The Indianapolis Star from Indianapolis, Indiana on June 3, 1986 · Page 17
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The Indianapolis Star from Indianapolis, Indiana · Page 17

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Tuesday, June 3, 1986
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USINESS AT&T, union still aren't connecting Page 18 Tax reform good for state, Quayle says Page 22 Borman lands now job at Texas Air Page 22 TUESDAY, JUNE 3, 1986 TlIE INDIANAPOLIS STAR PAGE 17 AmeriTrust Corp. roliczzo in Indiana Indiana Economy Indianapolis area: Northern Indiana: mm mmm American National Bank J llil First National Bank (Elkhart) (Noblesville) $215 million in assets. ! , 1 1 S700 million in assets lllliilillllllllllil mm Trust Co. .m-JLhN-k Franklin Bank and American State Bank (Franklin $175 million in assets (Ligonier) $56 million in assets. t:ii::-:ir. '::::!!( :!:i;i.-;.:;r I X V. T I Tm f I I IflB.': ::,::!:-L:l:iI!Ti:;::i!i:i:t v.: j r:: ii! : :f: r;n Indiana Bank & Trust CO. , S77--W jr X" j r h- n i State Bank of Lima (Martinsville) . ' .-I 111!; $55 million in assets mmm iiiftliBiSli Po minion in assuis. ,i:,:,:.,.jr, I I II illiiilpIIljlplp illlSiltellSSll!ll!p;lllllll IIIH ill " :" V f W M .. ( :i;iit::i Iir, :: Lii J ! i iT!i l ! lil! rstl! ! 'I : : i !ii : i ! : : : ! siItsI i ' . !' i State Bank of Syracuse Will Merchants National Corp. become the second of Indiana's "Big Three" bank holding companies to be bought? Two weeks ago. Merchants stock rose $13 per share in one week. The reasons? There was speculation that investors wanted to get in before a 2-for-l stock split took effect May 23. There also were rumors that NBD Bancorp. Michigan's largest holding company, was interested in buying Merchants. The Detroit concern is said to be on the prowl for acquisitions, especially those with $1 billion or more in assets. National Bank of Detroit, NBD's main bank, and Merchants National Bank. Merchant's primary subsidiary are correspondent banks. Under a correspondent relationship, two banks participate in a loan that may exceed the legal lending limit of one or both. The combination is potentially intriguing. Asked about it. Donald W. Tanselle, Mer- . chants vice chairman, said: "We haven't had any conversations. There is no fact to the rumor." NBD said it doesn't comment on "potential acquisitions until they happen." Meanwhile, you might wonder what the $597.3 million, or $60 per share, that American Fletcher Corp. will fetch from Banc One Corp. of Columbus, Ohio, will mean for executives and board members. For example, AFC Chairman Frank E. Mc-Kinney Jr. held 486.845 shares as of Jan. 31. according to this year's proxy statement. At $60 per share, McKinney would receive $29.2 million in Banc One stock, under terms of the sale announced last month. Among other executives, Walter W. Ogilvie, Jr., vice chairman, will get nearly $10.2 million for his 169.635 shares. Joseph D. Bar-nette, AFC president, will receive $5.8 million for his 96.352 shares. (Syracuse) equals S100 million iiiiiiiii i!if!lllf! nit, $41 million in assets. 2nd Ohio bank making its mark "I looked at them (AmeriTrust) as a sleeping giant. They have a new executive team that made the determination that the policy of their predecessors was not the wave of banking." Thomas L. Dusthimer chairman of ' . ,v. First National Bank Associated Dry Goods Corp.'s 1985 annual report is titled Growth in America 's Heartland and features L.S. Ayres and Co. Needless to say, Ayres officials are happy that the Indianapolis-based department store chain drew the attention in its parent company's publication. Apparently, the spotlight doesn't fall on it very often. "Ayres in Indiana. Ohio and Kentucky', as well as Home's in Pennsylvania and Ohio, Sibley's in New York, and Hahne's in New Jersey,, are divisions that tend to be overlooked both by our shareholders and the investment community in general." the annual report's story begins. . ADG executives aren't overlooking those r four, though. Their combined sales are expected to be more than $1 billion in 1986. Ayres will produce approximately 45 percent of the 'group's volume and 65 percent of its profits. AmeriTrust flexes muscle in Indiana By BILL KOENIG STAR STAFF WRITER Elkhart, Ind. Thomas L. Dusthimer, chairman of the First National Bank here, faced a choice last fall. His bank could affiliate with one of two Ohio-based holding companies. The first was Banc One Corp. of Columbus: highly praised by , Wall-Street as aggressive and with a stock priced to match. Or,' he could go with AmeriTrust Corp. of Cleveland, which was portrayed as a bank company that missed the boat during the 1970s by not expanding when its Ohio competition did. The company went from largest in the state to fourth. Dusthimer went with the latter. "I looked at them as a sleeping giant," Dusthimer remembers. "They have a new executive team that made the determination that the policy of their predecessors was not the wave of banking." Indeed, that giant appears to be wide awake. Using Dusthimer's bank as its lead institution, AmeriTrust will control - once pending deals are final - about $1 billion in Hoo-sier banking assets. What's more, Dusthimer and others say AmeriTrust intends to follow Banc One as a large player in Indiana banking. Banc One, which last month agreed to take over American Fletcher Corp. of Indianapolis, will control more than $5 billion when that transaction is finalized. AmeriTrust has yet to have that impact. Still, it has bought, or agreed to buy. banks in the Indianapolis metropolitan area as well as north-, ern Indiana. So far. AmeriTrust has consuming way of building a customer base. In recent months, AmeriTrust has also bought branches of the failed Home State Savings Bank" in Cincinnati. In 1984, AmeriTrust bought an 88 percent interest in Central Ban-corporation Inc. in Denver. The deal was structured as an investment in order to win regulatory approval. That means AmeriTrust does not control the banking firm. "That bank was caught in some of the problems with the oil patch." says an Ohio-based analyst who follows AmeriTrust but asked not to be quoted by name. As oil prices dropped, problem energy loans have cost AmeriTrust money. Last year, the Denver bank lost $3.8 million. The picture began to change, however, when Indiana legalized interstate banking with neighboring states in 1985. Indiana's banking terrain was much more familar. "They (Indiana and Ohio) are similar: the industrial base, the ethnic makeup, similar work habits." Jarrett says. "We felt there were good banking opportunities." That led AmeriTrust to begin courting First National's Dusthimer '. in Elkhart. The bank has "a strong organization and has been a good performer," says John C. Reed, president of Ryan,f Beck & Co. Mid States, an investment banking company. First Indiana Bancorp, First National's parent firm, controls about $700 million In assets. AmeriTrust paid $90 million for ; First Indiana Bancorp. The holding company remains intact to coordinate AmeriTrust's Indiana pur-, chases. Dusthimer was familiar to other Indiana bankers. He has served as an officer of the Indiana Bankers Association. Also, he spent from 1958 to 1969 at American Fletcher. National Bank in Indianapolis. Part of the time was spent in the See BANK Page 20 purchase agreements in the Indianapolis area in Franklin, Noblesville and Martinsville. The Cleveland company's key man in the state is Dusthimer, who also has been appointed to Ameri-Trust's board of directors. Dusthimer's goal is that AmeriTrust will control "a three- to four-billion dollar holding company" in Indiana. Under that setup, the state would be divided Into five regions. "In each area. I'd like to have an anchor bank," he says. That institution would coordinate auditing, training and other services to be shared among AmeriTrust banks. AmeriTrust's aggressiveness is a long way from its approach a decade ago- During the 1970s, under then-Chairman M. Brock Weir, AmeriTrust decided that retail banking servicing the banking needs of consumers could become unprofitable. The company believed that financial deregulation would squeeze margins on such business. Instead, it focused on the commercial sector. "We didn't know how all of this would turn out." says Jerry V. Jar-rett, the current AmeriTrust chairman and chief executive. As a result, AmeriTrust generally shunned making acquisitions in Ohio. "Most of the banks we could have bought were retail-oriented banks," says Jarrett. Deregulation created more competition. But while a tougher business, retail banking remains profitable. AmeriTrust's Ohio rivals, notably Banc One, went ahead and bought banks, growing in both size and earnings. AmeriTrust is not strong in Ohio markets outside Cleveland. "In hindsight, we made a mistake." Jarrett says. . Jarrett assumed his post two years ago after Weir retired. The bank changed direction, opting to begin making acquisitions. The transition, though, got off to a bumpy start. Because few banks could be bought in Ohio, AmeriTrust has been forced to set up branches in the state a more expensive and time- Early on in the Orr-Mutz administration the electronics industry, specifically "communications electronics," was identified in an Indiana Department of Commerce study as a top priority for the state's economic development efforts. So far, the results seem to be mixed, according to an annual survey of electronics industry employment distributed by the American Electronics Association. The number of Hoosiers estimated by the , trade group to be employed in the electronics field increased to 53,000 in 1984 from 48,000 in 1983. In 1985. though, the number dropped to 51.000. That put Indiana 16th among the states. Not surprisingly. California, New York. Massachusetts and Texas ranked as the top four in employment in the field. Illinois, with 108,000, and Minnesota, with 81.000. ranked sixth and ninth, respectively. How does the state of Indiana persuade a Japanese company to build a factory In Indiana? ' When it came to the Aisin U.S.A. investment in Seymour, Lt. Gov. John M. Mutz, the state department of commerce and city officials had the help of a former sports reporter and a rock 'n roll singer. Aisin plans to build a plant to produce auto parts in the southern Indiana city. Helping with the negotiations between the company and government officials for an economic incentive package was Jim Plump. Until a year or so ago. he worked for the Columbus Republic. Now he's the executive director of the Jackson County Industrial Development Corp. During those negotiations. Plump learned that one of the company executives has a teen-age daughter who likes, rock music. Since John Cougar Mellencamp was born in Seymour. Plump volunteered to send one of the singer's records to the girl. Now Plump is hoping the record arrives. He Jokingly said that the Aisin investment could be canceled if it doesn't. Some union leaders say ranks will balk at many concessions Business section tells more 7 1 t ii ..linWI - Money, Jobs And People What do the following have in common: Ronald Reagan, concessions, layoffs and foreign competition for American industry? Most labor union officials will tell you those four have helped put unions In the. position they're in today struggling when compared to the years preceding the Reagan administration. Nationwide, union membership Is down and labor contract concessions are up. And pay increases are getting smaller and smaller. "Contract settlements reached by unions and management in several major industrial sectors . . . will not reflect the 1986 growth economy." reads an article written by EF Hut-ton researchers. "In fact, with very few exceptions, major unions will settle for wage hikes at or below the rate of increase for non-union workers, a reversal of the way things were in the 1970s. "We look for wage Increases of about 5 percent for the work force as a whole: 3.8 percent for union wages and 5.5 percent for non-union pay." Don't expect unions to roll over and give in to every demand from management, though. Most union representatives say competitive with ones made overseas. Cummins is also hoping to keep the Japanese out of the North American market. "We've heard so much about the Japanese we're sick of It," said one union official at Cummins. That's because some of the cost-cutting has come at the expense of the two unions that represent Cummins workers In Columbus. There have beeri layoffs and" workers expect they will be asked to give concessions when their contracts expire next year. While global competition Is playing a part In unions' woes. William W. Wlnpislnger thinks the trouble started when Mr. Reagan fired striking air traffic controllers. President of the International Association of Machinists and Aerospace Workers, Wlnpislnger said Mr. Reagan's action caused some people to lose respect for unions. Will the bad times for unions end? Will unions ever regain the power they had. "It's one of those questions that probably, for the first time in this country, the solutions to the prob- See UXIONSPage 20 The Star is expanding its coverage of business news beginning today. Business Extra, a special section, will appear in the newspaper every Tuesday. Its focus will be on local and state developments. V Regular features will include: Regional Report, a look at the economic conditions of a specific area in Indiana. Data Bank, a summary of economic Indicators. Stock Spotlight, an at-a-glance look at the recent performance of an Indiana company's stock. Newsmakers, reports of business promotions and elections. Indiana Economy, a column that gives you inside Infor- ; mation. Business Extra will also contain the latest local, state, national and international stories and Jane Bryant Quinn's personal finance column. By MORRIS D. WILDEY their members have sacrificed enough. For instance, hear the warning from Howard Young, a special assistant to United Auto Workers President Owen Bieber. about concessions: "We don't think there are more (concessons) that are effective." And about pay: "Do we want to go down to $2 an hour like (workers in) Korea?" That doesn't mean that unions aren't aware of current economic conditions. Most members realize that American businesses are competing In a global economy now. Cummins Engine Co. in Columbus, Ind.. is an example. Since the early 1980s, management has been looking for ways to cut the cost of Its diesel engines so they can be Inside: Page Business Report 19 Data Bank ....................................................19 Insider Trading ............................................19 Jane Bryant Quinn 21 Meetings ........................... ....... ........... 23 Newsmakers ... .................23 the TflpG (( 1 8 Regional Report ........... .....................19 Stock Spotlight 19 Stock Tables 24,25

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