<PAGE>
 

                                                                 Exhibit 3(ii)

                    AMENDED BY-LAWS OF CNB BANCSHARES, INC.

                   (ADOPTED AND APPROVED FEBRUARY 12, 1985)
                        (AS AMENDED ON APRIL 19, 1995)

             (Incorporated under the laws of the State of Indiana)


                                   ARTICLE I

                                 SHAREHOLDERS

     SECTION 1.  ANNUAL MEETING.  The annual meeting of the shareholders of CNB
Bancshares, Inc. ("Corporation") for the election of Directors and for the
transaction of such other business as may properly come before the meeting shall
be held within five (5) months after the close of each fiscal year at such place
within the State of Indiana and on such date and at such time as may be
determined from time to time by resolution of the Board of Directors, which
place, date, and time shall be designated in the notice of the meeting.
Nominations for election to the Board of Directors may be made by the Board of
Directors or by any shareholder of any outstanding class of capital stock
entitled to vote for the election of Directors.  Nominations, other than those
made by or on behalf of the existing management, shall be made in writing and
shall be delivered or mailed to the Chairman of the Board of the Corporation not
less than fourteen (14) days nor more than fifty (50) days prior to any meeting
of shareholders called for the election of Directors, provided however, that if
less than twenty-one (21) days notice of the meeting is given to shareholders,
such nominations shall be mailed or delivered to the Chairman of the Board not
later than the close of business on the seventh day following the day on which
the notice of meeting was mailed.

     SECTION 2.  SPECIAL MEETINGS.  Special meetings of the shareholders shall
be held at such place within the State of Indiana and on such date and at such
time as is designated in the notice of the meeting, and may be called by the
Chairman of the Board ("Chairman"), President, a majority of the Board of
Directors, or by the holders of 
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not less than eighty percent (80%) of all the shares outstanding and entitled to
vote on business proposed to be transacted at such meeting.

     SECTION 3.  NOTICE OF MEETINGS.  Written or printed notice of each meeting
of the shareholders shall be delivered or mailed at least ten (10) days before
the date of the meeting to each shareholder of record entitled to vote at the
meeting.  Each such notice shall state the date, time, and place of the meeting
and, in the case of a special meeting, the purpose or purposes for which the
meeting is called.  Each such notice shall be prepared and delivered by or at
the direction of the Chairman of the Board, the President, the Secretary, the
Board of Directors, or the persons calling the meeting.  Any notice of a
shareholders' meeting sent by mail shall be deemed delivered when deposited in
the United States mail, postage prepaid, addressed to the shareholder at his
address as it appears on the records of the Corporation.  Attendance by a
shareholder at any meeting shall constitute a waiver of notice of the meeting,
except when a shareholder attends a meeting for the express purpose of objecting
to the transaction of any business because the meeting is not lawfully called or
convened.  Any notice required by this section may also be waived as provided in
Article VIII below.

     SECTION 4.  ORGANIZATION OF MEETINGS.  Each regular and special meeting of
the shareholders of the Corporation shall be convened by the Chairman of the
Board, or in the absence of the Chairman, the President, at the time and place
on the date specified in the notice of the meeting.  If the Chairman, or in the
absence of the Chairman, the President, fails or refuses to do so, the Secretary
shall so convene the meeting, or in case of a special meeting when all of them
fail or refuse to do so, one of the persons calling the meeting by notice given
as provided above shall so convene the meeting.  If the Chairman, or in the
absence of the Chairman, the President, is present at the meeting, he shall act
as its chairman, but if he fails or refuses to so act, a chairman for the
meeting shall be elected.  If the Secretary is present at the meeting, he shall
act as 

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its secretary, but if he fails or refuses to so act, the Chairman shall appoint
the secretary for the meeting.

     SECTION 5.  QUORUM.  A majority of the outstanding shares entitled to vote
at any meeting of the shareholders, represented in person or by proxy, shall
constitute a quorum for the transaction of business (except as otherwise
provided in or required by the Articles of Incorporation) at the meeting, but if
the holders of a majority of the outstanding shares entitled to vote at a
meeting are not represented in person or by proxy at the time and place fixed
for such meeting, then a majority of the shares actually represented in person
or by proxy at such meeting may adjourn the meeting successively to a specified
date not more than ninety (90) days after the adjournment, and no notice need be
given of the adjournment to shareholders not present at the meeting.

     SECTION 6.  PROXIES.  Each shareholder entitled to vote at a meeting of the
shareholders may vote either in person or by proxy executed in writing by the
shareholder or his duly authorized attorney-in-fact and filed with the Secretary
at or before the meeting.  A telecopied proxy, which on its face purports to be
properly dated and signed, shall be a valid proxy.

     SECTION 7.  VOTING AND REQUISITE VOTE.  In voting on all matters, each
outstanding share entitled to vote shall be entitled to one vote on each matter
submitted to a vote at any meeting of the shareholders; and every decision of
the majority of a quorum shall be valid as a corporate act unless a larger vote
is required at any time by law, by the Articles of Incorporation, or by these
By-Laws.

     SECTION 8.  LIST OF SHAREHOLDERS.  At least five (5) days before each
meeting of the shareholders at which Directors are to be elected, the Officer
having charge of the transfer book for shares of the Corporation shall make a
complete list of the shareholders entitled to vote at the meeting, arranged in
alphabetical order, with the address of each shareholder and the number of
shares held by each shareholder.  The 

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list shall be kept on file at the registered office of the Corporation for five
(5) days prior to the meeting and shall be subject to inspection by any
shareholder at any time during usual business hours. The list shall also be
produced and kept open at the time and place of the meeting and shall be subject
to inspection by any shareholder during the meeting.

                                  ARTICLE II

                                   DIRECTORS

     SECTION 1.  POWERS AND NUMBER.  The property and business of the
Corporation shall be managed by the Board of Directors.  The number of Directors
to constitute the Board of Directors shall not be less than six (6) nor more
than twenty (20), with the number of Directors to be fixed or changed from time
to time, within the minimum and maximum of the foregoing range, by resolution of
the Board of Directors.  No person may be elected to the Board of Directors at a
time when he has reached the age of seventy (70) years.

     SECTION 2.  ELECTION AND TERMS OF DIRECTORS AND FILLING OF VACANCIES.
Directors shall be classified and shall serve for terms as more particularly set
forth in Article VII of the Articles of Incorporation.  Vacancies upon the Board
of Directors shall be filled in the manner set forth in said Article VII of the
Articles of Incorporation.

     SECTION 3.  REMOVAL OF DIRECTORS.  Directors shall be subject to removal
from office in accordance with applicable provisions of law and the provisions
of Section 2 of Article VII of the Articles of Incorporation of the Corporation.

     SECTION 4.  REGULAR MEETINGS.  Immediately following each annual meeting of
the shareholders, a regular meeting of the Board of Directors shall be held for
the election of Officers and for such other business as may properly come before
the meeting.  Other regular meetings of the Board of Directors shall be held,
without notice, on the third Tuesday of each month at the principal business
office of the Corporation 

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or at any other convenient place duly authorized by the Board, except that no
regular meetings of the Board of Directors shall be held in the months of
February and August. When any regular meeting of the Board falls upon a holiday,
the meeting shall be held on the next banking business day unless the Board
shall designate some other day.

     SECTION 5.  SPECIAL MEETINGS.  Special meetings of the Board of Directors
may be held at any date, time, and place upon the call of the Chairman of the
Board or the President or twenty-five percent (25%) of the members of the Board
of Directors.  Written notice of the date, time, place, and purposes of each
special meeting shall be delivered personally to each Director by or at the
direction of the Chairman, the President, or the Secretary at least forty-eight
(48) hours before the time set for the meeting, or shall be sent by mail at
least ninety-six (96) hours before the time set for the meeting or by telegraph
forty-eight (48) hours before the time set for the meeting, to the last known
address of each Director.

     SECTION 6.  NOTICES AND WAIVER THEREOF.  Any notice of a regular or special
meeting of the Board of Directors sent by mail or telegraph shall be deemed to
be delivered: (i) in the case of notice by mail, when deposited in the United
States mail, postage prepaid, addressed to the Director at his last known
address; or (ii) in the case of notice by telegraph, when delivered  in written
form, cost prepaid, addressed to the Director at his last known address, to a
telegraph office for transmission.  Any required notice of a regular or special
meeting of the Board of Directors shall be deemed to have been waived by any
Director who attends the meeting, except when a Director attends a meeting for
the express purpose of objecting to the transaction of any business because the
meeting is not lawfully called or convened.  Any required notice of a regular or
special meeting of the Board of Directors also may be waived as provided in
Article VIII below.

     SECTION 7.  QUORUM AND POWERS OF THE MAJORITY.  A majority of the Board of
Directors shall constitute a quorum for the transaction of business.  The action
of a 

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majority of the Directors present at a meeting at which a quorum is present
shall be the act of the Board of Directors.

     SECTION 8.  ACTION OF THE BOARD OF DIRECTORS WITHOUT A MEETING.  Any action
which is required to be or may be taken at a meeting of the Directors may be
taken without a meeting if consents in writing, setting forth the action so
taken, are signed by all of the Directors.  The consents shall have the same
force and effect as a unanimous vote of all the Directors at a meeting duly
held, and may be stated as such in any certificate or document filed under the
Indiana General Corporation Act.  The Secretary shall file the consents with the
minutes of the meetings of the Board of Directors.

                                  ARTICLE III

                                   OFFICERS

     SECTION 1.  ELECTION.  The Board of Directors shall elect a Chairman of the
Board and a Chief Executive Officer, both of whom shall be members of the Board
of Directors (the same person may hold both positions) and shall elect a
Secretary.  In addition, the Board of Directors may elect a President, a
Treasurer and such number of Vice Presidents, Assistant Secretaries, Assistant
Treasurers, and other Officers as the Board of Directors may from time to time
deem necessary.

     SECTION 2.  TENURE.  Each Officer shall hold his office for the term of one
year and until his successor is duly elected and qualified, unless sooner
removed by the Board of Directors.  Any Officer elected by the Board of
Directors may be removed by the Board of Directors whenever in its judgment the
best interests of the Corporation will be served by the Officer's removal, but
such removal shall be without prejudice to the contract rights, if any, of the
person so removed.  A vacancy in any office for any reason may be filled by the
Board of Directors for the unexpired portion of the term.

     SECTION 3.  CHAIRMAN OF THE BOARD.  The Chairman shall preside at each
meeting of the shareholders and the Board of Directors.  He shall be an ex
officio member of all committees established by the Board of Directors with the
exception of 

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the Audit Committee and the Compensation and Corporate Structure Committee. He
may sign and execute in the name of the Corporation deeds, mortgages, bonds,
contracts, and other instruments, except in cases where the signing and
execution thereof shall be expressly delegated by the Board or by the By-Laws to
some other Officer or agent of the Corporation, or shall be required by law
otherwise to be signed or executed; and, in general, he shall perform all duties
incident to the office of the Chairman and other such duties as from time to
time may be assigned to him by the Board.

     SECTION 4.  CHIEF EXECUTIVE OFFICER.  The Chief Executive Officer shall
have general executive powers in conducting the affairs of the Corporation as
well as the specific powers conferred by these By-Laws.  The Chief Executive
Officer shall be the principal officer of the Corporation and shall have all
powers of the Board of Directors pertaining to the management of the business of
the Corporation between meetings of the Board and the Executive Committee and
such further powers as may be conferred upon him by these By-Laws or the Board
of Directors or the Executive Committee, from time to time.  The Chief Executive
Officer, in the absence of the Chairman of the Board, shall perform the duties
and exercise the powers of the Chairman.

     SECTION 5.  PRESIDENT.  The President of the Corporation, in the absence of
the Chairman of the Board, shall preside at each meeting of the shareholders and
the Board of Directors.  He shall also serve the Association in such capacities
and perform such duties as may be assigned to him, from time to time, by the
Board of Directors or the Chief Executive Officer.

     SECTION 6.  VICE PRESIDENT.  If the President is unable to act, then the
Vice Presidents in order of their election to office, or if there is no Vice
President, the

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Secretary, shall become Acting President and in that capacity perform all of the
duties of the President, unless some other Officer is designated by the Board of
Directors to perform those duties. The Vice Presidents shall perform such other
duties as may from time to time be prescribed by the Board of Directors or by
the Chairman.

     SECTION 7.  THE SECRETARY.  The Secretary shall be secretary of all
meetings of the shareholders.  The Secretary shall also be secretary of all
meetings of the Board of Directors when he is present.  The Secretary shall keep
the minutes of meetings of the shareholders and the Board of Directors, and all
shareholders' and Directors' consents to action, in books maintained for that
purpose.  The Secretary shall have custody of the seal of the Corporation (if
any), shall have custody of all books, instruments, documents, and papers of the
Corporation entrusted to the Secretary by the Board of Directors or other
Officers, and shall perform such other duties as are provided elsewhere in these
By-Laws and as may from time to time be prescribed by the Board of Directors or
by the Chairman.  If the Secretary is unable to act, then the Assistant
Secretaries (if any) in order of their election to office shall perform the
Secretary's duties.  The Secretary or any Assistant Secretary may affix the seal
(if any) to all instruments, documents, and papers required to be sealed and may
attest the seal and the signature of other Officers when necessary.

     SECTION 8.  THE TREASURER.  The Treasurer, under the supervision and
control at all times of the Board of Directors or the Chairman, shall have
custody of the funds and securities of the Corporation, shall keep such funds
and securities deposited in such financial institutions or in such other manner
as the Board of Directors may from time to time direct, shall keep full and
accurate account of the income and expenses of the Corporation in books kept for
that purpose, and shall perform such other duties as may from time to time be
prescribed by the Board of Directors or by the Chairman.  If the Treasurer is
unable to act, then the Assistant Treasurers (if any) in the order of their
election to office shall perform the Treasurer's duties.

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     SECTION 9.  EXECUTION OF INSTRUMENTS, DOCUMENTS, AND PAPERS.  All
instruments, documents, and papers required to be executed by the Corporation
shall be signed by such Officer or Officers or such other person or persons and
in such manner as the Board of Directors may from time to time prescribe, except
that all instruments, documents, and papers required to be executed in the
ordinary course of business of the Corporation, and all instruments, documents,
and papers which the Board of Directors have determined shall be executed by the
Corporation but have not required to be executed by any particular Officer or
Officers or other person or persons, may be signed by the Chairman of the Board
or the President, and the seal (if any) and the Chairman of the Board's or
President's signature thereto may be attested by the Secretary or any Assistant
Secretary, without prior authorization by the Board of Directors.

                                  ARTICLE IV

                                  FISCAL YEAR

     The fiscal year of the Corporation shall be as established from time to
time by the Board of Directors.

                                   ARTICLE V

                                     STOCK

     SECTION 1.  CERTIFICATES.  The shares of stock of the Corporation shall be
represented by certificates (except fractional shares, which may be represented
by certificates or, in the discretion of the Board of Directors, scrip) in such
form, not inconsistent with the Articles of Incorporation, as are approved by
the Board of Directors.  Each certificate shall be signed by the Chairman,
President or a Vice President and also by the Secretary, an Assistant Secretary
or such other officer as designated by the Board and sealed with the seal of the
Corporation (if any).  Each certificate shall designate the name of the person
to whom issued and shall have 

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plainly stated upon its face the number and class of shares which it represents
and the par value of each share or a statement that such shares have no par
value. No share of stock of the Corporation shall be issued until the entire
consideration for the share has been received by the Corporation. When issued,
all shares of stock of the Corporation shall be deemed full-paid and are non
assessable.

     SECTION 2.  REGISTERED OWNERS.  Except as otherwise provided by law, only
the persons whose names are registered on the books of the Corporation as
shareholders shall have the right to vote and to receive dividends.

     SECTION 3.  TRANSFER.  Transfer of shares of stock of the Corporation shall
be registered on the books of the Corporation only when the certificates
representing the shares are presented for transfer at the principal office of
the Corporation by the owner of the certificates or the owner's attorney-in-
fact.  The Board of Directors may adopt such rulings and regulations not
inconsistent with law or these By-Laws as it deems expedient concerning the
issuance, transfer, and registration of certificates.

     SECTION 4.  CLOSING OF TRANSFER BOOKS AND FIXING OF RECORD DATES.  The
Board of  Directors shall have power to close the share transfer books of the
Corporation for a period not exceeding fifty (50) days prior to the date of any
meeting of the shareholders, or the date for the payment of any dividend, or the
date for the allotment of rights, or the date when any change, conversion, or
exchange of shares will become effective; provided, however, that instead of
closing the share transfer books the Board of Directors may fix in advance a
date, not exceeding fifty (50) days prior to the date of any meeting of
shareholders, or the date for the payment of any dividend, or the date for the
allotment of rights, or the date when any change, conversion, or exchange of
shares becomes effective, as a record date for the determination of the
shareholders entitled to notice of, and to vote at, the meeting and any
adjournment of the meeting, or entitled to receive payment of the dividend, or
entitled to the allotment of rights, or entitled to exercise rights in respect
of the change, 

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conversion, or exchange of shares, as the case may be. Only the shareholders who
are shareholders of record on the date of closing the share transfer books, or
on the record date so fixed, shall be entitled to notice of, and to vote at, the
meeting and any adjournment of the meeting, or to receive payment of the
dividend, or to receive the allotment of rights, or to exercise rights in
respect of the change, conversion, or exchange of shares, as the case may be,
notwithstanding any transfer of any shares on the books of the Corporation after
the date of closing of the share transfer books or the record date so fixed. If
the Board of Directors does not close the share transfer book or so fix a record
date, the twentieth (20th) day prior to the date of the meeting, or the date the
dividend is declared, or the date the other right is announced, as the case may
be, shall be the record date.

     SECTION 5.  DIVIDENDS.  Subject to limitations upon the payment of
dividends as may from time to time be imposed by law, the Articles of
Incorporation, or these By-Laws, the Board of Directors in its discretion may
from time to time declare and cause the Corporation to pay dividends on its
outstanding shares in cash, property, or shares of stock of the Corporation.

                                  ARTICLE VI

                                INDEMNIFICATION

     SECTION 1.  Every person (and the heirs, executors and administrators of
such person) who is or was a Director or Officer of this Corporation or who, at
the request of this Corporation, served in any position or capacity or on any
committee for this Corporation or in any other corporation, partnership,
association, trust, foundation, not-for-profit corporation, employee benefit
plan or other organization or entity, shall be indemnified by the Corporation
against any and all liability and reasonable expense that may be incurred by him
in connection with or resulting from any claim, action, suit or proceeding in
which either (i) such person is wholly successful, thereby entitling such person
to Mandatory Indemnification, or (ii) such person is not wholly successful 

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but it is nevertheless determined, pursuant to the procedures set forth below in
Section 2 of this Article VI of these By-Laws, that such person acted in good
faith and that such person reasonably believed that (a) in the case of conduct
in his official capacity, his conduct was in the Corporation's best interests,
or (b) in all other cases, his conduct was at least not opposed to the best
interests of such Corporation, entity or organization, and, in addition with
respect to any criminal action or proceeding, either had reasonable cause to
believe his conduct was lawful or had no reasonable cause to believe his conduct
was unlawful, thereby entitling such person to Permissive Indemnification. The
terms "claim," "action," "suit" or "proceeding" shall mean and include any
claim, action, suit or proceeding (whether brought by or in the right of the
Corporation or any other corporation or otherwise), civil, criminal,
administrative or investigative action, or threat thereof, in which a Director
or Officer of the Corporation (or his heirs, executors or administrators) may
become involved as a party or otherwise:

     (a)  by reason of his being or having been a Director or Officer of the
          Corporation, or of any subsidiary corporation of the Corporation, or
          of any other corporation where he served as such at the request of the
          Corporation, or

     (b)  by reason of his acting or having acted in any position or capacity or
          on any committee for this Corporation or any subsidiary corporation of
          the Corporation, or in any position or capacity in or for a
          partnership, association, trust, foundation, not-for-profit
          corporation, employee benefit plan or other organization or entity
          where he served as such at the request of the Corporation, or

     (c)  by reason of any action taken or not taken by him in any such
          capacity, whether or not he continues in such capacity at the time
          such liability or expense shall have been incurred.

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The terms "liability" and "expenses" shall include, but shall not be limited to,
counsel fees and disbursements and amounts of judgments, fines or penalties
against, and amounts paid in settlement by or on behalf of, a person, and excise
taxes assessed with respect to an employee benefit plan, but shall not in any
event include any liability or expenses on account of profits realized by him in
the purchase or sale of securities of the Corporation.  The term "wholly
successful" shall mean termination of any action, suit or proceeding against the
person in question without any finding of liability or guilt against him or the
expiration of a reasonable period of time after the making of any claim or
threat of an action, suit or proceeding without the institution of the same,
without any payment or promise made to induce a settlement.

     SECTION 2.  With regard to Permissive Indemnification, the determination
that a person acted in good faith and that such person reasonably believed that
(a) in the case of conduct in his official capacity, his conduct was in the
Corporation's best interests, or (b) in all other cases, his conduct was at
least not opposed to the best interests of the Corporation, and, in addition,
with respect to any criminal action or proceeding, either had reasonable cause
to believe that his conduct was lawful or had no reasonable cause to believe
that his conduct was unlawful with regard to a specific claim, action, suit or
proceeding in or as to which such person is not wholly successful shall be made
by or for the Board of Directors of the Corporation in the manner hereinafter
described.  Any request for such indemnification must first be proposed to the
Board of Directors of the Corporation, and a motion for such indemnification may
be made by any Director of the Corporation, including a Director who is seeking
such indemnification for himself.  If a quorum of Directors eligible to decide
the matter exists with the limitations and requirements of I.C. 23-1-37-
12(b)(1), such Directors may either (i) decide the question themselves; (ii)
refer the matter to Special Legal Counsel for decision pursuant to I.C. 23-1-37-
12(b)(3)(A); or (iii) decline to take any action to either decide the question
of such indemnification or refer the matter for decision to Special 

                                      13
<PAGE>
 

Legal Counsel. If there does not exist a quorum of Directors eligible to decide
the matter within the limitations and requirements of I.C. 23-1-37-12(b)(1), a
majority of the entire Board of Directors may either (i) refer the matter to a
committee of two or more Directors who are eligible to vote thereon pursuant to
I.C. 23-1-37-12(b)(2) who may either decide the matter themselves or refer the
matter to Special Legal Counsel for decision pursuant to I.C. 23-1-37-
12(b)(3)(A); (ii) if such a committee cannot be appointed, refer the matter to
Special Legal Counsel pursuant to the procedures described in I.C. 23-1-37-
12(b)(3)(B); or (iii) decline to take any action to refer the matter of such
indemnification to a committee or to Special Legal Counsel. Any decision on the
question of entitlement to such Permissive Indemnification by a majority of a
quorum of the Board of Directors eligible to vote pursuant to I.C. 23-1-37-
12(b)(1); by a special committee of eligible Directors pursuant to I.C. 23-1-37-
12(b)(2); or by Special Legal Counsel duly appointed pursuant to the provisions
of I.C. 23-1-37-12(b)(3), shall be in the sole and absolute discretion of such
person or persons who are to make such determination. If it is determined and
decided that such Permissive Indemnification should be given in a specific
situation, the authorization for such indemnification and a determination of the
amount thereof shall be made in accordance with the procedures and requirements
of I.C. 23-1-37-12(c). For purposes of this Section 2, Permissive
Indemnification shall be deemed to have been denied (i) if a majority of any
group of persons who are to decide the question do not vote in favor of the
proposed indemnification; (ii) if the Board of Directors or any committee
thereof declines to take any permitted action to either decide the question,
refer it to a committee, or refer it to Special Legal Counsel; (iii) if no
decision is made by the person or persons who were to decide such question
within a period of six (6) months after such indemnification was first proposed
to the Board of Directors of the Corporation; or (iv) to the extent that the
dollar amount of any indemnification to be made by the Corporation is less than
the total dollar amount of indemnification proposed or

                                      14
<PAGE>
 

requested to be made. If proposed Permissive Indemnification is denied, the
question may not be reconsidered at any subsequent time by the Corporation.

     SECTION 3.  Expenses incurred with respect to any claim, action, suit or
proceeding may be advanced by the Corporation (by action of the Board of
Directors, whether or not a disinterested quorum exists) prior to the final
disposition thereof upon receipt of an undertaking by or on behalf of the
recipient to repay such amount unless he is entitled to indemnification under
this Article of these By-Laws.

     SECTION 4.  The rights of Mandatory and Permissive Indemnification provided
in this Article of the By-Laws shall be in addition to any rights to which any
such person may otherwise be entitled by contract, as matter of law, or pursuant
to I.C. 23-1-37.  Any person claiming the right to indemnification pursuant to
any provisions of these By-Laws may at any time apply for indemnification to or
seek review of any decision denying indemnification or determining the amount
thereof by a court pursuant to I.C. 23-1-37-11.  Persons who are not Directors
or Officers of the Corporation but who are Directors or Officers of any
subsidiary may be indemnified to the extent authorized at any time or from time
to time by the Board of Directors.

     SECTION 5.  Irrespective of the provisions of this Article of the By-Laws,
the Board of Directors may, at any time or from time to time, approve
indemnification of Directors and Officers or other persons to the full extent
permitted by the provisions of the Indiana Business Corporation Law at the time
in effect, whether on account of past or future transactions.

     SECTION 6.  To the extent not inconsistent with Indiana law as in effect
from time to time, the Board of Directors may, at any time or from time to time,
approve the purchase and maintenance of insurance on behalf of any such
Director, Officer or other person arising out of his status as a Director,
Officer, Employee or agent of the Corporation or any corporation, partnership,
association, employee benefit plan, trust, foundation, not-for-profit
corporation or other organization or entity in which he served 

                                      15
<PAGE>
 

as such at the request of the Corporation, whether or not the Corporation would
have the power to indemnify him under the provisions of this Article of the By-
Laws. In the event that any expense or liability otherwise subject to
indemnification hereunder is covered entirely or in part by any insurance, the
indemnification provided for by this Article of these By-Laws shall only be
available, if at all, as to any uninsured liability or expense or that portion
which is in excess of the amount of all available insurance coverage. Under no
circumstances shall any insurer or other person making payment under such an
insurance policy or contract be subrogated to the rights of any person entitled
to indemnification under this Article of these By-Laws.

     SECTION 7.  Any and all references contained in Article VI of these By-Laws
to any provision, section, sub-section or portion of the Indiana Code (I.C.)
shall mean the Indiana Code as the same existed on January 1, 1987, and no
subsequent amendment, repeal, modification, change, or judicial invalidation of
any provision of the Indiana Code subsequent to January 1, 1987, shall alter,
modify, or otherwise affect these By-Laws, and these By-Laws shall be construed
and interpreted under the statutory law of the State of Indiana as it existed as
of the date of adoption of these By-Laws.

     SECTION 8.  The indemnification herein required or permitted by these
amended indemnification By-Laws shall be a contractual obligation, undertaking
and commitment of the Corporation as to any person who either continued to serve
or commenced to serve, following the date of the adoption of these amended
indemnification By-Laws, as a Director or Officer of this Corporation or any
subsidiary of this Corporation, or in any other position or capacity, at the
request of this Corporation or any subsidiary corporation, on any committee,
partnership, association, trust, foundation, not-for-profit corporation,
employee benefit plan, or other organization or entity, and no subsequent
amendment or repeal of these By-Laws and no judicial decision invalidating the
legislation authorizing the indemnification provided for by these By-Laws or
invalidating all or any part of these indemnification By-Laws shall in any
manner deny, diminish, 

                                      16
<PAGE>
 

limit, restrict, or qualify the indemnification herein provided for any such
person who so continued to serve or commenced to serve with regard to any claim
concerning any matter which occurred, which commenced to occur, or which
continued to occur subsequent to the adoption of these amended indemnification
By-Laws and prior to any such amendment, repeal, or judicial invalidation.

                                  ARTICLE VII

                                     SEAL

     If the Board of Directors so determines, the Corporation shall adopt as a
seal a circular device with the name of the Corporation around the border.

                                 ARTICLE VIII

                               WAIVER OF NOTICE

     Whenever any notice of a meeting is required to be given by law, the
Articles of Incorporation, or these By-Laws, a waiver of the notice in writing,
signed by the person or persons entitled to the notice, whether before or after
the meeting for which the notice would otherwise be required, and filed with the
Chairman of the Board, the President or Secretary, shall be deemed equivalent to
the giving of the notice.

                                  ARTICLE IX

                       ADOPTION AND AMENDMENT OF BY-LAWS

     The Board of Directors shall have the power to make, alter, amend, or
repeal the By-Laws of the Corporation and to adopt new or additional By-Laws
which are not inconsistent with applicable law and the Articles of
Incorporation; provided, however, that notice of each proposed amendment of or
other change in the By-Laws shall be given to each Director at least ten (10)
days prior to the date of the meeting at which the proposed amendment or other
change will be submitted for consideration and action by the Board of Directors.

                                      17
<PAGE>
 

                                   ARTICLE X

                                  COMMITTEES

     SECTION 1.  COMMITTEES.  The Board of Directors may, upon the
recommendation of the Chairman of the Board, by resolution designate two or more
Directors to constitute such committee or committees as the Board shall deem
advisable and shall designate Directors to constitute the committees provided
for in the following Sections of this Article X.  Each such committee, to the
extent provided in these By-Laws or any such resolution, shall have and exercise
all of the authority of the Board of Directors in the management of the
Corporation; provided that the designation of such committee or committees and
the delegation thereto of authority shall not operate to relieve the Board of
Directors, or any member thereof, of any responsibility imposed upon it or him
by law.  The Board of Directors may designate officers, employees or other
persons who are not Directors of the Corporation to serve as ex officio members
of any committee.

     SECTION 2.  EXECUTIVE COMMITTEE.  The Board of Directors shall designate
three or more Directors to constitute an Executive Committee, which Committee
shall have and may exercise all of the authority of the Board of Directors in
the management of the Corporation, except such as the Board only, by law, is
authorized to perform.  The Chairman of the Board shall be a member of such
Committee and shall act as Chairman thereof; a majority of the members of such
Committee shall be Directors who are not officers or employees of the
Corporation.  The Committee shall report its actions in writing at each regular
meeting of the Board of Directors, which shall approve or disapprove the report
and record such action in the minutes of the meeting.

     SECTION 3.  AUDIT COMMITTEE.  The Board of Directors shall designate three
or more Directors to constitute an Audit Committee.  Audit Committee members
shall be appointed by the Board annually or more often.  The membership,
structure and responsibilities of the Audit Committee shall be such as to be in
compliance with 

                                      18
<PAGE>
 

Section 36 of the Federal Deposit Insurance Act, as amended, 12 CFR Part 363,
the official Guidelines and Interpretations thereto, and any other related
implementing regulations, as the same are applicable to a holding company
performing for its subsidiaries comparable services and functions as are
required of the subsidiaries under such laws and regulations.

     The Audit Committee shall have and may exercise all of the authority of the
Board of Directors with respect to the review and examination of the financial
affairs and the accounting and control matters of the Corporation and its
subsidiaries.  The results of such examinations shall be reported, in writing,
to the Board at the regular meeting thereafter.

     It shall also be the duty of the Audit Committee to oversee and review the
Corporation's annual internal audit; to nominate the independent auditors of the
Corporation for appointment by the Board of Directors; to ratify all
accountants' fees rendered during the year; and to recommend to the Board such
changes in the manner of doing business, etc., as shall be deemed advisable.

     It shall also be the duty of the Audit Committee to review and discuss with
the Board of Directors and the Corporation's independent public accountant:
management's reports concerning compliance with safety and soundness laws,
internal control structures and procedures for financial reporting; the
independent public accountant's reports and attestations; the resolution of
identified material weaknesses and reportable conditions in internal controls,
including the prevention or detection of management override or compromise of
the internal control system; the scope of the audit services; significant audit
policies; audit conclusions regarding significant accounting estimates; the
selection and termination and resolution of any significant disagreements with
the independent public accountant.

     The Audit Committee shall also be authorized to engage independent legal
counsel at its discretion.  The Audit Committee shall further be authorized to,
at its sole 

                                      19
<PAGE>
 

discretion, consult and consider the advice of a panel of advisors made up of
members of the Board of Directors of The Citizens National Bank of Evansville as
to the discharge of any of its responsibilities hereunder.

     SECTION 4.  COMPENSATION AND CORPORATE STRUCTURE COMMITTEE.  The Board of
Directors shall designate three or more Directors to constitute a Compensation
and Corporate Structure Committee.  Compensation and Corporate Structure
Committee members shall be appointed by the Board annually or more often.  The
Compensation and Corporate Structure Committee shall review the competency and
effectiveness of management of the Corporation and its subsidiaries; the
soundness and adequacy of compensation programs, including fringe benefit plans
and programs, compliance with regulations and the like; the approval of salaries
of Corporation officers and salaries of senior management of its subsidiaries;
the formulation of policy on and administration of special Corporation programs
such as stock option plans, executive incentive plans, stock purchase plans for
employees and the like.  It shall also be the duty of the Compensation and
Corporate Structure Committee to formulate and adopt overall management
structure and organization policies, including selection, recruiting, management
development and succession of the senior management of the Corporation and its
subsidiaries.  The Compensation and Corporate Governance Committee shall report
all of its findings and recommendations to the Board of Directors for its action
thereon.

     SECTION 5.  NOMINATING AND CORPORATE GOVERNANCE COMMITTEE.  The Board of
Directors shall designate three or more Directors to constitute a Nominating and
Corporate Governance Committee.  Nominating and Corporate Governance Committee
members shall be appointed by the Board annually or more often.  The Nominating
and Corporate Governance Committee shall recommend to the Board a slate of
nominees for directors to be presented on behalf of the Board for election by
shareholders at each annual meeting of the Corporation and shall recommend to
the Board persons to 

                                      20
<PAGE>
 

fill vacancies on the Board. It shall also be the duty of the Nominating and
Corporate Governance Committee to review the procedures and other matters
related to the governance of the Corporation and its subsidiaries generally,
including, but not limited to, the composition, size and committee structure of
the boards of directors of the Corporation's subsidiaries and the background and
qualifications of the members of the boards of directors of the Corporation's
subsidiaries and to submit to the full Board of Directors any recommended
actions to be taken with respect to matters within the Committee's jurisdiction.

     SECTION 6.  LOAN COMMITTEE.  The Board of Directors may designate three or
more Directors to constitute a Loan Committee.  Loan Committee members shall be
appointed by the Board annually or more often.  In the absence of the
appointment of a Loan Committee, the Executive Committee shall perform the
functions of the Loan Committee.  The Loan Committee shall have and may exercise
all of the authority of the Board of Directors with respect to the adequacy of
credit policies and procedures adopted by the Corporation and its subsidiaries;
the monitoring of trends in the loan portfolio of the Corporation and its
subsidiaries; and the approval of loans, and review of loans previously
approved, that exceed an amount specified by resolution of the Board of
Directors of the Corporation or its subsidiaries.

     SECTION 7.  SHAREHOLDER VALUE COMMITTEE.  The Board of Directors shall
designate three or more Directors to constitute a Shareholder Value Committee.
Shareholder Value Committee members shall be appointed by the Board annually or
more often.  The Shareholder Value Committee shall review and consider the
Corporation's ongoing long-range strategic plans, with specific emphasis on the
expansion of the Corporation's business in both existing and new market areas,
and the maximization of the long-term value of the Corporation's franchise,
including merger and acquisition activity.  The Shareholder Value Committee
shall report all of its findings and recommendations to the Board of Directors
for its action thereon.

                                      21
<PAGE>
 

     SECTION 8.  APPOINTMENT OF COMMITTEES.  The Board of Directors may appoint,
from time to time, other committees for such purposes and with such powers and
tenure as the Board may determine to be advisable.

                                  ARTICLE XI

                         REDEMPTION OF CONTROL SHARES

     SECTION 1.  CORPORATE SHARE ACQUISITIONS.  The Indiana Business
Corporation Law (Indiana Code (S)(S)23-1-42-1 et seq.) contains a "control share
acquisition" provision which is designed to increase the protection of dispersed
shareholders when a prospective acquirer seeks to obtain a dominant position in
an Indiana corporation which has stock registered under the federal securities
laws.  The provision permits disinterested shareholders (defined in Indiana Code
(S)23-1-42-3 as essentially all shareholders other than the acquiror, officers
of the corporation or employees who are also directors of the corporation) to
decide whether voting power should be given to an acquirer's "control shares."
Control shares are not all shares owned by an acquiring person, but only shares
acquired in a control share acquisition (which can be acquired in separate
purchases over a considerable period of time, see Indiana Code (S)23-1-42-2)
that, when added to the acquiring person's pre-acquisition holdings, put the
acquirer over any one of three thresholds of corporate voting power -- one-
fifth, one-third or one-half.  If any person proposing to make or who has made a
control share acquisition does not file an "acquiring person statement" with the
issuing corporation or if the control shares are not accorded full voting rights
by disinterested shareholders, the control shares are subject to redemption at
the option of the corporation; provided that the articles of incorporation or
bylaws of the corporation whose shares are acquired authorize such redemption.
By virtue of this Article XI, the Corporation is authorized to redeem control
shares as permitted under Indiana Code 

                                      22
<PAGE>
 

(S)(S)23-1-42-1 et seq. in accordance with the procedures set forth in Section 3
of this Article XI. All capitalized terms used in Sections 2 through 4 of this
Article XI have the meanings set forth in Section 4 of this Article XI.

     SECTION 2.  RIGHT OF REDEMPTION.  The Corporation may redeem, at any
time during the Redemption Period, Control Shares from an Acquiring Person for
an amount equal to the Fair Value of the Control Shares.

     SECTION 3.  REDEMPTION PROCEDURE.  In the event that the Corporation
shall desire to exercise its right to redeem Control Shares as provided in this
Article XI, it shall give notice of such redemption to the Acquiring Person by
mailing first class, postage prepaid, a notice of such redemption to the
Acquiring Person's address as it shall appear upon the Corporation's books.  The
notice of redemption shall (i) describe the Control Shares to be redeemed, (ii)
state the date fixed for redemption, (iii) indicate the Fair Value of the
Control Shares, and (iv) state that payment of the Fair Value of the Control
Shares to be redeemed shall be made at the principal offices of the Corporation
upon presentation and surrender of the certificate or certificates representing
such Control Shares (duly endorsed to the Corporation or in blank).  Any notice
of redemption which is mailed in the manner herein provided shall be
conclusively presumed to have been duly given, whether or not the Acquiring
Person receives such notice.  If the notice of redemption shall have been given
as above provided, the Fair Value of the Control Shares shall become due and
payable on the date and at the place stated in such notice upon presentation and
surrender of the certificate or certificates representing such Control Shares
(duly endorsed to the Corporation or in blank).  From and after the date of the
notice of redemption, the Control Shares shall no longer be deemed issued and
outstanding and all rights of the Acquiring Person with respect to such Control
Shares shall cease and terminate, except for the Acquiring Person's right to
receive Fair Value for such Control Shares as herein provided.

                                      23
<PAGE>
 

     SECTION 4.  DEFINITIONS.  As used in Section 2 through 4 of this
Article XI, the following terms shall have the respective meanings set forth
below:
          "Acquiring Person" shall mean any Person (or two or more Persons
acting cooperatively or in concert) that acquires Control Shares.

          "Acquiring Person Statement" shall mean a written notice from an
Acquiring Person to the Corporation which satisfies the requirements of Indiana
Code (S)23-1-42-6.

          "Control Shares" shall have the meaning provided therefor in Indiana
Code (S)23-1-42-1.

          "Fair Value" shall mean the mean average per share closing price for
shares of the same class as the Control Shares on the principal exchange on
which such shares are listed for trading or, if not traded on an exchange, then
the average of the closing bid and asked prices quoted over-the-counter or the
average closing price reported on the NASDAQ National Market System, if admitted
for quotation thereon, for the 20 business days immediately preceding the
earlier of the public announcement or the commencement of the Control Share
acquisition by the Acquiring Person (as such prices are reported in the Wall
Street Journal or, if not so reported, in any nationally recognized financial
journal or newspaper).

          "Person" shall have the meaning provided therefor in Indiana Code
(S)23-1-20-18.

          "Redemption Period" shall mean the period commencing on the date that
an Acquiring Person first acquires Control Shares and ending on the earlier to
occur of (i) the date sixty (60) days after the last acquisition of Control
Shares by such Acquiring Person, or (ii) the date that the Corporation receives
an Acquiring Person Statement from such Acquiring Person; provided, however,
that in the event that, pursuant to Indiana Code (S)23-1-42-9, the Control
Shares are not accorded full voting rights by the shareholders of the
Corporation, the Redemption Period shall also include the period 

                                      24
<PAGE>
 

from and after the date of the shareholder meeting (referred to in Indiana Code
(S)23-1-42-7) at which the shareholders determined not to grant full voting
rights to the Control Shares.

                                  ARTICLE XII

                            MISCELLANEOUS PROVISIONS

     SECTION 1.  PRIOR BY-LAWS SUPERSEDED.  All present and existing By-Laws of
this Corporation are hereby expressly repealed and superseded by these By-Laws.

     SECTION 2.  GENDER.  As used herein, all references to the masculine, all
masculine pronouns and masculine forms of other words or phrases shall be
construed as also meaning and including the feminine.


                       * * * * * * * * * * * * * * * * *


                                 CERTIFICATION

     Certified to be a true copy of the By-Laws, now in force and effect, of CNB
Bancshares, Inc., Evansville, Indiana.

     Dated this 28th day of April, 1995.

(SEAL)

                                     /s/ David L. Knapp
                                   -----------------------------------
                                        Secretary of the Board


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