Trustees of the Trust has
executed this certificate this _____day of _______________, 1997.

IUB CAPITAL TRUST
By:
-----------------------------------------

-----------------------------------------
Administrative Trustee

E-1
<PAGE>

FORM OF CERTIFICATE OF AUTHENTICATION

CERTIFICATE OF AUTHENTICATION

This is on of the ___% Cumulative Trust Preferred Securities referred to
in the within-mentioned Amended and Restated Trust Agreement.

Dated:

STATE STREET BANK & TRUST COMPANY,
as Authenticating Agent and Registrar

By:
-----------------------------------
Authorized Signatory

E-2

<PAGE>

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

PREFERRED SECURITIES GUARANTEE AGREEMENT

BY AND BETWEEN

INDIANA UNITED BANCORP

AND

STATE STREET BANK AND TRUST COMPANY

_______________, 1997

- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
<PAGE>

TABLE OF CONTENTS
Page No.
ARTICLE I. DEFINITIONS AND INTERPRETATION. . . . . . . . . . . . . . . . . .1
SECTION 1.1. DEFINITIONS AND INTERPRETATION. . . . . . . . . . . . . . .1

ARTICLE II. TRUST INDENTURE ACT. . . . . . . . . . . . . . . . . . . . . . .4
SECTION 2.1. TRUST INDENTURE ACT; APPLICATION. . . . . . . . . . . . . .4
SECTION 2.2. THE LIST OF HOLDERS OF THE SECURITIES.. . . . . . . . . . .5
SECTION 2.3. REPORTS BY THE PREFERRED GUARANTEE TRUSTEE. . . . . . . . .5
SECTION 2.4. PERIODIC REPORTS TO THE PREFERRED GUARANTEE TRUSTEE.. . . .5
SECTION 2.5. EVIDENCE OF COMPLIANCE WITH CONDITIONS PRECEDENT. . . . . .5
SECTION 2.6. EVENTS OF DEFAULT; WAIVER.. . . . . . . . . . . . . . . . .5
SECTION 2.7. EVENT OF DEFAULT; NOTICE. . . . . . . . . . . . . . . . . .6
SECTION 2.8. CONFLICTING INTERESTS.. . . . . . . . . . . . . . . . . . .6

ARTICLE III. POWERS, DUTIES AND RIGHTS OF THE PREFERRED GUARANTEE TRUSTEE. .6
SECTION 3.1. POWERS AND DUTIES OF THE PREFERRED GUARANTEE TRUSTEE. . . .6
SECTION 3.2. CERTAIN RIGHTS OF THE PREFERRED GUARANTEE TRUSTEE.. . . . .8
SECTION 3.3. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF GUARANTEE . . .9

ARTICLE IV. THE PREFERRED GUARANTEE TRUSTEE. . . . . . . . . . . . . . . . 10
SECTION 4.1. THE PREFERRED GUARANTEE TRUSTEE; ELIGIBILITY. . . . . . . 10
SECTION 4.2. APPOINTMENT, REMOVAL AND RESIGNATION OF THE PREFERRED
GUARANTEE TRUSTEE . . . . . . . . . . . . . . . . . . . . 10

ARTICLE V. GUARANTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 5.1. GUARANTEE.. . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 5.2. WAIVER OF NOTICE AND DEMAND.. . . . . . . . . . . . . . . 11
SECTION 5.3. OBLIGATIONS NOT AFFECTED. . . . . . . . . . . . . . . . . 11
SECTION 5.4. RIGHTS OF THE HOLDERS.. . . . . . . . . . . . . . . . . . 12
SECTION 5.5. GUARANTEE OF PAYMENT. . . . . . . . . . . . . . . . . . . 13
SECTION 5.6. SUBROGATION.. . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 5.7. INDEPENDENT OBLIGATIONS.. . . . . . . . . . . . . . . . . 13

<PAGE>

ARTICLE VI. LIMITATION OF TRANSACTIONS; SUBORDINATION. . . . . . . . . . . 13
SECTION 6.1. LIMITATION ON TRANSACTIONS. . . . . . . . . . . . . . . . 13
SECTION 6.2 RANKING . . . . . . . . . . . . . . . . . . . . . . . . . 14

ARTICLE VII. TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 7.1. TERMINATION.. . . . . . . . . . . . . . . . . . . . . . . 14

ARTICLE VIII. INDEMNIFICATION. . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 8.1. EXCULPATION.. . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 8.2. INDEMNIFICATION.. . . . . . . . . . . . . . . . . . . . . 15

ARTICLE IX. MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 9.1. SUCCESSORS AND ASSIGNS. . . . . . . . . . . . . . . . . . 15
SECTION 9.2. AMENDMENTS. . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 9.3. NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 9.4. BENEFIT . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 9.5. GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . 16

ii
<PAGE>

CROSS-REFERENCE TABLE

Section of Section of
Trust Indenture Act Guarantee
of 1939, as amended Agreement
- ------------------- ----------
310(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1(a)
310(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4.1(c), 2.8
310(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
311(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2(b)
311(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2(b)
311(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
312(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2(a)
312(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2(b)
313. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3
314(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2.4
314(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
314(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2.5
314(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
314(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1, 2.5,3.2
314(f) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1, 3.2
315(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1(d)
315(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2.7
315(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3.1
315(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1(d)
316(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1.1, 2.6, 5.4
316(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5.3
317(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3.1
317(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
318(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1(a)
318(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2.1
318(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1(b)

Note: This Cross-Reference Table does not constitute part of this Agreement and
shall not affect the interpretation of any of its terms or provisions.

iii
<PAGE>

PREFERRED SECURITIES GUARANTEE AGREEMENT

THIS PREFERRED SECURITIES GUARANTEE AGREEMENT (this "Preferred Securities
Guarantee"), dated as of ___________, 1997, is executed and delivered by
INDIANA UNITED BANCORP, an Indiana corporation (the "Guarantor"), and STATE
STREET BANK AND TRUST COMPANY, a trust company organized and existing under
the laws of the Commonwealth of Massachusetts, as trustee (the "Preferred
Guarantee Trustee"), for the benefit of the Holders (as defined herein) from
time to time of the Preferred Securities (as defined herein) of IUB CAPITAL
TRUST, a Delaware statutory business trust (the "Trust").

RECITALS

WHEREAS, pursuant to an Amended and Restated Trust Agreement (the "Trust
Agreement"), dated as of ___________, 1997, among the trustees of the Trust
named therein, the Guarantor, as depositor, and the holders from time to time
of undivided beneficial interests in the assets of the Trust, the Trust is
issuing on the date hereof 1,850,000 preferred securities, having an
aggregate liquidation amount of $18,500,000, designated the ________%
Cumulative Trust Preferred Securities (the "Preferred Securities");

WHEREAS, as incentive for the Holders to purchase the Preferred
Securities, the Guarantor desires irrevocably and unconditionally to agree,
to the extent set forth in this Preferred Securities Guarantee, to pay to the
Holders of the Preferred Securities the Guarantee Payments (as defined
herein) and to make certain other payments on the terms and conditions set
forth herein.

NOW, THEREFORE, in consideration of the purchase by each Holder of
Preferred Securities, which purchase the Guarantor hereby agrees shall
benefit the Guarantor, the Guarantor executes and delivers this Preferred
Securities Guarantee for the benefit of the Holders.

ARTICLE I.
DEFINITIONS AND INTERPRETATION

SECTION 1.1. DEFINITIONS AND INTERPRETATION.

In this Preferred Securities Guarantee, unless the context otherwise
requires:

(a) capitalized terms used in this Preferred Securities Guarantee but not
defined in the preamble above have the respective meanings assigned to them
in this Section 1.1;

(b) terms defined in the Trust Agreement as at the date of execution of
this Preferred Securities Guarantee have the same meaning when used in this
Preferred Securities Guarantee;

<PAGE>

(d) all references to "the Preferred Securities Guarantee" or "this
Preferred Securities Guarantee" are to this Preferred Securities Guarantee as
modified, supplemented or amended from time to time;

(e) all references in this Preferred Securities Guarantee to Articles and
Sections are to Articles and Sections of this Preferred Securities Guarantee,
unless otherwise specified;

(f) a term defined in the Trust Indenture Act has the same meaning when
used in this Preferred Securities Guarantee, unless otherwise defined in this
Preferred Securities Guarantee or unless the context otherwise requires; and

(g) a reference to the singular includes the plural and vice versa.

"Affiliate" has the same meaning as given to that term in Rule 405 of the
Securities Act of 1933, as amended, or any successor rule thereunder.

"Business Day" means any day other than a Saturday or a Sunday or a day on
which federal or state banking institutions in the Borough of Manhattan, the
City of New York are authorized or required by law, executive order or
regulation to close or a day on which the Corporate Trust Office of the
Preferred Guarantee Trustee is closed for business.

"Corporate Trust Office" means the office of the Preferred Guarantee
Trustee at which the corporate trust business of the Preferred Guarantee
Trustee shall, at any particular time, be principally administered, which
office at the date of execution of this Preferred Securities Guarantee is
located at Two International Place, 4th Floor, Boston, Massachusetts 02110,
Attention: Corporate Trust Department.

"Covered Person" means any Holder or beneficial owner of Preferred
Securities.

"Debentures" means the ____% Subordinated Debentures due December 30,
2027, of the Debenture Issuer held by the Property Trustee of the Trust.

"Debenture Issuer" means the Guarantor.

"Event of Default" means a default by the Guarantor on any of its payment
or other obligations under this Preferred Securities Guarantee.

"Guarantor" means Indiana United Bancorp, an Indiana corporation.

"Guarantee Payments" means the following payments or distributions,
without duplication, with respect to the Preferred Securities, to the extent
not paid or made by the Trust: (i) any accrued and unpaid Distributions that
are required to be paid on such Preferred Securities, to the extent the Trust
shall have funds available therefor, (ii) the redemption price, including all
accrued and unpaid Distributions to the date of redemption (the "Redemption
Price"), to the extent the Trust has funds available therefor, with respect
to any Preferred Securities called for redemption by the Trust, and (iii)
upon a voluntary or involuntary dissolution, winding-up or termination of the
Trust (other than in connection with the distribution of the Debentures to the

2
<PAGE>

Holders in exchange for the Preferred Securities as provided in the Trust
Agreement), the lesser of (a) the aggregate of the Liquidation Amount and all
accrued and unpaid Distributions on the Preferred Securities to the date of
payment, to the extent the Trust shall have funds available therefor (the
"Liquidation Distribution"), and (b) the amount of assets of the Trust
remaining available for distribution to Holders in liquidation of the Trust.

"Holder" means a Person in whose name a Preferred Security is or Preferred
Securities are registered in the Securities Register; any such Person is a
beneficial owner within the meaning of the Delaware Business Trust Act;
provided, however, that, in determining whether the holders of the requisite
percentage of the Preferred Securities have given any request, notice,
consent or waiver hereunder, "Holder" shall not include the Guarantor or any
Affiliate of the Guarantor.

"Indemnified Person" means the Preferred Guarantee Trustee, any Affiliate
of the Preferred Guarantee Trustee, or any officers, directors, shareholders,
members, partners, employees, representatives, nominees, custodians or agents
of the Preferred Guarantee Trustee.

"Indenture" means the Indenture dated as of _____________, 1997, among the
Debenture Issuer and State Street Bank and Trust Company, as trustee, and any
indenture supplemental thereto pursuant to which the Debentures are to be
issued to the Property Trustee of the Trust.

"Liquidation Distribution" has the meaning provided therefor in the
definition of Guarantee Payments.

"Majority in Liquidation Amount of the Preferred Securities" means the
holders of more than 50% of the Liquidation Amount (including the stated
amount that would be paid on redemption, liquidation or otherwise, plus
accrued and unpaid Distributions to the date upon which the voting
percentages are determined) of all of the Preferred Securities.

"Officers' Certificate" means, with respect to any Person, a certificate
signed by two authorized officers of such Person. Any Officers' Certificate
delivered with respect to compliance with a condition or covenant provided
for in this Preferred Securities Guarantee shall include:

(a) a statement that each officer signing the Officers' Certificate has
read the covenant or condition and the definition relating thereto;

(b) a brief statement of the nature and scope of the examination or
investigation undertaken by each officer in rendering the Officers'
Certificate;

(c) a statement that each such officer has made such examination or
investigation as, in such officer's opinion, is necessary to enable such
officer to express an informed opinion as to whether or not such covenant or
condition has been complied with; and

(d) a statement as to whether, in the opinion of each such officer, such
condition or covenant has been complied with.

3
<PAGE>

"Person" means a legal person, including any individual, corporation,
estate, partnership, joint venture, association, joint stock company, limited
liability company, trust, unincorporated association, or government or any
agency or political subdivision thereof, or any other entity of whatever
nature.

"Preferred Guarantee Trustee" means State Street Bank and Trust Company,
until a Successor Preferred Guarantee Trustee has been appointed and has
accepted such appointment pursuant to the terms of this Preferred Securities
Guarantee and thereafter means each such Successor Preferred Guarantee
Trustee.

"Redemption Price" has the meaning provided therefor in the definition of
Guarantee Payments.

"Responsible Officer" means, with respect to the Preferred Guarantee
Trustee, any officer within the Corporate Trust Office of the Preferred
Guarantee Trustee, including any vice-president, any assistant
vice-president, any assistant secretary, the treasurer, any assistant
treasurer or other officer of the Corporate Trust Office of the Preferred
Guarantee Trustee customarily performing functions similar to those performed
by any of the above designated officers and also means, with respect to a
particular corporate trust matter, any other officer to whom such matter is
referred because of that officer's knowledge of and familiarity with the
particular subject.

"Successor Preferred Guarantee Trustee" means a successor Preferred
Guarantee Trustee possessing the qualifications to act as Preferred Guarantee
Trustee under Section 4.1.

"Trust Indenture Act" means the Trust Indenture Act of 1939, as amended,
as in force at the date of which this instrument was executed; provided,
however, that in the event the Trust Indenture Act of 1939, as amended, is
amended after such date, "Trust Indenture Act" means, to the extent required
by any such amendment, the Trust Indenture Act of 1939, as so amended.

ARTICLE II.
TRUST INDENTURE ACT

SECTION 2.1. TRUST INDENTURE ACT; APPLICATION.

(a) This Preferred Securities Guarantee is subject to the provisions of
the Trust Indenture Act that are required to be part of this Preferred
Securities Guarantee and shall, to the extent applicable, be governed by such
provisions.

(b) If and to the extent that any provision of this Preferred Securities
Guarantee limits, qualifies or conflicts with the duties imposed by Section
310 to 317, inclusive, of the Trust Indenture Act, such imposed duties shall
control.

4
<PAGE>

SECTION 2.2. THE LIST OF HOLDERS OF THE SECURITIES.

(a) In the event the Preferred Guarantee Trustee is not also the
Securities Registrar, the Guarantor shall provide the Preferred Guarantee
Trustee with a list, in such form as the Preferred Guarantee Trustee may
reasonably require, of the names and addresses of the Holders of the
Preferred Securities (the "List of Holders") as of such date, (i) within 1
Business Day after January 1 and June 30 of each year, and (ii) at any other
time within 30 days of receipt by the Guarantor of a written request for a
List of Holders as of a date no more than 15 days before such List of Holders
is given to the Preferred Guarantee Trustee; provided, that the Guarantor
shall not be obligated to provide such List of Holders at any time the List
of Holders does not differ from the most recent List of Holders given to the
Preferred Guarantee Trustee by the Guarantor. The Preferred Guarantee Trustee
may destroy any List of Holders previously given to it on receipt of a new
List of Holders.

(b) The Preferred Guarantee Trustee shall comply with its obligations
under Sections 311(a), 311(b) and Section 312(b) of the Trust Indenture Act.

SECTION 2.3. REPORTS BY THE PREFERRED GUARANTEE TRUSTEE.

On or before July 15 of each year, the Preferred Guarantee Trustee shall
provide to the Holders of the Preferred Securities such reports as are
required by Section 313 of the Trust Indenture Act, if any, in the form and
in the manner provided by Section 313 of the Trust Indenture Act. The
Preferred Guarantee Trustee shall also comply with the requirements of
Section 313(d) of the Trust Indenture Act.

SECTION 2.4. PERIODIC REPORTS TO THE PREFERRED GUARANTEE TRUSTEE.

The Guarantor shall provide to the Preferred Guarantee Trustee such
documents, reports and information as required by Section 314 (if any) and
the compliance certificate required by Section 314 of the Trust Indenture Act
in the form, in the manner and at the times required by Section 314 of the
Trust Indenture Act.

SECTION 2.5. EVIDENCE OF COMPLIANCE WITH CONDITIONS PRECEDENT.

The Guarantor shall provide to the Preferred Guarantee Trustee such
evidence of compliance with any conditions precedent, if any, provided for in
this Preferred Securities Guarantee that relate to any of the matters set
forth in Section 314(c) of the Trust Indenture Act. Any certificate or
opinion required to be given by an officer pursuant to Section 314(c)(1) may
be given in the form of an Officers' Certificate.

SECTION 2.6. EVENTS OF DEFAULT; WAIVER.

The Holders of a Majority in Liquidation Amount of the Preferred
Securities may, by vote, on behalf of the Holders of all of the Preferred
Securities, waive any past Event of Default and its consequences. Upon such
waiver, any such Event of Default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been cured, for every
purpose of this

5
<PAGE>

Preferred Securities Guarantee, but no such waiver shall extend to any
subsequent or other default or Event of Default or impair any right
consequent thereon.

SECTION 2.7. EVENT OF DEFAULT; NOTICE.

(a) The Preferred Guarantee Trustee shall, within 90 days after the
occurrence of an Event of Default, transmit by mail, first class postage
prepaid, to the Holders of the Preferred Securities, notices of all Events of
Default actually known to a Responsible Officer of the Preferred Guarantee
Trustee, unless such defaults have been cured before the giving of such
notice; provided, that the Preferred Guarantee Trustee shall be protected in
withholding such notice if and so long as a Responsible Officer of the
Preferred Guarantee Trustee in good faith determines that the withholding of
such notice is in the interests of the Holders of the Preferred Securities.

(b) The Preferred Guarantee Trustee shall not be deemed to have knowledge
of any Event of Default unless the Preferred Guarantee Trustee shall have
received written notice, or of which a Responsible Officer of the Preferred
Guarantee Trustee charged with the administration of the Trust Agreement
shall have obtained actual knowledge of such Event of Default.

SECTION 2.8. CONFLICTING INTERESTS.

The Trust Agreement shall be deemed to be specifically described in this
Preferred Securities Guarantee for the purposes of clause (i) of the first
proviso contained in Section 310(b) of the Trust Indenture Act.

ARTICLE III.
POWERS, DUTIES AND RIGHTS OF THE PREFERRED GUARANTEE TRUSTEE

SECTION 3.1. POWERS AND DUTIES OF THE PREFERRED GUARANTEE TRUSTEE.

(a) This Preferred Securities Guarantee shall be held by the Preferred
Guarantee Trustee for the benefit of the Holders of the Preferred Securities,
and the Preferred Guarantee Trustee shall not transfer this Preferred
Securities Guarantee to any Person except a Holder of Preferred Securities
exercising his or her rights pursuant to Section 5.4(b) or to a Successor
Preferred Guarantee Trustee on acceptance by such Successor Preferred
Guarantee Trustee of its appointment to act as Successor Preferred Guarantee
Trustee. The right, title and interest of the Preferred Guarantee Trustee
shall automatically vest in any Successor Preferred Guarantee Trustee, and
such vesting and cessation of title shall be effective whether or not
conveyancing documents have been executed and delivered pursuant to the
appointment of such Successor Preferred Guarantee Trustee.

(b) If an Event of Default actually known to a Responsible Officer of the
Preferred Guarantee Trustee has occurred and is continuing, the Preferred
Guarantee Trustee shall enforce this Preferred Securities Guarantee for the
benefit of the Holders of the Preferred Securities.

6
<PAGE>

(c) The Preferred Guarantee Trustee, before the occurrence of any Event of
Default and after the curing of all Events of Default that may have occurred,
shall undertake to perform only such duties as are specifically set forth in
this Preferred Securities Guarantee, and no implied covenants shall be read into
this Preferred Securities Guarantee against the Preferred Guarantee Trustee. In
case an Event of Default has occurred (that has not been cured or waived
pursuant to Section 2.6) and is actually known to a Responsible Officer of the
Preferred Guarantee Trustee, the Preferred Guarantee Trustee shall exercise such
of the rights and powers vested in it by this Preferred Securities Guarantee,
and use the same degree of care and skill in its exercise thereof, as a prudent
person would exercise or use under the circumstances in the conduct of his or
her own affairs.

(d) No provision of this Preferred Securities Guarantee shall be construed
to relieve the Preferred Guarantee Trustee from liability for its own negligent
action, its own negligent failure to act, or its own willful misconduct, except
that:

(i) prior to the occurrence of any Event of Default and after the curing
or waiving of all such Events of Default that may have occurred:

(A) the duties and obligations of the Preferred Guarantee Trustee
shall be determined solely by the express provisions of this Preferred
Securities Guarantee, and the Preferred Guarantee Trustee shall not be liable
except for the performance of such duties and obligations as are specifically
set forth in this Preferred Securities Guarantee, and no implied covenants or
obligations shall be read into this Preferred Securities Guarantee against the
Preferred Guarantee Trustee; and

(B) in the absence of bad faith on the part of the Preferred
Guarantee Trustee, the Preferred Guarantee Trustee may conclusively rely, as to
the truth of the statements and the correctness of the opinions expressed
therein, upon any certificates or opinions furnished to the Preferred Guarantee
Trustee and conforming to the requirements of this Preferred Securities
Guarantee; but in the case of any such certificates or opinions that by any
provision hereof are specifically required to be furnished to the Preferred
Guarantee Trustee, the Preferred Guarantee Trustee shall be under a duty to
examine the same to determine whether or not they conform to the requirements of
this Preferred Securities Guarantee;

(ii) the Preferred Guarantee Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer of the Preferred Guarantee
Trustee, unless it shall be proved that the Preferred Guarantee Trustee was
negligent in ascertaining the pertinent facts upon which such judgment was made;

(iii) the Preferred Guarantee Trustee shall not be liable with respect
to any action taken or omitted to be taken by it in good faith in accordance
with the direction of the Holders of not less than a Majority in Liquidation
Amount of the Preferred Securities relating to the time, method and place of
conducting any proceeding for any remedy available to the Preferred Guarantee
Trustee, or exercising any trust or power conferred upon the Preferred Guarantee
Trustee under this Preferred Securities Guarantee; and

<PAGE>

(iv) no provision of this Preferred Securities Guarantee shall require the
Preferred Guarantee Trustee to expend or risk its own funds or otherwise incur
personal financial liability in the performance of any of its duties or in the
exercise of any of its rights or powers, if the Preferred Guarantee Trustee
shall have reasonable grounds for believing that the repayment of such funds or
liability is not reasonably assured to it under the terms of this Preferred
Securities Guarantee or indemnity, reasonably satisfactory to the Preferred
Guarantee Trustee, against such risk or liability is not reasonably assured to
it.

SECTION 3.2. CERTAIN RIGHTS OF THE PREFERRED GUARANTEE TRUSTEE.

(a) Subject to the provisions of Section 3.1:

(i) the Preferred Guarantee Trustee may conclusively rely, and shall be
fully protected in acting or refraining from acting upon, any resolution,
certificate, statement, instrument, opinion, report, notice, request, direction,
consent, order, bond, debenture, note, other evidence of indebtedness or other
paper or document believed by it to be genuine and to have been signed, sent or
presented by the proper party or parties;

(ii) any direction or act of the Guarantor contemplated by this Preferred
Securities Guarantee shall be sufficiently evidenced by an Officers'
Certificate;

(iii) whenever, in the administration of this Preferred Securities
Guarantee, the Preferred Guarantee Trustee shall deem it desirable that a matter
be proved or established before taking, suffering or omitting any action
hereunder, the Preferred Guarantee Trustee (unless other evidence is herein
specifically prescribed) may, in the absence of bad faith on its part, request
and conclusively rely upon an Officers' Certificate which, upon receipt of such
request, shall be promptly delivered by the Guarantor;

(iv) the Preferred Guarantee Trustee shall have no duty to see to any
recording, filing or registration of any instrument (or any rerecording,
refiling or registration thereof);

(v) the Preferred Guarantee Trustee may consult with counsel, and the
written advice or opinion of such counsel with respect to legal matters shall be
full and complete authorization and protection in respect of any action taken,
suffered or omitted by it hereunder in good faith and in accordance with such
advice or opinion. Such counsel may be counsel to the Guarantor or any of its
Affiliates and may include any of its employees. The Preferred Guarantee Trustee
shall have the right at any time to seek instructions concerning the
administration of this Preferred Securities Guarantee from any court of
competent jurisdiction;

(vi) the Preferred Guarantee Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this Preferred Securities
Guarantee at the request or direction of any Holder, unless such Holder shall
have provided to the Preferred Guarantee Trustee such security and indemnity,
reasonably satisfactory to the Preferred Guarantee Trustee, against the costs,
expenses (including attorneys' fees and expenses and the expenses of the
Preferred Guarantee Trustee's agents, nominees or custodians) and liabilities
that might be incurred by it in complying with such request or direction,
including such reasonable advances as may be

<PAGE>

requested by the Preferred Guarantee Trustee; provided that, nothing
contained in this Section 3.2(a)(vi) shall be taken to relieve the
Preferred Guarantee Trustee, upon the occurrence of an Event of
Default, of its obligation to exercise the rights and powers vested
in it by this Preferred Securities Guarantee;

(vii) the Preferred Guarantee Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction, consent,
order, bond, debenture, note, other evidence of indebtedness or other paper or
document, but the Preferred Guarantee Trustee, in its discretion, may make such
further inquiry or investigation into such facts or matters as it may see fit;

(viii) the Preferred Guarantee Trustee may execute any of the trusts or
powers hereunder or perform any duties hereunder either directly or by or
through agents, nominees, custodians or attorneys, and the Preferred Guarantee
Trustee shall not be responsible for any misconduct or negligence on the part of
any agent or attorney appointed with due care by it hereunder;

(ix) no third party shall be required to inquire as to the authority of the
Preferred Guarantee Trustee to so act or as to its compliance with any of the
terms and provisions of this Preferred Securities Guarantee, both of which shall
be conclusively evidenced by the Preferred Guarantee Trustee's or its agent's
taking such action;

(x) whenever in the administration of this Preferred Securities Guarantee
the Preferred Guarantee Trustee shall deem it desirable to receive instructions
with respect to enforcing any remedy or right or taking any other action
hereunder, the Preferred Guarantee Trustee (i) may request instructions from the
Holders of a Majority in Liquidation Amount of the Preferred Securities, (ii)
may refrain from enforcing such remedy or right or taking such other action
until such instructions are received, and (iii) shall be protected in
conclusively relying on or acting in accordance with such instructions.

(b) No provision of this Preferred Securities Guarantee shall be deemed to
impose any duty or obligation on the Preferred Guarantee Trustee to perform any
act or acts or exercise any right, power, duty or obligation conferred or
imposed on it in any jurisdiction in which it shall be illegal, or in which the
Preferred Guarantee Trustee shall be unqualified or incompetent in accordance
with applicable law, to perform any such act or acts or to exercise any such
right, power, duty or obligation. No permissive power or authority available to
the Preferred Guarantee Trustee shall be construed to be a duty.

SECTION 3.3. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF GUARANTEE.

The Recitals contained in this Guarantee shall be taken as the statements of
the Guarantor, and the Preferred Guarantee Trustee does not assume any
responsibility for their correctness. The Preferred Guarantee Trustee makes no
representation as to the validity or sufficiency of this Preferred Securities
Guarantee.

<PAGE>

ARTICLE IV.
THE PREFERRED GUARANTEE TRUSTEE

SECTION 4.1. THE PREFERRED GUARANTEE TRUSTEE; ELIGIBILITY.

(a) There shall at all times be a Preferred Guarantee Trustee which shall:

(i) not be an Affiliate of the Guarantor; and

(ii) be a corporation organized and doing business under the laws of the
United States or any state or territory thereof or of the District of Columbia,
or a corporation or Person permitted by the Securities and Exchange Commission
to act as an institutional trustee under the Trust Indenture Act, authorized
under such laws to exercise corporate trust powers, having a combined capital
and surplus of at least $50,000,000, and subject to supervision or examination
by federal, state, territorial or District of Columbia authority. If such
corporation publishes reports of condition at least annually, pursuant to law or
to the requirements of the supervising or examining authority referred to above,
then, for the purposes of this Section 4.1(a)(ii), the combined capital and
surplus of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published.

(b) If at any time the Preferred Guarantee Trustee shall cease to be
eligible to so act under Section 4.1(a), the Preferred Guarantee Trustee shall
immediately resign in the manner and with the effect set out in Section 4.2(c).

(c) If the Preferred Guarantee Trustee has or shall acquire any
"conflicting interest" within the meaning of Section 310(b) of the Trust
Indenture Act, the Preferred Guarantee Trustee and the Guarantor shall in all
respects comply with the provisions of Section 310(b) of the Trust Indenture
Act.

SECTION 4.2. APPOINTMENT, REMOVAL AND RESIGNATION OF THE PREFERRED GUARANTEE
TRUSTEE.

(a) Subject to Section 4.2(b), the Preferred Guarantee Trustee may be
appointed or removed without cause at any time by the Guarantor.

(b) The Preferred Guarantee Trustee shall not be removed in accordance
with Section 4.2(a) until a Successor Preferred Guarantee Trustee has been
appointed and has accepted such appointment by written instrument executed by
such Successor Preferred Guarantee Trustee and delivered to the Guarantor.

(c) The Preferred Guarantee Trustee appointed to office shall hold office
until a Successor Preferred Guarantee Trustee shall have been appointed or until
its removal or resignation. The Preferred Guarantee Trustee may resign from
office (without need for prior or subsequent accounting) by an instrument in
writing executed by the Preferred Guarantee Trustee and delivered to the
Guarantor, which resignation shall not take effect until a Successor Preferred
Guarantee Trustee has been appointed and has accepted such appointment by
instrument in

<PAGE>

writing executed by such Successor Preferred Guarantee Trustee and
delivered to the Guarantor and the resigning Preferred Guarantee
Trustee.

(d) If no Successor Preferred Guarantee Trustee shall have been appointed
and accepted appointment as provided in this Section 4.2 within 60 days after
delivery to the Guarantor of an instrument of resignation, the resigning
Preferred Guarantee Trustee may petition any court of competent jurisdiction for
appointment of a Successor Preferred Guarantee Trustee. Such court may
thereupon, after prescribing such notice, if any, as it may deem proper, appoint
a Successor Preferred Guarantee Trustee.

(e) No Preferred Guarantee Trustee shall be liable for the acts or
omissions to act of any Successor Preferred Guarantee Trustee.

(f) Upon termination of this Preferred Securities Guarantee or removal or
resignation of the Preferred Guarantee Trustee pursuant to this Section 4.2, the
Guarantor shall pay to the Preferred Guarantee Trustee all fees and expenses
accrued to the date of such termination, removal or resignation.

ARTICLE V.
GUARANTEE

SECTION 5.1. GUARANTEE.

The Guarantor irrevocably and unconditionally agrees to pay in full to the
Holders the Guarantee Payments (without duplication of amounts theretofore paid
by the Trust), as and when due, regardless of any defense, right of set-off or
counterclaim that the Trust may have or assert. The Guarantor's obligation to
make a Guarantee Payment may be satisfied by direct payment of the required
amounts by the Guarantor to the Holders or by causing the Trust to pay such
amounts to the Holders.

SECTION 5.2. WAIVER OF NOTICE AND DEMAND.

The Guarantor hereby waives notice of acceptance of this Preferred Securities
Guarantee and of any liability to which it applies or may apply, presentment,
demand for payment, any right to require a proceeding first against the Trust or
any other Person before proceeding against the Guarantor, protest, notice of
nonpayment, notice of dishonor, notice of redemption and all other notices and
demands.

SECTION 5.3. OBLIGATIONS NOT AFFECTED.

The obligations, covenants, agreements and duties of the Guarantor under this
Preferred Securities Guarantee shall in no way be affected or impaired by reason
of the happening from time to time of any of the following:

<PAGE>

(a) the release or waiver, by operation of law or otherwise, of the
performance or observance by the Trust of any express or implied agreement,
covenant, term or condition relating to the Preferred Securities to be performed
or observed by the Trust;

(b) the extension of time for the payment by the Trust of all or any
portion of the Distributions, Redemption Price, Liquidation Distribution or any
other sums payable under the terms of the Preferred Securities or the extension
of time for the performance of any other obligation under, arising out of, or in
connection with, the Preferred Securities (other than an extension of time for
payment of Distributions, Redemption Price, Liquidation Distribution or other
sum payable that results from the extension of any interest payment period on
the Debentures or any extension of the maturity date of the Debentures permitted
by the Indenture);

(c) any failure, omission, delay or lack of diligence on the part of the
Holders to enforce, assert or exercise any right, privilege, power or remedy
conferred on the Holders pursuant to the terms of the Preferred Securities, or
any action on the part of the Trust granting indulgence or extension of any
kind;

(d) the voluntary or involuntary liquidation, dissolution, sale of any
collateral, receivership, insolvency, bankruptcy, assignment for the benefit of
creditors, reorganization, arrangement, composition or readjustment of debt of,
or other similar proceedings affecting, the Trust or any of the assets of the
Trust;

(e) any invalidity of, or defect or deficiency in, the Preferred
Securities;

(f) any failure or omission to receive any regulatory approval or consent
required in connection with the Preferred Securities (or the common equity
securities issued by the Trust), including the failure to receive any approval
of the Board of Governors of the Federal Reserve System required for the
redemption of the Preferred Securities;

(g) the settlement or compromise of any obligation guaranteed hereby or
hereby incurred; or

(h) any other circumstance whatsoever that might otherwise constitute a
legal or equitable discharge or defense of a guarantor, it being the intent of
this Section 5.3 that the obligations of the Guarantor hereunder shall be
absolute and unconditional under any and all circumstances.

There shall be no obligation of the Holders to give notice to, or obtain
consent of, the Guarantor with respect to the happening of any of the foregoing.

SECTION 5.4. RIGHTS OF THE HOLDERS.

(a) The Holders of a Majority in Liquidation Amount of the Preferred
Securities have the right to direct the time, method and place of conducting of
any proceeding for any remedy available to the Preferred Guarantee Trustee in
respect of this Preferred Securities Guarantee or exercising any trust or power
conferred upon the Preferred Guarantee Trustee under this Preferred Securities
Guarantee.

<PAGE>

(b) Any Holder of Preferred Securities may institute a legal proceeding
directly against the Guarantor to enforce its rights under this Preferred
Securities Guarantee, without first instituting a legal proceeding against the
Trust, the Preferred Guarantee Trustee or any other Person.

SECTION 5.5. GUARANTEE OF PAYMENT.

This Preferred Securities Guarantee creates a guarantee of payment and not
of collection.

SECTION 5.6. SUBROGATION.

The Guarantor shall be subrogated to all (if any) rights of the Holders of
the Preferred Securities against the Trust in respect of any amounts paid to
such Holders by the Guarantor under this Preferred Securities Guarantee;
provided, however, that the Guarantor shall not (except to the extent required
by mandatory provisions of law) be entitled to enforce or exercise any right
that it may acquire by way of subrogation or any indemnity, reimbursement or
other agreement, in all cases as a result of payment under this Preferred
Securities Guarantee, if, at the time of any such payment, any amounts are due
and unpaid under this Preferred Securities Guarantee. If any amount shall be
paid to the Guarantor in violation of the preceding sentence, the Guarantor
agrees to hold such amount in trust for the Holders and to pay over such amount
to the Holders.

SECTION 5.7. INDEPENDENT OBLIGATIONS.

The Guarantor acknowledges that its obligations hereunder are independent of
the obligations of the Trust with respect to the Preferred Securities, and that
the Guarantor shall be liable as principal and as debtor hereunder to make
Guarantee Payments pursuant to the terms of this Preferred Securities Guarantee
notwithstanding the occurrence of any event referred to in subsections (a)
through (h), inclusive, of Section 5.3 hereof.

ARTICLE VI.
LIMITATION OF TRANSACTIONS; SUBORDINATION

SECTION 6.1. LIMITATION ON TRANSACTIONS.

So long as any of the Preferred Securities remain outstanding, if any of the
circumstances described in Section 5.6 of the Indenture shall have occurred,
then (a) the Guarantor shall not declare or pay any dividend on, make any
distributions with respect to, or redeem, purchase, acquire or make a
liquidation payment with respect to, any of its capital stock and (b) the
Guarantor shall not make any payment of principal or interest on or repay,
repurchase or redeem any debt securities issued by the Guarantor which rank pari
passu with or junior to the Debentures other than payments under this Preferred
Securities Guarantee and (c) the Guarantor shall not redeem, purchase or acquire
less than all of the outstanding Debentures or any of the Preferred Securities.

<PAGE>

SECTION 6.2 RANKING.

This Preferred Securities Guarantee will constitute an unsecured obligation
of the Guarantor and will rank (i) subordinate and junior in right of payment to
all Senior Debt, Subordinated Debt and Additional Senior Obligations (as defined
in the Indenture) of the Guarantor, (ii) pari passu with the most senior
preferred securities or preference stock now or hereafter issued by the
Guarantor and with any guarantee now or hereafter entered into by the Guarantor
in respect of any preferred securities or preference stock of any Affiliate of
the Guarantor, and (iii) senior to the Guarantor's common stock.

ARTICLE VII.
TERMINATION

SECTION 7.1. TERMINATION.

This Preferred Securities Guarantee shall terminate upon (i) full payment of
the Redemption Price of all the Preferred Securities, (ii) full payment of the
amounts payable in accordance with the Trust Agreement upon liquidation of the
Trust, or (iii) distribution of the Debentures to the Holders of the Preferred
Securities. Notwithstanding the foregoing, this Preferred Securities Guarantee
shall continue to be effective or shall be reinstated, as the case may be, if at
any time any Holder of Preferred Securities must restore payment of any sums
paid under the Preferred Securities or under this Preferred Securities
Guarantee.

ARTICLE VIII.
INDEMNIFICATION

SECTION 8.1. EXCULPATION.

(a) No Indemnified Person shall be liable, responsible or accountable in
damages or otherwise to the Guarantor or any Covered Person for any loss, damage
or claim incurred by reason of any act or omission performed or omitted by such
Indemnified Person in good faith in accordance with this Preferred Securities
Guarantee and in a manner that such Indemnified Person reasonably believed to be
within the scope of the authority conferred on such Indemnified Person by this
Preferred Securities Guarantee or by law, except that an Indemnified Person
shall be liable for any such loss, damage or claim incurred by reason of such
Indemnified Person's negligence or willful misconduct with respect to such acts
or omissions.

(b) An Indemnified Person shall be fully protected in relying in good
faith upon the records of the Guarantor and upon such information, opinions,
reports or statements presented to the Guarantor by any Person as to matters the
Indemnified Person reasonably believes are within such other Person's
professional or expert competence and who has been selected with reasonable care
by or on behalf of the Guarantor, including information, opinions, reports or
statements as to the value and amount of the assets, liabilities, profits,
losses, or any other facts pertinent to the existence and amount of assets from
which Distributions to the Holders of the Preferred Securities might properly be
paid.

<PAGE>

SECTION 8.2. INDEMNIFICATION.

The Guarantor agrees to indemnify each Indemnified Person for, and to hold
each Indemnified Person harmless against, any loss, liability or expense
incurred without negligence or bad faith on its part, arising out of or in
connection with the acceptance or administration of the trust or trusts
hereunder, including the costs and expenses (including reasonable legal fees and
expenses) of defending itself against, or investigating, any claim or liability
in connection with the exercise or performance of any of its powers or duties
hereunder. The obligation to indemnify as set forth in this Section 8.2 shall
survive the termination of this Preferred Securities Guarantee.

ARTICLE IX.
MISCELLANEOUS

SECTION 9.1. SUCCESSORS AND ASSIGNS.

All guarantees and agreements contained in this Preferred Securities
Guarantee shall bind the successors, assigns, receivers, trustees and
representatives of the Guarantor and shall inure to the benefit of the Holders
of the Preferred Securities then outstanding.

SECTION 9.2. AMENDMENTS.

Except with respect to any changes that do not materially adversely affect
the rights of the Holders (in which case no consent of the Holders will be
required), this Preferred Securities Guarantee may only be amended with the
prior approval of the Holders of at least a Majority in Liquidation Amount of
the Preferred Securities. The provisions of Article VI of the Trust Agreement
with respect to meetings of the Holders of the Preferred Securities apply to the
giving of such approval.

SECTION 9.3. NOTICES.

All notices provided for in this Preferred Securities Guarantee shall be in
writing, duly signed by the party giving such notice, and shall be delivered,
telecopied or mailed by registered or certified mail, as follows:

(a) If given to the Preferred Guarantee Trustee, at the Preferred
Guarantee Trustee's mailing address set forth below (or such other address as
the Preferred Guarantee Trustee may give notice of to the Holders of the
Preferred Securities):

State Street Bank and Trust Company
Two International Place, 4th Floor
Boston, Massachusetts 02110
Attention: Corporate Trust Department

(b) If given to the Guarantor, at the Guarantor's mailing address set
forth below (or such other address as the Guarantor may give notice of to the
Holders of the Preferred Securities):

<PAGE>

Indiana United Bancorp
201 North Broadway
P. O. Box 87
Greensburg, Indiana 47240
Attention: Chairman and President

All such notices shall be deemed to have been given when received in person,
telecopied with receipt confirmed, or mailed by first class mail, postage
prepaid except that if a notice or other document is refused delivery or cannot
be delivered because of a changed address of which no notice was given, such
notice or other document shall be deemed to have been delivered on the date of
such refusal or inability to deliver.

SECTION 9.4. BENEFIT.

This Preferred Securities Guarantee is solely for the benefit of the Holders
of the Preferred Securities and, subject to Section 3.1(a), is not separately
transferable from the Preferred Securities.

SECTION 9.5. GOVERNING LAW.

THIS PREFERRED SECURITIES GUARANTEE SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF [INDIANA].

This Preferred Securities Guarantee is executed as of the day and year
first above written.

INDIANA UNITED BANCORP,
as Guarantor

By
----------------------------------
Robert E. Hoptry
Chairman and President

STATE STREET BANK AND TRUST COMPANY,
as Preferred Guarantee Trustee

By
----------------------------------
Name:
-------------------------------
Title:
------------------------------

<PAGE>
EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT ("Agreement") is made and entered into as of the
10th day of October, 1995 by and between Indiana United Bancorp, an Indiana
corporation (together with its successors and assigns permitted under this
Agreement, the "Company") and Michael K. Bauer (the "Executive"). Regional
Federal Savings Bank (the "Bank"), a wholly owned subsidiary of the Company,
joins in this Agreement for the purposes expressed herein.

RECITALS:

A. Executive has made and is expected to continue to make substantial
contributions in maintaining high quality assets, enhancing customer
service, improving productivity and/or operating efficiency, generating loan
and deposit growth, and/or other contributions favorably impacting the
financial performance of the Company. Executive's contributions have
occurred while serving as Bank's Chief Executive Officer.

B. The Company believes the continued services of Executive to be in the best
interests of the Company, its shareholders and the Bank, and desires to
enter into this Agreement to assure for a certain minimum period the
continued services of Executive free of the distractions of an actual or
potential Change of Control.

C. The Bank desires to join in this Agreement to evidence its consent to the
provisions herein and its willingness to perform in accordance with all such
provisions as they relate to the Bank.

D. Executive desires to enter into this Agreement to assure a fair and
reasonable transition period for Change of Control principals to evaluate
Executive's past performance and to determine how to best maximize his
future value to Company or Bank, subject to the terms and provisions of this
Agreement.

E. The parties intend certain capitalized terms not otherwise defined to have
the meanings assigned to them in Section 26 of this Agreement.

AGREEMENT:

NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein and for other good and valuable considerations, the receipt of
which is mutually acknowledged, the Company, the Bank and the Executive
(individually, a "Party" and collectively, the "Parties") agree as follows:

1. AT-WILL EMPLOYMENT. The Company, the Bank and the Executive mutually
acknowledge and agree that Executive is employed as an at-will employee and,
notwithstanding contrary provisions of this Agreement, is entitled only to
the rights afforded all at-will employees in the state of Indiana, together
with all rights afforded under federal discrimination laws. Executive
expressly acknowledges that the obligations and responsibilities of Company
created by this Agreement shall be applicable only in the event of a Change
of Control.

2. TERM OF THIS AGREEMENT. This Agreement shall be effective upon its
execution by the Parties and shall expire on September 30, 1998.

a) TERMINATION OF AGREEMENT BY EXECUTIVE: This Agreement may be terminated
at any time by Executive upon six months written notice to Bank.

b) EFFECT OF TERMINATION: A notice of termination by Executive shall
immediately and unconditionally release all other Parties from any
obligation specifically created by this Agreement.

c) TERMINATION BY MUTUAL CONSENT: All Parties may agree by mutual written
consent to terminate or modify this Agreement at any time, with or
without consideration.

3. POSITION, DUTIES AND RESPONSIBILITIES DURING THE TERM OF THIS AGREEMENT.

a) Executive shall be employed by Bank as its Chief Executive Officer, (or
in a position of similar scope, responsibility and authority), and shall
serve as a member of the Bank's board of directors
<PAGE>
(the "Bank Board"). The Executive, in carrying out his duties under this
Agreement, shall report to the Bank Board.

b) Executive shall engage in charitable activities and community affairs,
provided that such activities are likely to enhance the image of Bank and
do not materially interfere with the proper performance of his duties and
responsibilities as Chief Executive Officer (or any other position
similar in scope, responsibility and authority).

4. BASE SALARY. The Executive shall be paid an annualized Base Salary of
$120,000.00, payable in accordance with the regular payroll practices of
Bank. The Base Salary shall be reviewed no less frequently than annually for
increase in the discretion of the Bank Board. Future references to base
salary shall include any and all increases that may result from such annual
reviews.

5. BONUS AWARDS. The Executive may receive such bonus payments for services
performed under this Agreement as the Bank Board may award Executive from
time to time. Such bonus payments may be in addition to, in lieu of or in
combination with any increase in the Base Salary under Section 4. The amount
of bonus payments for any year within the term of this Agreement shall be
within the discretion of the Bank Board, but in no event less than a formula
percentage applicable to other executives and employees.

6. EMPLOYEE BENEFIT PROGRAMS. During the term of this Agreement, Executive
shall be entitled to participate in all employee pension and welfare benefit
plans and programs made available by Company and/or Bank to Bank(1)s senior
level executives or employees generally, as such plans or programs may be in
effect from time to time, including without limitations, Employee
Performance Incentive Compensation Plan or other pension, profit-sharing
plans and retirement plans, medical, dental, hospitalization, short-term and
long-term disability and life insurance plans, and any other employee
welfare benefit plans or programs that may be sponsored by Company and/or
Bank for Bank senior level executives or employees generally from time to
time, including any plans that supplement the above-listed types of plans or
programs, whether funded or unfunded.

7. REIMBURSEMENT OF BUSINESS AND OTHER EXPENSES. The Executive is authorized
to incur reasonable expenses in carrying out his duties and responsibilities
under this Agreement and Bank shall promptly reimburse him for all business
expenses incurred in connection with carrying out the business of Bank,
subject to documentation in accordance with the Bank's policy.

8. TERMINATION OF EMPLOYMENT. During the term of this agreement, the
termination of Executive shall be processed as follows:

a) TERMINATION FOR CAUSE.

i) A termination for Cause shall not take effect unless Executive shall
be given written notice by the Bank Board of his termination for
Cause, such notice to state in detail the particular act or acts or
failure or failures to act that constitute the grounds on which the
proposed termination for Cause is based.

ii) In the event Executive's employment is terminated for Cause, he
shall be entitled to:

A) the Base Salary through the date of the termination of his
employment for Cause;

B) any bonus awarded or earned, but not yet paid to Executive under
Section 5 for the year ending prior to the termination of
Executive's employment;

C) any amounts earned, accrued or owing but not yet paid under
Sections 6 or 7 of this Agreement; and

D) other or additional benefits in accordance with applicable plans
or programs of Company and/or Bank.

2
<PAGE>
iii) Anything herein to the contrary notwithstanding, if following a
termination of Executive's employment for Cause as defined in
Section 26(d)(i) such conviction is overturned in a final
determination on appeal, Executive shall be entitled to the
payments and the economic equivalent of the benefits Executive
would have received under the provisions of the Agreement if his
employment had been terminated by Company without Cause.

b) TERMINATION WITHOUT CAUSE OR CONSTRUCTIVE TERMINATION WITHOUT
CAUSE. If, subsequent to the occurrence of:

Y) any public announcement by another entity of its intention to
engage in any activity which, if successful, would lead to a
Change of Control of Company or Bank; or

Z) the signing of any agreement by Company or Bank incidental to any
proposed transaction which, upon completion, would result in a
Change of Control of Company or Bank,

the Executive(1)s employment is terminated without Cause, other than due
to Disability or Death, or in the event there is a Constructive
Termination Without Cause, Executive shall be entitled to:

i) the Base Salary (or in the event a reduction in Base Salary is the
basis for a Constructive Termination Without Cause, then the Base
Salary in effect immediately prior to such reduction) to the date of
termination of Executive's employment; plus

A) continuation of the Base Salary (or in the event a reduction in
Base Salary is the basis for a Constructive Termination Without
Cause, then the Base Salary in effect immediately prior to such
reduction) through the expiration of this Agreement; or

B) in the event employment is terminated prior to September 30, 1998,
continuation of the Base Salary for a period of twelve months;

ii) any bonus awarded or earned, but not yet paid, to Executive under
Section 5 of this Agreement for the year ending prior to the date
of termination of Executive's employment;

iii) payment for any accrued but unused vacation pay;

iv) any amounts earned, accrued or owing but not yet paid under Sections
6 or 7 of this Agreement;

v) continued participation in all medical, dental, hospitalization and
life insurance coverage and in other employee benefit plans in which
he was participating on the date of the termination of his
employment until the earlier of:

A) the end of the period for which he is receiving salary
continuation payments; or

B) the date, or dates, he becomes eligible to participate in the
benefit plans and programs of a subsequent employer (such
coverages and benefits to be determined on a coverage-
by-coverage, or benefit-by-benefit, basis);

PROVIDED, that (x) if Executive is precluded from continuing his
participation in any employee benefit plan or program as provided in
this clause (v) of this Section 8(b), he shall be provided with the
after-tax economic equivalent of the benefits provided under the plan
or program in which he is unable to participate for the period
specified in this clause (vi) of this Section 8(b), (y) the economic
equivalent of any benefit foregone shall be deemed to be the lowest
cost that would be incurred by Executive in obtaining such benefit
himself on an individual basis, and (z) payment of such after-tax
economic equivalent shall be made quarterly in advance; and

vi) other or additional benefits in accordance with applicable plans of
Company and/or Bank.

3
<PAGE>
c) TERMINATION DUE TO DISABILITY. In the event Executive(1)s employment is
terminated due to his Disability, he shall be entitled to receive all
benefits provided under Section 8 (b) of this Agreement, or the benefits
under the then current Company, or Bank, Disability Benefit Plan,
whichever provides the greatest economic benefit to Executive.

d) TERMINATION DUE TO DEATH. In the event Executive's employment is
terminated due to his Death, his estate or his beneficiaries, as the case
may be, shall be entitled to:

i) Base Salary through the date of Death and for an additional period
of ninety (90) days following the date of Death:

ii) any bonus awarded or earned, but not yet paid, to Executive under
Section 5 for the year ending prior to the date of termination of
Executive's employment;

iii) payment for any accrued but unused vacation pay; and

iv) any amounts earned, accrued or owing, but not yet paid under
Sections 6 or 7 of this Agreement.

e) VOLUNTARY TERMINATION. If, during the term of this agreement, Executive
terminates his employment on his own initiative, other than a termination
due to Death or Disability or a Constructive Termination Without Cause,
Executive shall have the same entitlements as provided in Section
8(a)(ii) for a termination for Cause. A voluntary termination under this
Section 8(e) shall be effective upon six months written notice to Company
and shall not be deemed a breach of this Agreement. If Executive fails to
provide such notice, he shall forfeit any and all claims to any bonus,
incentive compensation or other financial benefit that otherwise may have
been payable during or at the expiration of the six month period.

f) NATURE OF PAYMENTS. Any amounts due under this Section 8 are in the
nature of severance payments considered to be reasonable by all Parties
and are not in the nature of a penalty, and shall be paid under the
normal pay practices of the Bank until expired.

9. COMPETING WITH COMPANY OR BANK. Executive acknowledges his familiarity and
understanding of the Company's Statement of Policy Concerning Code of
Conduct with Respect to Confidentiality, Inside Information and Conflicts of
Interest and, in conformance with such policy, agrees to the following:

a) CONFIDENTIALITY. Executive agrees that all contracts, prices, business
practices, secrets, existing or prospective customer lists or files,
advertising strategies, employee records, payroll, benefit and other
compensation data, or any proprietary information or knowledge which
Executive has or will acquire while in the employ of Company or Bank with
respect to the business of Company or Bank is strictly confidential and
may not be disclosed, used or exploited by Executive for his personal
benefit or for the benefit of any other person, firm or corporation
during his employment by Company or Bank or subsequent thereto, without
limitation as to time. Executive agrees not to disclose any such
information except as required by government process or court of
competent jurisdiction.

b) EMPLOYEE AND CUSTOMER RELATIONSHIPS. During the term of this Agreement
and for an additional period equal to the number of months, if any,
Executive is entitled to payment under Section 8 of this Agreement, or
twelve months, whichever shall last occur, Executive shall not:

i) advise, suggest, encourage, solicit, or otherwise attempt to induce
any employee of Company or Bank to terminate his or her employment
relationship with Company or Bank; nor

ii) directly or indirectly solicit, contact or communicate with any
customers or clients of Company or Bank with respect to providing
such customers or clients any of the products or services (the
"Business") offered by Bank, nor

4
<PAGE>
iii) directly or indirectly, for himself or on behalf of any other
person, firm or corporation, otherwise attempt to divert, influence
or take away any of Bank's customers or in any way cause Bank's
customers to discontinue or decrease the scope of Business they
conduct with Bank;

c) DIRECT BUSINESS COMPETITORS. In further consideration of the payments
and benefits provided under this Agreement, during the term of this
Agreement and for an additional period equal to the number of months
remaining, if any, Executive is entitled to payment under Section 8 of
this Agreement, or twelve months, whichever shall last occur, Executive
shall not be employed directly or indirectly by, or act as a consultant
to, any person or entity that is or is about to be engaged in any
business located in Clark or Floyd Counties, Indiana, or any Indiana
counties contiguous thereto, that is or is about to be engaged (i) in the
solicitation or acceptance of deposits; (ii) the solicitation or making
of loans; (iii) the provision of financial advisory services, or (iv) any
other activities that now or hereafter during the period covered by this
Agreement are permitted to be conducted by commercial banks, savings
associations, mortgage loan companies, consumer finance companies, credit
unions, bank holding companies or savings and loan holding companies.

10. MITIGATION AND OFFSET. In the event of any termination of employment under
Section 8(b) of this Agreement, Executive shall be under no obligation to
seek other employment and there shall be no offset against amounts due
Executive under this Agreement on account of any remuneration attributable
to any subsequent employment that he may obtain, provided such subsequent
employment or other action of Executive does not violate any provision of
Section 9 of this Agreement. With respect to a violation of any provision of
Section 9 by Executive, amounts payable to Executive as provided under
Section 8(b) shall immediately cease without prejudice to any other rights
or causes of action that the Company or Bank may have as a result of a
violation of any provision of Section 9 of this Agreement.

11. EFFECT OF AGREEMENT ON OTHER BENEFITS. Except as specifically provided in
this Agreement, the existence of this Agreement shall not prohibit or
restrict Executive(1)s entitlement to full participation in employee benefit
and other plans in which other officers of Bank are customarily eligible to
participate.

12. ASSIGNABILITY; BINDING NATURE. This Agreement shall be binding upon and
inure to the benefit of the Parties and their respective successors, heirs
(in the case of Executive) and assigns. No rights or obligations of Company
or Bank under this Agreement may be assigned or transferred by Company or
Bank except that such rights or obligations may be assigned or transferred
pursuant to a merger or consolidation in which Company or Bank is not the
continuing entity, or the sale or liquidation of all or substantially all of
the assets of Company or Bank, provided that the assignee or transferee is
the successor to all or substantially all of the assets of Company or Bank,
and such assignee or transferee assumes the liabilities, obligations and
duties of Company and Bank, as contained in this Agreement, either
contractually or as a matter of law. The Company and Bank further agree
that, in the event of a sale of assets or liquidation as described in the
preceding sentence, each shall take whatever action it legally can to cause
such assignee or transferee to expressly assume the liabilities, obligations
and duties of Company and Bank hereunder. No rights or obligations of
Executive under this Agreement may be assigned or transferred by Executive
other than his rights to compensation and benefits, which may be transferred
only by will or operation of law, except as provided in Section 18.

13. REPRESENTATION. The Company represents and warrants that Company and Bank
are each fully authorized and empowered to enter into this Agreement and
that the performance of obligations under this Agreement will not violate
any agreement between either of them and any other person, firm or
organization.

5
<PAGE>
14. ENTIRE AGREEMENT. This Agreement contains the entire understanding and
agreement between the Parties concerning the subject matter hereof and
supersedes all prior agreements, understandings, discussions, negotiations
and undertakings, whether written or oral, between the Parties with respect
thereto.

15. AMENDMENT OR WAIVER. No provision in this Agreement may be amended unless
such amendment is agreed to in writing and signed by Executive and an
authorized officer of Company and Bank. No waiver by any Party or any breach
by another Party of any condition or provision contained in this Agreement
to be performed by such other Party shall be deemed a waiver of a similar or
dissimilar condition or provision at the same or any prior or subsequent
time. Any waiver must be in writing and signed by the Executive or an
authorized officer of Company or Bank, as the case may be.

16 SEVERABILITY. In the event that any provision or portion of this Agreement
shall be determined to be invalid or unenforceable for any reason, in whole
or in part, the remaining provisions of this Agreement shall be unaffected
thereby and shall remain in full force and effect to the fullest extent
permitted by law.

17. SURVIVORSHIP. The respective rights and obligations of the Parties
hereunder shall survive any termination of Executive's employment to the
extent necessary to the preservation of such intended rights and
obligations.

18. BENEFICIARIES/REFERENCES. The Executive shall be entitled to select (and
change, to the extent permitted under any applicable law) a beneficiary or
beneficiaries to receive any compensation or benefit payable hereunder
following Executive(1)s death by giving Company written notice thereof. In
the event of Executive(1)s death or a judicial determination of his
incompetence, reference in this Agreement to Executive shall be deemed,
where appropriate, to refer to his beneficiary, estate or other legal
representative.

19. GOVERNING LAW/JURISDICTION. This Agreement shall be governed by and
construed and interpreted in accordance with the laws of the State of
Indiana without reference to principles of conflict of laws.

20. RESOLUTION OF DISPUTES. Any disputes arising under or in connection with
this Agreement shall be resolved by binding arbitration, to be held in
accordance with the rules and procedures of the American Arbitration
Association. Judgment upon the award rendered by the arbitrator(s) may be
entered in any court having jurisdiction thereof. Attorney(1)s fees shall be
borne by the respective parties. All other expenses of the arbitration or
litigation, up to $10,000 shall be borne equally by Executive and Company.
Arbitration expenses exceeding $10,000 shall be borne by Company. However,
if the arbitrator(s) determine that the claims or defenses of Executive were
meritorious and rules in favor of Executive, Company shall reimburse or pay
all reasonable expenses incurred by Executive relative to such claims
including reasonable attorney fees.

21. NOTICES. Any notice given to a Party shall be in writing and shall be
deemed to have been given when delivered personally or sent by certified or
registered mail, postage prepaid, return receipt requested,

6
<PAGE>
duly addressed to the Party concerned at the address indicated below or to
such changed address as such Party may subsequently give such notice of:

<TABLE>
<CAPTION>
If to Company or Bank: Robert E. Hoptry
<S> <C>
Chairman and President
Indiana United Bancorp
P.O. Box 87
Greensburg, IN 47240

(with a copy to:) David W. Harper, Esq.
2450 Meidinger Tower
Louisville, KY 40202

If to Executive: Michael K. Bauer
1908 Plum Hill Ct.
Floyds Knobs, IN 47119
</TABLE>

22. HEADINGS. The headings of the sections contained in this Agreement are for
convenience only and shall not be deemed to control or affect the meaning or
construction of any provision of this Agreement.

23. REMEDY FOR BREACH. Executive expressly recognizes that any breach of the
provisions of Section 9 of this Agreement by him is likely to result in
irreparable injury to the Company and/or the Bank and agrees that the
Company and/or the Bank shall be entitled, if it so elects, to institute and
prosecute proceedings in any court of competent jurisdiction, either at law
or in equity, to obtain damages for any breach of this Agreement, or to
enforce the specific performance of Section 9 of this Agreement by
Executive, or to enjoin Executive from activities in violation of Section 9
of this Agreement.

24. COUNTERPARTS. This Agreement may be executed in two or more counterparts.

25. BANK AS PARTY. The Bank joins this Agreement for the purpose of agreeing to
pay or perform those obligations to Executive under this Agreement where
performance by Bank is contemplated or appropriate, including, without
limitation, the obligations to Executive set forth in Sections 1, 2, 3, 4,
5, 6, 7, 8, 11 and 12. The Company, as the sole shareholder of Bank, shall
take all action that may be necessary or appropriate to cause Bank
(including the Bank Board) to pay or perform all such obligations to
Executive under this Agreement. Should Bank, for whatever reason, fail or be
unable to pay or perform any obligation to Executive under this Agreement
(including, without limitation, any failure or inability to pay or perform
arising from any law, regulation, judicial decision or any order, letter or
directive from any bank regulatory agency), Company shall pay or perform all
such obligations to Executive under this Agreement as direct obligations of
Company.

26. DEFINITIONS.

a) "Affiliate" of a person or other entity shall mean a person or other
entity that directly or indirectly controls, is controlled by or is under
common control with the person or other entity specified.

b) "Bank Board" shall mean the Board of Directors of Bank.

c) "Base Salary" shall mean the salary provided for in Section 4 or any
increased salary granted to Executive pursuant to Section 4.

d) "Termination for Cause" shall mean Executive:

i) is convicted in a criminal proceeding (other than a minor traffic
violation), or plea bargains to a lesser offense; or

7
<PAGE>
ii) is guilty of willful gross neglect or willful gross misconduct in
carrying out his duties under this Agreement, resulting, in either
case, in material economic or reputational harm to Bank or Company;
or

iii) is in possession of illegal substances or an unauthorized firearm
on Company property; or

iv) reports or returns to work under the influence of illegal substances
or alcohol.

e) "Change of Control" shall mean the occurrence of any one of the
following events:

i) any "person", as such term is used in Section 3(a)(9) and 13(d) of
the Securities Exchange Act of 1934, other than William G. Barron,
or any "group" as such term is used in Section 13(d) of that act,
other than any "group" comprised of any two or more of Company's
shareholders of record on the date of this Agreement, becomes a
"beneficial owner" as such term is used in Rule 13d-3 promulgated
under that act, of 20% or more of the Voting Stock of Company or
Bank;

ii) the majority of Company Board consists of individuals other than
incumbent directors, which term means the members of Company Board
on the date of this Agreement; provided that any person becoming a
director on or subsequent to such date whose election or nomination
for election was supported by two-thirds of the directors who then
comprise the incumbent directors shall be considered to be an
incumbent director;

iii) Company or Bank adopts any plan of liquidation providing for the
distribution of all or substantially all of its assets;

iv) all or substantially all of the assets or business of Company or
Bank is disposed of pursuant to a merger, consolidation or other
transaction in which the shareholders of Company or Bank, as the
case may be, immediately subsequent to such merger, consolidation or
other transaction, do not continue to beneficially own, directly or
indirectly, at least 51% of the Voting Stock or other ownership
interests of the entity or entities, if any, that succeed to the
business of Company or Bank.

f) "Company Board" shall mean the Board of Directors of Company.

g) "Constructive Termination Without Cause" shall mean a termination of
Executive's employment at his initiative as provided in Section 8(b)
following the occurrence, without Executive's prior written consent, of
one or more of the following events (except in consequence of a prior
termination):

i) a reduction in Executive(1)s Base Salary or the termination or
material reduction of any employee benefit or perquisite enjoyed by
him other than as part of an across-the-board reduction applicable
to all officers of Bank;

ii) the failure to appoint, reappoint, elect or re-elect Executive as
Chief Executive Officer of the Bank (or any other position similar
in scope, responsibility and authority) or removal of him from any
such position;

iii) a material diminution in Executive's scope of responsibilities or
the assignment to Executive of additional responsibilities which
materially impair Executive's ability to effectively execute duties
customarily assigned to positions similar in scope, authority and
responsibility;

iv) the relocation of Bank(1)s principal office to a location outside of
Indiana, or the relocation of Executive's own office location as
assigned to him by Bank to any location that is not within that area
of Bank's principal office in which the executive officers of Bank
next most senior to Executive generally have offices;

8
<PAGE>
v) the failure of Company or Bank to pay the expenses associated with
any relocation of Executive in accordance with the normal expense
policy then in effect, but in no event less than:

A) reimbursement for up to three (3) visits to city in which
Executive is to be relocated for the purpose of exploring
residential market opportunities;

B) reimbursement of customary realtor/broker commissions actually
incurred in the sale of residence being vacated;

C) temporary living allowance of $1,000 per month for up to three (3)
months;

D) payment of all customary charges actually incurred in employing a
professional moving company for packing, loading, transporting,
unloading, unpacking and insuring personal and household
belongings of Executive, and;

E) providing a real estate mortgage on residence in relocated area at
an interest rate no less favorable than existing mortgage on
vacated residence.

vi) the failure of Company and Bank to obtain the assumption in writing
of their obligations to perform this Agreement by any successor to
all or substantially all of the assets of Company or Bank within 60
days after a merger, consolidation, sale or similar transaction.

h) "Disability" shall mean Executive's inability to substantially perform
his duties and responsibilities under this Agreement for a period of 180
consecutive days.

i) "Stock" shall mean the Common Stock of Company.

j) "Subsidiary" of Company or Bank shall mean any corporation of which
Company or Bank owns, directly or indirectly, more than 50% of the Voting
Stock.

k) "Voting Stock" shall mean capital stock of any class or classes having
general voting power under ordinary circumstances, in the absence of
contingencies, to elect the directors of a corporation.

IN WITNESS WHEREOF, the undersigned have executed this Agreement on October
6, 1997 as of October 10, 1995.

<TABLE>
<S> <C> <C>
By: /s/ MICHAEL K. BAUER
-----------------------------------------
Michael K. Bauer (EXECUTIVE)
INDIANA UNITED BANCORP

By: /s/ ROBERT E. HOPTRY
-----------------------------------------
PRESIDENT AND CHAIRMAN OF THE BOARD
REGIONAL FEDERAL SAVINGS BANK

By: /s/ EDWARD J. ZOELLER
-----------------------------------------
(DIRECTOR)
</TABLE>

<PAGE>
EXHIBIT 23.4

We consent to the incorporation by reference and the inclusion of our report
dated February 3, 1997 on the consolidated financial statements of Indiana
United Bancorp included and incorporated by reference herein and to the
reference to our firm under the heading "Experts" in the Registration
Statement on Form S-2 filed by Indiana United Bancorp with the Securities and
Exchange Commission.

Indianapolis, Indiana
November 19, 1997

<PAGE>

CONSENT OF INDEPENDENT AUDITORS

Board of Directors
P.T.C. Bancorp
Brookville, Indiana

We consent to the inclusion in the Registration Statement on Form S-2, to be
filed by Indiana United Bancorp, of our report dated January 23, 1997 on the
consolidated financial statements of P.T.C. Bancorp as of December 31, 1996
and 1995, and for the years then ended, appearing in the Prospectus, which is
part of the Registration Statement. We also consent to the use of our name
under the heading "Experts" in the Prospectus.

/s/ Crowe, Chizek and Company LLP
- ---------------------------------
Crowe, Chizek and Company LLP

Indianapolis, Indiana
November 19, 1997

<PAGE>

Exhibit 25.1

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM T-1
_________

STATEMENT OF ELIGIBILITY UNDER THE
TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE

CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY
OF A TRUSTEE PURSUANT TO SECTION 305(b)(2) __

STATE STREET BANK AND TRUST COMPANY
(EXACT NAME OF TRUSTEE AS SPECIFIED IN ITS CHARTER)

MASSACHUSETTS 04-1867445
(JURISDICTION OF INCORPORATION OR (I.R.S. EMPLOYER
ORGANIZATION IF NOT A U.S. NATIONAL BANK) IDENTIFICATION NO.)

225 Franklin Street, Boston, Massachusetts 02110
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)

John R. Towers, Esq. Executive Vice President and General Counsel
225 Franklin Street, Boston, Massachusetts 02110
(617) 654-3253
(NAME, ADDRESS AND TELEPHONE NUMBER OF AGENT FOR SERVICE)

_____________________

INDIANA UNITED BANCORP
(EXACT NAME OF OBLIGOR AS SPECIFIED IN ITS CHARTER)

INDIANA 35-1562245
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)

201 N BROADWAY
GREENSBURG, INDIANA 47240
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)

____________________

% SUBORDINATED DEBENTURES
(TITLE OF INDENTURE SECURITIES)

<PAGE>

GENERAL

ITEM 1. GENERAL INFORMATION.

FURNISH THE FOLLOWING INFORMATION AS TO THE TRUSTEE:

(a) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISORY AUTHORITY
TO WHICH IT IS SUBJECT.

Department of Banking and Insurance of The Commonwealth of
Massachusetts, 100 Cambridge Street, Boston, Massachusetts.

Board of Governors of the Federal Reserve System, Washington,
D.C., Federal Deposit Insurance Corporation, Washington, D.C.

(b) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS.

Trustee is authorized to exercise corporate trust powers.

ITEM 2. AFFILIATIONS WITH OBLIGOR.

IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH
AFFILIATION.

The obligor is not an affiliate of the trustee or of its parent, State
Street Boston Corporation.

(See note on page 2.)

ITEM 3. THROUGH ITEM 15. NOT APPLICABLE.

ITEM 16. LIST OF EXHIBITS.

LIST BELOW ALL EXHIBITS FILED AS PART OF THIS STATEMENT OF ELIGIBILITY.

1. A COPY OF THE ARTICLES OF ASSOCIATION OF THE TRUSTEE AS NOW IN EFFECT.

A copy of the Articles of Association of the trustee, as now in
effect, is on file with the Securities and Exchange Commission as
Exhibit 1 to Amendment No. 1 to the Statement of Eligibility and
Qualification of Trustee (Form T-1) filed with the Registration
Statement of Morse Shoe, Inc. (File No. 22-17940) and is incorporated
herein by reference thereto.

2. A COPY OF THE CERTIFICATE OF AUTHORITY OF THE TRUSTEE TO COMMENCE
BUSINESS, IF NOT CONTAINED IN THE ARTICLES OF ASSOCIATION.

A copy of a Statement from the Commissioner of Banks of
Massachusetts that no certificate of authority for the trustee to
commence business was necessary or issued is on file with the
Securities and Exchange Commission as Exhibit 2 to Amendment No. 1
to the Statement of Eligibility and Qualification of Trustee (Form
T-1) filed with the Registration Statement of Morse Shoe, Inc. (File
No. 22-17940) and is incorporated herein by reference thereto.

3. A COPY OF THE AUTHORIZATION OF THE TRUSTEE TO EXERCISE CORPORATE TRUST
POWERS, IF SUCH AUTHORIZATION IS NOT CONTAINED IN THE DOCUMENTS
SPECIFIED IN PARAGRAPH (1) OR (2), ABOVE.

A copy of the authorization of the trustee to exercise corporate
trust powers is on file with the Securities and Exchange Commission
as Exhibit 3 to Amendment No. 1 to the Statement of Eligibility and
Qualification of Trustee (Form T-1) filed with the Registration
Statement of Morse Shoe, Inc. (File No. 22-17940) and is
incorporated herein by reference thereto.

4. A COPY OF THE EXISTING BY-LAWS OF THE TRUSTEE, OR INSTRUMENTS
CORRESPONDING THERETO.

A copy of the by-laws of the trustee, as now in effect, is on file
with the Securities and Exchange Commission as Exhibit 4 to the
Statement of Eligibility and Qualification of Trustee (Form T-1)
filed with the Registration Statement of Eastern Edison Company
(File No. 33-37823) and is incorporated herein by reference thereto.

<PAGE>

5. A COPY OF EACH INDENTURE REFERRED TO IN ITEM 4. IF THE OBLIGOR IS IN
DEFAULT.

Not applicable.

6. THE CONSENTS OF UNITED STATES INSTITUTIONAL TRUSTEES REQUIRED BY
SECTION 321(b) OF THE ACT.

The consent of the trustee required by Section 321(b) of the Act is
annexed hereto as Exhibit 6 and made a part hereof.

7. A COPY OF THE LATEST REPORT OF CONDITION OF THE TRUSTEE PUBLISHED
PURSUANT TO LAW OR THE REQUIREMENTS OF ITS SUPERVISING OR EXAMINING
AUTHORITY.

A copy of the latest report of condition of the trustee published
pursuant to law or the requirements of its supervising or examining
authority is annexed hereto as Exhibit 7 and made a part hereof.

NOTES

In answering any item of this Statement of Eligibility which relates to
matters peculiarly within the knowledge of the obligor or any underwriter for
the obligor, the trustee has relied upon information furnished to it by the
obligor and the underwriters, and the trustee disclaims responsibility for the
accuracy or completeness of such information.

The answer furnished to Item 2. of this statement will be amended, if
necessary, to reflect any facts which differ from those stated and which would
have been required to be stated if known at the date hereof.

SIGNATURE

Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the trustee, State Street Bank and Trust Company, a corporation
organized and existing under the laws of The Commonwealth of Massachusetts, has
duly caused this statement of eligibility to be signed on its behalf by the
undersigned, thereunto duly authorized, all in the City of Boston and The
Commonwealth of Massachusetts, on the 14th day of November, 1997.

STATE STREET BANK AND TRUST COMPANY

By: /s/ PAUL D. ALLEN
---------------------------------
PAUL D. ALLEN
VICE PRESIDENT

<PAGE>

EXHIBIT 6

CONSENT OF THE TRUSTEE

Pursuant to the requirements of Section 321(b) of the Trust Indenture Act
of 1939, as amended, in connection with the proposed issuance by INDIANA UNITED
BANCORP of its % SUBORDINATED DEBENTURES, we hereby consent that reports of
examination by Federal, State, Territorial or District authorities may be
furnished by such authorities to the Securities and Exchange Commission upon
request therefor.

STATE STREET BANK AND TRUST COMPANY

By: /s/ PAUL D. ALLEN
---------------------------------
PAUL D. ALLEN
VICE PRESIDENT

DATED: NOVEMBER 14, 1997

<PAGE>

EXHIBIT 7

Consolidated Report of Condition of State Street Bank and Trust Company,
Massachusetts and foreign and domestic subsidiaries, a state banking institution
organized and operating under the banking laws of this commonwealth and a member
of the Federal Reserve System, at the close of business JUNE 30, 1997, published
in accordance with a call made by the Federal Reserve Bank of this District
pursuant to the provisions of the Federal Reserve Act and in accordance with a
call made by the Commissioner of Banks under General Laws, Chapter 172, Section
22(a).

Thousands of
ASSETS Dollars
- ------ ----------
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coin 1,842,337
Interest-bearing balances 8,771,397
Securities 10,596,119
Federal funds sold and securities purchased
under agreements to resell in domestic offices
of the bank and its Edge subsidiary 5,953,036
Loans and lease financing receivables:
Loans and leases, net of unearned income 5,769,090
Allowance for loan and lease losses 74,031
Allocated transfer risk reserve 0
Loans and leases, net of unearned income and allowances 5,695,059
Assets held in trading accounts 916,608
Premises and fixed assets 374,999
Other real estate owned 755
Investments in unconsolidated subsidiaries 28,992
Customers' liability to this bank on acceptances outstanding 99,209
Intangible assets 229,412
Other assets 1,589,526
----------
Total assets 36,097,449
----------
----------
LIABILITIES
- -----------
Deposits:
In domestic offices 11,082,135
Noninterest-bearing 8,932,019
Interest-bearing 2,150,116
In foreign offices and Edge subsidiary 13,811,677
Noninterest-bearing 112,281
Interest-bearing 13,699,396
Federal funds purchased and securities sold under
agreements to repurchase in domestic offices of
the bank and of its Edge subsidiary 6,785,263
Demand notes issued to the U.S. Treasury and Trading Liabilities 755,676
Other borrowed money 716,013
Subordinated notes and debentures 0
Bank's liability on acceptances executed and outstanding 99,605
Other liabilities 841,566

Total liabilities 34,091,935
----------
EQUITY CAPITAL
Perpetual preferred stock and related surplus 0
Common stock 29,931
Surplus 437,183
Undivided profits and capital reserves/Net unrealized
holding gains (losses) 1,542,695
Cumulative foreign currency translation adjustments (4,295)
Total equity capital 2,005,514
----------
Total liabilities and equity capital 36,097,449
==========

<PAGE>

I, Rex S. Schuette, Senior Vice President and Comptroller of the above named
bank do hereby declare that this Report of Condition has been prepared in
conformance with the instructions issued by the Board of Governors of the
Federal Reserve System and is true to the best of my knowledge and belief.

Rex S. Schuette

We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and is true and
correct.

David A. Spina
Marshall N. Carter
Truman S. Casner

<PAGE>

Exhibit 25.2

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM T-1
_________

STATEMENT OF ELIGIBILITY UNDER THE
TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE

CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY
OF A TRUSTEE PURSUANT TO SECTION 305(b)(2) __

STATE STREET BANK AND TRUST COMPANY
(EXACT NAME OF TRUSTEE AS SPECIFIED IN ITS CHARTER)

MASSACHUSETTS 04-1867445
(JURISDICTION OF INCORPORATION OR (I.R.S. EMPLOYER
ORGANIZATION IF NOT A U.S. NATIONAL BANK) IDENTIFICATION NO.)

225 Franklin Street, Boston, Massachusetts 02110
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)

John R. Towers, Esq. Executive Vice President and General Counsel
225 Franklin Street, Boston, Massachusetts 02110
(617) 654-3253
(NAME, ADDRESS AND TELEPHONE NUMBER OF AGENT FOR SERVICE)

_____________________

IUB CAPITAL TRUST
(EXACT NAME OF OBLIGOR AS SPECIFIED IN ITS CHARTER)

DELAWARE XX-XXXXXXX
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)

201 N BROADWAY
GREENSBURG, INDIANA 47240
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)

____________________

PREFERRED SECURITIES
(TITLE OF INDENTURE SECURITIES)

<PAGE>

GENERAL

ITEM 1. GENERAL INFORMATION.

FURNISH THE FOLLOWING INFORMATION AS TO THE TRUSTEE:

(A) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISORY AUTHORITY
TO WHICH IT IS SUBJECT.

Department of Banking and Insurance of The Commonwealth of
Massachusetts, 100 Cambridge Street, Boston, Massachusetts.

Board of Governors of the Federal Reserve System, Washington,
D.C., Federal Deposit Insurance Corporation, Washington, D.C.

(B) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS.

Trustee is authorized to exercise corporate trust powers.

ITEM 2. AFFILIATIONS WITH OBLIGOR.

IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH
AFFILIATION.

The obligor is not an affiliate of the trustee or of its parent,
State Street Boston Corporation.

(See note on page 2.)

ITEM 3. THROUGH ITEM 15. NOT APPLICABLE.

ITEM 16. LIST OF EXHIBITS.

LIST BELOW ALL EXHIBITS FILED AS PART OF THIS STATEMENT OF
ELIGIBILITY.

1. A COPY OF THE ARTICLES OF ASSOCIATION OF THE TRUSTEE AS NOW IN EFFECT.

2. A COPY OF THE CERTIFICATE OF AUTHORITY OF THE TRUSTEE TO COMMENCE
BUSINESS, IF NOT CONTAINED IN THE ARTICLES OF ASSOCIATION.

A copy of a Statement from the Commissioner of Banks of
Massachusetts that no certificate of authority for the trustee to
commence business was necessary or issued is on file with the
Securities and Exchange Commission as Exhibit 2 to Amendment No. 1
to the Statement of Eligibility and Qualification of Trustee (Form
T-1) filed with the Registration Statement of Morse Shoe, Inc.
(File No. 22-17940) and is incorporated herein by reference thereto.

3. A COPY OF THE AUTHORIZATION OF THE TRUSTEE TO EXERCISE CORPORATE
TRUST POWERS, IF SUCH AUTHORIZATION IS NOT CONTAINED IN THE DOCUMENTS
SPECIFIED IN PARAGRAPH (1) OR (2), ABOVE.

4. A COPY OF THE EXISTING BY-LAWS OF THE TRUSTEE, OR INSTRUMENTS
CORRESPONDING THERETO.

<PAGE>

5. A COPY OF EACH INDENTURE REFERRED TO IN ITEM 4. IF THE OBLIGOR IS IN
DEFAULT.

Not applicable.

6. THE CONSENTS OF UNITED STATES INSTITUTIONAL TRUSTEES REQUIRED BY
SECTION 321(b) OF THE ACT.

The consent of the trustee required by Section 321(b) of the Act is
annexed hereto as Exhibit 6 and made a part hereof.

7. A COPY OF THE LATEST REPORT OF CONDITION OF THE TRUSTEE PUBLISHED
PURSUANT TO LAW OR THE REQUIREMENTS OF ITS SUPERVISING OR EXAMINING
AUTHORITY.

A copy of the latest report of condition of the trustee published
pursuant to law or the requirements of its supervising or examining
authority is annexed hereto as Exhibit 7 and made a part hereof.

NOTES

SIGNATURE

STATE STREET BANK AND TRUST COMPANY

By: /s/ PAUL D. ALLEN
-------------------------------
PAUL D. ALLEN
VICE PRESIDENT

<PAGE>

EXHIBIT 6

CONSENT OF THE TRUSTEE

Pursuant to the requirements of Section 321(b) of the Trust Indenture Act
of 1939, as amended, in connection with the proposed issuance by IUB CAPITAL
TRUST of its PREFERRED SECURITIES, we hereby consent that reports of
examination by Federal, State, Territorial or District authorities may be
furnished by such authorities to the Securities and Exchange Commission upon
request therefor.

STATE STREET BANK AND TRUST COMPANY

By: /s/ PAUL D. ALLEN
-------------------------------
PAUL D. ALLEN
VICE PRESIDENT

DATED: NOVEMBER 14, 1997

<PAGE>
EXHIBIT 7

Consolidated Report of Condition of State Street Bank and Trust Company,
Massachusetts and foreign and domestic subsidiaries, a state banking
institution organized and operating under the banking laws of this commonwealth
and a member of the Federal Reserve System, at the close of business JUNE 30,
1997, published in accordance with a call made by the Federal Reserve Bank of
this District pursuant to the provisions of the Federal Reserve Act and in
accordance with a call made by the Commissioner of Banks under General Laws,
Chapter 172, Section 22(a).

Thousands of
ASSETS Dollars
- ------ ----------
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coin 1,842,337
Interest-bearing balances 8,771,397
Securities 10,596,119
Federal funds sold and securities purchased
under agreements to resell in domestic offices
of the bank and its Edge subsidiary 5,953,036
Loans and lease financing receivables:
Loans and leases, net of unearned income 5,769,090
Allowance for loan and lease losses 74,031
Allocated transfer risk reserve 0
Loans and leases, net of unearned income and allowances 5,695,059
Assets held in trading accounts 916,608
Premises and fixed assets 374,999
Other real estate owned 755
Investments in unconsolidated subsidiaries 28,992
Customers' liability to this bank on acceptances
outstanding 99,209
Intangible assets 229,412
Other assets 1,589,526
----------
Total assets 36,097,449
----------
----------
LIABILITIES
- -----------
Deposits:
In domestic offices 11,082,135
Noninterest-bearing 8,932,019
Interest-bearing 2,150,116
In foreign offices and Edge subsidiary 13,811,677
Noninterest-bearing 112,281
Interest-bearing 13,699,396
Federal funds purchased and securities sold under
agreements to repurchase in domestic offices of
the bank and of its Edge subsidiary 6,785,263
Demand notes issued to the U.S. Treasury and Trading Liabilities 755,676
Other borrowed money 716,013
Subordinated notes and debentures 0
Bank's liability on acceptances executed and outstanding 99,605
Other liabilities 841,566

<PAGE>

Rex S. Schuette

David A. Spina
Marshall N. Carter
Truman S. Casner

<PAGE>

Exhibit 25.3

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM T-1
_________

STATEMENT OF ELIGIBILITY UNDER THE
TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE

CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY
OF A TRUSTEE PURSUANT TO SECTION 305(B)(2) __

STATE STREET BANK AND TRUST COMPANY
(EXACT NAME OF TRUSTEE AS SPECIFIED IN ITS CHARTER)

MASSACHUSETTS 04-1867445
(JURISDICTION OF INCORPORATION OR (I.R.S. EMPLOYER
ORGANIZATION IF NOT A U.S. NATIONAL BANK) IDENTIFICATION NO.)

225 Franklin Street, Boston, Massachusetts 02110
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)

John R. Towers, Esq. Executive Vice President and General Counsel
225 Franklin Street, Boston, Massachusetts 02110
(617) 654-3253
(NAME, ADDRESS AND TELEPHONE NUMBER OF AGENT FOR SERVICE)

_____________________

INDIANA UNITED BANCORP
(EXACT NAME OF OBLIGOR AS SPECIFIED IN ITS CHARTER)

INDIANA 35-1562245
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)

201 N. BROADWAY
GREENSBURG, INDIANA 47240
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)

____________________

GUARANTEE
(TITLE OF INDENTURE SECURITIES)

<PAGE>

GENERAL

ITEM 1. GENERAL INFORMATION.

FURNISH THE FOLLOWING INFORMATION AS TO THE TRUSTEE:

(a) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISORY AUTHORITY
TO WHICH IT IS SUBJECT.

Department of Banking and Insurance of The Commonwealth of
Massachusetts, 100 Cambridge Street, Boston, Massachusetts.

Board of Governors of the Federal Reserve System, Washington,
D.C., Federal Deposit Insurance Corporation, Washington, D.C.

(b) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS.
Trustee is authorized to exercise corporate trust powers.

ITEM 2. AFFILIATIONS WITH OBLIGOR.

IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH
AFFILIATION.

The obligor is not an affiliate of the trustee or of its parent, State
Street Boston Corporation.

(See note on page 2.)

ITEM 3. THROUGH ITEM 15. NOT APPLICABLE.

ITEM 16. LIST OF EXHIBITS.

LIST BELOW ALL EXHIBITS FILED AS PART OF THIS STATEMENT OF ELIGIBILITY.

1. A COPY OF THE ARTICLES OF ASSOCIATION OF THE TRUSTEE AS NOW IN EFFECT.

2. A COPY OF THE CERTIFICATE OF AUTHORITY OF THE TRUSTEE TO COMMENCE
BUSINESS, IF NOT CONTAINED IN THE ARTICLES OF ASSOCIATION.

A copy of a Statement from the Commissioner of Banks of Massachusetts
that no certificate of authority for the trustee to commence business
was necessary or issued is on file with the Securities and Exchange
Commission as Exhibit 2 to Amendment No. 1 to the Statement of
Eligibility and Qualification of Trustee (Form T-1) filed with the
Registration Statement of Morse Shoe, Inc. (File No. 22-17940) and is
incorporated herein by reference thereto.

3. A COPY OF THE AUTHORIZATION OF THE TRUSTEE TO EXERCISE CORPORATE TRUST
POWERS, IF SUCH AUTHORIZATION IS NOT CONTAINED IN THE DOCUMENTS
SPECIFIED IN PARAGRAPH (1) OR (2), ABOVE.

A copy of the authorization of the trustee to exercise corporate trust
powers is on file with the Securities and Exchange Commission as
Exhibit 3 to Amendment No. 1 to the Statement of Eligibility and
Qualification of Trustee (Form T-1) filed with the Registration
Statement of Morse Shoe, Inc. (File No. 22-17940) and is incorporated
herein by reference thereto.

4. A COPY OF THE EXISTING BY-LAWS OF THE TRUSTEE, OR INSTRUMENTS
CORRESPONDING THERETO.

1
<PAGE>

5. A COPY OF EACH INDENTURE REFERRED TO IN ITEM 4. IF THE OBLIGOR IS IN
DEFAULT.

Not applicable.

6. THE CONSENTS OF UNITED STATES INSTITUTIONAL TRUSTEES REQUIRED BY
SECTION 321(b) OF THE ACT.

The consent of the trustee required by Section 321(b) of the Act is
annexed hereto as Exhibit 6 and made a part hereof.

7. A COPY OF THE LATEST REPORT OF CONDITION OF THE TRUSTEE PUBLISHED
PURSUANT TO LAW OR THE REQUIREMENTS OF ITS SUPERVISING OR EXAMINING
AUTHORITY.

A copy of the latest report of condition of the trustee published
pursuant to law or the requirements of its supervising or examining
authority is annexed hereto as Exhibit 7 and made a part hereof.

NOTES

SIGNATURE

STATE STREET BANK AND TRUST COMPANY

By: /s/ PAUL D. ALLEN
-------------------------------
PAUL D. ALLEN
VICE PRESIDENT

<PAGE>

EXHIBIT 6

CONSENT OF THE TRUSTEE

Pursuant to the requirements of Section 321(b) of the Trust Indenture Act
of 1939, as amended, in connection with the proposed issuance by INDIANA UNITED
BANCORP of its GUARANTEE, we hereby consent that reports of examination by
Federal, State, Territorial or District authorities may be furnished by such
authorities to the Securities and Exchange Commission upon request therefor.

STATE STREET BANK AND TRUST COMPANY

By: /S/ PAUL D. ALLEN
------------------------------
PAUL D. ALLEN
VICE PRESIDENT

DATED: NOVEMBER 14, 1997

<PAGE>

EXHIBIT 7

Consolidated Report of Condition of State Street Bank and Trust Company,
Massachusetts and foreign and domestic subsidiaries, a state banking institution
organized and operating under the banking laws of this commonwealth and a member
of the Federal Reserve System, at the close of business June 30, 1997, published
in accordance with a call made by the Federal Reserve Bank of this District
pursuant to the provisions of the Federal Reserve Act and in accordance with a
call made by the Commissioner of Banks under General Laws, Chapter 172, Section
22(a).

Thousands of
ASSETS Dollars
- ------ ------------
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coin 1,842,337
Interest-bearing balances 8,771,397
Securities 10,596,119
Federal funds sold and securities purchased
under agreements to resell in domestic offices
of the bank and its Edge subsidiary 5,953,036
Loans and lease financing receivables:
Loans and leases, net of unearned income 5,769,090
Allowance for loan and lease losses 74,031
Allocated transfer risk reserve 0
Loans and leases, net of unearned income and allowances 5,695,059
Assets held in trading accounts 916,608
Premises and fixed assets 374,999
Other real estate owned 755
Investments in unconsolidated subsidiaries 28,992
Customers' liability to this bank on acceptances outstanding 99,209
Intangible assets 229,412
Other assets 1,589,526
----------
Total assets 36,097,449
----------
----------
LIABILITIES

Deposits:
In domestic offices 11,082,135
Noninterest-bearing 8,932,019
Interest-bearing 2,150,116
In foreign offices and Edge subsidiary 13,811,677
Noninterest-bearing 112,281
Interest-bearing 13,699,396
Federal funds purchased and securities sold under
agreements to repurchase in domestic offices of
the bank and of its Edge subsidiary 6,785,263
Demand notes issued to the U.S. Treasury and Trading Liabilities 755,676
Other borrowed money 716,013
Subordinated notes and debentures 0
Bank's liability on acceptances executed and outstanding 99,605
Other liabilities 841,566

<PAGE>

Rex S. Schuette

David A. Spina
Marshall N. Carter
Truman S. Casner