UNION PLANTERS CORP
S-4, 1998-11-20
NATIONAL COMMERCIAL BANKS
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<PAGE>   1

   As filed with the Securities and Exchange Commission on November 20, 1998
                                                                    
                                                  Registration No. 333-
                                                                   --- ---------

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM S-4

                          REGISTRATION STATEMENT UNDER
                           THE SECURITIES ACT OF 1933

                           UNION PLANTERS CORPORATION
             (Exact Name of Registrant as Specified in its Charter)
<TABLE>
<CAPTION>


    <S>                                      <C>                                 <C>       
               TENNESSEE                                 6712                                62-0859007
    (State or Other Jurisdiction of          (Primary Standard Industrial       (I.R.S. Employer Identification No.)
    Incorporation or Organization)           Classification Code Number)
</TABLE>

                           7130 GOODLETT FARMS PARKWAY
                            MEMPHIS, TENNESSEE 38018
                                 (901) 580-6000
  (Address, including zip code, and telephone number, including area code, of
                   Registrant's principal executive offices)

                            E. JAMES HOUSE, JR., ESQ.
                SECRETARY AND MANAGER OF THE LEGAL DEPARTMENT OF
                           UNION PLANTERS CORPORATION
                           7130 GOODLETT FARMS PARKWAY
                            MEMPHIS, TENNESSEE 38018
                                 (901) 580-6495
 (Name, address, including zip code, and telephone number, including area code,
 of agent for service)

                                 WITH COPIES TO:


J. ALLEN ROBERTS, ESQ.                                J. DAVID SMITH, JR., ESQ. 
Wyatt, Tarrant & Combs                                Stoll, Keenon & Park, LLP
  6075 Poplar Avenue                                      2650 Aegon Center
       Suite 650                                           400 West Market 
   Memphis, TN 38177                                  Louisville, KY 40202-3377
    (901) 537-1031                                         (502) 568-9100      
                                                      

                            -------------------------
                                             
 APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF SECURITIES TO THE PUBLIC:
  As soon as practicable after this Registration Statement becomes effective.

If the securities being registered on this form are being offered in connection
with the formation of a holding company and there is compliance with General
Instruction G, 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, 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(d) under
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]

<TABLE>
<CAPTION>

                                          CALCULATION OF REGISTRATION FEE

- ---------------------------------------------------------------------------------------------------------------------------------
           TITLE OF EACH                                                                   PROPOSED
              CLASS OF                                            PROPOSED                 MAXIMUM
             SECURITIES                      AMOUNT           MAXIMUM OFFERING             AGGREGATE              AMOUNT OF
                TO BE                         TO BE                 PRICE                  OFFERING              REGISTRATION
             REGISTERED                   REGISTERED(1)          PER SHARE(2)              PRICE(2)                  FEE
- ---------------------------------------------------------------------------------------------------------------------------------
<S>                                     <C>                   <C>                         <C>                    <C> 
Common Stock, $5.00 par                 1,250,005 shares           $20.79                 $25,989,640            $7,225.22
value per share (and associated          (with Preferred                              
Preferred Share Rights)                   Share Rights)
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>

(1)  This Registration Statement covers the maximum number of shares of common
     stock of the Registrant which is expected to be issued in connection with
     the merger described herein.
(2)  Estimated solely for the purpose of calculating the Registration Fee and
     based, pursuant to Rule 457(f)(2) under the Securities Act of 1933, as
     amended, on the book value per share of the Common Stock of Southeast
     Bancorp, Inc. as of the latest practicable date prior to the filing of this
     Registration Statement.

                               DELAYING AMENDMENT

The Registrant hereby amends this registration statement on such date or dates
as may be necessary to delay its effective date until the 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 1993 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.


<PAGE>   2



                             SOUTHEAST BANCORP, INC.
                              100 NORTH MAIN STREET
                             CORBIN, KENTUCKY 40702
                                                             November   , 1998
                                                                      -- 
Dear Shareholder:

You are cordially invited to attend a special meeting of shareholders of
Southeast Bancorp, Inc. to be held at 9:00 a.m., local time, on December 30,
1998 in the boardroom of the principal office of Southeast Bancorp, Inc.
located at 100 North Main Street, Corbin, Kentucky 40702.

At the special meeting, you will be asked to vote on a proposal to approve an
Agreement and Plan of Merger between Southeast Bancorp, Inc. ("SBI"), Union
Planters Holding Corporation ("UPHC") and Union Planters Corporation ("Union
Planters") (the "Agreement") and a related Plan of Merger between UPHC and SBI
(the "Plan of Merger"). The Agreement and the Plan of Merger provide for the
merger of SBI with and into UPHC, a wholly-owned subsidiary of Union Planters.
As a result of the merger, each outstanding share of SBI common stock will be
converted into 11.87 shares of Union Planters common stock and associated
Preferred Share Rights (as defined in the accompanying proxy
statement-prospectus). Cash (without interest) will be paid in lieu of the
issuance of fractional shares of Union Planters common stock. THE ACCOMPANYING
PROXY STATEMENT-PROSPECTUS CONTAINS DETAILED INFORMATION ABOUT THE PROPOSED
MERGER. YOU SHOULD READ IT CAREFULLY.

The closing price of Union Planters common stock on the New York Stock Exchange
on November __, 1998 was $____. If the Merger had been consummated on that
date the value of the Union Planters shares to be received for each share of SBI
common stock, based on the closing price of Union Planters common stock on
November __, 1998, would have been $______.

AFTER CAREFUL CONSIDERATION, YOUR BOARD OF DIRECTORS HAS APPROVED THE AGREEMENT
AND THE PLAN OF MERGER. THE BOARD BELIEVES THE MERGER IS IN THE BEST INTERESTS
OF SBI AND ITS SHAREHOLDERS AND RECOMMENDS THAT YOU VOTE FOR APPROVAL OF THE
AGREEMENT AND THE PLAN OF MERGER. THE REASONS FOR THE BOARD OF DIRECTORS'
RECOMMENDATION ARE STATED IN THE ACCOMPANYING PROXY STATEMENT-PROSPECTUS.
FURTHERMORE, SBI'S FINANCIAL ADVISOR, STIFEL, NICOLAUS & COMPANY, INCORPORATED,
HAS ISSUED ITS OPINION TO THE EFFECT THAT THE EXCHANGE RATIO OF UNION PLANTERS
COMMON STOCK FOR SBI COMMON STOCK IN THE MERGER IS FAIR, FROM A FINANCIAL POINT
OF VIEW, TO SBI'S SHAREHOLDERS.

The merger presents an opportunity for holders of SBI common stock to join on
favorable terms in a combined enterprise with greater financial resources and a
more geographically diversified business. As a result of the proposed merger,
you, as a new shareholder of Union Planters, will own common stock in a bank
holding company whose shares are actively traded on the New York Stock Exchange.

We urge you to read the enclosed materials carefully so that you can evaluate
the merger for yourself.

All shareholders are invited to attend the special meeting in person. However,
in order to ensure that your shares will be represented at the special meeting,
please date, sign and promptly return the enclosed proxy card in the enclosed
postage-paid envelope, whether or not you plan to attend the special meeting. If
you attend the special meeting in person, you may, if you wish, vote personally
on all matters brought before the special meeting.

                                                Very truly yours,



                                                James D. Rickard
                                                Chief Executive Officer


                             YOUR VOTE IS IMPORTANT
                     PLEASE SIGN, DATE AND RETURN YOUR PROXY


<PAGE>   3




       PROXY STATEMENT
   FOR THE SPECIAL MEETING                                PROSPECTUS
      OF SHAREHOLDERS OF                          UNION PLANTERS CORPORATION
   SOUTHEAST BANCORP, INC.

     The board of directors of Southeast Bancorp, Inc. ("SBI") has approved a
merger of SBI into Union Planters Holding Corporation ("UPHC"), a wholly-owned
subsidiary of Union Planters Corporation ("Union Planters"). In the proposed
merger, Union Planters will issue shares of Union Planters common stock in
exchange for shares of SBI common stock. All outstanding options to acquire SBI
common stock will become options to acquire Union Planters common stock. At the
special meeting, we will ask SBI shareholders to approve the merger, the
Agreement and the Plan of Merger which set out the terms of the merger. We
cannot complete the merger unless SBI shareholders approve it.

     If we complete the merger, you will receive 11.87 shares of Union Planters
common stock for each of your shares of SBI common stock. If the exchange
results in your owning any fraction of a share of Union Planters common stock,
you will receive cash (without interest) instead of stock for that fraction.
Union Planters common stock is traded on the New York Stock Exchange under the
symbol "UPC". Based on the $_____ closing price of Union Planters common stock
on November __, 1998, and the 11.87 exchange ratio, you will receive shares of
Union Planters common stock having a market value of $______ for each share of
SBI common stock. The market value of the Union Planters stock you will receive
in the merger will go up or down depending on the market price of Union Planters
common stock.

     This proxy statement-prospectus provides you with detailed information
about the proposed merger. In addition, you may obtain information about Union
Planters from documents filed with the Securities and Exchange Commission. We
encourage you to carefully read this entire document and the other documents
that we refer you to in this document.

     NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THE SHARES OF UNION PLANTERS COMMON
STOCK TO BE ISSUED IN THE MERGER OR DETERMINED IF THIS PROXY
STATEMENT-PROSPECTUS IS ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.

     SHARES OF UNION PLANTERS COMMON STOCK ARE NOT DEPOSITS, SAVINGS ACCOUNTS OR
OTHER OBLIGATIONS OF A DEPOSITORY INSTITUTION AND ARE NOT INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENTAL AGENCY.

     The date of this proxy statement-prospectus is November ___, 1998. It is
first being mailed to shareholders on November ___, 1998.


<PAGE>   4



                             SOUTHEAST BANCORP, INC.
                              100 NORTH MAIN STREET
                             CORBIN, KENTUCKY 40702

                    NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
                        TO BE HELD ON DECEMBER 30, 1998

     Southeast Bancorp, Inc. ("SBI") will hold a special meeting of shareholders
in the boardroom of the principal office of SBI located at 100 North Main
Street, Corbin, Kentucky 40702, at 9:00 a.m. local time on December 30, 1998, to
vote on:

     1.  The Agreement and Plan of Merger (the "Agreement"), dated as of August
         7, 1998, between Southeast Bancorp, Inc. ("SBI") and Union Planters
         Corporation ("Union Planters"), and the related Plan of Merger, dated
         August 7, 1998, between SBI and Union Planters Holding Corporation
         ("UPHC"), a wholly-owned subsidiary of Union Planters (the "Plan of
         Merger"), and the transactions contemplated by the Agreement and the
         Plan of Merger. These transactions include the merger of SBI into UPHC.

     2.  Any other matters that properly come before the special meeting, or any
         adjournments or postponements of the special meeting.

     Record holders of SBI common stock at the close of business on ________,
1998, will receive notice of and may vote at the special meeting, including any
adjournments or postponements. The Agreement and the Plan of Merger require
approval by the holders of a majority of the outstanding shares of SBI common
stock.

     Shareholders of SBI are entitled to assert dissenters' rights under
Subtitle 13 of Section 271B of the Kentucky Revised Statutes. We have attached a
copy of that law as an Appendix to the accompanying proxy statement-prospectus.

     YOUR VOTE IS VERY IMPORTANT. Whether or not you plan to attend the special
meeting, please take the time to vote by completing and mailing the enclosed
proxy card. If you sign, date and mail your proxy card without indicating how
you want to vote, we will vote your proxy in favor of the merger. If you do not
return your card, the effect will be a vote against the merger.

                                      BY ORDER OF THE BOARD OF DIRECTORS


                                      --------------------
                                      James D. Rickard
                                      Chief Executive Officer

November _____,1998

      YOUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR APPROVAL OF THE
                        AGREEMENT AND THE PLAN OF MERGER.


<PAGE>   5



                                TABLE OF CONTENTS
<TABLE>
<CAPTION>

                                                                                                                 Page
                                                                                                                 ----

<S>                                                                                                              <C>
SUMMARY.............................................................................................................1
     The Companies..................................................................................................1
     The Merger.....................................................................................................2
     What SBI Shareholders Will Receive in the Merger...............................................................2
     Effect of the Merger on Employee Options.......................................................................2
     Ownership of Union Planters After the Merger...................................................................3
     Dissenters' Rights.............................................................................................3
     Certain Federal Income Tax Consequences of the Merger..........................................................3
     Comparative Market Prices of Common Stock......................................................................3
     Our Reasons for the Merger.....................................................................................4
     Fairness Opinion of SBI's Financial Advisor ...................................................................4
     Special Meeting of Shareholders................................................................................4
     Voting Rights at the Special Meeting...........................................................................5
     Our Recommendation to Shareholders.............................................................................5
     Shareholder Vote Required to Approve the Merger................................................................5
     Share Ownership of Management and Certain Shareholders ........................................................5
     Interests of Certain Persons in the Merger That May Be Different From Yours ...................................6
     Effective Time.................................................................................................6
     Exchange of Stock Certificates.................................................................................6
     Limitation on Negotiations.....................................................................................6
     Regulatory Approval and Other Conditions.......................................................................7
     Waiver, Amendment, and Termination.............................................................................7
     Accounting Treatment...........................................................................................8
     Certain Differences in Shareholders' Rights....................................................................8
     Historical and Pro Forma Comparative Per Share Data............................................................8
     Selected Financial Data.......................................................................................10

INTRODUCTION.......................................................................................................14

SPECIAL MEETING OF SBI SHAREHOLDERS................................................................................14
     Date, Place, Time, and Purpose................................................................................14
     Record Date, Voting Rights, Required Vote, and Revocability Of Proxies........................................14
     Solicitation of Proxies.......................................................................................16
     Dissenters' Rights............................................................................................16
     Recommendation................................................................................................19

DESCRIPTION OF TRANSACTION.........................................................................................19
     General.......................................................................................................19
     Effect of the Merger on Options...............................................................................20
     Certain Federal Income Tax Consequences of the Merger.........................................................20
     Background of and Reasons for the Merger......................................................................23
     Opinion of SBI's Financial Advisor............................................................................27
     Effective Time of the Merger..................................................................................33
     Distribution of Union Planters Stock Certificates.............................................................34
     Limitations on Negotiations...................................................................................34
</TABLE>

                                      -i-

<PAGE>   6

<TABLE>



     <S>                                                                                                           <C>
     Conditions to Consummation of the Merger......................................................................35
     Regulatory Approval...........................................................................................36
     Waiver, Amendment, and Termination............................................................................37
     Conduct of Business Pending the Merger........................................................................38
     Management and Operations After the Merger....................................................................38
     Interests of Certain Persons in the Merger....................................................................39
     Accounting Treatment..........................................................................................40
     Expenses and Fees.............................................................................................41
     Resales of Union Planters Common Stock........................................................................41

EFFECT OF THE MERGER ON RIGHTS OF SHAREHOLDERS.....................................................................42
     Anti-Takeover Provisions Generally............................................................................43
     Authorized Capital Stock......................................................................................44
     Preemptive Rights.............................................................................................45
     Amendment of Charter and Bylaws...............................................................................45
     Classified Board of Directors and Absence of Cumulative Voting................................................46
     Director Removal..............................................................................................47
     Limitations on Director Liability.............................................................................48
     Indemnification...............................................................................................49
     Special Meeting of Shareholders...............................................................................51
     Actions by Shareholders Without a Meeting.....................................................................51
     Shareholder Nominations and Proposals.........................................................................51
     Business Combinations.........................................................................................52
     Limitations on Ability to Vote Stock..........................................................................55
     Dissenters' Rights of Appraisal...............................................................................55
     Shareholders' Rights to Examine Books and Records.............................................................55
     Dividends.....................................................................................................56

COMPARATIVE MARKET PRICES AND DIVIDENDS............................................................................56

BUSINESS OF SBI....................................................................................................59
     General.......................................................................................................59
     Business and Property.........................................................................................59
     Employees.....................................................................................................59
     Customers.....................................................................................................60
     Competition...................................................................................................60
     Legal Proceedings.............................................................................................60
     Management and Beneficial Ownership of SBI Common Stock.......................................................60

MANAGEMENT'S DISCUSSION AND ANALYSIS
     OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS..............................................................62
     Business......................................................................................................62
     Results of Operations, Comparison of Nine Months Ended September 30, 1998 to September
         30, 1997..................................................................................................63
     Results of Operations, Comparison of Year Ended December 31, 1997 to December 31, 1996
         and December 31, 1995.....................................................................................63
</TABLE>

                                      -ii-

<PAGE>   7

<TABLE>


     <S>                                                                                                           <C>
     Financial Condition, Comparison of September 30, 1998 to December 31, 1997....................................66
     Financial Condition, Comparison of December 31, 1997 to December 31, 1996.....................................66
     Asset/Liability Management....................................................................................71
     Liquidity.....................................................................................................72
     Capital Resources.............................................................................................73
     Impact of Inflation...........................................................................................73
     Year 2000.....................................................................................................74

BUSINESS OF UNION PLANTERS.........................................................................................74
     General.......................................................................................................74
     Recent Developments...........................................................................................76

CERTAIN REGULATORY CONSIDERATIONS..................................................................................79
     General.......................................................................................................79
     Payment of Dividends..........................................................................................81
     Capital Adequacy..............................................................................................82
     Support of Subsidiary Institutions............................................................................84
     Prompt Corrective Action......................................................................................84

DESCRIPTION OF UNION PLANTERS CAPITAL STOCK........................................................................87
     Union Planters Common Stock...................................................................................87
     Union Planters Preferred Stock................................................................................88

OTHER MATTERS......................................................................................................89

SHAREHOLDER PROPOSALS..............................................................................................89

EXPERTS............................................................................................................89

OPINIONS...........................................................................................................90

WHERE YOU CAN FIND MORE INFORMATION................................................................................90

APPENDICES:
     APPENDIX A            AGREEMENT AND PLAN OF MERGER DATED AS OF AUGUST 7, 1998 BETWEEN
                           UNION PLANTERS CORPORATION, UNION PLANTERS HOLDING CORPORATION, AND
                           SOUTHEAST BANCORP, INC.
     APPENDIX B -          PLAN OF MERGER OF SOUTHEAST BANCORP, INC. WITH AND INTO UNION PLANTERS
                           HOLDING CORPORATION DATED AUGUST 7, 1998
     APPENDIX C -          SOUTHEAST BANCORP, INC. FINANCIAL STATEMENTS
     APPENDIX D -          FAIRNESS OPINION OF STIFEL, NICOLAUS & COMPANY, INCORPORATED DATED
                           NOVEMBER____, 1998
     APPENDIX E -          SUBTITLE 13 OF THE KENTUCKY BUSINESS CORPORATION ACT, REGARDING
                           DISSENTERS' RIGHTS

</TABLE>

                                       -iii-

<PAGE>   8



                                   PLEASE NOTE

     We have not authorized anyone to provide you with any information other
than the information included in this document and the documents we refer you
to. If someone provides you with other information, please do not rely on it as
being authorized by us.

     This proxy statement-prospectus has been prepared as of November ____,
1998. There may be changes in the affairs of Union Planters or SBI since that
date which are not reflected in this document.

     As used in this proxy statement-prospectus, the terms "Union Planters",
"UPHC" and "SBI" refer to Union Planters Corporation, Union Planters Holding
Corporation and Southeast Bancorp, Inc., respectively, and where the context
requires, to Union Planters, UPHC and SBI and their respective subsidiaries.


                      HOW TO OBTAIN ADDITIONAL INFORMATION

     THIS PROXY STATEMENT-PROSPECTUS INCORPORATES IMPORTANT BUSINESS AND
FINANCIAL INFORMATION ABOUT UNION PLANTERS AND SBI THAT IS NOT INCLUDED IN OR
DELIVERED WITH THIS DOCUMENT. YOU CAN OBTAIN FREE COPIES OF THIS INFORMATION BY
WRITING OR CALLING:

FOR UNION PLANTERS DOCUMENTS:                         FOR SBI DOCUMENTS:
E. James House, Jr.                                   Thelma Higgins
Secretary and Manager of the Legal Department         Administrative Officer
Union Planters Corporation                            Southeast Bancorp, Inc.
7130 Goodlett Farms Parkway                           100 North Main Street
Memphis, Tennessee 38018                              Corbin, Kentucky  40702
(telephone (901) 580-6584).                           (telephone (606) 528-2500)

     IN ORDER TO OBTAIN TIMELY DELIVERY OF THE DOCUMENTS, YOU MUST REQUEST THE
INFORMATION BY DECEMBER___, 1998.

                   A WARNING ABOUT FORWARD-LOOKING STATEMENTS

     This document contains forward-looking statements about Union Planters and
SBI and about Union Planters following the merger and other acquisitions by
Union Planters. These statements can be identified by our use of words like
"expect", "may", "could", "intend", "project", "estimate" or "anticipate". These
forward-looking statements reflect our current views, but they are based on
assumptions and are subject to risks, uncertainties and other factors. These
factors include the following:

     (1)  expected cost savings from the merger and the other acquisitions
          cannot be fully realized;

                                      -iv-

<PAGE>   9




     (2)  deposit attrition, customer loss, or revenue loss following the merger
          and the other acquisitions is greater than expected;

     (3)  competitive pressure in the banking industry increases significantly;

     (4)  costs or difficulties related to the integration of the businesses of
          Union Planters and the institutions to be acquired are greater than
          expected;

     (5)  changes in the interest rate environment reduce margins;

     (6)  general economic conditions, either nationally or regionally, are less
          favorable than expected, resulting in, among other things, a
          deterioration in credit quality;

     (7)  changes occur in the regulatory environment;

     (8)  changes occur in business conditions and inflation;

     (9)  changes occur in the securities markets; and

     (10) disruptions of the operations of Union Planters, SBI or any of their
          subsidiaries, or any other governmental or private entity as a result
          of the "Year 2000 Problem."

The forward-looking earnings estimates included in this proxy
statement-prospectus have not been examined or compiled by the independent
public accountants of Union Planters and SBI, nor have our independent
accountants applied any procedures to our estimates. Accordingly, such
accountants do not express an opinion or any other form of assurance on them.
Further information on other factors that could affect the financial results of
Union Planters after the merger and the other acquisitions is included in the
Securities and Exchange Commission filings incorporated by reference in this
proxy statement-prospectus.

                                      -v-

<PAGE>   10



                                     SUMMARY

     This summary highlights selected information from this proxy
statement-prospectus and may not contain all of the information that is
important to you. You should carefully read this entire document and the other
documents we refer to in this document. These will give you a more complete
description of the transaction we are proposing. For more information about
Union Planters, see "WHERE YOU CAN FIND MORE INFORMATION" on page 90. We have
included page references in this summary to direct you to other places in this
proxy statement-prospectus where you can find a more complete description of the
topics we have summarized.

THE COMPANIES   (SEE PAGE 59 FOR SBI, PAGE 74 FOR UNION PLANTERS)

Southeast Bancorp, Inc.
100 North Main Street
Corbin, Kentucky  40702
(606) 528-2500

SBI is a registered bank holding company incorporated in Kentucky. SBI owns two
bank subsidiaries and, through its subsidiaries, conducts a complete range of
commercial and personal banking activities in Kentucky and Tennessee. The banks
operate a total of 6 offices in Whitley and Knox counties in Kentucky and in
Campbell County in Tennessee. As of September 30, 1998, SBI had consolidated
assets of approximately $335.9 million, consolidated loans of approximately
$241.9 million, consolidated deposits of approximately $262.0 million, and
consolidated shareholders' equity of approximately $25.6 million.

Union Planters Corporation
7130 Goodlett Farms Parkway
Memphis, Tennessee 38018
(901)580-6000

Union Planters is a registered bank holding company incorporated in Tennessee.
Through Union Planters Bank, National Association ("UPB"), its principal bank
subsidiary, and various other banking and banking-related subsidiaries, Union
Planters provides a diversified range of financial services in the communities
in which it operates. It maintains 801 banking offices and 1,000 automated
teller machines.

Union Planters considers acquisitions an important part of its business strategy
and expects that they will continue to be important in the future. During the
period beginning January 1, 1994 and ending September 30, 1998, Union Planters
has completed 43 acquisitions adding approximately $26.4 billion to Union
Planters' assets. Union Planters also has pending acquisitions to acquire five
financial institutions, not including SBI, in four states, and an agreement to
purchase 56 branches and assume deposit liabilities of approximately $1.8
billion in Indiana. These other pending acquisitions, including SBI, had
combined total assets of approximately $3.3 billion.

                                        1

<PAGE>   11




On September 30, 1998, Union Planters had consolidated assets of approximately
$30.5 billion, consolidated loans of approximately $19.7 billion, consolidated
deposits of approximately $23.3 billion, and consolidated shareholders' equity
of approximately $2.9 billion.

Union Planters Holding Corporation
7130 Goodlett Farms Parkway
Memphis, Tennessee 38018

UPHC is a wholly-owned subsidiary of Union Planters. It is a bank holding
company. Union Planters owns most of its banking subsidiaries through UPHC. The
directors and officers of UPHC are officers of Union Planters.

THE MERGER (SEE PAGE 19)

Union Planters proposes to acquire SBI by merging SBI with UPHC, a wholly-owned
subsidiary of Union Planters. In exchange, SBI shareholders will receive shares
of Union Planters common stock. After the merger, SBI's business will continue
to be conducted by UPHC as the surviving corporation in the merger. The
Agreement and Plan of Merger, which is an agreement between Union Planters and
SBI and is attached to this proxy statement-prospectus as Appendix A, governs
the whole transaction (the "Agreement"). The Plan of Merger, which is attached
to this proxy statement-prospectus as Appendix B, is an agreement between UPHC
and SBI that governs the merger of these two corporations (the "Plan of
Merger"). The Agreement and the Plan of Merger were entered into on August 7,
1998.

WHAT SBI SHAREHOLDERS WILL RECEIVE IN THE MERGER   (SEE PAGE 19)

If we complete the merger, you will receive 11.87 shares of Union Planters
common stock for each share of your SBI common stock.

Union Planters will not issue any fractional shares of common stock. Rather,
Union Planters will pay cash (without interest) for any fractional share
interest any SBI shareholder would otherwise receive in the merger. The cash
payment will be in an amount equal to the fraction multiplied by the closing
price of one share of Union Planters common stock on the New York Stock Exchange
on the last trading day before the merger is completed.

EFFECT OF THE MERGER ON EMPLOYEE OPTIONS (SEE PAGE 20)

SBI has granted certain options to acquire SBI common stock under certain stock
option agreements with executive officers. If the merger is completed, Union
Planters will assume each outstanding option. Each option will then become an
option to purchase Union Planters common stock. The number of Union Planters
shares that may be purchased and the exercise price under the option will be
adjusted based on the exchange ratio of 11.87 of Union Planters common stock for
each share of SBI common stock issued and outstanding at the effective time of
the merger. Union Planters will assume all outstanding options whether or not
the option holder then has the right to exercise the option.

                                        2

<PAGE>   12



OWNERSHIP OF UNION PLANTERS AFTER THE MERGER

Union Planters will issue approximately 1,250,000 shares of Union Planters
common stock to SBI shareholders in the merger. This figure includes shares
subject to the options discussed above. Based on that number, after the merger,
SBI shareholders will own approximately 0.91% of the outstanding shares of Union
Planters common stock (assuming all SBI options are exercised). This information
is based on the number of shares of SBI and Union Planters common stock
outstanding on October 31, 1998. It does not reflect shares that Union Planters
may issue due to other pending acquisitions or due to the exercise of Union
Planters stock options, or for other purposes.

DISSENTERS' RIGHTS (SEE PAGE 16)

Under Kentucky law, certain rights of dissent are available to SBI shareholders
who do not vote their shares in favor of the Agreement and the Plan of Merger
and deliver to SBI before the vote is taken, written notice of intent to demand
payment for their SBI common stock if the merger is consummated.

CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER (SEE PAGE 20)

We expect that, for federal income tax purposes, you will not recognize any gain
or loss upon the exchange of your SBI shares solely for shares of Union Planters
common stock. But you may recognize taxable gain or loss related to any cash you
receive in lieu of a fractional share of Union Planters common stock. You may
also recognize taxable gain or loss related to cash you receive if you exercise
your dissenters' rights. See discussion under "What SBI Shareholders Will
Receive in the Merger." Before the merger can be completed, Union Planters and
SBI expect to receive an opinion of Wyatt, Tarrant & Combs, substantially to
this effect.

Tax matters are very complicated and the tax consequences of the merger to you
will depend on your own situation. You should consult your own tax advisors to
determine the effect of the merger on you under federal, state, local, and
foreign tax laws.

COMPARATIVE MARKET PRICES OF COMMON STOCK  (SEE PAGE 56)

Shares of Union Planters common stock are traded on the New York Stock Exchange
under the symbol "UPC". Shares of SBI common stock are not traded on
any exchange or in the over-the-counter market.

The following table sets forth the reported closing sale prices per share for
Union Planters common stock and the equivalent per share prices giving effect to
the merger (as explained below) for SBI common stock on (i) August 6, 1998, the
last trading day preceding the public announcement of the execution of the
Agreement, and (ii) November __, 1998, the latest practicable date prior to
the mailing of this proxy statement-prospectus.


                                        3

<PAGE>   13

<TABLE>
<CAPTION>


                                   Union Planters             Equivalent Price
                                   Common Stock                Per SBI Share(1) 

     <S>                           <C>                           <C>    
     August 6, 1998                   $52.50                        $623.18
     November 18, 1998                $                             $      
                                      ------                        -------
</TABLE>

- ----------------------------
(1) The equivalent price per share of SBI common stock at each specified date
represents the closing sale price of a share of Union Planters common stock on
such date multiplied by an exchange ratio of 11.87.

We can provide no assurance as to what the market price of the Union Planters
common stock will be if and when the merger is completed. You should obtain
current stock price quotations for Union Planters common stock.

OUR REASONS FOR THE MERGER (SEE PAGE 23)

We believe that the merger will result in a company with expanded opportunities
for profitable growth. In addition, we anticipate that the combined resources
and capital of SBI and Union Planters will improve our ability to compete in the
changing and competitive financial services industry. We also believe that the
SBI shareholders will benefit from the merger because in exchange for their
shares of SBI common stock which do not trade in any established market, they
will receive shares of Union Planters common stock which are traded on the New
York Stock Exchange.

FAIRNESS OPINION OF SBI'S FINANCIAL ADVISOR (SEE PAGE 27)

In deciding to approve the merger, we have considered an opinion from our
financial advisor, Stifel, Nicolaus & Company, Incorporated, that the price to
be paid to SBI shareholders is fair, from a financial point of view. The full
text of this opinion is attached as Appendix D to this proxy
statement-prospectus. We encourage you to read this opinion.

SPECIAL MEETING OF SHAREHOLDERS  (SEE PAGE 14)

The special meeting will be held in the boardroom of the principal office of SBI
located at 100 North Main Street, Corbin, Kentucky 40702, at 9:00 a.m., local
time, on December 30, 1998. At the special meeting, we will ask you:

     (1)  to approve the merger, the Agreement and the Plan of Merger ; and

     (2)  to act on any other matters that may be put to a vote at the special
          meeting.

In order for the special meeting to be held, a quorum must be present. A quorum
is established when a majority of shares of SBI common stock are represented at
the special meeting either in person or by proxy.


                                        4

<PAGE>   14



VOTING RIGHTS AT THE SPECIAL MEETING (SEE PAGE 14)

You are entitled to vote at the special meeting if you owned shares as of the
close of business on __________, 1998, the record date. On the record date,
there were 101,440 shares of SBI common stock outstanding. You will be entitled
to one vote for each share of SBI common stock that was validly issued and
outstanding and that you owned on the record date. You may vote either by
attending the special meeting and voting your shares or by completing the
enclosed proxy card and mailing it to us in the enclosed envelope.

We are seeking your proxy to use at the special meeting. We have prepared this
proxy statement-prospectus to assist you in deciding how to vote and whether or
not to grant your proxy to us. If you have elected not to attend the meeting,
please indicate on your proxy card how you want to vote. Then sign, date and
mail it to us as soon as possible so that your shares will be represented at the
special meeting. If you sign, date and mail your proxy card without indicating
how you wish to vote, your proxy will be counted as a vote for the merger and
the related Agreement and Plan of Merger. If you fail to return your proxy card
and fail to vote at the meeting, the effect will be a vote against the merger.
If you sign a proxy, you may revoke it at any time before the special meeting or
by attending and voting at the special meeting. You cannot vote shares held in
"street name"; only your broker can. If you do not provide your broker with
instructions on how to vote your shares, your broker will not be permitted to
vote then, and your shares will be treated as votes against the merger.

OUR RECOMMENDATION TO SHAREHOLDERS (SEE PAGE 19)

SBI's board of directors approved the Agreement and the Plan of Merger. We
believe that the proposed merger is fair to you and in your best interests. We
recommend that you vote to approve the merger, the Agreement and the Plan of
Merger.

SHAREHOLDER VOTE REQUIRED TO APPROVE THE MERGER (SEE PAGE 14)

Assuming that a quorum is present at the special meeting, to approve the merger,
shareholders who own a majority of the outstanding shares of SBI common stock
must vote for the merger. If you do not vote, this will have the same effect as
a vote against the merger. Union Planters shareholders will not vote on the
merger.

SHARE OWNERSHIP OF MANAGEMENT AND CERTAIN SHAREHOLDERS  (SEE PAGE 60)

On the record date, SBI's directors and executive officers, their immediate
family members and entities they control owned 41,257 shares, or approximately
40.67% of the outstanding shares of SBI common stock. This number does not
include stock that certain of the SBI executive officers may acquire through
exercising stock options.

On the record date, Union Planters' directors and executive officers owned no
shares of SBI common stock and Union Planters held no shares of SBI common stock
in a fiduciary capacity for others, or as a result of debts previously
contracted.


                                        5

<PAGE>   15



INTERESTS OF CERTAIN PERSONS IN THE MERGER THAT MAY BE DIFFERENT FROM YOURS (SEE
PAGE 39)

Certain of SBI's executive officers have employment agreements, stock options
and other benefit plans and other arrangements that may provide them with
interests in and benefits from the merger that are different from yours. The
board of directors of SBI was aware of these interests and considered them in
approving and recommending the merger.

EFFECTIVE TIME (SEE PAGE 33)

The merger will become final when Articles of Merger are filed with the
Secretary of State of the Commonwealth of Kentucky and the Secretary of State of
the State of Tennessee. If SBI shareholders approve the merger at the special
meeting, and Union Planters obtains all required regulatory approvals, we
currently anticipate that the merger will be completed on or about December 31,
1998, although delays could occur. Union Planters and SBI cannot assure you that
they can obtain the necessary shareholder and regulatory approvals or that the
other conditions precedent to the merger can or will be satisfied.

EXCHANGE OF STOCK CERTIFICATES  (SEE PAGE 34)

Promptly after the merger is completed, you will receive a letter and
instructions on how to surrender your SBI stock certificates in exchange for
Union Planters stock certificates. You will need to carefully review and
complete these materials and return them as instructed along with your stock
certificates for SBI common stock. Please do not send SBI, Union Planters or
Union Planters' transfer agent any stock certificates until you receive these
instructions. If you do not have stock certificates but hold shares of SBI
common stock in the form of a book entry with SBI's transfer agent, the transfer
agent will automatically exchange the shares, unless you have elected to
exercise your dissenters' rights. If you elected dissenters' rights, you should
follow the procedures outlined in the "Dissenters' Rights" section beginning on
page 16 of this proxy statement-prospectus.

Do not send in your stock certificates until you receive a letter and
instructions on how to surrender your SBI certificates.

LIMITATION ON NEGOTIATIONS (SEE PAGE 34)

SBI has agreed that neither it nor any of its representatives will, directly or
indirectly, solicit any proposal for the acquisition of SBI or its subsidiaries,
except to the extent necessary to comply with the fiduciary duties of SBI's
board of directors as advised by counsel, furnish non-public information
concerning SBI that it is not legally obligated to furnish, negotiate with
respect to, or enter into any contract with respect to, any proposal to acquire
SBI or its subsidiaries ("Acquisition Proposal"). As protection against possible
violation of this limitation, SBI has agreed, under certain circumstances, to
pay Union Planters the sum of $3,000,000.00 at the time that SBI enters into a
letter of intent or agreement with respect to an Acquisition Proposal.


                                        6

<PAGE>   16



REGULATORY APPROVAL AND OTHER CONDITIONS (SEE PAGE 36)

Union Planters is required to notify and obtain approvals from certain
government regulatory agencies, including the Board of Governors of the Federal
Reserve System, before the merger may be completed. We expect that Union
Planters will obtain all required regulatory approvals before the special
meeting.

In addition to the required regulatory approvals, the merger will be completed
only if certain conditions, including, but not limited to, the following, are
met or waived, if waivable:

     (1)  SBI shareholders approve the merger at the special meeting;

     (2)  the receipt of an opinion from Union Planters' counsel that the merger
          will qualify as a tax-free reorganization;

     (3)  the receipt of letters from Union Planters' accountants concerning the
          pooling-of-interests accounting treatment of the merger (discussed
          below under "Accounting Treatment"); and

     (4)  neither Union Planters nor SBI has breached any of its representations
          or obligations under the Agreement and the Plan of Merger.

In addition to the conditions, the Agreement, attached to this proxy
statement-prospectus as Appendix A, describes other conditions that must be met
before the merger may be completed.

WAIVER, AMENDMENT, AND TERMINATION (SEE PAGE 37)

Union Planters and SBI may agree to terminate the Agreement and the Plan of
Merger and elect not to complete the merger at any time before the merger is
completed.

Each of the parties also can terminate the merger in certain other
circumstances, including if the merger is not completed by March 31, 1999. But a
party may not terminate the Agreement if (a) it willfully breached the Agreement
and (b) its breach is the reason the merger has not been completed. There are
also some instances where the parties cannot use this reason to terminate the
merger if the delay results from actions of third parties.

The parties may also terminate the merger if other conditions occur which are
described in the Agreement, attached to this proxy statement-prospectus as
Appendix A.

The Agreement and the Plan of Merger may be amended by the written agreement of
Union Planters and SBI. The parties can amend the Agreement without shareholder
approval, even if the SBI shareholders have already approved the merger;
provided, however, that after such approval by the SBI shareholders, no
amendments may be made which modify in any material respect the consideration to
be received by the holders of the SBI common stock without further approval of
such shareholders.


                                        7

<PAGE>   17



ACCOUNTING TREATMENT (SEE PAGE 40)

Union Planters intends to account for the merger as a pooling-of-interests
transaction for accounting and financial reporting purposes.

Pooling-of-interests is an accounting method that assumes that each company's
shareholders have combined their ownership interests in such a manner that each
group becomes an owner of the combined, enlarged business. The key differences
between this method of accounting and the more common purchase accounting method
fall into two areas: income measurement and asset valuation. Under
pooling-of-interests, the earnings of each company are combined as though the
combination had occurred at the beginning of the earliest financial period
presented, or in the case of transactions which are not considered significant,
from the date of consummation forward. Under purchase accounting, the earnings
of the acquired company are included only after the closing of the merger. Under
pooling-of-interests, the assets of the acquired company are valued at their
historical cost. Under the purchase method, the assets are valued at their fair
value at the time of the merger. The excess of the consideration the acquiring
company pays over the fair value of the target's assets is recorded as goodwill
on the acquiring company's financial statements.

CERTAIN DIFFERENCES IN SHAREHOLDERS' RIGHTS  (SEE PAGE 42)

When the merger is completed, unless you have elected to exercise your right to
dissent, you will automatically become a Union Planters shareholder. The rights
of Union Planters shareholders differ from the rights of SBI shareholders in
certain important ways. Many of these have to do with provisions in Union
Planters' charter and bylaws and Tennessee law. Certain of these provisions are
intended to make a takeover of Union Planters harder if the Union Planters board
of directors does not approve it.

HISTORICAL AND PRO FORMA COMPARATIVE PER SHARE DATA

The following table shows certain comparative per share data relating to
earnings (before extraordinary items and accounting changes), cash dividends,
and book value. The equivalent pro forma information assumes an exchange ratio
of 11.87 shares of Union Planters common stock for each share of SBI common
stock.

The merger and the other acquisitions which Union Planters has pending, with the
exception of a pending purchase of certain branches of First Chicago NBD
Corporation in Indiana and the pending mergers with First Mutual Bancorp, Inc.
and First & Farmers Bancshares, Inc., are expected to be accounted for using the
pooling-of-interests method of accounting. The pending purchase of certain
branches and the mergers with First Mutual Bancorp, Inc. and First & Farmers
Bancshares, Inc. are expected to be accounted for using the purchase method of
accounting. The SBI equivalent pro forma information reflects only the
acquisition of SBI because the other acquisitions which Union Planters currently
has pending are not considered significant to Union Planters from a financial
statement presentation standpoint. See "BUSINESS OF UNION PLANTERS -- Recent
Developments" for a discussion of Union Planters' other pending acquisitions.

We present the pro forma and the equivalent pro forma data for your information
only. It does not necessarily indicate the results of operations or combined
financial position that would have resulted

                                        8

<PAGE>   18



had Union Planters completed the merger or the other acquisitions at the times
indicated, and it does not necessarily indicate what future results of
operations or combined financial position will be.

You should read the information shown below in conjunction with the historical
consolidated financial statements of Union Planters and SBI and the notes
provided with them. In reviewing Union Planters' historical information, please
keep in mind that Union Planters has restated its historical financial
statements to reflect the impact of the several mergers completed through the
third quarter of 1998. You will find the restated numbers in Union Planters'
September 30, 1998 Quarterly Report on Form 10-Q, Exhibit 99.1. See "WHERE YOU
CAN FIND MORE INFORMATION," "-- Selected Financial Data," and "BUSINESS OF UNION
PLANTERS -- Recent Developments."



                                 UNION PLANTERS
                                     AND SBI
               HISTORICAL AND PRO FORMA COMPARATIVE PER SHARE DATA

<TABLE>
<CAPTION>

                                            YEARS ENDED DECEMBER 31(1)
                                                                                                      
                                                                                                      
                                                                               NINE MONTHS    
                                                                                  ENDED       
                                                                                SEPTEMBER     
                                          1995          1996         1997        30,1998
                                       --------------------------------------------------
<S>                                    <C>           <C>           <C>          <C>      
EARNINGS BEFORE EXTRAORDINARY ITEMS
 AND ACCOUNTING CHANGES
 Union Planters
 Basic                                 $      2.55   $      2.24   $     2.50   $    1.44
 Diluted                                      2.46          2.17         2.43        1.41

SBI
  Basic                                      20.55         27.12        29.64       25.99
  Diluted                                    20.49         27.02        29.46       25.64

Pro Forma (Union Planters and SBI)
  Basic                                       2.55          2.24         2.50        1.45
  Diluted                                     2.45          2.17         2.43        1.42

 SBI equivalent pro forma (1)
  Basic                                      30.27         26.59        29.68       17.21
  Diluted                                    29.08         25.76        28.84       16.86

CASH DIVIDENDS PER SHARE
  Union Planters                       $       .98   $      1.08   $     1.495  $    1.50
  SBI                                         5.80          7.00         7.20        5.55
  SBI equivalent pro forma (1)               11.63         12.82        17.75       17.81
</TABLE>


<TABLE>
<CAPTION>


                                    December 31, 1997       September 30, 1998
                                    -----------------       ------------------
<S>                                 <C>                     <C>        
BOOK VALUE PER COMMON SHARE
 Union Planters                       $    20.93                 $    21.43 
 SBI                                      249.25                     252.35 
 Pro Forma (Union Planters and SBI)        20.91                      21.43 
 SBI equivalent pro forma (1)             248.20                     254.37 
</TABLE>

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

(1)  The equivalent pro forma per share data for SBI is computed by multiplying
     Pro Forma information by the exchange ratio of 11.87.


                                        9

<PAGE>   19



SELECTED FINANCIAL DATA

The following tables present selected consolidated historical data for Union
Planters and SBI. The information is based on the consolidated financial
information that is contained in reports Union Planters has previously filed
with the Securities and Exchange Commission, including its September 30, 1998
Quarterly Report on Form 10-Q. Union Planters' September 30, 1998 Quarterly
Report on Form 10-Q includes as Exhibit 99.1, restated 1997 audited financial
statements and restated Management Discussion and Analysis of Results of
Operation and Financial Condition for the three years ended December 31, 1997.
The financial information was restated for four significant acquisitions
completed in the third quarter of 1998 and accounted for as
pooling-of-interests. All of these documents are incorporated by reference in
this proxy statement-prospectus. See "WHERE YOU CAN FIND MORE INFORMATION" on
page 90.

The information for SBI is based on its Consolidated Financial Statements
including its unaudited financial statements for the nine months ended September
30, 1998 and 1997 and its audited consolidated financial statements for the year
ended December 31, 1997, all of which are attached to this proxy
statement-prospectus as Appendix C.

You should read the following tables in conjunction with the consolidated
financial statements of Union Planters and SBI described above and with the
notes to them.

Historical results do not necessarily indicate the results that you can expect
for any future period. In the opinions of the respective managements of Union
Planters and SBI, all adjustments (which include only normal recurring
adjustments) necessary to arrive at a fair statement of interim results of
operations of Union Planters and SBI, respectively, have been included. With
respect to Union Planters and SBI, results for the nine months ended September
30, 1998 do not necessarily indicate the results which you can expect for any
other interim period or for the year as a whole. See "BUSINESS OF UNION PLANTERS
- -- Recent Developments" for information concerning Union Planters' Other Pending
Acquisitions.

                                       10

<PAGE>   20




                         UNION PLANTERS AND SUBSIDIARIES
                             SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>

                                                                                                                              
                                                                          Years Ended December 31, (1)                     
                                               ------------------------------------------------------------------------------
                                                  1993             1994             1995            1996            1997 
                                               -----------     ------------      -----------     -----------     -----------
                                                         (Dollars in thousands, except per share data)
<S>                                            <C>             <C>               <C>             <C>             <C>        
INCOME STATEMENT DATA:
   Net interest income ....................    $   779,756     $    881,875      $   944,694     $ 1,043,942     $ 1,122,149
   Provision for losses on loans ..........         49,267           23,000           47,393          84,198         150,606
   Investment securities gains (losses) ...         12,160          (21,053)           2,008           4,942           4,781
   Other noninterest income ...............        282,124          297,596          355,317         383,824         449,261
   Noninterest expense ....................        737,608          845,217          818,944         942,733         950,986
                                               -----------     ------------      -----------     -----------     -----------
   Earnings before income taxes, extra-
      ordinary item, and accounting changes        287,165          290,201          435,682         405,777         474,599
   Applicable income taxes ................         86,669           92,325          145,485         139,649         162,302
                                               -----------     ------------      -----------     -----------     -----------
   Earnings before extraordinary item and
     accounting changes ...................        200,496          197,876          290,197         266,128         312,297
   Extraordinary item and accounting
     changes, net of taxes ................          4,757               --               --              --              -- 
                                               -----------     ------------      -----------     -----------     -----------
   Net earnings ...........................        205,253          197,876          290,197         266,128         312,297
                                               ===========     ============      ===========     ===========     ===========

PER COMMON SHARE DATA(4):
 Basic
   Earnings before extraordinary item and
     accounting changes ...................    $      2.11     $       1.74      $      2.55     $      2.25     $      2.50
   Net earnings ...........................           2.16             1.74             2.55            2.24            2.50
 Diluted
   Earnings before extraordinary item and
     accounting changes ...................           1.97             1.71             2.46            2.17            2.43
   Net earnings ...........................           2.02             1.71             2.46            2.17            2.43
 Cash dividends ...........................            .72              .88              .98            1.08           1.495
 Book value ...............................          15.23            15.66            18.64           19.87           20.93

BALANCE SHEET DATA (AT PERIOD END):
  Total assets ............................    $20,330,065     $ 22,260,487      $24,596,205     $26,427,236     $27,993,452
  Loans, net of unearned income ...........     11,815,553       14,381,566       15,713,783      17,819,088      19,126,708
  Allowance for losses on loans ...........        229,334          237,377          243,395         257,638         310,385
  Investment securities ...................      5,970,140        5,810,934        5,976,297       5,667,251       5,840,704
  Total deposits ..........................     16,989,720       17,954,001       19,014,248      19,899,772      21,203,147
  Short-term borrowings ...................        432,461          980,935        1,074,673       1,732,437       1,784,347
  Long-term debt(5)
     Parent company .......................        114,729          114,790          214,758         373,459         373,746
     Subsidiary banks .....................        530,810          937,160        1,193,861       1,426,433       1,327,451
  Total shareholders' equity ..............      1,657,832        1,768,009        2,147,621       2,376,768       2,668,721
  Average assets ..........................     19,462,599       21,796,952       23,261,530      26,003,849      27,366,896
  Average shareholders' equity ............      1,481,351        1,779,158        1,963,852       2,247,335       2,562,009
  Average shares outstanding
  (in thousands)(4)
  Basic ...................................         90,360          107,981          110,255         115,794         122,812
  Diluted .................................         96,001          114,810          117,673         123,793         129,397

PROFITABILITY AND CAPITAL RATIOS:
   Return on average assets ...............           1.05%             .91%            1.25%           1.02%           1.14%
   Return on average common equity ........          14.65            11.89            15.60           12.32           12.51
   Net interest income (taxable equivalent)
     /average earning assets(6) ...........           4.28             4.53             4.52            4.45            4.57
</TABLE>

<TABLE>
<CAPTION>

                                                     Nine Months Ended     
                                                 September 30, (2) and (3) 
                                               ----------------------------
                                                   1997             1998
                                               -----------     ------------
                                               (Dollars in thousands, except
                                                     per share data)
<S>                                            <C>             <C>         
INCOME STATEMENT DATA:
   Net interest income ....................    $   835,730     $    858,506
   Provision for losses on loans ..........        104,440          122,436
   Investment securities gains (losses) ...          4,500          (15,111)
   Other noninterest income ...............        333,146          375,596
   Noninterest expense ....................        645,979          795,169
                                               -----------     ------------
   Earnings before income taxes, extra-
      ordinary item, and accounting changes        422,957          301,386
   Applicable income taxes ................        144,291          113,321
                                               -----------     ------------
   Earnings before extraordinary item and
     accounting changes ...................        278,666          188,065
   Extraordinary item and accounting
     changes, net of taxes ................             --               --
                                               -----------     ------------
   Net earnings ...........................        278,666          188,065
                                               ===========     ============

PER COMMON SHARE DATA(4):
 Basic
   Earnings before extraordinary item and
     accounting changes ...................    $      2.25     $       1.44
   Net earnings ...........................           2.25             1.44
 Diluted
   Earnings before extraordinary item and
     accounting changes ...................           2.18             1.41
   Net earnings ...........................           2.18             1.41
 Cash dividends ...........................          1.095             1.50
 Book value ...............................          21.13            21.43

BALANCE SHEET DATA (AT PERIOD END):
  Total assets ............................    $ 7,939,458     $ 30,525,482
  Loans, net of unearned income ...........     18,936,526       19,653,468
  Allowance for losses on loans ...........        291,084          352,643
  Investment securities ...................      5,709,842        7,867,587
  Total deposits ..........................     20,800,890       23,288,899
  Short-term borrowings ...................      1,827,953        1,829,275
  Long-term debt(4)
     Parent company .......................        373,169          380,164
     Subsidiary banks .....................      1,588,764        1,362,894
  Total shareholders' equity ..............      2,680,841        2,932,567
  Average assets ..........................     27,240,642       28,724,000
  Average shareholders' equity ............      2,396,275        2,734,717
  Average shares outstanding
     (in thousands)(3)
    Basic .................................        122,068          129,561
    Diluted ...............................        127,924          133,784

PROFITABILITY AND CAPITAL RATIOS:
   Return on average assets ...............           1.37%             .88%
   Return on average common equity ........          15.79             9.23
   Net interest income (taxable equivalent)
     /average earning assets(6) ...........           4.55             4.45
</TABLE>


                                       11
<PAGE>   21
                         UNION PLANTERS AND SUBSIDIARIES
                             SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>


                                                                                                       Nine Months Ended     
                                                             Years Ended December 31, (1)           September 30, (2) and (3)   
                                           ----------------------------------------------------------------------------------
                                            1993        1994        1995        1996        1997        1997        1998 
                                           ----------------------------------------------------------------------------------
                                                         (Dollars in thousands, except per share data)                        

<S>                                        <C>         <C>         <C>         <C>         <C>         <C>         <C>   
  Loan/deposits .......................      69.55%      80.10%      82.64%      89.54%      90.21%      91.04%      84.39%
  Equity/assets (period end) ..........       8.15        7.82        8.73        8.99        9.53        9.60        9.61
  Average shareholders' equity/average
       total assets ...................       7.61        8.16        8.44        8.64        9.36        8.80        9.52
  Leverage ratio ......................       8.02        7.93        8.41        9.32        9.62        9.67        9.29
  Tier 1 capital/risk-weighted assets .      13.47       12.75       13.32       14.39       14.25       14.05       13.49
  Total capital/risk-weighted assets ..      15.41       14.57       15.71       16.63       16.39       16.20       17.07

Credit Quality Ratios (7):
   Allowance/period end loans .........       2.02        1.74        1.65        1.59        1.74        1.66        1.87
   Nonperforming loans/total loan .....       1.22         .76         .80         .81         .83         .83         .79
   Allowance/nonperforming loans ......        166         228         206         195         210         199         236
   Nonperforming assets/loans and fore-
     closed properties ................       1.73        1.06        1.03        1.04        1.01        1.01         .93
   Provision/average loans ............        .45         .18         .33         .54         .87         .80         .88
   Net charge-offs/average loans ......        .38         .21         .31         .49         .66         .65         .75
</TABLE>

(1)  Union Planters' audited financial statements for the three years ended
     December 31, 1997 and the related management's discussion and analysis of
     results of operations and financial condition were restated for four
     acquisitions completed in the third quarter of 1998 and accounted for as
     poolings-of-interests. The 1997 restated audited financial statements (the
     "1997 Restated Financial Statements") and the restated management's
     discussion and analysis of results of operations and financial condition
     were filed as Exhibit 99.1 to Union Planters Quarterly Report on Form 10-Q
     dated September 30, 1998. Additionally, the selected financial data for
     1993 and 1994 has been restated to reflect the aforementioned four
     acquisitions.
(2)  Interim period ratios have been annualized where applicable.
(3)  Reference is made to Union Planters' Quarterly Report on Form 10-Q dated
     September 30, 1998 for a discussion of merger-related and other charges
     that significantly impacted operating results for the nine months ended
     September 30, 1998.
(4)  Share and per share amounts have been retroactively restated for
     significant acquisitions accounted for as poolings-of-interests and to
     reflect the changes in presentation of Earnings Per Share as discussed in
     Notes 2 and 16 to the 1997 Restated Financial Statements.
(5)  Long-term debt includes Medium-Term Notes, Federal Home Loan Bank advances,
     Trust Preferred Securities, variable rate asset-backed certificates,
     subordinated notes and debentures, obligations under capital leases,
     mortgage indebtedness, and notes payable with maturities greater than one
     year.
(6)  Average balances and calculations do not include the impact of the net
     unrealized gain or loss on available for sale securities. (6) FHA/VA
(7)  FHA/VA government-insured/guaranteed loans have been excluded, since they
     represent minimal credit risk to Union Planters.




                                       12

<PAGE>   22



                              SBI AND SUBSIDIARIES
                             SELECTED FINANCIAL DATA

<TABLE>
<CAPTION>

                                                                                                  AS OF AND FOR THE NINE MONTHS
                                                          AS OF THE YEAR ENDED                                 ENDED
                                                              DECEMBER 31,                                SEPTEMBER 30,(1)
                                       ------------------------------------------------------------------------------------------
                                         1993         1994         1995         1996         1997         1997         1998
                                       ------------------------------------------------------------------------------------------
                                                            (Dollar amounts other than per share in thousands)
<S>                                    <C>          <C>          <C>          <C>          <C>          <C>          <C>     
INCOME STATEMENT DATA
Net interest income                    $  7,281     $  7,754     $  7,887     $  8,780     $ 10,873     $  7,759     $  9,310
Provision for losses on loans               464          317          890          372          587          396          409
                                       --------     --------     --------     --------     --------     --------     --------
Net interest income after provision
    for loan losses                       6,817        7,437        6,997        8,408       10,286        7,363        8,901
Noninterest income                          696          622          740          813        1,674        1,178        1,437
Noninterest expense                       4,445        4,957        4,906        5,355        7,387        4,960        6,655
                                       --------     --------     --------     --------     --------     --------     --------
Income before income tax expense          3,068        3,102        2,831        3,866        4,573        3,581        3,683
Income tax expense                          830          841          766        1,138        1,506        1,109        1,015
                                       --------     --------     --------     --------     --------     --------     --------
Net income                             $  2,238     $  2,261     $  2,065     $  2,728     $  3,067     $  2,472     $  2,668
                                       ========     ========     ========     ========     ========     ========     ========

PER SHARE DATA
Net income
    Basic                              $  22.27     $  22.50     $  20.55     $  27.12     $  29.64     $  24.14     $  25.99
    Diluted                               22.27        22.45        20.49        27.02        29.46        24.02        25.64
Cash dividends declared                    5.40         5.60         5.80         7.00         7.20         5.40         5.55
Book value                               153.56       167.58       185.24       204.58       249.25       241.55       252.35

BALANCE SHEET DATA
   (AT PERIOD END)
Loans                                  $113,704     $129,115     $135,919     $156,543     $244,531     $240,649     $241,945
Allowance for loan losses                 2,000        2,050        1,800        2,000        2,912        3,045        2,997
Securities                               57,601       54,139       57,538       47,319       54,232       52,980       63,451
Goodwill                                      -            -            -            -        5,542        5,557        5,372
Total assets                            181,070      194,907      208,203      216,301      328,025      323,300      335,876
Deposits                                150,668      154,641      167,398      173,617      259,683      264,660      261,964
Borrowings                               14,352       22,614       21,254       21,164       41,294       31,879       46,542
Shareholders' equity                     15,430       16,838       18,613       20,569       25,064       24,530       25,590

SELECTED FINANCIAL RATIOS
Net income to average assets               1.23%        1.20%        1.00%        1.28%        1.13%        1.32%        1.05%
Net income to average equity              15.27%       13.95%       11.60%       13.85%       13.36%       14.61%       14.16%
Cash dividend payout ratio                24.26%       24.90%       28.23%       25.81%       24.30%       21.97%       21.39%
Average equity to average assets           8.07%        8.57%        8.66%        9.23%        8.44%       10.28%        7.42%

OTHER DATA
Weighted average shares
    outstanding
    Basic                               100,480      100,480      100,498      100,584      100,512      100,524      100,935
    Diluted                             100,480      100,705      100,780      100,953      100,139      101,049      102,301
</TABLE>

- ------------------------------
(1)  Annualized, where applicable.

                                       13

<PAGE>   23




                                  INTRODUCTION

     Union Planters and SBI are furnishing this proxy statement-prospectus to
holders of SBI common stock, no par value per share, in connection with the
proxy solicitation by SBI's board of directors. The SBI board of directors will
use the proxies at the special meeting of shareholders of SBI to be held on
December 30, 1998, and at any adjournments.

     At the special meeting, holders of SBI common stock will be asked to vote
upon a proposal to approve the Agreement and Plan of Merger, dated August 7,
1998, between Union Planters, UPHC and SBI, attached to this proxy
statement-prospectus as Appendix A (the "Agreement"), and a related Plan of
Merger between SBI and UPHC, a wholly-owned subsidiary of Union Planters,
attached to this proxy statement-prospectus as Appendix B (the "Plan of
Merger"). Pursuant to the Agreement and the Plan of Merger, SBI will merge into
UPHC, and the outstanding shares of SBI common stock will be converted into
whole shares of Union Planters common stock, $5.00 par value per share, and
associated Preferred Share Rights. For information about Union Planters'
Preferred Share Rights, see page 88. SBI shareholders will receive cash in lieu
of any fractional shares.


                       SPECIAL MEETING OF SBI SHAREHOLDERS

DATE, PLACE, TIME, AND PURPOSE

     The special meeting of SBI's shareholders will be held at in the boardroom
of the principal office of SBI located at 100 North Main Street, Corbin,
Kentucky, 40702 at 9:00 a.m., local time, on December 30, 1998. At the special
meeting, holders of SBI common stock will be asked to vote to approve the
Agreement, the Plan of Merger and the merger.

RECORD DATE, VOTING RIGHTS, REQUIRED VOTE, AND REVOCABILITY OF PROXIES

     SBI's board of directors fixed the close of business on _________, 1998, as
the record date for determining those SBI shareholders who are entitled to
notice of and to vote at the special meeting. Only holders of SBI common stock
of record on the books of SBI at the close of business on the record date have
the right to receive notice of and to vote at the special meeting. On the record
date, there were 101,440 shares of SBI common stock issued and outstanding held
by approximately 311 holders of record.

     At the special meeting, SBI shareholders will have one vote for each share
of SBI common stock owned on the record date. The holders of a majority of the
outstanding shares of SBI common stock entitled to vote at the special meeting
must be present in order for a quorum to exist.


                                       14

<PAGE>   24



     To determine if a quorum is present, SBI intends to count the following:

     -    shares of SBI common stock present at the special meeting either in
          person or by proxy;

     -    shares of SBI common stock present in person at the special meeting
          but not voting; and

     -    shares of SBI common stock for which it has received proxies but with
          respect to which holders of shares have abstained on any matter.

Approval of the Agreement and the Plan of Merger requires the affirmative vote
of a majority of all outstanding shares of SBI common stock.

     Brokers who hold shares in street name for customers who are the beneficial
owners of such shares may not give a proxy to vote those shares without specific
instructions from their customers. Any abstention, non-voting share or "broker
non-vote" will have the same effect as a vote AGAINST the approval of the
Agreement and the Plan of Merger.

     Properly executed proxies that SBI receives before the vote at the special
meeting that are not revoked will be voted in accordance with the instructions
indicated on the proxies. IF NO INSTRUCTIONS ARE INDICATED, SUCH PROXIES WILL BE
VOTED FOR THE PROPOSAL TO APPROVE THE AGREEMENT AND THE PLAN OF MERGER, AND THE
PROXY HOLDER MAY VOTE THE PROXY IN ITS DISCRETION AS TO ANY OTHER MATTER WHICH
MAY COME PROPERLY BEFORE THE SPECIAL MEETING. IF NECESSARY, THE PROXY HOLDERS
MAY VOTE IN FAVOR OF A PROPOSAL TO ADJOURN THE SPECIAL MEETING IN ORDER TO
PERMIT FURTHER SOLICITATION OF PROXIES IF THERE ARE NOT SUFFICIENT VOTES TO
APPROVE THE PROPOSAL AT THE TIME OF THE SPECIAL MEETING. HOWEVER, NO PROXY
HOLDER WILL VOTE ANY PROXIES VOTED AGAINST APPROVAL OF THE AGREEMENT AND THE
PLAN OF MERGER IN FAVOR OF A PROPOSAL TO ADJOURN THE SPECIAL MEETING.

     An SBI shareholder who has given a proxy solicited by SBI's board of
directors may revoke it at any time prior to its exercise at the special meeting
by (1) giving written notice of revocation to SBI, (2) properly submitting to
SBI a duly executed proxy bearing a later date, or (3) attending the special
meeting and voting in person. All written notices of revocation and other
communications with respect to revocation of proxies should be sent to:
Southeast Bancorp, Inc., 100 North Main Street, P.O. Box 496, Corbin, Kentucky
40702, Attention: Thelma Higgins, Administrative Officer.

     On the record date, SBI's directors and executive officers, including their
immediate family members and affiliated entities owned 41,257 shares or
approximately 40.67% of the outstanding shares of SBI common stock, not
including shares subject to options to purchase SBI common stock. As of the
record date, Union Planters' directors and executive officers owned no shares of
SBI common stock.


                                       15

<PAGE>   25



     As of the record date, Union Planters held no shares of SBI common stock in
a fiduciary capacity for others, or as a result of debts previously contracted,
and SBI held no shares of SBI common stock in a fiduciary capacity for others
with respect to which it has sole or shared voting power.

SOLICITATION OF PROXIES

     Directors, officers, and employees of SBI may solicit proxies by mail, in
person, or by telephone or telegraph. They will receive no additional
compensation for such services. SBI may make arrangements with brokerage firms
and other custodians, nominees, and fiduciaries, if any, for the forwarding of
solicitation materials to the beneficial owners of SBI common stock held of
record by such persons. SBI will reimburse any such brokers, custodians,
nominees, and fiduciaries for the reasonable out-of-pocket expenses incurred by
them for such services. Union Planters and SBI will share all expenses
associated with the solicitation of proxies, other expenses associated with the
special meeting, and expenses related to the printing and mailing of this proxy
statement-prospectus, as provided in the Agreement. See "DESCRIPTION OF
TRANSACTION -- Expenses and Fees."

DISSENTERS' RIGHTS

     Under Kentucky law, an SBI shareholder entitled to vote on the merger may
dissent and obtain payment of the fair value of his or her shares if the
merger is approved by the shareholders of SBI. Generally, dissenter's rights are
a shareholders' sole remedy for objecting to the merger. The following
summary is not intended to and does not constitute a complete statement or
summary of each provision of the Kentucky Revised Statutes relating to the
rights of dissenting shareholders and is qualified in its entirety by reference
to Subtitle 13 of the Kentucky Business Corporation Act which is attached as
Appendix E hereto. Accordingly, any holder of SBI Common Stock intending to
exercise dissenters' rights is urged to review Appendix E carefully and to
consult his or her own legal counsel. Each step must be taken in strict
compliance with the applicable provisions of the statutes in order for a holder
of SBI Common Stock to perfect dissenters' rights.

     A shareholder wishing to exercise dissenters' rights must deliver to SBI,
prior to the vote on the Agreement and the Plan of Merger at the special
meeting, a written notice of intent to demand payment for his or her shares if
the merger is consummated and must refrain from voting in favor of the Agreement
and the Plan of Merger. The written notice of intent must be given in addition
to and separate from any vote, in person or by proxy, against approval of the
Agreement and the Plan of Merger; a vote, in person or by proxy, against
approval of the Agreement and the Plan of Merger will not constitute such a
written notice. The written notice of intent should be sent to Thelma Higgins,
Southeast Bancorp, Inc., 100 North Main Street, Corbin, Kentucky 40702. It is
recommended that all required documents to be delivered by mail be sent
registered or certified mail with return receipt requested.


                                       16

<PAGE>   26



     SBI shareholders electing to exercise their dissenters' rights under
Subtitle 13 of the Kentucky Business Corporation Act must not vote for approval
of the Agreement and the Plan of Merger. A vote by a shareholder against
approval of the Agreement and the Plan of Merger is not required in order for
that shareholder to exercise dissenters' rights. However, if a shareholder
returns a signed proxy form but does not specify a vote against approval of the
Agreement and the Plan of Merger or a direction to abstain, the proxy form, if
not revoked, will be voted for approval of the Agreement and the Plan of Merger,
which will have the effect of waiving that shareholder's dissenters' rights.

     If the merger is approved, within ten days after the special meeting (or
any adjournment thereof), UPHC, as the surviving corporation under the merger,
will send to all shareholders who notified SBI of their intent to demand payment
for their shares and who did not vote any of their shares in favor of the
Agreement and the Plan of Merger, a dissenters' notice which will (i) state
where the shareholder must send a demand for payment and where and when his or
her share certificates must be deposited; (ii) enclose a form for demanding
payment to be completed by the dissenter and returned to UPHC, which form will
require the shareholder to certify whether or not he beneficially owned the
shares prior to August 7, 1998 (the date of the first announcement to the media
of the merger); (iii) establish the date (not less than 30 no more than 60 days
after the delivery of the dissenters' notice) by which UPHC must receive the
demand for payment from the shareholder; and (iv) enclose a copy of Subtitle 13
of the Kentucky Business Corporation Act. After a shareholder receives the
dissenters' notice, he or she must deliver the demand for payment to UPHC and
deposit his or her shares in accordance with the dissenters' notice or he or she
will not be entitled to payment under Subtitle 13 and will instead receive 11.87
shares of Union Platers common stock for each share of SBI common stock held by
him or her.

     Upon its receipt of a properly executed and completed demand for payment,
accompanied by such shareholder's stock certificate, UPHC will send payment to
each dissenting shareholder of the amount UPHC estimates to be the fair value of
the dissenters' shares as of the day before the date of the special meeting,
excluding any appreciation or depreciation in anticipation of the merger (unless
exclusion would be inequitable), and accrued interest. The payment will be
accompanied by an explanation of how interest was calculated along with the
balance sheet of SBI as of the end of the most recent fiscal year, an income
statement for that year, a statement of changes in shareholders' equity for that
year and the latest available interim financial statement. In addition, the
dissenter will be informed of his or her right to demand payment according to
the dissenter's own estimate of the fair value of such shares.

     UPHC is not required to send payment as decribed above to a dissenter who
was not a beneficial owner of the shares prior to August 7, 1998 (the time of
the first public announcement of the merger), but rather may offer to purchase
the shares based on UPHC's estimate of their fair value. Any such owner must
either accept that amount in full satisfaction or proceed with the exercise of
his or her dissenters' rights.

     Within 30 days after UPHC has delivered payment based upon its estimate of
fair value, a dissenting shareholder may notify UPHC of his or her own estimate
of the fair value of the shares and demand payment of the balance due under such
shareholder's estimate.


                                       17

<PAGE>   27



     If an agreement is not reached as to the fair value of the shares, UPHC
must file a petition in the Circuit Court of Whitley County within 60 days after
receiving the dissenter's payment demand for the balance due such shareholder
under his or her estimate of fair value. Such petition must request the court to
determine the fair value of the shares and the accrued interest. If UPHC fails
to institute such a proceeding, it will be required to pay each dissenter whose
demand remains unsettled the amount demanded.

     Each dissenting SBI shareholder who is a party to the proceeding is
entitled to the amount, if any, by which the court finds the fair value of his
or her shares, plus interest, exceeds the amount paid by UPHC. In an appraisal
proceeding, the Whitley County Circuit Court will determine all costs of the
proceeding, including the reasonable compensation and expenses of appraisers
appointed by the court. The court will access costs against UPHC, except that
the court may assess costs against all or some of the dissenters, in amounts the
court find equitable, to the extent the court finds the dissenters acted
arbitrarily, vexatiously or not in good faith in demanding payment. The court
may also assess the fees and expenses of counsel and experts for the respective
parties, in amounts the court finds equitable as follows: (i) against UPHC and
in favor of any or dissenters' if the court finds UPHC did not substantially
comply with the statutory requirements set forth in Subtitle 13 of the Kentucky
Revised Statutes; or (ii) against either SBI or a dissenter, in favor of any
other party, if the court finds that the party against whom the fees and
expenses are assessed acted arbitrarily, vexatiously or not in good faith with
respect to the rights provided by Subtitle 13 of the Kentucky Business
Corporation Act. If the court finds that the services of counsel for any
dissenter were of substantial benefit to other dissenters similarly situated,
and that the fees for those services should not be assessed against UPHC, the
court may award to such counsel reasonable fees to be paid out of the amounts
awarded the dissenters who benefitted.

     If for whatever reason the merger is not consummated within 60 days after
the deadline for demanding payment and depositing certificates, SBI must return
all deposited shares. If SBI fails to do so, the dissenter may nevertheless
proceed with the exercise of his or her dissenters' rights, and SBI will have no
further right to terminate the dissenters' rights by returning deposited shares.

     A record shareholder may dissent as to less than all of the shares
registered in his or her name only if he or she dissents with respect to all of
the shares beneficially owned by any one person and notifies SBI in writing of
the name and address of each person on whose behalf the shareholder is asserting
dissenters' rights. In that event, such dissenters' rights shall be determined
as if the shares as to which the shareholder has dissented and the shareholder's
other shares were registered in the names of different shareholders.

     A beneficial shareholder may assert dissenters' rights as to shares held on
his or her behalf only if he or she submits to SBI the record shareholder's
written consent to the dissent no later than the time such beneficial
shareholder asserts his or her dissenters' rights, and he or she dissents as to
all shares of which he or she is the beneficial owner or over which he or she
has the power to direct the vote.


                                       18

<PAGE>   28



     SHAREHOLDERS OF SBI SHOULD BE AWARE THAT FAILURE TO PROCEED IN ACCORDANCE
WITH THE PROVISIONS OF SUBCHAPTER 13 OF THE KENTUCKY BUSINESS CORPORATION ACT
WILL RESULT IN A LOSS OF ALL DISSENTERS' RIGHTS AND RESULT IN THEIR BEING BOUND
BY THE MERGER AGREEMENT AND THE MERGER.

RECOMMENDATION

     SBI's board of directors has approved the Agreement, the Plan of Merger,
and the merger and believes that the Agreement and the Plan of Merger are in the
best interests of SBI and its shareholders. SBI's board of directors recommends
that the SBI shareholders vote FOR approval of the Agreement and the Plan of
Merger.


                           DESCRIPTION OF TRANSACTION

     The following information describes material aspects of the merger. This
description does not provide a complete description of all the terms and
conditions of the Agreement and the Plan of Merger. It is qualified in its
entirety by the Appendices hereto, including the text of the Agreement and the
Plan of Merger, which are attached as Appendices A and B, respectively, to this
proxy statement-prospectus. The Agreement and the Plan of Merger are
incorporated herein by reference. You are urged to read the Appendices in their
entirety.

GENERAL

     The Agreement provides for the acquisition of SBI by Union Planters
pursuant to the merger of SBI with and into UPHC. UPHC is a Tennessee
corporation and a wholly-owned subsidiary of Union Planters. UPHC will be the
surviving corporation resulting from the merger. At the time the merger becomes
effective, each share of SBI common stock then issued and outstanding (except
shares held by SBI, Union Planters and their subsidiaries other than shares held
in a fiduciary capacity or as a result of debts previously contracted) will be
converted into and exchanged for the right to receive 11.87 shares of Union
Planters common stock and the associated Preferred Share Rights.

     No fractional shares of Union Planters common stock will be issued. Rather,
Union Planters will pay cash (without interest) in an amount equal to such
fractional part of a share of Union Planters common stock multiplied by the
closing price of Union Planters common stock on the New York Stock Exchange (as
reported by The Wall Street Journal) on the last trading day before the merger
becomes effective.

     On the record date, SBI had 101,440 shares of common stock issued and
outstanding and 3,868 additional shares of common stock were subject to stock
options. Based on an exchange ratio of 11.87 shares of Union Planters common
stock for each share of SBI common stock, upon completion of the merger, Union
Planters will issue approximately 1,204,092 shares of its common stock to SBI
shareholders, not including shares subject to options. After the merger, Union

                                       19

<PAGE>   29



Planters would then have outstanding approximately 137,267,127 shares of common
stock based on the number of shares of Union Planters common stock outstanding
on October 31, 1998 (not including shares Union Planters may issue in its other
pending acquisitions and shares it may issue pursuant to the exercise of Union
Planters stock options or for other purposes).

EFFECT OF THE MERGER ON OPTIONS

     When the merger becomes effective, each outstanding option granted under
certain agreements with SBI executive officers, whether or not exercisable, will
become an option to purchase Union Planters common stock. Union Planters will
assume each option in accordance with the terms of the applicable agreements
with the SBI executive officers. After the merger becomes effective,

     (1)  Union Planters and its Salary and Benefits Committee will be
          substituted for SBI and the Committee of SBI's board of directors
          administering the options granted pursuant to agreements with SBI
          executive officers;

     (2)  each option assumed by Union Planters may be exercised only for shares
          of Union Planters common stock;

     (3)  the number of shares of Union Planters common stock subject to the
          option will be equal to the number of shares of SBI common stock
          subject to the option immediately before the merger becomes effective
          multiplied by the exchange ratio and rounding down to the nearest
          whole share; and

     (4)  the per share exercise price under each option will be adjusted by
          dividing it by the exchange ratio and rounding up to the nearest cent.

     Notwithstanding the foregoing, each SBI option which is an "incentive stock
option" shall be adjusted as required by Section 424 of the Internal Revenue
Code, and the regulations promulgated thereunder, so as not to constitute a
modification, extension or renewal of the option, within the meaning of Section
424(h) of the Internal Revenue Code.

     For information with respect to stock options held by SBI's management, see
"-- Interests of Certain Persons in the Merger."

CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER

     The following is a summary of the material anticipated federal income tax
consequences of the merger to SBI shareholders who hold their SBI common stock
as a capital asset (generally, property held for investment). This summary is
based on the federal income tax laws as now in effect and as currently
interpreted. No assurance can be given that future changes in such laws or
interpretations, including amendments to applicable statutes or regulations or
changes in judicial or administrative rulings, some of which may have
retroactive effect, will not affect the accuracy of any statement in this proxy
statement-prospectus. This summary does not purport to address all aspects of
the possible federal income tax consequences of the merger that may be relevant
to

                                       20

<PAGE>   30



United States shareholders of SBI. The tax discussion set forth below is
included for general information only and should not be construed as tax advice
to a particular shareholder of SBI.

     Union Planters and SBI have not and do not intend to seek a ruling from the
Internal Revenue Service as to the federal income tax consequences of the
merger. Instead, Union Planters and SBI have obtained the opinion of counsel,
Wyatt, Tarrant & Combs, as to certain of the expected federal income tax
consequences of the merger. A copy of this opinion is attached as an exhibit to
the registration statement to which this proxy statement-prospectus is a part.

     The tax opinion which Union Planters has obtained does not address, among
other matters:

          (1)  state, local, estate, foreign or other federal tax consequences
               of the merger not specifically addressed in the opinion;

          (2)  federal income tax consequences to SBI shareholders who are
               subject to special rules under the Internal Revenue Code, such as
               foreign persons, corporations, tax-exempt organizations,
               insurance companies, financial institutions, dealers in stocks
               and securities, and persons who do not own such stock as a
               capital asset;

          (3)  federal income tax consequences affecting shares of SBI common
               stock acquired upon the exercise of stock options, stock purchase
               plan rights or otherwise as compensation;

          (4)  federal income tax consequence, affecting shares of SBI common
               stock acquired as part of a hedge, straddle or conversion
               transaction;

          (5)  the tax consequences to holders of warrants, options or other
               rights to acquire shares of such stock;

          (6)  the tax consequences for Union Planters, UPHC and SBI of the
               inclusion in income of the amount of the bad-debt reserve
               maintained by SBI and/or its subsidiaries and any other amounts
               resulting from any required change in accounting methods; and

          (7)  the tax consequences for Union Planters, UPHC and SBI of any
               income and deferred gain recognized pursuant to Treasury
               Regulations issued under Section 1502 of the Internal Revenue
               Code.

          Subject to the conditions, qualifications, representations and
assumptions contained herein, and in the tax opinion, Wyatt, Tarrant & Combs has
opined that:

          (1)  The acquisition by UPHC of substantially all of the assets of SBI
               in exchange for shares of Union Planters common stock and the
               assumption of liabilities of SBI pursuant to the merger will
               constitute a reorganization within the meaning of Section 368(a)
               of the Internal Revenue Code.

          (2)  SBI, Union Planters and UPHC will each be "a party to a
               reorganization" within the meaning of Section 368(b) of the
               Internal Revenue Code.

                                       21

<PAGE>   31



          (3)  No gain or loss will be recognized by SBI as a result of the
               merger.

          (4)  No gain or loss will be recognized by UPHC or Union Planters as a
               result of the merger.

          (5)  No gain or loss will be recognized by the shareholders of SBI as
               a result of the exchange of SBI common stock for Union Planters
               common stock pursuant to the merger, except that a gain or loss
               will be recognized on the receipt of any cash in lieu of a
               fractional share. Assuming that the SBI common stock is a capital
               asset in the hands of the respective SBI shareholders, any gain
               or loss recognized as a result of the receipt of cash in lieu of
               a fractional share will be a capital gain or loss equal to the
               difference between the cash received and that portion of the
               holder's tax basis in the SBI common stock allocable to the
               fractional share.

          (6)  The tax basis of Union Planters common stock to be received by
               the shareholders of SBI will be the same as the tax basis of the
               SBI common stock surrendered in exchange therefor (reduced by any
               amount allocable to a fractional share interest for which cash is
               received).

          (7)  The holding period of the Union Planters common stock to be
               received by shareholders of SBI will include the holding period
               of the SBI common stock surrendered in exchange therefor,
               provided the SBI shares were held as a capital asset by the
               shareholders of SBI on the date of the exchange.

          (8)  A shareholder of SBI who perfects his dissenters' rights and who
               receives payment of the fair market value of his shares of SBI
               common stock will be treated as having received such payment in
               redemption of such stock. Such redemption will be subject to the
               conditions and limitations of Section 302 of the Internal Revenue
               Code.

         The tax opinion is based on the Internal Revenue Code, the Treasury
Regulations promulgated under the Internal Revenue Code by the Internal Revenue
Service, judicial decisions and administrative pronouncements of the Internal
Revenue Service, all existing and in effect on the date of this proxy
statement-prospectus and all of which are subject to change at any time,
possibly retroactively. Any such change could have a material impact on the
conclusions reached in the opinion. The opinion represents only such counsel's
best judgment as to the expected federal income tax consequences of the merger
and is not binding on the Internal Revenue Service or the courts. The Internal
Revenue Service may challenge the conclusions stated in the opinion and
shareholders of SBI may incur the cost and expense of defending positions taken
by them with respect to the merger. A successful challenge by the Internal
Revenue Service could have material adverse consequences to the parties to the
merger, including shareholders of SBI and Union Planters.

         In rendering the tax opinion, Wyatt, Tarrant & Combs has relied, as to
factual matters, solely on the continuing accuracy of (1) the description of the
facts relating to the merger

                                       22

<PAGE>   32



contained in the Agreement and this proxy statement-prospectus, (2) the factual
representations and warranties contained in the Agreement and this proxy
statement-prospectus and related documents and agreements, and (3) certain
factual matters addressed by representations made by certain executive officers
of SBI, Union Planters and UPHC, as further described in the opinion. Events
occurring after the date of the opinion could alter the facts upon which the
opinion is based. In such case, the conclusions reached in the opinion and in
this summary could be materially impacted.

         Accordingly, for all of the above reasons, shareholders of SBI are
urged to consult their own tax advisors as to the specific tax consequences to
them of the merger, including the applicability and effect of federal, state,
local and other tax laws, and the implications of any proposed changes in the
tax laws.

         The obligation of Union Planters and SBI to complete the merger is
conditioned on, among other things, receipt by Union Planters and SBI of an
opinion of Wyatt, Tarrant & Combs, substantially to the foregoing effect. The
conditions relating to the receipt of the tax opinion may be waived by both
Union Planters and SBI. Neither Union Planters nor SBI currently intends to
waive the conditions relating to the receipt of the tax opinion. If the
conditions relating to the receipt of the tax opinion were waived and the
material federal income tax consequences of the merger were substantially
different from those described in this proxy statement-prospectus, SBI would
resolicit the approval of its shareholders prior to completing the merger.

BACKGROUND OF AND REASONS FOR THE MERGER

         BACKGROUND OF THE MERGER. During the past several years substantial and
rapid changes have occurred in the banking industry and small institutions have
been acquired by larger bank holding companies with greater access to capital
and greater capability to realize economies of scale in the delivery of banking
services. During the third week of April, 1998, the executive committee of the
SBI board of directors began discussing the future of SBI in the face of rapid
change within the financial services industry, and determined that it would be
in SBI's best interest to engage a financial advisor to advise SBI with respect
to available strategic alternatives. On April 29, 1998 the SBI board of
directors approved the hiring of Stifel, Nicolaus & Company, Incorporated
("Stifel") and authorized the executive committee to explore (with the
assistance of Stifel) the various strategic alternatives available to SBI
(including without limitation the sale of the company). On May 4, 1998, SBI
entered into an agreement with Stifel to advise SBI in this respect, Stifel
having been selected based on its knowledge of the banking industry and
experience in working with similarly sized financial institutions.

         After extensive review of the analytical materials presented by Stifel
to the board executive committee, and much discussion of various strategic
alternatives, including the sale of SBI, the acquisition by SBI of other
financial institutions and the raising of capital by SBI (through, among other
means, a trust preferred stock offering), the SBI executive committee (convinced
that profit margins would become increasingly difficult to maintain given the
changes in the competitive structure of the banking industry) determined to
explore the possible sale of the company. SBI and

                                       23

<PAGE>   33



Stifel compiled a list of financial institutions deemed by SBI and Stifel to be
organizations that might have both the interest and the ability to acquire SBI.

         One of such prospective acquiror candidates was considered by SBI to be
most suitable as a merger partner and was approached by Stifel to determine its
interest in entering into exclusive negotiations with SBI respecting the
acquisition of SBI (such entity is referred to herein as the "First Offeror").
After the First Offeror expressed an interest in such negotiations and upon its
execution of a confidentiality agreement, detailed information respecting SBI
was provided and SBI's Chief Executive Officer and Chief Financial Officer,
accompanied by Stifel and legal counsel, met with representatives of the First
Offeror on May 13, 1998. This meeting resulted in an offer for the acquisition
of SBI by the First Offeror on May 19, 1998, which offer was deemed inadequate
by the SBI board of directors at its May 19, 1998 meeting.

         Commencing the week of June 1, 1998, nine (9) institutions (including
the First Offeror and Union Planters) which had orally indicated to Stifel an
interest in acquiring SBI were provided (on a confidential basis) with a package
of detailed information respecting SBI. Of such institutions, the First Offeror
and a second financial institution (referred to herein as the "Second Offeror")
delivered to SBI on June 11 and 12, 1998 written offers respecting the
acquisition of SBI. Moreover, without making a specific offer, Union Planters
indicated its interest in purchasing SBI. Accordingly, following consultation
with the SBI board of directors at its June 11, 1998 meeting, SBI's Chief
Executive Officer and Chief Financial Officer met with representatives of Union
Planters and the Second Offeror on June 22, 1998 and June 24, 1998,
respectively, which meetings resulted in an increased offer for the purchase of
SBI from the Second Offeror on June 26, 1998 and an acquisition proposal from
Union Planters on June 30, 1998.

         Based upon the fact that the offer of the Second Offeror was higher
than both the Union Planters proposal and the revised offer of the First
Offeror, the Second Offeror was invited by SBI to conduct due diligence, which
due diligence was conducted from July 3 to July 10, 1998. Following such due
diligence, SBI was informed (without explanation) by such Second Offeror on July
14, 1998 that its offer for the acquisition of SBI was being withdrawn.

         Immediately thereafter, SBI contacted Union Planters respecting its
previous offer and during the week of July 27, 1998 Union Planters made a
revised offer to acquire SBI. Union Planters conducted due diligence of SBI from
July 29 to July 31, 1998 during which time SBI and Union Planters began
negotiations resulting in a draft of a definitive merger agreement.

         On August 7, 1998, the board of directors of SBI met with its financial
and legal advisors for the purpose of considering the proposed merger agreement
with Union Planters. Stifel presented a report of its analysis of the financial
terms of the proposed agreement and a comparison of the terms of the proposed
agreement with other comparable transactions in terms of price to book value and
price to earnings ratios, deposit premium and other measures. Stifel also
commented on the financial strength and prospects of Union Planters, its stock
price performance, dividend history, likely effects of the proposed transaction
on Union Planters's stock price, its prospects for regulatory approval and other
information regarding Union Planters. Stifel also reported to the board its
opinion that the proposed transaction as of August 7, 1998 was fair from

                                       24

<PAGE>   34



a financial point of view to SBI and all of its shareholders. In addition, legal
counsel presented a summary of the terms of the proposed merger agreement and
SBI management presented the background of the agreement and reported on the
history of the negotiations with potential purchasers. Following lengthy
discussion, the board concluded that the proposed merger agreement was in the
best interests of SBI and its shareholders and accordingly, by unanimous vote of
all directors present (one director being absent due to illness), the board of
directors authorized SBI to enter into the Agreement and to engage in the
transactions contemplated thereby. On the basis of the authorization by the
board of directors of SBI, SBI executed the Agreement and the Plan of Merger
following the meeting on August 7, 1998 and a press release was issued later
that day.

         RECOMMENDATION OF THE SBI BOARD OF DIRECTORS; REASONS FOR THE MERGER.
The SBI board of directors believes that the merger is fair to, and in the best
interests of, SBI and its shareholders. If the merger is consummated, the
shareholders of SBI will acquire an equity interest in a much larger and more
diversified enterprise. Union Planters common stock is traded on the New York
Stock Exchange, and, accordingly, is more readily marketable than the SBI common
stock. ACCORDINGLY, THE SBI BOARD HAS APPROVED THE AGREEMENT AND THE PLAN OF
MERGER AND RECOMMENDS THAT THE HOLDERS OF SBI COMMON STOCK VOTE FOR THE APPROVAL
OF THE AGREEMENT AND THE PLAN OF MERGER AND THE CONSUMMATION OF THE TRANSACTIONS
CONTEMPLATED THEREBY. See the "Opinion of SBI's Financial Advisor," below.

         The terms of the merger, including the exchange ratio of 11.87 shares
of Union Planters common stock for each share of SBI common stock, are the
results of arm's-length negotiations between representatives of SBI and Union
Planters. In reaching its decision to approve the Agreement, the SBI board of
directors consulted with its legal advisors regarding the terms of the
transaction, with its financial advisor regarding the financial aspects of the
proposed transaction and the fairness of the exchange ratio, and with management
of SBI, and, without assigning any relative or specific weights, considered a
number of factors, both from a short-term and long-term perspective, including,
without limitation, the following:

          (a)  the SBI board of directors' familiarity with and review of SBI's
               business, financial condition, results of operations, and
               prospects, including, without limitation, its potential growth
               and profitability and the business risks associated therewith;

          (b)  the current and prospective environment in which SBI operates,
               including national and local economic conditions, the competitive
               environment for commercial banks and other financial institutions
               generally and the increasing consolidation in the financial
               services industry and the competitive effects of such increased
               consolidation on smaller financial institutions such as SBI;

          (c)  information concerning the business, financial condition, results
               of operations and prospects of Union Planters, including the
               recent performance of Union Planters common stock, the historical
               financial data

                                       25

<PAGE>   35



               of Union Planters, customary statistical measurements of Union
               Planters financial performance, and the future prospects for
               Union Planters common stock following the merger;

          (d)  the value to be received by holders of SBI common stock pursuant
               to the Agreement in relation to the historical trading prices of
               SBI common stock;

          (e)  the lack of an established trading market for shares of SBI
               common stock;

          (f)  the information presented by Stifel to the SBI board of directors
               with respect to the merger and the opinion of Stifel that, as of
               the date of such opinion, the exchange ratio was fair to the
               holders of SBI Common Stock from a financial point of view (see
               "Opinion of SBI's Financial Advisor," below);

          (g)  the financial and other significant terms of the proposed merger
               with Union Planters, and the review by SBI with its legal and
               financial advisors of the provisions of the Agreement;

          (h)  the SBI board's belief that the receipt of Union Planters common
               stock in the merger generally will permit holders of SBI common
               stock to defer any federal income tax liability associated with
               any increase in the value of their stock that may follow the
               merger (see "Certain Federal Income Tax Consequences of the
               Merger") and to become shareholders of Union Planters, an
               institution with a strong history of operations, earnings
               performance, dividend payments, and share liquidity;

          (i)  the significantly higher dividend rate of Union Planters compared
               with SBI; and

          (j)  the alternative strategic courses available to SBI, including
               remaining independent and exploring other potential business
               combination transactions, including, in particular, the potential
               values that could be derived therefrom.

         The foregoing enumeration is not intended to be exhaustive but includes
material factors considered by the SBI board of directors in determining to
approve the Agreement and the Plan of Merger and recommend its adoption by the
SBI shareholders.

         UNION PLANTERS' REASONS FOR THE MERGER. In adopting the Agreement, the
Plan of Merger, and the merger, the Union Planters' board of directors
considered a number of factors

                                       26

<PAGE>   36



concerning the benefits of the merger. Without assigning any relative or
specific weights to the factors, the Union Planters board of directors
considered the following additional material factors:

          (1)  a review, based in part on a presentation by Union Planters'
               management, of

               -    the business, operations, earnings, and financial condition,
                    including the capital levels and asset quality, of SBI on an
                    historical, prospective, and pro forma basis and in
                    comparison to other financial institutions in the area,

               -    the demographic, economic, and financial characteristics of
                    the markets in which SBI operates, including existing
                    competition, history of the market areas with respect to
                    financial institutions, and average demand for credit, on
                    historical and prospective basis, and

               -    the results of Union Planters' due diligence review of SBI;
                    and

          (2)  a variety of factors affecting and relating to the overall
               strategic focus of Union Planters, including Union Planters'
               desire to expand into markets in Whitley and Knox Counties,
               Kentucky and Campbell County, Tennessee and the business lines
               pursued by SBI.

Union Planters' board of directors determined that the merger was in the best
interests of Union Planters and its shareholders and unanimously approved the
proposed merger on October 15, 1998.

OPINION OF SBI'S FINANCIAL ADVISOR

         SBI has retained Stifel as its financial advisor in connection with the
merger and to render a fairness opinion with respect thereto. Stifel is an
investment banking and securities firm with membership on all principal U.S.
securities exchanges. As part of its investment banking activities, Stifel is
regularly engaged in the valuation of businesses and their securities in
connection with merger transactions and other types of acquisitions,
underwritings, sales and distributions of listed and unlisted securities,
private placements and valuations for estate, corporate and other purposes. In
connection with the August 7, 1998 meeting of the board of directors of SBI,
Stifel rendered its oral opinion that, as of such date, the exchange ratio was
fair to the holders of SBI common stock from a financial point of view. Stifel
has confirmed its August 7, 1998 oral opinion by delivery of its written opinion
to the SBI board of directors, dated the date of this proxy
statement-prospectus, that, based upon and subject to the various considerations
set forth therein, as of the date hereof the exchange ratio is fair to the
holders of SBI common stock from a financial point of view. Stifel is familiar
with SBI, having acted as its financial advisor in connection with, and having
participated in the negotiations leading to, the Agreement and the Plan of
Merger.

         The full text of Stifel's opinion as of the date hereof, which sets
forth the assumptions made, matters considered and limitations of the review
undertaken, is attached as Appendix D to this proxy statement-prospectus and is
incorporated herein by reference, and should be read in its entirety in
connection with this proxy statement-prospectus. The summary of the opinion of
Stifel

                                       27

<PAGE>   37



set forth in this proxy statement-prospectus is qualified in its entirety by
reference to the full text of such opinion.

         Stifel's opinion is directed only to the fairness of the exchange ratio
from a financial point of view and does not constitute a recommendation to any
holders of SBI common stock as to how such holders of SBI common stock should
vote at the special meeting or as to any other matter.

         In connection with its August 7, 1998 oral opinion and its written
opinion dated the date hereof, Stifel reviewed, among other things: the August
7, 1998 draft of the Agreement; the financial statements of SBI and Union
Planters included in their respective Annual Reports for the five years ended
December 31, 1997 and their respective Quarterly Reports for the quarter ended
March 31, 1998; certain internal financial analyses and forecasts for SBI
prepared by its management; certain internal financial forecasts for SBI;
certain pro forma financial forecasts for SBI and Union Planters on a combined
basis, giving effect to the merger, prepared by the management of SBI utilizing
SBI's internal financial forecasts and publicly available consensus analyst
estimates for Union Planters. Stifel held conversations with SBI's senior
management regarding recent developments and management's financial forecasts
for SBI. In addition, Stifel spoke to members of SBI's senior management and
Union Planter's senior management regarding factors which affect each entity's
business. Stifel has reviewed the analysts' forecasts for Union Planters used by
the management of SBI in preparing pro forma financial forecasts for the
combined company resulting from the merger. Stifel has also compared certain
financial and securities data of SBI and Union Planters with various other
companies whose securities are traded in public markets, reviewed the historical
stock prices and trading volumes of the common stock of Union Planters, reviewed
the financial terms of certain other business combinations and conducted such
other financial studies, analyses and investigations as it deemed appropriate
for purposes of its opinion. Stifel also took into account its assessment of
general economic, market and financial conditions and its experience in other
transactions, as well as its experience in securities valuations and its
knowledge of the commercial banking industry generally.

         In rendering its opinion, Stifel relied upon and assumed, without
independent verification, the accuracy and completeness of all of the financial
and other information that was provided to it or that was otherwise reviewed by
it and did not assume any responsibility for independently verifying any of such
information. With respect to the financial forecasts supplied to Stifel
(including without limitation, projected cost savings and operating synergies
resulting from the merger), Stifel assumed with SBI's consent that they were
reasonably prepared on the basis reflecting the best currently available
estimates and judgments of SBI as to the future operating and financial
performance of SBI, that they would be realized in the amounts and time periods
estimated and that they provided a reasonable basis upon which Stifel could form
its opinion. Stifel also assumed with SBI's consent that the analysts forecasts
for Union Planters used in preparing the pro forma financial forecasts for the
combined company resulting from the merger would be realized in the amounts and
time periods estimated and that they would provide a reasonable basis upon which
Stifel could form its opinion. Stifel also assumed that there were no material
changes in the assets, liabilities, financial condition, results of operations,
business or prospects of either SBI or Union Planters since the date of the last
financial statements made available to it. Stifel also assumed, without
independent verification and with SBI's consent, that

                                       28

<PAGE>   38



the aggregate allowances for loan losses set forth in the financial statements
of SBI and Union Planters are in the aggregate adequate to cover all such
losses. Stifel did not make or obtain any independent evaluation, appraisal or
physical inspection of SBI's or Union Planters' assets or liabilities, the
collateral securing any of such assets or liabilities, or the collectibility of
any such assets nor did it review loan or credit files of SBI or Union Planters.
Stifel relied on advice of SBI's counsel and accountants as to all legal and
accounting matters with respect to SBI, the Agreement and the transactions and
other matters contained or contemplated therein. Stifel assumed, with SBI's
consent, that there are no factors that would delay or subject to any adverse
conditions any necessary regulatory or governmental approval and that all
conditions to the merger will be satisfied and not waived. Stifel was retained
by the SBI board to express an opinion as to the fairness of the exchange ratio
to the holders of SBI common stock, from a financial point of view.

         The financial forecasts furnished to Stifel for SBI and Union Planters
and estimates of costs savings and operating snyergies resulting from the merger
were prepared by the management of SBI and constitute forward-looking statements
within the meaning of the Private Securities Litigation Reform Act of 1995. As a
matter of policy, SBI does not publicly disclose internal management forecasts,
projections or estimates of the type furnished to Stifel in connection with its
analysis of the financial terms of the merger, and such forecasts and estimates
were not prepared with a view towards public disclosure. These forecasts and
estimates were based on numerous variables and assumptions which are inherently
uncertain and which may not be within the control of the management of either
SBI or Union Planters, including, without limitation, factors related to the
integration of SBI and Union Planters and general economic, regulatory and
competitive conditions. Accordingly, actual results could vary materially from
those set forth in such forecasts and estimates.

         In connection with rendering its August 7, 1998 oral opinion, Stifel
performed a variety of financial analyses that are summarized below. Such
summary does not purport to be a complete description of such analyses. Stifel
believes that its analyses and the summary set forth herein must be considered
as a whole and that selecting portions of such analyses and the factors
considered therein, without considering all factors and analyses, could create
an incomplete view of the analyses and processes underlying its opinions. The
preparation of a fairness opinion is a complex process involving subjective
judgments and is not necessarily susceptible to partial analysis or summary
description. In its analyses, Stifel made numerous assumptions with respect to
industry performance, business and economic conditions, and other matters, many
of which are beyond the control of SBI or Union Planters. Any estimates
contained in Stifel's analyses are not necessarily indicative of actual future
values or results, which may be significantly more or less favorable than
suggested by such estimates. Estimates of values of companies do not purport to
be appraisals or necessarily reflect the actual prices at which companies or
their securities actually may be sold. No company or transaction utilized in
Stifel's analyses was identical to SBI or Union Planters or the merger.
Accordingly, such analyses are not based solely on arithmetic calculations;
rather, they involve complex considerations and judgments concerning differences
in financial and operating characteristics of the relevant companies, the timing
of the relevant transactions, and prospective buyer interest, as well as other
factors that could affect the public trading values of the company or

                                       29

<PAGE>   39



companies to which they are being compared. None of the analyses performed by
Stifel was assigned a greater significance by Stifel than any other.

         The following is a summary of the financial analyses performed by
Stifel in connection with providing its oral opinion, on August 7, 1998. In
connection with its written opinion dated as of the date of this proxy
statement-prospectus, Stifel intends on performing procedures to update certain
of its analyses and review the assumptions on which such analyses were based and
the factors considered in connection therewith. In updating its opinion, Stifel
will not utilize any methods of analysis in addition to those described.

         PRO FORMA EFFECT OF THE MERGER. Stifel reviewed certain estimated
future operating and financial information developed by SBI and certain
estimated future operating and financial information for the pro forma combined
entity resulting from the merger for the twelve month period ended December 31,
1999 prepared by the management of SBI utilizing publicly available consensus
analyst estimates for Union Planters. Based on this analysis, Stifel compared
certain of SBI's estimated future per share results with such estimated figures
for the pro forma combined entity. On a pro forma basis the merger is forecast
to be accretive to SBI's book value per share and tangible book value per share.
Stifel also compared SBI's estimated future stand-alone earnings and dividends
per share with such estimated figures for the pro forma combined entity. On a
pro forma basis the merger is forecast to be accretive to both earnings per
share and dividend per share. This analysis did not purport to be indicative of
actual future results.

         ANALYSIS OF BANK MERGER TRANSACTIONS. Stifel analyzed certain
information relating to recent transactions in the banking industry, consisting
of 20 acquisitions announced in the U.S. between January 1, 1997 and July 24,
1998, by sellers in the Central Region of the United States with assets between
$200 million and $500 million ("Group A"), as well as a group of 87 acquisitions
announced between January 1, 1997 and August 3, 1998, by sellers in the United
States with assets between $200 million and $500 million ("Group B") (the
"Selected Transactions"). Stifel calculated the following ratios with respect to
the merger and the Selected Transactions:

<TABLE>
<CAPTION>

                                               GROUP A SELECTED TRANSACTIONS
                                     SBI/      -----------------------------
                                 Union Planters
Ratios                                          Minimum   Median    Maximum
- ------                                          -------   ------    -------

<S>                                   <C>       <C>       <C>       <C>   
Deal Price per share/Book Value       264.2%    139.4%    235.0%    558.8%
Deal Price per share/Tangible Book
       Value                          339.1%    143.3%    238.1%    558.8%
Adjusted Deal Price/6.50% Equity      287.3%     69.7%    314.7%    865.0%
Deal Price per share/Last 12
       months earnings per share       20.3x     13.7x     21.0x     36.3x
Deal Price/Assets                      22.4%      9.0%     24.7%     60.6%
Premium over Tangible Book
       Value/Deposits                  17.6%     -2.0%     17.0%     56.3%
Deal Price/Deposits                    28.6%     10.2%     28.6%     68.5%
                                      =====     =====     =====     =====

</TABLE>


                                       30

<PAGE>   40

<TABLE>
<CAPTION>



                                                SBI/                     GROUP B SELECTED TRANSACTIONS
                                           Union Planters
Ratios                                                                  Minimum      Median        Maximum
- ------                                                                  -------      ------        -------

<S>                                        <C>                          <C>          <C>           <C>   
Deal Price per share/Book Value                264.2%                   132.4%       253.4%        558.8%
Deal Price per share/Tangible Book
       Value                                   339.1%                   133.3%       268.3%        558.8%
Adjusted Deal Price/6.50% Equity               287.3%                   -75.4%       310.2%        865.0%
Deal Price per share/Last 12
       months earnings per share                20.3x                    5.7x         20.9x         57.1x
Deal Price/Assets                               22.4%                    9.0%         23.3%         60.6%
Premium over Tangible Book
       Value/Deposits                           17.6%                   -15.1%        16.7%         56.3%
Deal Price/Deposits                             28.6%                    10.2%        27.8%         68.5%
                                                =====                    =====        =====         =====
</TABLE>


         COMPARISON OF SELECTED COMPANIES. Stifel reviewed and compared certain
multiples and ratios for a peer group of 28 selected banks with assets between
$225 million and $425 million which Stifel deemed to be relevant. The group of
selected banks consisted of American Bancshares Inc., Bay Bancshares Inc., Bryn
Mawr Bank Corp., Boston Private Financial, Columbia Bancorp, Community Financial
Corp., Civic BanCorp, Commercial Bankshares Inc., CNBT Bancshares, Inc., Damen
Financial Corp., First Mariner Bancorp, FNB Financial Services Corp., First
International Bancorp, First State Bancorp., First Colonial Group Inc.,
Independent Bankshares Inc., Indiana United Bancorp, Main Street Bancorp Inc.,
Merit Holding Corp., NMBT CORP, Oak Hill Financial Inc., Mahaska Investment Co.,
Ramapo Financial Corp., State Financial Services Corp., SJNB Financial Corp.,
Success Bancshares Inc., VRB Bancorp and Westbank Corp. Utilizing the range of
multiples and ratios for the peer group specified above, Stifel calculated a
range of imputed values for a share of SBI common stock by comparing the offer
price to each of book value, tangible book value, adjusted 6.5% equity, latest
12 month earnings, estimated 1998 earnings and estimated 1999 earnings as
provided by Institutional Brokers Estimate System ("IBES"), assets, tangible
book value to deposits and deposits, applied to the appropriate financial
results of SBI. This analysis resulted in a range of imputed values for SBI
common stock between $686 and $378 based on the median multiples and ratios for
the peer group. This analysis did not purport to reflect the prices at which
shares of SBI Common Stock may trade in the public markets. The value of one
share of SBI common stock under the terms of the Agreement is calculated to be
$623.

         PRESENT VALUE ANALYSIS. Applying discounted cash flow analysis to the
theoretical future earnings of SBI, Stifel compared the calculated value of a
SBI share to the calculated value of a SBI share under the terms of the
Agreement. The analysis was based upon a management's projected earnings growth,
a range of assumed price/earnings ratios, and a 12%, 13% and 14% discount rate.
Stifel selected the range of terminal price/earnings ratios on the basis of past
and current trading multiples for other publicly traded comparable commercial
banks. The stand-alone present value of SBI common stock calculated on this
basis ranged from $566 to $823 per share. The value of one share of SBI common
stock under the terms of the Agreement is calculated to be $623.

                                       31

<PAGE>   41



         DISCOUNTED CASH FLOW ANALYSIS. Using a discounted cash flow ("DCF")
analysis, Stifel estimated the net present value of the future streams of
after-tax cash flow that SBI could produce to benefit its shareholders
("Dividendable Net Income"). In this analysis, Stifel assumed that SBI would
perform in accordance with management's estimates and calculated assumed
after-tax distributions to SBI shareholders such that its tangible common equity
ratio would be maintained at 6.5 percent of assets. Stifel calculated the sum of
(1) the estimated terminal values per share of SBI common stock based on assumed
multiples to SBI's projected 2002 earnings ranging from 16.2x to 21.4x, plus (2)
the assumed 1998 - 2002 Dividendable Net Income streams per share, in each case
discounted to present values at assumed discount rates ranging from 12.0% to
14.0%. This DCF analysis indicated an implied equity value reference range of
$641 to $887 per share of SBI common stock. This analysis did not purport to be
indicative of actual future results and did not purport to reflect the prices at
which shares of SBI common stock may trade in the public markets. A DCF analysis
was included because it is a widely used valuation methodology, but the results
of such methodology are highly dependent upon the numerous assumptions that must
be made, including estimated revenue enhancements, earnings growth rates,
dividend payout rates, terminal values and discount rates.

         CONTRIBUTION ANALYSIS. Stifel reviewed certain financial information
for SBI and Union Planters for the three month period ended March 31, 1998
including net revenues before and after provision for loan losses, net income
before preferred dividends and extraordinary items, total assets, loans, total
deposits and total equity and compared the percentage contribution of SBI to the
pro forma combined figures for SBI and Union Planters and to the percentage of
total outstanding Union Planters common stock that would be owned by the SBI
shareholders as a result of the merger. The contribution analysis showed that
SBI would contribute 0.9% of pro forma combined net revenues before provision
for loan losses, 0.8% of pro forma combined net revenues after provision for
loan losses, 0.9% of pro forma combined net income before preferred dividends
and extraordinary items, 1.0% of pro forma combined total assets, 1.2% of pro
forma combined loans, 1.1% of pro forma combined total deposits, and 0.9% of pro
forma combined total equity. Under the terms of the Agreement, SBI shareholders
would own 0.9% of the total outstanding Union Planters common shares. Ownership
figures are based on an exchange ratio of 11.87.

         No company or transaction used in the above analyses as a comparison is
identical to SBI, Union Planters, or the merger. Accordingly, an analysis of the
results of the foregoing is not mathematical; rather, it involves complex
considerations and judgements concerning differences in financial and operating
characteristics of the companies and other facts that could affect the public
trading value of the companies to which they are being compared.

         As described above, Stifel's oral opinion was among the many factors
taken into consideration by the SBI board in making its determination to approve
the merger.

         Pursuant to the terms of Stifel's engagement, SBI has paid Stifel a
nonrefundable cash fee of $25,000 upon the execution of the engagement letter
and a nonrefundable cash fee of $250,000 upon the execution of the definitive
agreement and has agreed to pay Stifel a future fee equal to 1.00% of the total
aggregate consideration less $250,000 at the closing of the transaction. SBI has
also agreed

                                       32

<PAGE>   42



to reimburse Stifel for certain out-of-pocket expenses and has agreed to
indemnify Stifel, its affiliates and their respective partners, directors,
officers, agents, consultants, employees and controlling persons against certain
liabilities, including liabilities under the federal securities laws. Stifel has
rendered investment banking services to SBI from time to time in the past with
respect to other transactions, and expects to continue to do so in the future.

          In the ordinary course of its business, Stifel actively trades equity
securities of Union Planters for its own account and for the accounts of its
customers and, accordingly, may at any time hold a long or short position in
such securities. Stifel has performed various investment banking services for
Union Planters from time to time in the past, and expects to render such
services to Union Planters and its subsidiaries and affiliates in the future.

EFFECTIVE TIME OF THE MERGER

          Subject to the conditions to the obligations of the parties to effect
the merger, the merger will become effective when Articles of Merger reflecting
the merger become effective with the Secretary of State of the Commonwealth of
Kentucky and the Secretary of State of the State of Tennessee. Unless Union
Planters and SBI agree otherwise, they will use reasonable efforts to cause the
merger to become effective on the date designated by Union Planters that is
within 15 days after the last to occur of:

          (1)  the effective date of the last consent of any regulatory
               authority having authority over and approving or exempting the
               merger (taking into account any required waiting period);

          (2)  the date on which SBI's shareholders approve the Agreement and
               the Plan of Merger; and

          (3)  the date on which all other conditions precedent, other than
               those conditions which relate to those actions to be taken at
               closing, to each party's obligations under the Agreement have
               been satisfied or waived.

          Union Planters and SBI anticipate that the merger will become
effective on or about December 31, 1998. However, delays could occur.

          Union Planters and SBI cannot assure that the necessary shareholder
and regulatory approvals of the merger will be obtained or that other conditions
precedent to the merger can or will be satisfied. Either SBI's or Union
Planters' board of directors may terminate the Agreement and the Plan of Merger
if the merger is not completed by March 31, 1999, unless it is not completed
because of the willful breach of the Agreement by the party seeking termination.
See "-- Conditions to Consummation of the Merger" and "-- Waiver, Amendment, and
Termination."


                                       33

<PAGE>   43



DISTRIBUTION OF UNION PLANTERS STOCK CERTIFICATES

          Promptly after the merger is completed, each former SBI shareholder
will be mailed a letter of transmittal and instructions for the exchange of the
certificates representing shares of SBI common stock for certificates
representing shares of Union Planters common stock. Union Planters expects that
the corporate trust department of one of its bank subsidiaries will serve as
exchange agent.

          You should not send in your certificates until you receive a letter of
transmittal and instructions.

          After you surrender to the exchange agent certificates for SBI common
stock with a properly completed letter of transmittal, the exchange agent will
mail you a certificate or certificates representing the number of shares of
Union Planters common stock to which you are entitled and a check for the amount
to be paid in lieu of any fractional share (without interest), if any, together
with all undelivered dividends or distributions in respect of the shares of
Union Planters common stock (without interest thereon), if any. Union Planters
will not be obligated to deliver the consideration to you, as a former SBI
shareholder, until you have surrendered your SBI common stock certificates.

          Whenever a dividend or other distribution is declared by Union
Planters on Union Planters common stock with a record date after the date on
which the merger became effective, the declaration will include dividends or
other distributions on all shares of Union Planters common stock that may be
issued in the merger. However, Union Planters will not pay any dividend or other
distribution that is payable after the effective date of the merger to any
former SBI shareholder who has not surrendered his or her SBI common stock
certificate until the holder surrenders the certificate. If any SBI
shareholder's common stock certificate has been lost, stolen, or destroyed, the
exchange agent will issue the shares of Union Planters common stock and any cash
in lieu of fractional shares upon the shareholder's submission of an affidavit
claiming the certificate to be lost, stolen, or destroyed by the shareholder of
record and the posting of a bond in such amount as Union Planters may reasonably
direct as indemnity against any claim that may be made against Union Planters
with respect to the certificate.

          At the time the merger becomes effective, the stock transfer books of
SBI will be closed to SBI's shareholders and no transfer of shares of SBI common
stock by any shareholder will thereafter be made or recognized. If certificates
for shares of SBI common stock are presented for transfer after the merger
becomes effective, they will be canceled and exchanged for shares of Union
Planters common stock, a check for the amount due in lieu of fractional shares,
if any, and any undelivered dividends on the Union Planters common stock.

LIMITATIONS ON NEGOTIATIONS

          Section 8.8 of the Agreement provides that neither SBI nor of its
representatives will, directly or indirectly, solicit any proposal for the
acquisition of SBI or its subsidiaries, except to the extent necessary to comply
with the fiduciary duties of SBI's board of directors as advised by

                                       34

<PAGE>   44



counsel, furnish non-public information concerning SBI that it is not legally
obligated to furnish, negotiate with respect to, or enter into any contract with
respect to, any proposal to acquire SBI or its subsidiaries ("Acquisition
Proposal"). SBI must promptly notify Union Planters immediately following
receipt of any Acquisition Proposal. As protection against possible violation of
this limitation, SBI has agreed, under certain circumstances, to pay to Union
Planters the sum of $3,000,000 at the time that SBI enters into a letter of
intent or agreement with respect to an Acquisition Proposal or supports or
indicates an intent to support an Acquisition Proposal other than pursuant to
the Agreement. The limitation would survive termination of the Agreement in
certain circumstances. This provision may have, or may have had, the effect of
discouraging competing offers to acquire or merge with SBI.

CONDITIONS TO CONSUMMATION OF THE MERGER

          Union Planters and SBI are required to complete the merger only after
the satisfaction of various conditions. These conditions include:

          (1)  the approval of the Agreement and the Plan of Merger by the
               holders of a majority of the outstanding shares of SBI common
               stock;

          (2)  the receipt by Union Planters and SBI of certain required
               regulatory approvals;

          (3)  the receipt by Union Planters and SBI of a written opinion of
               Wyatt, Tarrant & Combs as to the tax-free nature of the merger;

          (4)  the declaration by the Securities and Exchange Commission that
               the registration statement registering the shares of Union
               Planters common stock to be issued to SBI shareholders in the
               merger, has become effective under the Securities Act of 1993, as
               amended;

          (5)  the shares of Union Planters common stock to be issued in the
               merger being approved for listing on the New York Stock Exchange,
               subject to official notice of issuance;

          (6)  the accuracy, as of the date of the Agreement and as of the date
               the merger becomes effective, of the representations and
               warranties of SBI and Union Planters as set forth in the
               Agreement;

          (7)  the performance of all agreements and the compliance with all
               covenants of SBI and Union Planters as set forth in the
               Agreement;

          (8)  the receipt of all other consents that may be required to
               complete the merger or to prevent any default under any contract
               or permit which would be reasonably likely to have, individually
               or in the aggregate, a material adverse effect on SBI or Union
               Planters;

          (9)  the receipt by Union Planters as of the date the merger becomes
               effective of a letter from PricewaterhouseCoopers LLP to the
               effect that the merger will qualify for pooling-of-interests
               accounting treatment;

                                       35

<PAGE>   45




          (10) the absence of any law or order or any action taken by any court,
               governmental, or regulatory authority of competent jurisdiction
               prohibiting or restricting the merger or making it illegal;

          (11) the receipt by Union Planters of agreements from each person SBI
               reasonably believes may be deemed an affiliate of SBI; and

          (12) the satisfaction of certain other conditions, including the
               receipt of various certificates from the officers of Union
               Planters and SBI.

          Neither Union Planters nor SBI can assure SBI shareholders as to when
or if all of the conditions to the merger can or will be satisfied or waived by
the party permitted to do so. If the merger is not effected on or before March
31, 1999, the board of directors of either SBI or Union Planters may terminate
the Agreement and abandon the merger. See "-- Waiver, Amendment, and
Termination."

REGULATORY APPROVAL

          Union Planters must receive certain regulatory approvals before the
merger can be completed. There is no assurance that these regulatory approvals
will be obtained or when they will be obtained.

          It is a condition to the completion of the merger that Union Planters
and SBI receive all necessary regulatory approvals to the merger, without the
imposition by any regulator of any condition that, in the reasonable judgment of
the Union Planters board of directors, would so materially adversely impact the
financial or economic benefits of the merger that, had such condition or
requirement been known, Union Planters would not have entered into the
Agreement. There can be no assurance that the regulatory approvals of the merger
will not contain terms, conditions or requirements which would have such an
impact.

          SBI and Union Planters are not aware of any material governmental
approvals or actions that are required to complete the merger, except as
described below. Should any other approval or action be required, Union Planters
and SBI contemplate that they would seek such approval or action.

          The merger is subject to the prior approval of the Federal Reserve,
pursuant to Section 3 of the Bank Holding Company Act. Factors considered by the
Federal Reserve in evaluating the merger are discussed under the heading
"CERTAIN REGULATORY CONSIDERATIONS-General" on page 79. The merger may not be
consummated until the 30th day following the date of the Federal Reserve
approval, although the Federal Reserve may reduce that period to 15 days. During
this period, the United States Department of Justice is given the opportunity to
challenge the transaction on antitrust grounds. The commencement of any
antitrust action would stay the effectiveness of the approval of the agencies,
unless a court of competent jurisdiction specifically ordered otherwise. As of
November ___, 1998, the Federal Reserve has not advised Union Planters that it
had approved the merger.

                                       36

<PAGE>   46



WAIVER, AMENDMENT, AND TERMINATION

          To the extent permitted by law, the boards of directors of Union
Planters and SBI may agree in writing to amend the Agreement, whether before or
after SBI's shareholders have approved the Agreement and the Plan of Merger;
provided, however, that after such approval by the SBI shareholders, no
amendments may be made which modify in any material respect the consideration to
be received by the holders of the SBI common stock without further approval of
such shareholders. In addition, before or at the time the merger becomes
effective, either SBI or Union Planters, or both, may waive any default in the
performance of any term of the Agreement by the other party or may waive or
extend the time for the compliance or fulfillment by the other party of any and
all of its obligations under the Agreement. In addition, either Union Planters
or SBI may waive any of the conditions precedent to its obligations under the
Agreement, unless a violation of any law or governmental regulation would
result. To be effective, a waiver must be in writing and signed by a duly
authorized officer of SBI or Union Planters, as the case may be.

          At any time before the merger becomes effective, the boards of
directors of Union Planters and SBI may agree to terminate the Agreement and the
Plan of Merger. In addition, either SBI's board of directors or the Union
Planters board of directors may terminate the Agreement in the following
circumstances:

          (1)  in certain circumstances, upon the inaccuracy of any
               representation or warranty of a party contained in the Agreement
               if the inaccuracy cannot be or has not been cured within 30 days
               after the giving of written notice to the breaching party of such
               inaccuracy and which inaccuracy would provide the terminating
               property the ability to refuse to consummate the merger under the
               applicable standards set forth in the Agreement (provided that
               the terminating party is not then in breach of any representation
               and warranty contained in the Agreement under the applicable
               standards set forth in the Agreement or in material breach of any
               covenant or other agreement contained in the Agreement);

          (2)  if a material breach by the other party of any covenant or
               agreement contained in the Agreement cannot be or has not been
               cured within 30 days after the giving of written notice to the
               breaching party of such breach (provided that the terminating
               party is not then in breach of any representation and warranty
               contained in the Agreement under the applicable standards set
               forth in the Agreement or in material breach of any covenant or
               other agreement contained in the Agreement);

          (3)  if any consent of any regulatory authority required to complete
               the merger or other transactions contemplated by the Agreement
               has been denied by final nonappealable action, or if any action
               taken by such authority is not appealed within the time limit for
               appeal;

          (4)  if the shareholders of SBI fail to approve the Agreement, the
               Plan of Merger and the merger at the special meeting; or


                                       37

<PAGE>   47



          (5)  if the merger is not consummated by March 31, 1999, provided that
               the failure to consummate is not caused by any willful breach of
               the Agreement by the party electing to terminate.

          If the merger is terminated, the Agreement and the Plan of Merger will
become void and have no effect, except that certain provisions of the Agreement,
including those relating to the obligations to share certain expenses and
maintain the confidentiality of certain information obtained, will survive.
Termination of the Agreement will not relieve any breaching party from liability
for any uncured willful breach of a representation, warranty, covenant, or
agreement. See "-- Expenses and Fees".

CONDUCT OF BUSINESS PENDING THE MERGER

          The Agreement obligates SBI to conduct its business only in the usual,
regular, and ordinary course before the merger becomes effective and imposes
certain limitations on the operations of SBI and its banking subsidiaries. These
items are listed in Article 7 of the Agreement which is attached as Appendix A
to this proxy statement-prospectus. The Agreement authorizes SBI to declare and
pay regular quarterly dividends on the SBI common stock in accordance with its
past practice in an amount not to exceed $1.85 per share per quarter. The
Agreement contemplates that the merger will be timed to occur at such a time
that the SBI shareholders will not fail to receive a dividend during a quarterly
period, nor will they receive a dividend on both their SBI common stock and the
Union Planters common stock they receive in the merger during the same quarterly
period.

          Union Planters and SBI have also agreed not to take any action that
would (a) materially adversely affect their ability to obtain any consents
required for the merger or prevent the merger from qualifying for
pooling-of-interests accounting treatment or as a tax-free reorganization under
the Internal Revenue Code (see "-- Certain Federal Income Tax Consequences of
the Merger"), or (b) materially adversely affect their ability to perform their
covenants and agreements under the Agreement.

MANAGEMENT AND OPERATIONS AFTER THE MERGER

          The merger will not change the present management team or board of
directors of Union Planters. Information concerning the management of Union
Planters is included in the documents incorporated by reference in this proxy
statement-prospectus. See "WHERE YOU CAN FIND MORE INFORMATION." For additional
information regarding the interests of certain persons in the merger, see "--
Interests of Certain Persons in the Merger."

          The current officers and directors of the SBI's subsidiary banks will
continue to serve in their respective capacities on behalf of the SBI banks.
UPHC, as the sole shareholder of the SBI subsidiary banks after the merger, may
change the composition of the board of directors of those banks. Union Planters
currently expects that each of the SBI subsidiary banks will be merged into UPB,
a second-tier subsidiary of Union Planters, as soon as practicable after the
merger becomes effective. At such time, executive officers of SBI's subsidiary
banks could be offered positions as

                                       38

<PAGE>   48



regional officers, and directors of SBI's subsidiary banks could be offered
positions as advisory directors of UPB. For additional information regarding the
interests of certain persons in the merger, see "-- Interests of Certain Persons
in the Merger."

         UPHC will be the surviving corporation resulting from the merger and
will continue to be governed by the laws of the State of Tennessee and operate
in accordance with its charter and bylaws.

INTERESTS OF CERTAIN PERSONS IN THE MERGER

         GENERAL. Certain members of SBI's management may be deemed to have
certain interests in the merger that are in addition to their interests as
shareholders of SBI generally. SBI's board of directors was aware of these
interests and considered them, among other matters, in approving the Agreement,
the Plan of Merger and the merger.

         EMPLOYMENT AGREEMENT James D. Rickard ("Rickard") will be offered an
employment agreement with Union Planters after consummation of the merger. The
employment agreement will provide for an employment term which commences upon
the Effective Time and terminates on ___________, 2001. The employment agreement
will provide Rickard with a base salary in an amount commensurate with salaries
of similarly situated employees of Union Planters, and Rickard will be entitled
to participate in the various employee benefit plans offered by Union Planters.
The employment agreement will provide that if the executive is terminated
without cause anytime during the term of the employment agreement, he will be
paid an amount equal to the greater of (i) his base salary for the remainder of
the term, or (ii) twelve (12) months' base salary. The employment agreement will
also contain provisions prohibiting Rickard from competing with Union Planters
or disclosing certain confidential information during the term of the employment
agreement and the two (2) years following the termination of the employment
agreement by Union Planters for cause or by Rickard.

         STOCK OPTIONS. As reflected in the table below, four (4) executive
officers of SBI currently have outstanding stock options to purchase SBI stock
for the price set forth thereon. If the merger is consummated, all options,
except for the options granted to James D. Rickard in 1994, will become fully
exercisable. The options granted to James D. Rickard in 1994 will vest in
accordance with his agreement with SBI.

<TABLE>
<CAPTION>

                          DATE        NUMBER OF       OPTION   EXERCISED TO    OPTIONS
       GRANTEE          OF GRANT       SHARES          PRICE       DATE      OUTSTANDING
- ----------------------------------------------------------------------------------------
<S>                     <C>           <C>            <C>       <C>           <C>
James D. Rickard        05/10/94        1,000        $   140.00     800          200
James D. Rickard        12/24/96        3,000            221.84       0        3,000
Robert R. Bryant        12/24/96          250            221.84      50          200
Steve Tolliver          12/24/96          250            221.84      32          218
Timothy Barnes          12/24/96          250            221.84       0          250
                                      ---------                               ----------

Total                                   4,750                                  3,868
                                      =========                               ==========
</TABLE>


                                       39
<PAGE>   49

         Upon consummation of the merger, each of the outstanding options to
purchase SBI common stock will be converted into and become options to purchase
Union Planters' common stock in an amount equal to the number of options to
purchase SBI common stock prior to the effective time multiplied by the exchange
ratio and at the price equal to the per share exercise price for such option to
purchase SBI common stock divided by the exchange ratio. The resulting number of
options and exercise prices are set forth in the table below.

<TABLE>
<CAPTION>
                                                                                                                          UNION
                                              MULTIPLIED BY            UNION                     DIVIDED BY THE          PLANTERS
                                 OUTSTANDING    THE 11.87             PLANTERS                       11.87               EXERCISE
    GRANTEE                      SBI OPTIONS  EXCHANGE RATIO          OPTIONS        SBI PRICE   EXCHANGE RATIO           PRICE
- ---------------------------------------------------------------------------------------------------------------------------------

<S>                              <C>          <C>                     <C>          <C>           <C>                    <C>
James D. Rickard                      200       X 11.87 =              2,374       $    140.00  /    11.87    =         $   11.79

James D. Rickard                    3,000       X 11.87 =             35,610            221.84  /    11.87    =             18.69

Robert R. Bryant                      200       X 11.87 =              2,374            221.84  /    11.87    =             18.69

Steve Tolliver                        218       X 11.87 =              2,587            221.84  /    11.87    =             18.69

Timothy Barnes                        250       X 11.87 =              2,967            221.84  /    11.87    =             18.69
</TABLE>


         INDEMNIFICATION; DIRECTORS AND OFFICERS INSURANCE. Union Planters has
agreed to indemnify the present and former directors, officers, employees, and
agents of SBI and its subsidiaries against certain liabilities arising out of
actions or omissions occurring at or prior to the effective time (including the
merger) to the full extent permitted under Tennessee law, SBI's articles of
incorporation or bylaws. This provision of the Agreement is consistently
included in Union Planters' standard form merger agreement and is not intended
to broaden in any manner the scope of indemnification to which the present and
former directors, officers, employees, and agents of SBI and its subsidiaries
are entitled, but serves to ratify the legal obligations of SBI and its
subsidiaries to provide indemnification in accordance with Tennessee law, SBI's
articles of incorporation or bylaws. These obligations will be assumed by UPHC
upon completion of the merger. The indemnification provided under these
instruments will be subject to the same standards that currently apply in
determining whether indemnified parties are entitled to indemnification.

ACCOUNTING TREATMENT

         It is anticipated that the merger will be accounted for as a
pooling-of-interests. Under the pooling-of-interests method of accounting, the
recorded amounts of the assets and liabilities of SBI will be carried forward at
their previously recorded amounts. Since SBI is not considered significant to
Union Planters from a financial statement presentation standpoint, the operating
results will be included in Union Planters results from the effective time of
the merger forward.


                                       40
<PAGE>   50

         In order for the merger to qualify for pooling-of-interests accounting
treatment, substantially all (90% or more) of the outstanding SBI common stock
must be exchanged for Union Planters common stock with substantially similar
terms. There are certain other criteria that must be satisfied in order for the
merger to qualify as a pooling-of-interests. Some of the criteria cannot be
satisfied until after the merger becomes effective. In addition, it is a
condition to closing the merger that PricewaterhouseCoopers LLP deliver a letter
to Union Planters to the effect the merger will qualify for pooling-of-interests
accounting treatment.

         Certain conditions will be imposed on the exchange of SBI common stock
for Union Planters common stock in the merger by affiliates of SBI. Certain
restrictions will also be imposed on the transferability of the Union Planters
common stock received by those affiliates in the merger. These conditions and
restrictions will be imposed in order, among other things, to ensure the
availability of pooling-of-interests accounting treatment. For information
concerning these conditions and restrictions see " - Resales of Union Planters
Common Stock."

EXPENSES AND FEES

         Union Planters and SBI will each pay its own expenses in connection
with the merger, including filing, registration and application fees, printing
fees, and fees and expenses of its own financial or other consultants,
investment bankers, accountants, and counsel, except that each of Union Planters
and SBI will bear and pay the filing fees payable in connection with the proxy
statement-prospectus and the printing and mailing costs incurred in connection
with the printing and mailing of the registration statement and this proxy
statement-prospectus based upon the relative asset sizes of the parties as of
December 31, 1997.

RESALES OF UNION PLANTERS COMMON STOCK

         Union Planters common stock to be issued to shareholders of SBI in the
merger will be registered under the Securities Act of 1933, as amended. All
shares of Union Planters common stock received by shareholders of SBI in the
merger will be freely transferable after the merger by those shareholders of SBI
who are not considered to be "affiliates" of SBI or Union Planters. "Affiliates"
generally are defined as persons or entities who control, are controlled by, or
are under common control with SBI or Union Planters at the time of the special
meeting (generally, executive officers, directors, and 10% or greater
shareholders).

         Rule 145 promulgated under the Securities Act of 1993, as amended,
restricts the sale of Union Planters common stock received in the merger by
affiliates of SBI and certain of their family members and related entities.
Under the rule, during the first calendar year after the merger becomes
effective, affiliates of SBI or Union Planters may resell publicly the Union
Planters common stock they receive in the merger but only within certain
limitations as to the amount of Union Planters common stock they can sell in any
three-month period and as to the manner of sale. After the one-year period,
affiliates of SBI who are not affiliates of Union Planters may resell their
shares without restriction. Union Planters must continue to satisfy its
reporting requirements under the Securities Exchange Act of 1934, as amended, in
order for affiliates to resell, under Rule 145, shares of Union Planters common
stock received in the merger. Affiliates also would be


                                       41
<PAGE>   51

permitted to resell Union Planters common stock received in the merger pursuant
to an effective registration statement under the Securities Act of 1933, as
amended, or an available exemption from the Securities Act of 1933, as amended,
registration requirements. This proxy statement-prospectus does not cover any
resales of Union Planters common stock received by persons who may be deemed to
be affiliates of SBI or Union Planters.

         The Securities and Exchange Commission's guidelines regarding
qualifying for the "pooling-of-interests" method of accounting also limit sales
of shares of Union Planters and SBI by their affiliates in connection with the
merger. The Securities and Exchange Commission guidelines indicate that the
"pooling-of-interests" method of accounting generally will not be challenged on
the basis of sales by affiliates of the acquiring or acquired company if such
affiliates do not dispose of any of the shares of the corporation they own, or
shares of a corporation they receive in connection with a merger, during the
period beginning 30 days before the merger is consummated and ending when
financial results covering at least 30 days of post-merger operations of the
combined companies have been published.

         SBI has agreed to use its reasonable efforts to cause each person who
may be deemed to be an affiliate of SBI to execute and deliver to Union Planters
not later than 30 days prior to the effective time of the merger, an agreement
intended to ensure compliance with the Securities Act of 1933, as amended, and
to preserve the ability of the merger to be accounted for as a "pooling of
interests." Each SBI affiliate must agree not to sell, pledge, transfer, or
otherwise dispose of any SBI common stock held by the affiliate except as
contemplated by the Agreement or the affiliate agreement. In addition, each SBI
affiliate must agree not to sell, pledge, transfer or otherwise dispose of any
Union Planters common stock received in the merger (1) except in compliance with
the Securities Act of 1933, as amended, and the rules and regulations under the
Securities Act of 1933, as amended, and (2) until such time as financial results
covering 30 days of combined operations of Union Planters and SBI have been
published. Prior to publication of such results, Union Planters will not
transfer on its books any shares of Union Planters common stock received by an
affiliate in the merger. The stock certificates representing Union Planters
common stock issued to affiliates in the merger may bear a legend summarizing
these restrictions on transfer. See "-- Conditions to Consummation of the
Merger."


                 EFFECT OF THE MERGER ON RIGHTS OF SHAREHOLDERS

         In the merger, shareholders of SBI will exchange their shares of SBI
for shares of Union Planters. SBI is a Kentucky corporation governed by Kentucky
law and SBI's articles of incorporation and bylaws. Union Planters is a
Tennessee corporation governed by Tennessee law and Union Planters' charter and
bylaws. There are significant differences between the rights of SBI shareholders
and Union Planters' shareholders. The following is a summary of the principal
differences between the current rights of SBI shareholders and those of Union
Planters' shareholders.


                                       42
<PAGE>   52

         The following summary is not intended to be complete and is qualified
it its entirety by reference to the Kentucky Revised Statutes and the Tennessee
Business Corporation Act as well as Union Planters' charter and bylaws and SBI's
articles of incorporation and bylaws.

ANTI-TAKEOVER PROVISIONS GENERALLY

         UNION PLANTERS. Union Planters' charter and bylaws contain certain
provisions designed to assist the Union Planters board of directors in playing a
role if any group or person attempts to acquire control of Union Planters so
that the Union Planters board of directors can further protect the interests of
Union Planters and its shareholders under the circumstances. These provisions
may help the Union Planters board of directors determine that a sale of control
is in the best interests of Union Planters' shareholders, or enhance the Union
Planters board of directors' ability to maximize the value to be received by the
shareholders upon a sale of control of Union Planters.

         Although Union Planters' management believes that these provisions are
beneficial to Union Planters' shareholders, they also may tend to discourage
some takeover bids. As a result, Union Planters' shareholders may be deprived of
opportunities to sell some or all of their shares at prices that represent a
premium over prevailing market prices. On the other hand, defeating undesirable
acquisition offers can be a very expensive and time-consuming process. To the
extent that these provisions discourage undesirable proposals, Union Planters
may be able to avoid those expenditures of time and money.

         These provisions also may discourage open market purchases by a company
that may desire to acquire Union Planters. Those purchases may increase the
market price of Union Planters common stock temporarily, and enable shareholders
to sell their shares at a price higher than that they might otherwise obtain. In
addition, these provisions may decrease the market price of Union Planters
common stock by making the stock less attractive to persons who invest in
securities in anticipation of price increases from potential acquisition
attempts. The provisions also may make it more difficult and time consuming for
a potential acquiror to obtain control of Union Planters through replacing the
board of directors and management. Furthermore, the provisions may make it more
difficult for Union Planters' shareholders to replace the board of directors or
management, even if a majority of the shareholders believe that replacing the
board of directors or management is in the best interests of Union Planters.
Because of these factors, these provisions may tend to perpetuate the incumbent
board of directors and management. For more information about these provisions,
see "-- Authorized Capital Stock," "-- Amendment of Charter and Bylaws," "--
Classified Board of Directors and Absence of Cumulative Voting," "-- Director
Removal and Vacancies," "-- Limitations on Director Liability," "--
Indemnification," "-- Special Meetings of Shareholders," "-- Actions by
Shareholders Without a Meeting," "-- Shareholder Nominations and Proposals" and
"-- Business Combinations."

         SBI. SBI's articles of incorporation contain certain anti-takeover
provisions which are described below. These provisions may discourage or prevent
tender or exchange offers by a corporation or group that intends to use the
acquisition of a substantial number of shares of SBI to initiate a takeover
culminating in a merger or other business combination. These provisions may also
have the effect of making the removal of current management more difficult.


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<PAGE>   53

AUTHORIZED CAPITAL STOCK

         UNION PLANTERS. Union Planters is authorized to issue 300,000,000
shares of common stock, of which 136,063,035 shares were issued and outstanding
as of October 31, 1998, and 10,000,000 shares of no par value preferred stock,
of which 968,865 shares of Series E preferred stock were issued and outstanding
as of October 31, 1998. The Union Planters' board of directors may authorize the
issuance of additional shares of common stock without further action by its
shareholders, unless applicable laws or regulations or a stock exchange on which
Union Planters' capital stock is listed requires shareholder action.

         Union Planters may issue, without a shareholders vote, shares of its
preferred stock, in one or more classes or series, with voting, conversion,
dividend, and liquidation rights as it specifies in its charter. The Union
Planters board of directors may determine, among other things, the distinctive
designation and number of shares comprising a series of preferred stock, the
dividend rate or rates on the shares of such series and the relation of such
dividends to the dividends payable on other classes of stock, whether the shares
of such series shall be convertible into or exchangeable for shares of any other
class or series of Union Planters capital stock, the voting powers if any of
such series, and any other preferences, privileges, and powers of such series.

         In the event of the voluntary or involuntary liquidation, dissolution,
distribution of assets, or winding up of Union Planters, holders of preferred
stock will have priority over holders of common stock.

         The authority to issue additional shares of common stock or preferred
stock provides Union Planters with the flexibility necessary to meet its future
needs without the delay resulting from seeking shareholder approval. The
authorized but unissued shares of common stock and preferred stock may be issued
from time to time for any corporate purpose, including, stock splits, stock
dividends, employee benefit and compensation plans, acquisitions, and public or
private sales for cash as a means of raising capital. The shares could be used
to dilute the stock ownership of persons seeking to obtain control of Union
Planters. The sale of a substantial number of shares of voting stock to persons
who have an understanding with Union Planters concerning the voting of such
shares, or the distribution or declaration of a dividend of shares of voting
stock (or the right to receive voting stock) to its shareholders, may have the
effect of discouraging or increasing the cost of unsolicited attempts to acquire
control of Union Planters.

         Union Planters has a share purchase rights plan ("Preferred Share
Rights Plan") and distributed a dividend of one preferred share unit purchase
right ("Preferred Share Right") for each outstanding share of Union Planters
common stock. Under the Plan, one Preferred Share Right is automatically
distributed for each share of Union Planters common stock. The Preferred Share
Rights may deter coercive takeover tactics and encourage persons interested in
potentially acquiring control of Union Planters to treat each shareholder on a
fair and equal basis. Each Preferred Share Right trades on the same basis with
the share of Union Planters common stock to which it relates until the
occurrence of certain events. Upon a potential change in control of Union
Planters, the Preferred Share Rights would separate from Union Planters common
stock and each holder of a Preferred Share Right (other than the potential
acquiror) would be entitled to purchase


                                       44
<PAGE>   54

equity securities of Union Planters at prices below their market value. Union
Planters has authorized 750,000 shares of Series A preferred stock for issuance
under the Preferred Share Rights Plan. No shares have been issued as of the date
of this proxy statement-prospectus. Until a Preferred Share Right is exercised,
the holder has no rights as a shareholder of Union Planters.

         SBI. SBI is authorized to issue 500,000 shares of common stock, of
which 101,440 shares were issued and outstanding as of October 31, 1998, and 500
shares of no par value preferred stock, none of which were issued and
outstanding as of October 31, 1998. The SBI board of directors may authorize the
issuance of additional shares of common stock without further action by its
shareholders unless applicable laws or regulations require shareholder action.

         SBI may issue, without a shareholders vote, shares of its preferred
stock, in one or more classes or series, with voting, conversion, dividend and
liquidation rights as it specifies in its charter. The SBI board of directors
may determine, among other things, the distinctive designation and number of
shares comprising a series of preferred stock, the dividend rate or rates on the
shares of such series and the relation of such dividends to the dividends
payable on other classes of stock, whether the shares of such series shall be
convertible into or exchangeable for shares of any other class or series of SBI
capital stock, the voting powers if any of such series, and any other
preferences, or privileges of such series. In the event of the voluntary or
involuntary liquidation, dissolution, distribution of assets, or winding up of
SBI, holders of preferred stock will have priority over holders of common stock.

PREEMPTIVE RIGHTS

         UNION PLANTERS. The Tennessee Business Corporation Act provides that,
unless a Tennessee corporation's charter expressly provides for preemptive
rights, shareholders of a Tennessee corporation do not have a preemptive right
to acquire proportional amounts of the corporation's unissued shares upon a
decision of the board of directors to issue shares. The Union Planters charter
does not provide for preemptive rights to its shareholders.

         SBI. The Kentucky Business Corporation Act provides that, unless a
Kentucky corporation's charter expressly provides for preemptive rights,
shareholders of a Kentucky corporation do not have a preemptive right to acquire
proportional amounts of the corporation's unissued shares upon a decision of the
board of directors to issue shares. SBI's charter expressly states that SBI
shareholders do not have preemptive rights.

AMENDMENT OF CHARTER AND BYLAWS

         UNION PLANTERS. Union Planters may amend its charter in any manner
permitted by Tennessee law. The Tennessee Business Corporation Act provides that
a corporation's charter may be amended by a majority of votes entitled to be
cast on an amendment, subject to any condition the board of directors may place
on its submission of the amendment to the shareholders. Union Planters' charter
requires a vote of two-thirds or more of the shares of capital stock entitled to
vote in an election of directors to amend the articles of the charter governing
directors and to


                                       45
<PAGE>   55

remove a director from office, whether with or without cause. A two-thirds vote
is also required to amend, alter, or repeal the article of the charter relating
to business combinations.

         The Union Planters board of directors may adopt, amend, or repeal Union
Planters' bylaws by a majority vote of the entire board of directors. The bylaws
may also be amended or repealed by action of Union Planters' shareholders.

         Union Planters' charter provides that the Union Planters board of
directors must exercise all powers unless otherwise provided by law. The board
of directors may designate an executive committee consisting of five or more
directors and may authorize that committee to exercise all of the authority of
the board of directors.

         SBI. SBI may amend its charter in any manner permitted by Kentucky law.
The Kentucky Business Corporation Act provides that a corporation's charter may
be amended by a majority of votes entitled to be cast on an amendment, subject
to any condition the board of directors may place on its submission of the
amendment to the shareholders. The Articles of Incorporation of SBI require a
vote of two-thirds or more of the outstanding shares of SBI common stock in
order to amend, alter, modify or repeal the provision of SBI's Articles relating
to (i) the election of directors and (ii) certain SBI business combinations and
dispositions of assets.

         The SBI board of directors may adopt, amend or repeal the SBI Bylaws by
a vote of two-thirds of the entire board of directors, subject always to the
power of the SBI shareholders to change or repeal such bylaws.

CLASSIFIED BOARD OF DIRECTORS AND ABSENCE OF CUMULATIVE VOTING

         UNION PLANTERS. The Union Planters charter provides that the Union
Planters board of directors is divided into three classes, with each class to be
as nearly equal in number as possible. The directors in each class serve
three-year terms of office. The effect of Union Planters having a classified
board of directors is that only approximately one-third of the members of the
Union Planters board of directors are elected each year. As a result, two annual
meetings are required for Union Planters' shareholders to change a majority of
the members of the Union Planters board of directors.

         The purpose of dividing the Union Planters board of directors into
classes is to facilitate continuity and stability of leadership of Union
Planters by ensuring that experienced personnel familiar with Union Planters
will be represented on the board of directors at all times, and to permit Union
Planters' management to plan for the future for a reasonable amount of time.
However, by potentially delaying the time within which an acquirer could obtain
working control of the Union Planters board of directors, this provision may
discourage some potential mergers, tender offers, or takeover attempts.

         Pursuant to the Union Planters charter, each holder of Union Planters 
common stock is entitled to one vote for each share of Union Planters common
stock held in the election of directors, and is not entitled to cumulative
voting rights in the election of directors. With


                                       46
<PAGE>   56

cumulative voting, a shareholder has the right to cast a number of votes equal
to the total number of such holder's shares multiplied by the number of
directors to be elected. The shareholder has the right to distribute all of his
or her votes in any manner among any number of candidates or to accumulate such
shares in favor of one candidate.

         Directors are elected by a plurality of the total votes cast by all
shareholders. With cumulative voting, it may be possible for minority
shareholders to obtain representation on the Union Planters board of directors.
Without cumulative voting, the holders of more than 50% of the shares of Union
Planters common stock generally have the ability to elect 100% of the Union
Planters board of directors. As a result, the holders of the remaining Union
Planters common stock effectively may not be able to elect any person to the
Union Planters board of directors. The absence of cumulative voting thus could
make it more difficult for a shareholder who acquires less than a majority of
the shares of Union Planters common stock to obtain representation on the Union
Planters board of directors.

         SBI. SBI's charter provides that SBI's board of directors is divided
into three classes, with each class to be as nearly equal in number as possible.
The directors in each class serve three-year terms of office. The effect of SBI
having a classified board of directors is that only approximately one-third of
the members of the SBI board of directors are elected each year. As a result,
two annual meetings are required for SBI's shareholders to change a majority of
the members of the SBI board of directors.

         Pursuant to SBI's charter, each holder of SBI common stock is entitled
to one vote for each share of SBI common stock held in the election of
directors, and is entitled to cumulative voting rights in the election of
directors. With cumulative voting, a shareholder has the right to cast a number
of votes equal to the total number of such holder's shares multiplied by the
number of directors to be elected. The shareholder has the right to distribute
all of his or her votes in any manner among any number of candidates or to
accumulate such shares in favor of one candidate.

DIRECTOR REMOVAL

         UNION PLANTERS. Union Planters' charter provides that a director may be
removed by the shareholders only if the shareholders holding at least two-thirds
of the voting power entitled to vote generally in the election of directors vote
for such removal. The purpose of this provision is to prevent a majority
shareholder from circumventing the classified board system by removing directors
and filling the vacancies with new individuals selected by that shareholder.
This provision may have the effect of impeding efforts to gain control of the
board of directors by anyone who obtains a controlling interest in Union
Planters common stock.

         SBI. SBI Articles of Incorporation require the affirmative vote of at
least two-thirds of the outstanding shares of SBI common stock for the removal
without cause of any or all directors of SBI. An SBI director may be removed
"for cause" by the vote of a majority of the outstanding shares of SBI common
stock entitled to vote thereon.


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<PAGE>   57

LIMITATIONS ON DIRECTOR LIABILITY

         UNION PLANTERS. Union Planters' charter does not address the issue of a
directors liability to the corporation. Section 48-18-301 of the Tennessee
Business Corporation Act provides that a director shall not be liable for any
action, or failure to take action if he discharges his duties:

         (1)      in good faith;

         (2)      with the care of an ordinarily prudent person in a like
                  position under similar circumstances; and

         (3)      in a manner the director reasonably believes to be in the best
                  interests of the corporation.

        In discharging his duties, a director may rely on the information,
opinions, reports, or statements, including financial statements, if prepared or
presented by officers or employees of the corporation whom the director
reasonably believes to be reliable. The director may also rely on such
information prepared or presented by legal counsel, public accountants or other
persons as to matters that the director reasonably believes are in the person's
competence.

        SBI. The SBI Articles of Incorporation limit the liability of its
directors to the greatest extent permitted by law and provide that no SBI
director shall be personally liable to SBI or its shareholders for monetary
damages for a breach of his or her duties as a director, except for liability
(a) for any transaction in which the director's personal financial interest is
in conflict with the financial interest of SBI or its shareholders, (b) for acts
or omissions not in good faith or which involve intentional misconduct or are
known to the director to be a violation of law, (c) for voting for or assenting
to any distributions made a violation of Section 271B.8-330 of the Kentucky
Revised Statutes, or (d) for any transaction from which the director derives an
improper personal benefit.

        Furthermore, the Kentucky Business Corporation Act provides that a
director shall not be liable for any action, or failure to take action if he
discharges his duties:

        (1)       in good faith;

        (2)       with the care of an ordinarily prudent person in a like
                  position under similar circumstances; and

        (3)       in a manner the director reasonably believes to be in the best
                  interests of the corporation.

        In discharging his duties, a director may rely on the information,
opinions, reports, or statements, including financial statements, if prepared or
presented by officers or employees of the corporation whom the director
reasonably believes to be reliable. The director may also rely on


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<PAGE>   58

such information prepared or presented by legal counsel, public accountants or
other persons as to matters that the director reasonably believes are in the
person's competence.

INDEMNIFICATION

        UNION PLANTERS.  Under the Tennessee Business Corporation Act, a 
corporation may indemnify any director against liability if the director:

        -         conducted himself or herself in good faith;

        -         reasonably believed, in the case of conduct in his or her 
                  official capacity with the corporation, that his or her
                  conduct was in the best interests of the corporation;

        -         reasonably believed, in all other civil cases, that his or her
                  conduct was at least not opposed to the corporation's best
                  interests;

        -         and, in the case of any criminal proceeding, had no reasonable
                  cause to believe his or her conduct was unlawful.

        Unless limited by its charter, a Tennessee corporation must indemnify,
against reasonable expenses incurred by him or her, a director who was wholly
successful, on the merits or otherwise, in defending any proceeding to which he
or she was a party because he or she is or was a director of the corporation.
Expenses incurred by a director in defending a proceeding may be paid by the
corporation in advance of the final disposition of the proceeding if three
conditions are met:


        (1)       The director must furnish the corporation a written
                  affirmation of the director's good faith belief that he or she
                  has met the standard of conduct as set forth above;

        (2)       the director must furnish the corporation a written
                  undertaking by or on behalf of a director to repay such amount
                  if it is ultimately determined that he or she is not entitled
                  to be indemnified by the corporation against such expenses;
                  and

        (3)       a determination must be made that the facts then known to
                  those making the determination would not preclude
                  indemnification.

        A director may apply for court-ordered indemnification under certain
circumstances. Unless a corporation's charter provide otherwise,

        (1)       an officer of a corporation is entitled to mandatory
                  indemnification and is entitled to apply for court-ordered
                  indemnification to the same extent as a director;

        (2)       the corporation may indemnify and advance expenses to an
                  officer, employee, or agent of the corporation to the same
                  extent as to a director; and

        (3)       a corporation may also indemnify and advance expenses to an
                  officer, employee, or agent who is not a director to the
                  extent, consistent with public policy, that may be


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<PAGE>   59

                  provided by its charter, bylaws, general or specific action of
                  its board of directors, or contract.

        Union Planters' charter and bylaws provide for the indemnification of
its directors and officers to the fullest extent permitted by Tennessee law.

        Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers, or persons controlling Union
Planters under the provisions described above, Union Planters has been informed
that, in the opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in the Securities Act of
1933, as amended, and is therefore unenforceable.

        SBI. Kentucky law authorizes a Kentucky corporation to indemnify its
directors, officers, employees and agents under certain circumstances. In
addition, Kentucky law authorizes a corporation to indemnify such persons, to an
extent not inconsistent with law, as may be provided by its bylaws, agreement,
vote of shareholders, disinterested directors or otherwise. Under the Kentucky
Business Corporation Act, a corporation may indemnify any director against
liability if the director:

                  -        conducted himself or herself in good faith;

                  -        reasonably believed, in the case of conduct in his or
                           her official capacity with the corporation, that his
                           or her conduct was in the best interests of the
                           corporation;

                  -        reasonably believed, in all other civil cases, that 
                           his or her conduct was at least not opposed to the
                           corporation's best interests;

                  -        and, in the case of any criminal proceeding, had no 
                           reasonable cause to believe his or her conduct was
                           unlawful.

        Unless limited by its charter, a Kentucky corporation must indemnify,
against reasonable expenses incurred by him or her, a director who was wholly
successful, on the merits or otherwise, in defending any proceeding to which he
or she was a party because he or she is or was a director of the corporation.
Expenses incurred by a director in defending a proceeding may be paid by the
corporation in advance of the final disposition of the proceeding if three
conditions are met. First, the director must furnish the corporation a written
affirmation of the director's good faith belief that he or she has met the
standard of conduct as set forth above. Second, the director must furnish the
corporation a written undertaking by or on behalf of a director to repay such
amount if its is ultimately determined that he or she is not entitled to be
indemnified by the corporation against such expenses. Third, a determination
must be made that the facts then known to those making the determination would
not preclude indemnification.


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<PAGE>   60

        A director may apply for court-ordered indemnification under certain
circumstances. Unless a corporation's charter provide otherwise,

                  (1)      an officer of a corporation is entitled to mandatory
                           indemnification and is entitled to apply for
                           court-ordered indemnification to the same extent as a
                           director;

                  (2)      the corporation may indemnify and advance expenses to
                           an officer, employee, or agent of the corporation to
                           the same extent as to a director; and

                  (3)      a corporation may also indemnify and advance expenses
                           to an officer, employee, or agent who is not a
                           director to the extent, consistent with public
                           policy, that may be provided by its charter, bylaws,
                           general or specific action of its board of
                           directors, or contract.

        The Articles of Incorporation and Bylaws of SBI contain no provisions
respecting the indemnification of directors and officers.

SPECIAL MEETING OF SHAREHOLDERS

        UNION PLANTERS. Special meetings of Union Planters' shareholders may be
called for any purpose or purposes whatever at any time by the Chairman of the
board, the President, the Secretary, or the holders of not less than one-tenth
of the shares entitled to vote at such meeting.

        SBI. Special meetings of SBI's shareholders may be called for any
purpose by a majority of the members of the SBI board of directors, the Chief
Executive Officer of SBI or by the holders of not less than 20% of all
outstanding shares of SBI entitled to vote at such meeting.

ACTIONS BY SHAREHOLDERS WITHOUT A MEETING

        UNION PLANTERS. The Union Planters charter and bylaws provide that any
action required or permitted to be taken by Union Planters shareholders at a
duly called meeting of Union Planters shareholders may be effected by the
unanimous written consent of the shareholders entitled to vote on such action.

        SBI. The SBI charter and bylaws provide that any action required or
permitted to be taken by SBI shareholders at a duly called meeting of SBI
shareholders may be effected by the unanimous written consent of the
shareholders entitled to vote on such action.

SHAREHOLDER NOMINATIONS AND PROPOSALS

        UNION PLANTERS.  Union Planters' charter and bylaws do not address 
whether a shareholder may nominate members of the board of directors.


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<PAGE>   61

        Holders of Union Planters common stock are entitled to submit proposals
to be presented at an annual meeting of Union Planters shareholders. Union
Planters' bylaws provide that any proposal of a shareholder which is to be
presented at any annual meeting of shareholders must be sent so it is be
received by Union Planters not less than 120 days in advance of the anniversary
date of the proxy statement issued in connection with the previous year's
annual meeting.

        SBI.  SBI's Articles of Incorporation and Bylaws do not address whether
a shareholder may nominate members of the SBI board of directors.

BUSINESS COMBINATIONS

        UNION PLANTERS. Holders of two-thirds or more of Union Planters common
stock must approve a merger, consolidation, or a sale or lease of all or
substantially all of the assets of Union Planters if the other party to the
transaction is a beneficial owner of 10% or more of the outstanding shares of
Union Planters. A two-thirds vote is not required for any merger or
consolidation of Union Planters with or into any corporation or entity if a
majority of the outstanding shares of voting capital stock is owned by Union
Planters.

        The requirement of a supermajority vote of shareholders to approve
certain business transactions may discourage a change in control of Union
Planters by allowing a minority of Union Planters' shareholders to prevent a
transaction favored by the majority of the shareholders. Also, in some
circumstances, the board of directors could cause a two-thirds vote to be
required to approve a transaction and thereby enable management to retain
control over the affairs of Union Planters. The primary purpose of the
supermajority vote requirement is to encourage negotiations with Union
Planters' management by groups or corporations interested in acquiring control
of Union Planters and to reduce the danger of a forced merger or sale of
assets.

        As a Tennessee corporation, Union Planters is or could be subject to
certain restrictions on business combinations under Tennessee law, including,
but not limited to, combinations with interested shareholders.

        Tennessee has three anti-takeover acts which are applicable to Union
Planters, the Tennessee Business Combination Act, the Tennessee Greenmail Act,
and the Tennessee Investor Protection Act. The Tennessee Control Share
Acquisition Act does not apply to Union Planters, because Union Planters'
charter does not include a provision electing to be covered by that act.

        The Tennessee Business Combination Act. The Tennessee Business
Combination Act generally prohibits a "business combination" by Union Planters
or a subsidiary with an "interested shareholder" within five years after the
shareholder becomes an interested shareholder. But Union Planters or a
subsidiary can enter into a business combination within that period if, before
the interested shareholder became such, the Union Planters board of directors
approved:

        -         the business combination or


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<PAGE>   62

        -         the transaction in which the interested shareholder became an
                  interested shareholder.

After that five year moratorium, the business combination with the interested
shareholder can be consummated only if it satisfies certain fair price criteria
or is approved by two-thirds of the other shareholders.

        For purposes of the Tennessee Business Combination Act, a "business
combination" includes mergers, share exchanges, sales and leases of assets,
issuances of securities, and similar transactions. An "interested shareholder"
is generally any person or entity that beneficially owns ten percent or more of
the voting power of any outstanding class or series of Union Planters stock.

        Tennessee law also severely limits the extent to which Union Planters or
any of its officers or directors could be held liable for resisting any business
combination. Under the Tennessee Business Corporation Act, neither a Tennessee
corporation having any stock registered or traded on a national securities
exchange, nor any of its officers or directors, may be held liable for:

        -         Failing to approve the acquisition of shares by an interested
                  shareholder on or before the date the shareholders acquired
                  such shares;

        -         Seeking to enforce or implement the provisions of Tennessee 
                  law;

        -         Failing to adopt or recommend any charter or by-law amendment 
                  or provision relating to such provisions of Tennessee law; or

        -         Opposing any merger, exchange, tender offer, or significant
                  asset sale because of a good faith belief that such
                  transaction would adversely affect the corporation's
                  employees, customers, suppliers, the communities in which the
                  corporation or its subsidiaries operate or any other relevant
                  factor. But the officers and directors can only consider such
                  factors if the corporation's charter permits the board to do
                  so in connection with the transaction.

        The Tennessee Greenmail Act. The Tennessee Greenmail Act applies to a
Tennessee corporation that has a class of voting stock registered or traded on a
national securities exchange or registered with the Securities and Exchange
Commission pursuant to Section 12(g) of the Securities Exchange Act of 1934.
Under the Tennessee Greenmail Act, Union Planters may not purchase any of its
shares at a price above the market value of such shares from any person who
holds more than 3% of the class of securities to be purchased if such person has
held such shares for less than two years, unless the purchase has been approved
by the affirmative vote of a majority of the outstanding shares of each class of
voting stock issued by Union Planters or Union Planters makes an offer, of at
least equal value per share, to all shareholders of such class.

        The Tennessee Investor Protection Act. The Tennessee Investor Protection
Act generally requires the registration, or an exemption from registration,
before a person can make a tender offer for shares of a Tennessee corporation
which, if successful, would result in the offeror


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<PAGE>   63

beneficially owning more than 10% of any class. Registration requires the filing
with the Tennessee Commissioner of Commerce and Insurance of a registration
statement, a copy of which must be sent to the target company, and the public
disclosure of the material terms of the proposed offer. Additional requirements
are imposed under that act if the offer or beneficially owns 5% or more of any
class of equity securities of the target company, any of which was purchased
within one year prior to the proposed takeover offer. The Tennessee Investor
Protection Act also prohibits fraudulent and deceptive practices in connection
with takeover offers, and provides remedies for violations.

        The Tennessee Investor Protection Act does not apply to an offer
involving a vote by holders of equity securities of the offeree company,
pursuant to its charter, on a merger, consolidation or sale of corporate assets
in consideration of the issuance of securities of another corporation, or on a
sale of its securities in exchange for cash or securities of another
corporation. Also excepted from the Tennessee Investor Protection Act are
tender offers which are open on substantially equal terms to all shareholders,
are recommended by the board of directors of the target company and include
full disclosure of all terms.

        The Tennessee Investor Protection Act applies to tender offers for
corporations with substantial ties in Tennessee, including corporations
incorporated in Tennessee or which have their principal offices in the state.
The Sixth Circuit Court of Appeals has held that the application of this act,
and Tennessee's other takeover statutes, to a target company that wasn't
organized under Tennessee law is unconstitutional. Tyson Foods, Inc. v.
McReynolds, 865 F.2d 99 (6th Cir. 1989).

        The acts described above along with the provisions of Union Planters'
charter regarding business combinations might be deemed to make Union Planters
less attractive as a candidate for acquisition by another company than would
otherwise be the case in the absence of such provisions. For example, if another
company should seek to acquire a controlling interest of less than 66-2/3% of
the outstanding shares of Union Planters common stock, the acquiror would not
thereby obtain the ability to replace a majority of the Union Planters board of
directors until at least the second annual meeting of shareholders following the
acquisition. Furthermore the acquiror would not obtain the ability immediately
to effect a merger, consolidation, or other similar business combination unless
the described conditions were met.

        As a result, Union Planters' shareholders may be deprived of
opportunities to sell some or all of their shares at prices that represent a
premium over prevailing market prices in a takeover context. The provisions
described above also may make it more difficult for Union Planters' shareholders
to replace the Union Planters board of directors or management, even if the
holders of a majority of the Union Planters common stock should believe that
such replacement is in the interests of Union Planters. As a result, such
provisions may tend to perpetuate the incumbent Union Planters board of
directors and management.

        SBI. Holders of two-thirds or more of SBI common stock must approve a
merger, consolidation, or a sale, lease or other disposition of all or
substantially all of the assets of SBI if the other party to the transaction is
a beneficial owner of 10% or more of the outstanding shares of SBI common stock.


                                       54
<PAGE>   64

LIMITATIONS ON ABILITY TO VOTE STOCK

        UNION PLANTERS. The Union Planters charter and bylaws do not contain any
provision restricting a shareholder's ability to vote shares of Union Planters
voting stock.

        SBI.  The SBI charter and bylaws do not contain any provision
restricting a shareholder's ability to vote shares of SBI voting stock.

DISSENTERS' RIGHTS OF APPRAISAL

        UNION PLANTERS. Under the Tennessee Business Corporation Act, a
shareholder is generally entitled to dissent from a corporate action and obtain
payment of the fair value of his shares in certain events. These events
generally include:

        (1)       mergers, share exchanges and sales of substantially all of the
                  corporation's assets other than in the usual and regular
                  course of business, if the shareholder is entitled to vote on
                  the transaction;

        (2)       certain types of amendments of the corporation's charter that
                  materially and adversely affects a shareholder's rights; or

        (3)       other corporate actions taken pursuant to a shareholder vote,
                  to the extent the charter, bylaws, or a resolution of the
                  board of directors provide for dissenters' rights. Union
                  Planters' charter and bylaws do not provide for any such
                  additional dissenters' rights.

Under the Tennessee Business Corporation Act, a shareholder will not have the
right to dissent as to any shares which are listed on a national securities
exchange registered under Section 6 of the Exchange Act or are national market
system securities under the Exchange Act rules. Union Planters common stock is
currently listed on the New York Stock Exchange. Accordingly, shareholders of
Union Planters will NOT be able to assert dissenters' rights with respect to
their shares of Union Planters common stock even if Union Planters were to
engage in one of the actions listed above.

        SBI. For information regarding SBI shareholders' right to dissent from
the transactions contemplated by the Agreement and the Plan of Merger, see
"SPECIAL MEETING OF SBI SHAREHOLDERS -- Dissenters' Rights" and Appendix E,
attached to this proxy statement-prospectus.

SHAREHOLDERS' RIGHTS TO EXAMINE BOOKS AND RECORDS

        UNION PLANTERS. The Tennessee Business Corporation Act provides that a
shareholder of a Tennessee corporation may inspect and copy books and records of
the corporation during regular business hours, if he or she gives the
corporation written notice of his or her demand at least five business days
before the date of the inspection. In order to inspect certain records, written
demand must also be made in good faith and for a proper purpose and must
describe with


                                       55
<PAGE>   65

reasonable particularity the purpose of the request and the records the
shareholder desires to inspect.

        SBI. The Kentucky Business Corporation Act provides that a shareholder
of a Kentucky corporation may inspect and copy books and records of the
corporation during regular business hours, if he or she gives the corporation
written notice of his or her demand at least five business days before the date
of the inspection. In order to inspect certain records, written demand must also
be made in good faith and for a proper purpose and must describe with reasonable
particularity the purpose of the request and the records the shareholder desires
to inspect.

DIVIDENDS

        UNION PLANTERS. Union Planters' ability to pay dividends on its common
stock is governed by Tennessee corporate law. Under Tennessee corporate law,
dividends may be paid so long as the corporation would be able to pay its debts
as they become due in the ordinary course of business and the corporation's
total assets would not be less than the sum of its total liabilities plus the
amount that would be needed, if the corporation were to be dissolved at the time
of the distribution, to satisfy the preferential rights upon dissolution to
shareholders whose preferential rights are superior to those receiving the
distribution.

        There are various statutory limitations on the ability of the Union 
Planters' banking subsidiaries to pay dividends to Union Planters. See "CERTAIN
REGULATORY CONSIDERATIONS -- Payment of Dividends."

        SBI. SBI's ability to pay dividends on its common stock is governed by
Kentucky corporate law. Under Kentucky corporate law, dividends may be paid so
long as the corporation would be able to pay its debts as they become due in the
ordinary course of business and the corporation's total assets would not be less
than the sum of its total liabilities plus the amount that would be needed, if
the corporation were to be dissolved at the time of the distribution, to satisfy
the preferential rights upon dissolution to shareholders whose preferential
rights are superior to those receiving the distribution.

        There are various statutory limitations on the ability of the SBI's 
banking subsidiaries to pay dividends to SBI. See "CERTAIN REGULATORY
CONSIDERATIONS -- Payment of Dividends."


                    COMPARATIVE MARKET PRICES AND DIVIDENDS

        Union Planters common stock is traded on the New York Stock Exchange
under the symbol "UPC". The following table sets forth, for the indicated
periods, the high and low closing sale prices for Union Planters common stock as
reported by the New York Stock Exchange, and the cash dividends declared per
share of Union Planters common stock for the indicated periods. The stock prices
do not include retail mark-ups, mark-downs or commissions.


                                       56
<PAGE>   66

                                 UNION PLANTERS

<TABLE>
<CAPTION>
                                                                           Cash     
                                                                         Dividends  
                                               Price Range               Declared  
                                               -----------                  Per     
                                           High           Low              Share
                                           ----           ---              -----

<S>                                       <C>            <C>             <C>    
1996
- ------------------------------
   First Quarter                          $31.75         $29.00           $  .27
   Second Quarter                          31.25          29.63              .27
   Third Quarter                           36.25          28.63              .27
   Fourth Quarter                          41.38          34.63              .27
                                                                          ------
        Total                                                             $ 1.08
                                                                          ======

1997
- ------------------------------
   First Quarter                          $47.75         $38.38           $ .320
   Second Quarter                          52.13          41.25             .375
   Third Quarter                           56.50          49.25             .400
   Fourth Quarter                          67.88          57.00             .400
                                                                          ------
        Total                                                             $1.495
                                                                          ======

1998
- ------------------------------
   First Quarter                          $67.31         $58.38           $  .50
   Second Quarter                          62.56          53.94              .50
   Third Quarter                           61.94          40.25              .50
   Fourth Quarter
   (through November                         .              .                .50
   ____, 1998)                             -----          -----           ------        

        Total                                                             $ 2.00
                                                                          ======
</TABLE>


         On November ____, 1998, the last sale price of Union Planters common
stock as reported on the New York Stock Exchange was $__________ per share. On
August 6, 1998, the last business day prior to public announcement of the
merger, the last sale price of the Union Planters common stock as reported by
the New York Stock Exchange, was $52.50.

         SBI common stock has not been listed on any national or regional stock
exchange, has not been the subject of published quotations in the
over-the-counter market nor has any other established market ever developed.
The market (to the extent one can be said to exist) for SBI common stock has
historically been one local to Corbin, Kentucky. Because there is no
established market for SBI common stock, the information provided below may not
be complete, and SBI is unable to ensure the accuracy and completeness of said
information. Moreover, the prices paid for SBI common stock should not
necessarily be considered indicative of either the prices which could be
obtained in an established market or the fair value of SBI common stock. The
following summarizes transactions in SBI common stock (as reported to SBI) for
the last two calendar years and through October 31, 1998.


                                       57
<PAGE>   67

<TABLE>
<CAPTION>
                                                                       PRICE RANGE
                                                                       ----------- 
                                                                   HIGH                      LOW
                                                                   ----                      ---

<S>                      <C>                                     <C>                      <C>        
1996
                         First Quarter                           $200.00                  $200.00
                         Second Quarter                          $226.25                  $185.00*
                         Third Quarter                           $226.25                  $218.00
                         Fourth Quarter                          $250.00                  $221.84
1997
                         First Quarter                           $215.00                  $215.00
                         Second Quarter                          $266.67                  $213.92*
                         Third Quarter                           $235.75                  $219.99*
                         Fourth Quarter                          $300.00                  $219.99*
1998
                         First Quarter                           $330.00**                $300.00
                         Second Quarter                          $300.00                  $140.00***
                         Third Quarter                           $221.84***               $221.84***
                         Fourth Quarter                          $___.__                  $___.__
                         (through __/__/98)
</TABLE>


         *Represents director qualifying shares purchased at book value pursuant
         to agreements between directors and SBI.
         **Price derived from unsubstantiated information provided SBI.
         ***Represents shares purchased pursuant to SBI stock option agreements.

         The holders of Union Planters common stock are entitled to receive
dividends when and if declared by the board of directors out of funds legally
available therefor. Although Union Planters currently intends to continue to pay
quarterly cash dividends on Union Planters common stock, there can be no
assurance that Union Planters' dividend policy will remain unchanged after
completion of the merger. The declaration and payment of dividends thereafter
will depend upon business conditions, operating results, capital and reserve
requirements, and the Union Planters board of directors' consideration of other
relevant factors.

         The Agreement provides that SBI may not declare and pay cash dividends,
other than regular quarterly cash dividends, on the shares of SBI common stock.
Dividends have been paid quarterly by SBI at the quarterly rate of $1.75 in
1996, $1.80 in 1997 and $1.85 in 1998.

         Union Planters and SBI are each legal entities separate and distinct
from their subsidiaries and their revenues depend in significant part on the
payment of dividends from their subsidiary depository institutions. Union
Planters' and SBI's subsidiary depository institutions are subject to certain
legal restrictions on the amount of dividends they are permitted to pay. See
"CERTAIN REGULATORY CONSIDERATIONS -- Payment of Dividends."


                                       58
<PAGE>   68

                                BUSINESS OF SBI

GENERAL

         SBI is a bank holding company registered with the Federal Reserve under
the Bank Holding Company Act. SBI was created under the laws of the Commonwealth
of Kentucky in May 1983 for the purpose of becoming a bank holding company in
connection with the bank holding company reorganization of The First National
Bank and Trust Company of Corbin ("First National"). As of September 30, 1998,
SBI had total consolidated assets of approximately $335.9 million, total
consolidated loans of approximately $241.9 million and consolidated
shareholders' equity of approximately $25.6 million.

         SBI conducts its business activities through its wholly-owned banking
subsidiaries, First National and First Bank of East Tennessee, National
Association ("First Bank"). First National was established as a national
banking association in 1905, has its principal executive offices in Corbin,
Whitley County, Kentucky and conducts a general commercial banking business
through three offices located in Whitley County, Kentucky and one office
located in Knox County, Kentucky. First Bank was established as a savings and
loan association in 1937 and converted to a national banking association in
1991, has its principal executive offices in La Follette, Campbell County,
Tennessee and conducts a general commercial banking business through two
offices located in Campbell County, Tennessee. First Bank was acquired by SBI
on July 1, 1997.

         The principal executive offices of SBI are located at 100 North Main
Street, Corbin, Kentucky 40702 and its telephone number is (606) 528-2500.

BUSINESS AND PROPERTY

         SBI's primary mission is to serve the financial needs of Southeast
Kentucky and Northeast Tennessee, particularly Whitley and Knox Counties in
Kentucky and Campbell County in Tennessee. SBI's subsidiaries have built a
reputation for fiscal soundness in their communities, particularly as a
competitive commercial and mortgage lender in Kentucky and as an aggressive
mortgage lender in Tennessee.

         All six of SBI's banking offices are owned by First National or First
Bank, as the case may be, including First National's 32,000 square foot
principal office in downtown Corbin and First Bank's 18,000 square foot
principal office in La Follette. SBI also owns two vacant lots being held for
the future expansion of First Bank, one directly behind First Bank's main office
and the other in Clinton, Tennessee at Exit 122 on Interstate-75.

EMPLOYEES

         As of September 30, 1998, SBI and its two subsidiaries had in the
aggregate approximately 145 employees. SBI believes its (and its subsidiaries')
relationships with employees to be good and none of such employees are
represented by a collective bargaining unit.


                                       59
<PAGE>   69

CUSTOMERS

         It is the opinion of SBI management that there is no single customer or
affiliated group of customers whose deposits, if withdrawn, would have a
materially adverse effect on the business of SBI.

COMPETITION

         SBI encounters competition from various sources, including other
commercial banking companies and thrift institutions, insurance and brokerage
companies and other financial intermediaries. Changes in banking laws have
resulted in increased competition from both conventional banking companies and
other business offering a broad range of financial services. SBI has had to
compete with these companies despite having significantly less resources than
many of such non-traditional competitors.

LEGAL PROCEEDINGS

         SBI and/or its subsidiaries are parties from time to time to various
legal proceedings routine to their business. Management, however, does not
believe that an adverse decision in any of such pending legal actions will have
a material adverse impact on the financial condition of SBI.

MANAGEMENT AND BENEFICIAL OWNERSHIP OF SBI COMMON STOCK

         The following table sets forth certain information about the Company's
directors and executive officers as of October 31, 1998 and indicates all
persons to the knowledge of SBI that beneficially owns 5.0% or more of the
outstanding shares of SBI common stock:

<TABLE>
<CAPTION>
                                                                                              No. of Shares of
                                        Director or    Present Occupation and                 SBI Common Stock
                                         Executive    Principal Occupation for                  Beneficially
          Name (Age)                   Officer Since      Last Five Years                          Owned(1)      % of Class
- ---------------------------------------------------------------------------------------------------------------------------
           DIRECTORS
           ---------

<S>                                    <C>            <C>                                     <C>                <C>   
Lonnie R. Anderson (48)                    1996        Superintendent                                 80                .08%
                                                       Whitley Co. Schools

Hiram Begley, Sr. (79)                     1976        Retired - Formerly                         11,218(2)           11.06%
                                                       President and Owner of
                                                       Corbin Brick Co.

William T. Daniel, II, M.D. (43)           1997        Radiologist                                   105                .10%

William Hacker (57)                        1976        Contractor                                  2,564(3)            2.53%

David N. Huff (65)                         1971        Owner, Huff Drug                           14,150(4)           13.95%
                                                       Company and Co-Owner,
                                                       South East Marine
</TABLE>


                                       60
<PAGE>   70

<TABLE>
<CAPTION>
                                                                                           No. of Shares of
                                        Director or    Present Occupation and              SBI Common Stock
                                         Executive    Principal Occupation for               Beneficially
          Name (Age)                   Officer Since      Last Five Years                       Owned(1)         % of Class
- ---------------------------------------------------------------------------------------------------------------------------

<S>                                    <C>            <C>                                  <C>                   <C> 
John Ladenburger (72)                      1982        Retired - Formerly buyer                 3,550(5)               3.50%
                                                       for R. J. Reynolds
                                                       Tobacco Co.

Herman Leick (73)                          1963        Attorney                                   722(6)                .71%

David Myers (49)                           1997        Owner, Central                             130                   .13%
                                                       Automotive Auto Parts

William Nighbert (47)                      1996        Mayor, City of                              80                   .08%
                                                       Williamsburg

James C. Oaks (61)                         1983        CSX, Vice-President                        280(7)                .28%

Charles Osborne (71)                       1976        Retired - Formerly Owner                 4,150(8)               4.09%
                                                       of Osborne/Blair Ins.
                                                       Agency

James D. Rickard (44)                      1990        CEO of SBI                               4,280(9)               4.22%

Maxine VonGruenigen (68)                   1989        Owner, Maggie J's Dress                  1,500(10)              1.48%
                                                       Shop
         NON-DIRECTOR
      EXECUTIVE OFFICERS

Timothy E. Barnes (32)                     1996        Sr.Vice-Pres. and Chief                    593(11)               .58%
                                                       Lending Officer of First
                                                       National - Previously Asst.
                                                       Vice-President of Regional
                                                       Banking at Bank One,
                                                       Kentucky, NA

Robert R. Bryant (31)                      1996        Sr. Vice-Pres. and Chief                   867(12)               .86%
                                                       Financial Officer of First
                                                       National - Previously Senior
                                                       Vice-President and Head of
                                                       Commercial Lending at
                                                       Farmers National Bank of
                                                       Williamsburg, Kentucky

Steve Tolliver (38)                        1995        Sr. Vice-Pres. and Sr.                     856(13)               .84%
                                                       Operations Officer of First
                                                       National - Previously Chief
                                                       Financial Officer/Vice-
                                                       President of Harlan Federal
                                                       Bank, Harlan, Kentucky
All Directors and Executive
Officers as a Group                                                                            45,125                 44.48%
</TABLE>

         (1)       Unless otherwise indicated, the named person has sole voting
                   and investment power with respect to the reported shares.
                   Certain of the shares reflected as being held by Messrs.
                   Hacker, Barnes and Bryant are subject to an escrow
                   arrangement (the "Escrow Arrangement"). These shares were
                   part of a block of SBI common stock purchased by these and
                   other individuals and financed (in part) by a promissory
                   note. The promissory note is secured by a portion of the
                   stock which was the subject of this transaction and such
                   stock is being held in escrow by an escrow agent designated
                   by the seller. Accordingly, such stock is held of record not
                   only by the purchasers but also by said escrow agent. The
                   escrowed stock is to be released from such Escrow Arrangement
                   pro-rata as the promissory note is paid, and, provided the
                   purchasers are not in default under the purchase agreement,
                   escrow agreement or promissory note respecting such shares,
                   all voting rights and dividends respecting such shares are
                   exercised by, and the property of, the purchasers. The
                   purchasers are not


                                       61
<PAGE>   71

                   in default under any of said agreements or instrument and
                   accordingly anticipate exercising all voting rights
                   respecting such shares at the special meeting.
         (2)       Includes 4,676 shares owned by Mr. Begley's wife, over which 
                   Mr. Begley has no voting or investment power.
         (3)       Includes 168 shares held by Mr. Hacker's wife, over which Mr.
                   Hacker has no voting and investment power, and 1,275 shares
                   owned jointly with Mr. Hacker's wife (including 1,169 shares
                   subject to the Escrow Arrangement).
         (4)       Includes 2,202 shares owned jointly with Mr. Huff's wife,
                   3,680 shares owned by Mr. Huff's wife (over which 3,680
                   shares Mr. Huff has no voting or investment power) and 6,762
                   shares owned by Huff Holdings, LLC, a Kentucky limited
                   liability company controlled by Mr. Huff.
         (5)       Includes 150 shares owned jointly with Mr. Ladenburger's wife
                   and 3,320 shares owned by Mr. Ladenburger's wife (over which
                   3,320 shares Mr. Ladenburger has no voting or investment
                   power).
         (6)       Includes 250 shares owned by Mr. Leick's wife, over which 
                   Mr. Leick has no voting or investment power.
         (7)       Includes 200 shares owned jointly with Mr. Oaks's wife.
         (8)       Includes 1,950 shares owned by Mr. Osborne's wife, over which
                   Mr. Osborne has no voting or investment power.
         (9)       Includes 50 shares held jointly with Mr. Rickard's wife and 
                   3,200 shares which Mr. Rickard may acquire pursuant to 
                   options.
         (10)      Includes 1,370 shares owned jointly with Mrs. VonGruenigen's
                   husband.
         (11)      Includes 250 shares jointly owned with Mr. Barnes's wife
                   (including 230 shares subject to the Escrow Arrangement), 71 
                   shares held for the benefit of Mr. Barnes in a retirement 
                   account and 250 shares which Mr. Barnes may acquire pursuant
                   to options.
         (12)      Includes 585 shares owned jointly with Mr. Bryant's wife
                   (including 458 shares subject to the Escrow Arrangement), 9
                   shares held for the benefit of Mr. Bryant in a retirement
                   account, 9 shares held for the benefit of Mr. Bryant's wife
                   in a retirement account, and 200 shares which Mr. Bryant may
                   acquire pursuant to options.
         (13)      Includes 62 shares owned jointly with Mr. Tolliver's wife, 
                   387 shares held for the benefit of Mr. Tolliver in two 
                   retirement accounts and 218 shares which Mr. Tolliver may
                   acquire pursuant to options.


                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

         The following discussion and analysis is presented to facilitate the
understanding of the financial position and results of operations of SBI and its
subsidiaries First National and First Bank (collectively referred to as the
"Banks"). It identifies trends and changes that occurred during the reported
periods and should be read in conjunction with the Consolidated Financial
Statements and related footnotes.

BUSINESS

         SBI is a two bank holding company which conducts no direct business
activities. All business activities are performed by its subsidiary banks. First
National operates 4 banking locations and conducts its operations in and
throughout the surrounding communities of Corbin and Williamsburg, Kentucky.
First Bank operates two banking locations and conducts its operations in and
throughout the surrounding communities of LaFollette, Tennessee. SBI's
consolidated results are dependant upon net interest income, which is the
difference between the interest income on interest earning assets and the
interest expense on interest bearing liabilities. Principal interest earning
assets are loans consisting of real estate mortgage, commercial, agricultural,
and consumer, and investment securities. Interest bearing liabilities consisted
of interest bearing deposit accounts and various forms of borrowed funds. Other
sources of income included fees charged to customers for a variety of loan and
deposit services. Operating expenses consist primarily of employee salaries and
benefits, occupancy, equipment, and other expenses. SBI's results of operations
are significantly affected by general economic and competitive conditions,
particularly changes in market interest rates, government policies and actions
of regulatory agencies. As of September 30, 1998 SBI and the Banks employed
approximately 145 persons on a full time equivalent basis.

         SBI acquired First Bank on July 1, 1997. The combination was accounted
for using the purchase method and accordingly, only the transactions and
balances of First Bank subsequent to


                                       62
<PAGE>   72

the date of acquisition are reflected in the consolidated financial reporting
and balances prior have not been restated.

RESULTS OF OPERATIONS, COMPARISON OF NINE MONTHS ENDED SEPTEMBER 30, 1998 TO
SEPTEMBER 30, 1997

         Consolidated net income increased $196,000 to $2.7 million, and net
interest income increased $1.6 million to $9.3 million. The increases are
primarily due to the acquisition of First Bank. Return on average assets
decreased and return on average equity decreased from 1.32% to 1.05% and from
14.61% to 14.16%. The decrease in these ratios is primarily due to an increase
in noninterest expenses associated with the acquisition of First Bank and the
planned merger with Union Planters. Had the consolidated results of operations
for the prior period reflected First Bank's earnings and the impact of recurring
acquisition costs (goodwill amortization and interest expense on funds borrowed
to purchase First Bank's stock) for first two quarters of 1997, net income would
have increased $360,000, net interest income would have increased $310,000,
return on average assets would have increased from .99% to 1.05% and return on
average equity would have increased from 13.64% to 14.16%, as compared to the
current period.

RESULTS OF OPERATIONS, COMPARISON OF YEAR ENDED DECEMBER 31, 1997 TO DECEMBER
31, 1996 AND DECEMBER 31, 1995

         GENERAL. The income statement for the year December 31, 1997 includes
results from SBI, First National and for the second half of the year, First
Bank, while the comparable prior periods only include the results of SBI and
First National. The increases in 1997 over 1996 are primarily the result of the
acquisition of First Bank. For the year ended December 31, 1997, consolidated
net income increased $339,000 to $3.1 million, return on average assets
decreased from 1.28% to 1.13%, and return on average equity decreased from
13.85% to 13.36%. Excluding First Bank's 1997 results of operations and the
recurring acquisition costs, SBI's 1997 consolidated net income would have
increased $481,000 (18%), return on average assets would have increased from
1.28% to 1.43% and return on average equity would have increased from 13.85% to
13.98%, as compared to the prior period.

         SBI's 1996 net income increased $663,000 (32%), return on average 
assets increased from 1.00% to 1.28% and return on average equity increased from
11.60% to 13.85%, as compared to the prior period.

         NET INTEREST INCOME. SBI's primary source of revenue is its net
interest income, which is the difference between the interest received on its
earning assets and the interest paid on the funds acquired to support those
assets. Loans made to businesses and individuals are the primary interest
earning assets, followed by investment securities. Deposits are the primary
interest bearing liabilities used to support the interest earning assets,
followed by various borrowings. The level of net interest income is affected by
both the balances and mix of interest earning assets and interest bearing
liabilities, the changes in their corresponding yields and costs, by the volume
of interest earning assets funded by noninterest bearing deposits, and the level
of capital. SBI's long term


                                       63
<PAGE>   73

objective is to manage this income to provide the largest possible amount of
income while balancing interest rate, credit and liquidity risks.

         Net interest income increased 23% or $2.0 million to $10.8 million in
1997 as compared to $8.8 million in 1996. The acquisition of First Bank
contributed $1.1 million to the increase. The remainder was attributable
primarily to the growth in interest earning assets which earn at a higher rate
than the rate paid on the corresponding growth in interest bearing liabilities.
Average loans increased $52.8 million, which included an average of $31.8
million acquired from First Bank. This growth was funded primarily through an
increase of $50.6 million in average deposits, which includes an average of
$35.4 acquired from First Bank. SBI's emphasis on attracting new loans rather
than investing in securities also positively impacted net interest income
because of the higher yield earned on loans over that earned on investment
securities.

         Net interest income increased 11% or $893,000 to $8.8 million in 1996
as compared to $7.9 million in 1995. The increase was primarily attributable to
a $13.9 million increase in average loans funded primarily with growth in
average deposits of $8.7 million and a $6.0 million decrease in average taxable
investment securities.

         Table 1 provides detailed information as to average balances, interest
income/expense, and rates by major balance sheet category for fiscal years 1995
through 1997. Table 2 provides an analysis of the changes in net interest income
attributable to rates and changes in volume of interest earning assets and
interest bearing liabilities.


          TABLE 1 - AVERAGE BALANCE SHEETS AND AVERAGE INTEREST RATES

<TABLE>
<CAPTION>
                                          1997                             1996                             1995
                                          ----                             ----                             ----

                            Average                Average   Average                Average   Average                Average
                            Balance     Interest    Rate     Balance     Interest    Rate     Balance     Interest    Rate
                            --------    --------   -------   --------    --------   -------   --------    --------   -------
Earning assets:                                                  (dollars in thousands)

<S>                         <C>         <C>        <C>       <C>         <C>        <C>       <C>         <C>        <C>
Investment securities
  Taxable                   $ 34,537    $ 2,192     6.35%    $ 41,806    $ 2,601     6.22%    $ 47,832    $ 2,866     5.99%
  Nontaxable (1)              11,016        892     8.10%       9,439        762     8.07%       8,810        709     8.05%
Loans (2),(3)                200,170     18,559     9.27%     147,322     13,576     9.22%     133,428     12,289     9.21%
Other                          7,694        427     5.55%       4,280        228     5.33%       4,660        274     5.88%
                            --------    -------     ----     --------    -------     ----     --------    -------     ----

                            $253,417    $22,070     8.71%    $202,847    $17,167     8.46%    $194,730    $16,138     8.29%
                            ========    =======     ====     ========    =======     ====     ========    =======     ====

Allowance for loan
  losses                      (2,409)                          (1,978)                          (1,893)

Nonearning assets:
Cash and due from
  banks                     $  9,798                         $  6,306                         $  6,754
Premises and
  equipment                    5,385                            3,709                            3,370
Other assets                   5,729                            2,549                            2,612
                            --------                         --------                         --------

    Total Assets            $271,920                         $213,433                         $205,573
                            ========                         ========                         ========
</TABLE>


                                       64
<PAGE>   74

    TABLE 1 - AVERAGE BALANCE SHEETS AND AVERAGE INTEREST RATES (CONTINUED)

<TABLE>
<CAPTION>
                                        1997                        1996                        1995
                                        ----                        ----                        ----
                           Average             Average  Average            Average  Average            Average
                           Balance    Interest  Rate    Balance   Interest  Rate    Balance   Interest  Rate
                           --------   -------- -------  --------  -------- -------  --------  -------- -------
                                                 (dollars in thousands)

<S>                        <C>        <C>      <C>      <C>       <C>      <C>      <C>       <C>      <C> 
Interest bearing
  liabilities:
Transaction accounts       $ 19,164   $   454   2.37%   $ 17,133   $  411   2.40%   $ 16,682   $  415   2.49%
Savings deposits             37,356     1,054   2.82%     25,003      707   2.83%     28,770      828   2.88%
Time deposits               145,650     7,892   5.42%    109,484    5,948   5.43%    100,198    5,469   5.46%
Borrowed funds               22,556     1,494   6.62%     18,513    1,062   5.74%     21,342    1,298   6.08%
                           --------   -------   ----    --------   ------   ----    --------   ------   ---- 

                           $224,726   $10,894   4.85%   $170,133   $8,128   4.78%   $166,992   $8,010   4.80%
                           ========   =======   ====    ========   ======   ====    ========   ======   ====

Noninterest bearing
  liabilities:
Demand deposits            $ 22,612                     $ 22,538                    $ 19,780
Other liabilities             1,631                        1,071                       1,003
Shareholders' Equity         22,951                       19,691                      17,798
                           --------                     --------                    --------


    Total liabilities and
    shareholders' equity   $271,920                     $213,433                    $205,573
                           ========                     ========                    ========
Net interest income                   $11,176                      $9,039                      $8,128
                                      =======                      ======                      ======
Net interest spread                             3.86%                        3.68%                      3.49%
                                                ====                         ====                       ====
Margin                                          4.41%                        4.46%                      4.17%
                                                ====                         ====                       ====
</TABLE>

1  Income computed on a tax equivalent basis assuming a 34% federal income tax
   rate. 
2  Includes loans on non-accrual status.
3  Also includes fee income.


                    TABLE 2 - RATE/VOLUME VARIANCE ANALYSIS

<TABLE>
<CAPTION>
                                          1997 vs 1996                                 1996 vs 1995

                              Increase (decrease) due to change in         Increase (decrease) due to change in
                              ------------------------------------         ------------------------------------

                              Net Change      Volume         Rate          Net Change      Volume         Rate
                              ----------      ------         ----          ----------      ------         -----
                                                               (dollars in thousands)
<S>                           <C>             <C>            <C>           <C>             <C>            <C>
Interest income:
Investment securities

   Taxable                     $ (409)        $ (460)        $ 51           $ (265)        $ (372)        $ 107
   Nontaxable                     130            128            2               53             51             2
Loans                           4,983          4,899           84            1,287          1,280             7
Other                             199            189           10              (46)           (21)          (25)
                               ------         ------         ----           ------         ------         ----- 

                               $4,903         $4,756         4147           $1,029         $  938         $  91
                               ------         ------         ----           ------         ------         -----


     Interest expense:
Transaction accounts           $   43         $   48         $ (5)          $   (4)        $   11         $ (15)
Savings deposits                  347            349           (2)            (121)          (107)          (14)
Time deposits                   1,944          1,960          (16)             479            505           (26)
Borrowed funds                    432            253          179             (236)          (165)          (71)
                               ------         ------         ----           ------         ------         -----

                                2,766          2,610          156              118            244          (126)
                               ------         ------         ----           ------         ------         -----
Net interest income            $2,137         $2,146         $ (9)          $  911         $  694         $ 217
                               ======         ======         ====           ======         ======         =====
</TABLE>
 

                                      65
<PAGE>   75

                      
         NONINTEREST INCOME.  Noninterest income was $1.7 million in 1997 having
increased $861,000, of which First Bank contributed $152,000. The primary
sources of other income include service charges on deposit products, late
charges on loan accounts, commissions on the sale of insurance contracts in
conjunction with loan originations, and fees on trust services. The remainder
of the increase was due to an increase in sales of insurance contracts,
expanded trust services, and a reduction in customer fee waivers. Noninterest
income increased $73,000 in 1996 to $813,000.

         NONINTEREST EXPENSE. Noninterest expense was $7.4 million in 1997
having increased $2.0 million, of which First Bank contributed $1.4 million. The
primary component of noninterest expense is salaries and employee benefits which
totaled $3.6 million in 1997 having increased $960,000, due to First Bank's
contribution of $545,000 and expansion of the bonus plan. The remainder of the
increase is attributable to increases in occupancy expenses, taxes other than
payroll and income, and marketing resulting from the acquisition of First Bank
and the overall growth in the organization. Noninterest expense increased by
$449,000 to $5.4 million in 1996.

         INCOME TAXES. Income tax expense was $1.5 million in 1997 having
increased $368,000 and was $1.1 million in 1996 having increased $372,000. Both
increases are commensurate with the increases in income before taxes.

FINANCIAL CONDITION, COMPARISON OF SEPTEMBER 30, 1998 TO DECEMBER 31, 1997

         Total assets increased $7.8 million to $335.9 million as of September
30, 1998. The increase is primarily the result of a $9.2 million increase in
available for sale securities which was funded by a decrease in total loans of
$2.6 million, growth in deposits of $2.3 million, and a $5.2 million increase in
various borrowings. Additionally, management redeemed $2.0 million of its Series
A Preferred Stock which had been outstanding during the same timeframe. During
the latter part of 1997 and continuing through September 30, 1998, the rate of
loan growth was intentionally reduced, primarily through pricing, to keep the
growth in total assets in line with growth in capital and to focus more efforts
on managing the existing loan portfolio and operational integration with First
Bank. The growth in assets exceeded the growth in equity, due in part to the
preferred stock redemption, as is evidenced by the decrease in average equity to
average assets from 8.44% to 7.42%.

FINANCIAL CONDITION, COMPARISON OF DECEMBER 31, 1997 TO DECEMBER 31, 1996

         LOANS. Loans represent SBI's largest earning asset and as of December
31, 1997, represented 75% of total assets or 81% of interest earning assets.
During 1997, loans increased $88.0 million of which the acquisition of First
Bank contributed $61.1 million. The increase is the result of strong commercial
and real estate loan demand.

         At September 30, 1998, neither Bank had concentrations of loans to
borrowers of similar activities that exceeded 10% of total loans other than
those categories already listed in the table below.


                                       66

<PAGE>   76
                            TABLE 3 - LOAN PORTFOLIO


<TABLE>
<CAPTION>

                                                           December 31,
                               September 30,    ----------------------------------------------------------
                                   1998                     1997                       1996        
                               ------------                 -----                      -----       
                                                                (dollars in thousands)
<S>                            <C>              <C>        <C>            <C>        <C>            <C>   
Commercial and agricultural      $121,290       50.1%      $114,823       46.9%      $ 87,126       55.7% 
Real estate                        83,402       34.5%        88,456       36.2%        39,077       25.0% 
Installment                        37,253       15.4%        41,252       16.9%        30,340       19.3% 
                                 --------      -----       --------       ----       --------       ---- 
                                                                                                          
                                                                                                          
  Total                          $241,945      100.0%      $244,531      100.0%      $156,543      100.0%        
                                 ========      =====       ========      =====       ========      ===== 

<CAPTION>
                                                                       December 31,
                                      --------------------------------------------------------------------------
                                        1995                       1994                      1993       
                                        ----                       ----                      ----       
<S>                                   <C>           <C>         <C>             <C>       <C>              <C>   

Commercial and agricultural           $ 69,054       50.9%      $ 59,687         46.2%    $ 57,792         50.8%
Real estate                             35,541       26.1%        38,184         29.6%      34,687         30.5%
Installment                             31,324       23.0%        31,244         24.2%      21,225         18.7%
                                      --------      -----       --------        -----     --------         ---- 

  Total                               $135,919      100.0%      $129,115        100.0%    $113,704        100.0%
                                      ========      =====       ========        =====     ========        ===== 


</TABLE>



                      TABLE 4 - SELECTED LOAN DISTRIBUTION


<TABLE>
<CAPTION>
                                                    December 31,
                                                       1997
                                                       ----
                                                   (in thousands)
<S>                                                   <C>                  <C>  
One year or less                                      $131,203             53.7%
Over one year through 5 years                           68,791             28.1%
Over five years through 15 years                        37,190             15.2%
Over 15 years                                            7,347              3.0%
                                                      --------            -----
  Total                                               $244,531            100.0%
                                                      ========            =====

Fixed rate                                            $104,212             42.6%
Variable repricing                                     140,319             57.4%
                                                      --------            -----
  Total                                               $244,531            100.0%
                                                      ========            =====
</TABLE>

               ALLOWANCE AND PROVISION FOR LOAN LOSSES. The allowance for loans
losses is regularly evaluated by management and maintained at a level believed
to be adequate to absorb future loan losses in SBI's portfolios. Periodic
provisions to the allowance are made as needed. The amount of the provision for
loan losses necessary to maintain an adequate allowance is based upon an
assessment of current economic conditions, analysis of periodic loan reviews,
delinquency trends and ratios, changes in the mixture and levels of the various
categories of loans, historical charge-offs, recoveries, and other information.
Management believes that the allowance for loan losses is adequate. Although
management believes it uses the best information available to make allowance
provisions, future adjustments which could be material may be necessary if
management's assumptions differ from the loan portfolio's actual future
performance.

               The allowance for loan losses increased $912,000 during 1997 to
$2.9 million at December 31, 1997, of which $806,000 was attributed to the
acquisition of First Bank. The remaining increase is attributed to the overall
growth in loans.

                                       67
<PAGE>   77
                    TABLE 5 - SUMMARY OF LOAN LOSS EXPERIENCE

<TABLE>
<CAPTION>

                                                    September 30,                             December 31,
                                                    ------------           -----------------------------------------------------
                                                   1998        1997        1997        1996        1995       1994          1993
                                                   ----        ----        ----        ----        ----       ----          ----
<S>                                              <C>         <C>         <C>         <C>         <C>         <C>         <C>    
                                                                                         (dollars in thousands)

Allowance for loan losses at beginning of year   $ 2,912     $ 2,000     $ 2,000     $ 1,800     $ 2,050     $ 2,000     $ 1,860

Charge-offs:
    Commercial and agricultural                      (59)        (67)       (300)       (822)     (1,021)       (181)       (476)
    Real Estate                                      (14)        (80)        (70)        (37)        (58)        (53)        (47)
    Installment                                     (414)       (183)       (307)       (254)       (160)       (211)        (74)
                                                 -------     -------     -------     -------     -------     -------     ------- 
        Total                                       (487)       (330)       (677)     (1,113)     (1,239)       (445)       (597)

Recoveries:
    Commercial and agricultural                       25         109         109         806          23         107         207
    Real Estate                                       11           9          18           9          10          45          49
    Installment                                      127          55          69         126          66          26          17
                                                 -------     -------     -------     -------     -------     -------     ------- 
        Total                                        163         173         196         941          99         178         273
                                                 -------     -------     -------     -------     -------     -------     ------- 
Net loan charge-offs                                (324)       (157)       (481)       (172)     (1,140)       (267)       (324)
Acquired balance                                                 806         806
Provision for loan losses                            409         396         587         372         890         317         464
                                                 -------     -------     -------     -------     -------     -------     ------- 

Allowance for loan losses at end of year         $ 2,997     $ 3,045     $ 2,912     $ 2,000     $ 1,800     $ 2,050     $ 2,000
                                                 ========    =======     =======     =======     =======     =======     =======

Ending allowance to total loans                     1.24%       1.27%       1.19%       1.28%       1.32%       1.59%       1.76%
</TABLE>

               The following table is management's allocation of the allowance
for loan losses by loan type. Allowance funding and allocation is based on
management's assessment of economic conditions, past loss experience, loan
volume, past due history and other factors. Since these factors are subject to
change, the allocation is not necessarily predictive of future portfolio
performance. The allocation for the allowance for loan losses is an estimate of
the portion of the allowance that will be used to cover future charge-offs in
each major loan category, but it does not preclude any portion of the allowance
allocated to one type of loan being used to absorb losses of another loan type.


              TABLE 6 - ALLOCATION OF THE ALLOWANCE FOR LOAN LOSSES
                       AND PERCENT OF LOANS TO TOTAL LOANS


<TABLE>
<CAPTION>
                                                                              December 31,
                                September 30,  ------------------------------------------------------------------------------------
                                    1998           1997               1996              1995            1994            1993
                                    ----           ----               ----              ----            ----            ----
<S>                           <C>      <C>     <C>     <C>      <C>      <C>      <C>       <C>     <C>      <C>    <C>      <C>  
                                                                 (dollars in thousands)

Commercial and agricultural   $1,499   50.1%   $1,398   46.9%   $  840    55.7%   $  684    50.9%   $  820    46.2% $  840   50.8%
Real estate                      959   34.5%    1,048   36.2%      640    25.0%      594    26.1%      554    29.6%    600   30.5%
Installment                      539   15.4%      466   16.9%      520    19.3%      522    23.0%      676    24.2%    560   18.7%
                              ------   ----    ------   ----    ------    ----    ------   -----    ------   -----  ------  -----

  Total                       $2,997  100.0%   $2,912  100.0%   $2,000   100.0%   $1,800   100.0%   $2,050   100.0% $2,000  100.0%
                              ======  =====    ======  =====    ======   =====    ======   =====    ======   =====  ======  ===== 
</TABLE>

     ASSET QUALITY. Loans are placed on non-accrual status when management
believes, after considering economic and business conditions and collection
efforts, that the borrower's financial

                                       68

<PAGE>   78



condition is such that the collection of interest is doubtful. When loans are
placed on non-accrual status, all unpaid accrued interest is reversed. Interest
income is subsequently recognized only to the extent cash payments are received.
These loans remain on non-accrual status until the borrower demonstrates the
ability to remain current or the loan is deemed uncollectible and is
charged-off. The following table provides information on non-performing assets.


                         TABLE 7 - NON-PERFORMING ASSETS


<TABLE>
<CAPTION>
                                   September 30,                December 31,
                                                 -------------------------------------------
                                        1998     1997     1996      1995     1994       1993
                                        ----     ----     ----      ----     ----       ----
                                                          (dollars in thousands)
<S>                                   <C>       <C>       <C>     <C>       <C>       <C>   
Loans on non-accrual status(1)        $  766    $  626    $346    $  764    $1,769    $1,765
Loans past due 90 days or more           869       328      14        20        22     1,349
Restructured Loans                        --        --      --        --        --        --
                                      ------    ------    ----    ------     -----    ------

      Total non-performing loans       1,635       954     360       784     1,791     3,114
Other real estate owned                   83       781      --       261       319       579
                                      ------    ------    ----    ------     -----    ------

      Total non-performing assets     $1,718    $1,735    $360    $1,045    $2,110    $3,693
                                      ======    ======    ====    ======    ======    ======
Percentage of non-performing loans
   to total loans                       0.68%     0.39%   0.23%     0.58%     1.39%     2.74%

Percentage of non-performing assets
    to total assets                     0.51%     0.53%   0.17%     0.50%     1.08%     2.04%
</TABLE>

(1)  The interest that would have been earned and received on non-accrual loans
     was not material.

               INVESTMENT SECURITIES. The securities portfolio consists of debt
and equity securities which provide SBI with a relatively stable source of
income and at December 31, 1997, all securities were classified as available for
sale. The investment portfolio provides a balance to interest rate and credit
risks in other categories of the balance sheet and is also used as a secondary
source of liquidity. The municipal securities in the portfolio have been issued
principally by Kentucky municipalities. The U. S. Treasury and Federal Agency
securities and asset-backed securities can be used as collateral to secure
municipal deposits and repurchase agreements. Securities as a percentage of
interest-earning assets decreased to 18% at December 31, 1997 versus 23% at
December 31, 1996. The decrease in securities reflects management's emphasis on
originating higher yielding loans and placing a lesser reliance on the
securities portfolio for sources of income.

               For increased flexibility in asset liability management, held to
maturity securities were transferred to available for sale effective January 1,
1997.

               Excluding those holdings in the investment security portfolio of
U.S. Treasury and U.S. agency and corporation securities, there were no
investments in securities of any one issuer which exceeded 10% of shareholders'
equity at September 30, 1998.

                                       69

<PAGE>   79




TABLE 8 - INVESTMENT PORTFOLIO
<TABLE>
<CAPTION>

                                               September 30,                  December 31,
                                                                  ----------------------------------
                                                  1998            1997          1996            1995
                                                  ----            ----          ----            ----
                                                                          (Dollars in thousands)
<S>                                              <C>            <C>            <C>            <C>    
Available for sale:
  U.S. Treasury and Federal Agencies             $14,054        $19,586        $15,492        $21,606
  State and municipal obligations                 16,531         15,789             --             --
  Asset-backed securities                         20,686         18,857          1,889          2,124
                                                 -------        -------        -------        -------
    Total available for sale                      63,451         54,232         17,381         23,730



HELD TO MATURITY:
  U.S. Treasury and Federal Agencies             $    --        $    --        $18,894        $24,062
  State and municipal obligations                     --             --          9,410          8,940
  Asset-backed securities                             --             --          1,635            805
                                                 -------        -------        -------        -------
    Total held to maturity                            --             --         29,939         33,807
                                                 -------        -------        -------        -------

    Total securities                             $63,451        $54,232        $47,320        $57,537
                                                 =======        =======        =======        =======

</TABLE>

TABLE 9 - MATURITY DISTRIBUTION OF SECURITIES

<TABLE>
<CAPTION>
                                                    As of December 31, 1997
                                                    -----------------------
                                                   One       Five
                                        Year      Through   Through   Over
                                         Or        Five       Ten     Ten
                                        Less      Years      Years    Years      Total
                                        ----      -----      -----    -----      -----
                                                      (Dollars in thousands)
<S>                                    <C>        <C>        <C>      <C>        <C>    
Available for sale:
  U.S. Treasury and Federal Agencies   $ 8,288    $ 8,863    $2,435   $    --    $19,586
  State and municipal obligations        1,390      3,306     7,459     3,634     15,789
  Asset-backed securities              -------    -------    ------   -------     18,857
                                                                                 -------
    Total                              $ 9,678    $12,169    $9,894    $3,634    $54,232
                                       =======    =======    ======    ======    =======

Weighted average yield(1)                 5.25%      5.84%     5.36%     5.00%      5.82%
</TABLE>

(1) The weighted average yields are calculated on a non tax-equivalent basis.

               DEPOSITS. Managing the mix and repricing of deposit liabilities
is an important factor affecting SBI's ability to maximize its net interest
margin. The strategies used to manage interest bearing deposit liabilities are
designed to adjust as the interest rate environment changes. In this regard,
management regularly assesses its funding needs, deposit pricing, and interest
rate outlook.

               Deposits were $259.7 million at December 31, 1997 having
increased $86.1 million, of which the acquisition of First Bank contributed
$71.1 million. The remaining increase was primarily due to growth in time
deposits. Non-interest bearing deposits to total deposits averaged 10% in 1997
as compared to 13% in 1996 the decrease of which is due to the acquisition of
First Bank.


                                       70

<PAGE>   80
               The table below provides information on the maturities of time
deposits of $100,000 or more at December 31, 1997:

              TABLE 10 - MATURITY OF TIME DEPOSITS $100,000 OR MORE

<TABLE>
<CAPTION>
                                                         December 31,
                                                             1997
                                                        (in thousands)

               <S>                                       <C>        
               Maturing 3 months or less                   $    11,476
               Maturing over 3 through 12 months                26,828
               Maturing over 12 months                          11,467
                                                           -----------

                                                           $    49,771
                                                           ===========
</TABLE>

               BORROWED FUNDS. SBI's borrowed funds consist of federal funds
purchased, securities sold under agreements to repurchase (repurchase
agreements), Federal Home Loan Bank advances, a note payable, and other borrowed
funds. Levels of other borrowed funds are routinely evaluated by management with
consideration given to growth in the loan portfolio, liquidity needs, cost of
retail deposits, market conditions, and other factors.

               Federal funds purchased and repurchase agreements increased $6.5
million in 1997 to $17.0 million and can fluctuate greatly depending on the cash
needs of the Banks or the Banks' customers. See Note 8 to the Consolidated
Financial Statements for additional information on repurchase agreements.
Federal Home Loan Bank advances increased $4.3 million during 1997 to $13.3
million, approximately half of which mature in 1998. SBI borrowed $10.0 million
from a commercial bank in 1997 used in part to purchase First Bank. This note
payable is a term note at LIBOR plus 1.5% with minimum quarterly installments of
$345,000 plus interest. The note is secured by all the common stock of First
National and First Bank and matures on June 26, 2004. At September 30, 1998,
$7.7 million was outstanding on this note.

ASSET/LIABILITY MANAGEMENT

               Asset/liability management involves developing, implementing and
monitoring strategies to maintain sufficient liquidity, maximize net interest
income and minimize the impact significant fluctuations in market interest rates
have on earnings. The Asset/Liability Committees of the Banks are responsible
for managing this process. Much of the committees' efforts are focused on
minimizing sensitivity to changes in interest rates.

               SBI uses an earnings simulation model to analyze net interest
income sensitivity. Potential changes in market interest rates and their
subsequent effect on interest income are then evaluated. The model projects the
effect of instantaneous movements in interest rates of up to 200 basis points.
Assumptions based on the historical behavior of the Banks' deposit rates and
balances in relation to changes in interest rates are also incorporated into the
model. These assumptions are inherently uncertain and, as a result, the model
cannot precisely measure net interest income. Actual results will differ from
the model's simulated results due to timing, magnitude, and

                                       71

<PAGE>   81
frequency of interest rate changes as well as changes in market conditions and
the application of various management strategies.

               The approved policy established for interest rate risk is stated
in terms of change in net interest income given a 100 and 200 basis point
immediate and sustained increase or decrease in market interest rates. The
current limits in this policy are plus or minus 10% for a 100 basis point change
and plus or minus 15% for a 200 basis point change.

               The following table illustrates SBI's estimated consolidated
annual earnings sensitivity profile as of June 30, 1998 which is the most recent
analysis date available:


                      TABLE 11 - INTEREST RATE SENSITIVITY



<TABLE>
<CAPTION>
                              Decrease in Rates                                  Increase in Rates
                              -----------------                         -------------------------------
                               200           100                             100              200
                           Basis Points  Basis Points        Base       Basis Points       Basis Points
                           ------------  ------------        ----       ------------       ------------
<S>                        <C>           <C>              <C>           <C>                <C>       
Projected Interest Income
  Loans                      $20,552        $21,551       $ 22,533         $ 23,498           $ 24,460  
  Investments                  3,216          3,348          3,441            3,479               3516  
  Short-term investments         390            436            482              525                565  
                             -------        -------       --------         --------           --------
Total interest income         24,158         25,335         26,456           27,502             28,541  
                                                                                                        
Projected interest expense                                                                              
  Deposits                     9,066         10,226         11,393           12,569             13,747  
  Other borrowings             2,079          2,364          2,648            2,933              3,217  
                             -------        -------       --------         --------           --------
Total interest expense        11,145         12,590         14,041           15,502             16,964  
                             -------        -------       --------         --------           --------
                                                                                                        
Net interest income          $13,013        $12,745       $ 12,415         $ 12,000           $ 11,577  
Change from base                 598            330             --             (415)              (838) 
% Change from base              4.82%          2.66%                          (3.34)%            (6.75)%
</TABLE>                                                                    

     Given an immediate, sustained 100 basis point upward shock to the yield
curve used in the simulation model, it is estimated that net interest income
would decrease by 3.34%, or 6.75% for a 200 basis point increase. A 100 basis
point immediate, sustained downward shock to the yield curve would increase net
interest income by an estimated 2.66%, or 4.82% for a 200 basis point increase.
These potential changes in net interest income, consolidated and separately for
each bank (not shown), are within SBI's approved policy guidelines.

LIQUIDITY

     Liquidity is generally defined as the ability to meet cash flow
requirements. SBI manages liquidity at two levels, the parent company and its
banking subsidiaries. SBI's primary cash

                                       72

<PAGE>   82



requirement is for repayment of debt used to acquire First Bank followed by
dividend payments to its shareholders. SBI's primary source of funds is
dividends received from the Banks.

               The Banks' primary liquidity consideration is to meet the cash
flow needs of its customers, such as borrowings and deposit withdrawals. To meet
cash flow requirements, sufficient sources of liquid funds must be available.
These sources include short-term investments, repayments and maturities of loans
and securities, growth in deposits and other liabilities, and profits. At
September 30, 1998, the Banks had $13.8 million in cash and due from banks and
deposits in other banks. Principal reductions received on loans and maturities
of investment securities also provides a continual stream of cash flows. Another
source of liquid funds is net cash provided from operating activities, which
provided $2.9 million during the first nine months in 1998. Also, the Banks have
established federal funds lines of credit with their correspondent banks which
allow the Banks to borrow up to $12.5 million. Finally, the Banks are members of
the Federal Home Loan Bank of Cincinnati (FHLB). Based on the Banks' September
30, 1998 stock ownership and available collateral, an additional $21.5 million
borrowing capacity is available with the FHLB.

CAPITAL RESOURCES

               Management believes that a strong capital position is paramount
to its continued profitability and continued depositor and shareholder
confidence. It also provides SBI with flexibility to take advantage of growth
opportunities and to accommodate larger commercial loan customers. Regulators
have established "risk based" capital guidelines for banks and bank holding
companies. Under the guidelines, minimum capital levels are based on the
perceived risk in asset categories and certain off-balance-sheet items, such as
loan commitments and standby letters of credit. Management monitors its capital
levels to comply with regulatory requirements. In order to be considered "well
capitalized" by the FDIC, financial institutions must maintain a leverage ratio
in excess of 5% and a total risk based capital ratio in excess of 10%. As
depicted in Note 22 to the Consolidated Financial Statements, at December 31,
1997 SBI and the Banks' capital ratios are in excess of regulatory standards for
classification as "well capitalized", except for consolidated total capital to
risk-weighted assets which is "adequate". Being considered "well capitalized" is
one condition for assessing the federal deposit insurance premiums at the lowest
available rate.

IMPACT OF INFLATION

               The consolidated financial statements and notes have been
prepared in accordance with generally accepted accounting principles, which
require the measurement of financial position and operating results in terms of
historical dollars without considering the change in the relative purchasing
power of money over time due to inflation. The impact of inflation is reflected
in the increased cost of SBI operations. Nearly all the assets and liabilities
of SBI are financial. As a result, performance is directly impacted by changes
in interest rates, which are indirectly influenced by inflationary expectations.
SBI's ability to match the interest sensitivity of its financial assets to the
interest sensitivity of its financial liabilities in its asset/liability
management may tend to minimize the effect of changes in interest rates on
performance. Changes in interest rates do not necessarily move to the same
extent as do changes in the prices of goods and services.


                                       73
<PAGE>   83
YEAR 2000

               Management has assessed the operational and financial
implications of its Year 2000 needs and developed a plan to ensure that data
processing systems can properly handle the change. Management has determined
that if a business interruption as a result of the Year 2000 issue occurred,
such an interruption could be material. The primary effort required to prevent a
potential business interruption is the installation of the most current software
release of the Banks' core system as provided by a third party software vendor.
The third party vendor has stated that Year 2000 remediation and testing efforts
will be completed prior to December 31, 1998. In further assurance of this, the
Banks have scheduled their own testing throughout the fourth quarter of 1998.
Non-compliant hardware will also be replaced concurrent with the installation of
the most current software release. Should mission critical system readiness not
be achieved by December 31, 1998, the Banks intend to seek alternative
solutions, one of which is to accelerate the planned conversion from the Banks'
current system to Union Planters' data processing system. Non-mission critical
systems, including systems other than data processing with embedded technology,
have been evaluated and are included in a remediation schedule according to
priority. Management projects the cost of Year 2000 readiness will be in the
range of $500,000 to $800,000 the majority of which will be capital assets and
expensed over the asset's life. Year 2000 expenses are subject to change and
could vary from current estimates if the final requirements for Year 2000
readiness exceed management's expectations.


                           BUSINESS OF UNION PLANTERS

GENERAL

               Union Planters, a Tennessee corporation, is a bank holding
company registered with the Federal Reserve under the Bank Holding Company Act.
As of September 30, 1998, Union Planters had total consolidated assets of
approximately $30.5 billion, total consolidated loans of approximately $19.7
billion, total consolidated deposits of approximately $23.3 billion, and total
consolidated shareholders' equity of approximately $2.9 billion.

               Union Planters conducts its business activities through UPB, its
principal bank subsidiary, and a number of other banking and banking-related
subsidiaries. Through its various subsidiaries, Union Planters provides a
diversified range of financial services, maintaining at September 30, 1998, 801
banking offices and 1,000 ATMs in the states in which it operates, as follows:

                                       74
<PAGE>   84
<TABLE>
<CAPTION>
                                  Full Service and
                                   Limited Service
                  State               Branches            ATMs
                                                         ------
                  <S>             <C>                    <C>
                   Alabama              22                  22
                   Arkansas             48                  37
                   Florida              65                  47
                   Illinois             95                 104
                   Indiana              17                  18
                   Iowa                 30                  33
                   Kentucky             28                  26
                   Louisiana            22                  17
                   Mississippi         151                 170
                   Missouri             98                 123
                   Tennessee           209                 375
                   Texas                16                  28
                                       ---               -----
                                       801               1,000
                                       ===               =====
</TABLE>

               Acquisitions have been, and are expected to continue to be, an
important part of the expansion of Union Planters' business. During the period
beginning January 1, 1994 and ending September 30, 1998, Union Planters
completed the acquisition of 43 institutions with approximately $26.4 billion in
total assets. The restated consolidated financial statements of Union Planters
included in Exhibit 99.1 to its September 30, 1998 Quarterly Report on Form 10-Q
and filed with the Securities and Exchange Commission, and the financial
information relating to Union Planters included under "Selected Financial Data"
in this proxy statement-prospectus, reflect the financial impact of all of such
acquisitions, including the acquisitions completed during 1998.

               In addition, as of September 30, 1998, Union Planters was a party
to definitive agreements to acquire five financial institutions in addition to
SBI, and to purchase 56 branch locations and assume deposit liabilities of
approximately $1.8 billion in Indiana (the "Indiana Branch Purchase" and,
together with all other pending acquisitions, the "Other Pending Acquisitions").
The Other Pending Acquisitions had aggregate total assets of approximately $3.3
billion at September 30, 1998. For information with respect to these
acquisitions, see "-- Recent Developments" below.

               Union Planters expects to continue to take advantage of the
consolidation of the financial services industry by further developing its
franchise through the acquisition of financial institutions. Future acquisitions
may entail the payment by Union Planters of consideration in excess of the book
value of the underlying net assets acquired, may result in the issuance of
additional shares of Union Planters capital stock or the incurring of additional
indebtedness by Union Planters, and could have a dilutive effect on the earnings
or book value per share of Union Planters common stock. Moreover, significant
charges against earnings are sometimes required incidental to acquisitions. For
a description of the acquisitions in addition to the merger which are currently
pending, see "-- Recent Developments."

                                       75

<PAGE>   85



               The principal executive offices of Union Planters are located at
7130 Goodlett Farms Parkway, Memphis, Tennessee 38018, and its telephone number
at such address is (901) 580-6000. Additional information with respect to Union
Planters and its subsidiaries is included in documents incorporated by reference
in this proxy statement-prospectus. See "WHERE YOU CAN FIND MORE INFORMATION."

RECENT DEVELOPMENTS

               RECENT SALE OF CREDIT CARD PORTFOLIO. On October 15, 1998, Union
Planters sold substantially all of its credit card portfolio to MBNA Bank
America, N.A. Union Planters also entered into an agreement with MBNA Bank
America, N.A. to sell it a large majority of the credit card portfolios of Union
Planters Bank of Kentucky, a wholly owned subsidiary of Union Planters, and of
Magna Bank, N.A. which merged into UPB on October 9, 1998. The value of the
credit card portfolio sold totaled $460 million. In the fourth quarter of 1998,
Union Planters expects to recognize a net gain of $65 to $70 million on a pretax
basis and approximately $40 to $43 million after taxes as a result of the sale.
Certain estimated costs related to selling the credit card portfolios, including
employee severance, equipment write-offs and other fees, have been netted
against the gain. Union Planters also expects to charge off approximately $10
million to $15 million of credit card receivables that will not be purchased by
MBNA Bank America, N.A. in the fourth quarter of 1998. A smaller portion of the
transaction will settle in the first quarter of 1999.

               RECENTLY COMPLETED ACQUISITIONS. Since December 31, 1997, Union
Planters has completed 14 acquisitions, representing approximately $13.5 billion
in assets. The financial impact of all of such acquisitions deemed material are
reflected in the consolidated financial statements of Union Planters included in
its Exhibit 99.1 to the September 30, 1998 Quarterly Report on Form 10-Q and
filed with the Securities and Exchange Commission, and in the financial
information relating to Union Planters included under "SUMMARY - Selected
Financial Data" in this proxy statement-prospectus.

               OTHER PENDING ACQUISITIONS. Union Planters has entered into
definitive agreements to acquire the following financial institutions in
addition to SBI (collectively, the "Other Pending Acquisitions") which Union
Planters' management considers probable of consummation and, which, except as
indicated, are expected to close in 1998.


<TABLE>
<CAPTION>
                                               Asset Size                                             Projected
         Institution                         (in Millions)(1)    Type of Consideration(2)            Closing Date
         -----------                         ----------------    ------------------------            ------------
<S>                                          <C>                 <C>                                 <C>
First Mutual Bancorp, Inc. and                   $   370         Approximately 1,100,000              12/31/98
its subsidiary 1st Mutual Bank,                                  shares of Union Planters
S.D., Decatur, Illinois (the "First                              common stock
Mutual Purchase")(3)

La Place Bancshares, Inc. and                         70         Approximately 412,000 shares         12/31/98
subsidiary Bank of La Place of                                   of Union Planters common
St. John the Baptist, Parish, La.,                               stock
La Place, Louisiana
</TABLE>


                                       76
<PAGE>   86
<TABLE>
<CAPTION>
                                               Asset Size                                             Projected
         Institution                         (in Millions)(1)    Type of Consideration(2)            Closing Date
         -----------                         ----------------    ------------------------            ------------
<S>                                          <C>                 <C>                                 <C>
Purchase of 56 branches and                       1,800          $294 million deposit premium        2/12/99
assumption of $1.8 billion of                                    in cash(4)
deposits/liabilities of First
Chicago NBD Corporation in
Indiana ("Indiana Branch
Purchase")(4)

Ready State Bank and its                            595          Approximately 3,214,000             12/31/98
subsidiary Ready Holding, Inc.,                                  shares of Union Planters
Hialeah, Florida                                                 common stock

First & Farmers Bancshares,                         275          $76 million in cash                 1/31/99
Inc. and subsidiaries First &
Farmers Bank of Somerset,
Somerset, Kentucky, and Bank
of Cumberland, Burkesville,
Kentucky (the "Somerset
Purchase")

FSB, Inc. and its subsidiary,                       145          Approximately 907,000 shares        12/31/98
First State Bank of Covington,                                   of Union Planters common
Tennessee                                        ------          stock

                   TOTAL                         $3,255  
                                                 ======              
</TABLE>
- --------------------------

(1)  Approximate total assets on September 30, 1998.
(2)  Assumes no adjustment to shares pursuant to exchange ratio adjustment
     mechanisms. 
(3)  Union Planters intends to purchase, in the open market, approximately one
     million Union Planters common shares to facilitate its purchase of First
     Mutual Bancorp, Inc.
(4)  The purchase price of the premises and equipment to be purchased has not
     yet been determined.

               FOURTH QUARTER EARNINGS CONSIDERATION. It is expected that either
Union Planters or the institutions acquired or to be acquired in connection with
the merger and the Other Pending Acquisitions will incur charges arising from
such acquisitions and from the assimilation of those institutions into the Union
Planters organization. Anticipated charges would normally arise from matters
such as, but not limited to:

               -    legal, accounting, financial advisory and consulting fees;

               -    payment of contractual benefits triggered by a change of
                    control, early retirement and involuntary separation and
                    related benefits;


                                       77

<PAGE>   87
               -    costs associated with elimination of duplicate facilities
                    and branch consolidations;

               -    data processing charges;

               -    cancellation of vendor contracts; and

               -    other contingencies and similar costs which normally arise
                    from the consolidation of operational activities.

               For a discussion of Union Planters' acquisition program and the
significant charges Union Planters has incurred over the past three years
incidental to its acquisition program, see the caption "Acquisitions" on pages
A-3, A-4 and A-5 in Union Planters' restated financial statements filed in Union
Planters' September 30, 1998 Quarterly Report on Form 10-Q, Exhibit 99.1 and
Note 2 to Union Planters' restated audited consolidated financial statements for
the years ended December 31, 1997, 1996, and 1995 also contained in Union
Planters' September 30, 1998 Quarterly Report on Form 10-Q, Exhibit 99.1.
Reference is also made to pages 17, 18, 20 and 21 to Union Planters September
30, 1998 Quarterly Report on Form 10-Q for a discussion of significant charges
incurred in the nine months ended September 30, 1998.

               The merger and the Other Pending Acquisitions (with the exception
of the Indiana Branch Purchase, the Somerset Purchase and the First Mutual
Purchase) are expected to be accounted for as pooling-of-interests. Union
Planters currently estimates incurring aggregate pre-tax and after-tax charges
in the range of $5 million to $6 million in connection with completing the
merger and the Other Pending Acquisitions. Union Planters also expects to incur
expenses of approximately $30 million in the fourth quarter of 1998, both as a
pretax and after tax basis, primarily in connection with the settlement of
employment agreements related to entities acquired in the third quarter of 1998.
To the extent that Union Planters' recognition of these acquisition-related
charges is contingent upon consummation of a particular transaction, those
charges would be recognized in the period in which such transaction closes. See
"SUMMARY - Historical and Pro Forma Comparative Per Share Data."

               The range of anticipated charges to be incurred in connection
with consummating the merger and the Other Pending Acquisitions is a preliminary
estimate of the significant charges which may, in the aggregate, be required and
should be viewed accordingly. Moreover, this range has been based on the due
diligence that has been performed to date in connection with the merger and the
Other Pending Acquisitions. The range may be subject to change, and the actual
charges incurred may be higher or lower than what is currently contemplated,
once the acquired institutions are assimilated from an operational perspective
and various contingencies are either satisfied or eliminated. Furthermore, the
range of anticipated charges will change if additional entities are acquired.
Union Planters regularly evaluates the potential acquisition of, and holds
discussions with, various potential acquisition candidates. As a general rule,
Union Planters will publicly announce such acquisitions only after a definitive
agreement has been reached, and only then if Union Planters considers the
acquisition to be of such a size as to be a significant acquisition. Since the
range of anticipated acquisition-related charges is likely to change with
additional acquisitions, and since Union Planters regularly engages in
acquisitions, such range could change, and you should view such information
accordingly.


                                       78

<PAGE>   88
               Since September 30, 1998, Union Planters has expensed that
portion of certain restricted stock grants that would otherwise have remained
unrecognized at the recipients earliest possible retirement age. This will have
the effect of increasing benefits expense in the fourth quarter of 1998 by
approximately $8.9 million pretax and $5.5 million on an after tax basis.
Additionally, in connection with the consolidation of certain loan and deposit
functions, Union Planters is implementing a plan to image all documents related
to loans and deposits. During the fourth quarter of 1998, Union Planters will
engage a third party to image all of its current documents. The total expenses
estimated to be incurred in the fourth quarter of 1998 related to this project
is approximately $4.8 million pretax and $3.29 million on an after tax basis.

               Certain acquisitions during 1998 have significantly increased the
goodwill and other intangible costs to $361 million at September 30, 1998. Given
changing market conditions, primarily interest rate and the related volatility
of the mortgage markets, Union Planters plans to perform a review of the
realization of these intangibles and other related assets such as investment
securities premiums during the fourth quarter of 1998. The impact of this review
cannot be quantified at this time.


                        CERTAIN REGULATORY CONSIDERATIONS

GENERAL

               Union Planters and SBI are bank holding companies registered with
the Federal Reserve. As such, Union Planters and SBI and their non-bank
subsidiaries are subject to the supervision, examination, and reporting
requirements of the Bank Holding Company Act and the regulations of the Federal
Reserve. The following discussion summarizes the regulatory framework applicable
to banks and bank holding companies and provides certain specific information
related to Union Planters and SBI. A more complete discussion is included in
Union Planters' 1997 Annual Report on Form 10-K. See "WHERE YOU CAN FIND MORE
INFORMATION."

               Bank holding companies are required to obtain the prior approval
of the Federal Reserve before they may:

               -    acquire direct or indirect ownership or control of more than
                    5% of the voting shares of any bank;

               -    acquire all or substantially all of the assets of any bank;
                    or

               -    merge or consolidate with any other bank holding company.

               The Federal Reserve generally may not approve any transaction
that would result in a monopoly or that would further a combination or
conspiracy to monopolize banking in the United States. Nor can the Federal
Reserve approve a transaction that could substantially lessen competition in any
section of the country, that would tend to create a monopoly in any section of
the country, or that would be in restraint of trade. But the Federal Reserve may
approve any such

                                       79
<PAGE>   89
transaction if it determines that the public interest in meeting the convenience
and needs of the community served clearly outweigh the anticompetitive effects
of the proposed transaction. The Federal Reserve is also required to consider
the financial and managerial resources and future prospects of the bank holding
companies and banks concerned, as well as the convenience and needs of the
community to be served. Consideration of financial resources generally focuses
on capital adequacy, which is discussed below. And consideration of convenience
and needs includes the parties' performance under the Community Reinvestment Act
of 1977.

               Another factor that is gaining increasing scrutiny in the
application process is the Year 2000 readiness of the parties involved in
acquisition transactions. Banking organizations whose Year 2000 readiness is in
less than satisfactory condition are undergoing special scrutiny in connection
with acquisition transactions requiring regulatory approval, and may not be
eligible to use expedited application procedures for acquisition transactions

               Under the Riegle-Neal Interstate Banking and Branching Efficiency
Act of 1994, Union Planters and any other bank holding company may now acquire a
bank located in any state, subject to certain deposit-percentage limitations,
aging requirements, and other restrictions. The Interstate Banking Act also
generally permits a bank to branch interstate through acquisitions of banks in
other states. By adopting legislation prior to June 1, 1997, a state had the
ability either to "opt in" and accelerate the date after which interstate
branching is permissible or "opt out" and prohibit interstate branching
altogether. Texas, where Union Planters recently completed an acquisition,
elected to "opt out," in legislation that expires September 2, 1999. Union
Planters has used the Interstate Banking Act to merge substantially all of Union
Planters' banking subsidiaries with and into UPB. As a result, that bank is now
a multi-state national bank with branches in Alabama, Arkansas, Florida,
Illinois, Iowa, Kentucky, Louisiana, Mississippi, Missouri, and Tennessee.

               The Bank Holding Company Act prohibits Union Planters and SBI
from:

               (1)  engaging in activities other than banking, managing, or
                    controlling banks or other permissible subsidiaries; and

               (2)  acquiring or retaining direct or indirect control of any
                    company engaged in any activities other than those
                    activities determined by the Federal Reserve to be so
                    closely related to banking or managing or controlling banks
                    as to be a proper incident thereto.

               In determining whether a particular activity is permissible, the
Federal Reserve must consider whether the performance of such an activity
reasonably can be expected to produce benefits to the public that outweigh
possible adverse effects. Possible benefits the Federal Reserve considers
include greater convenience, increased competition, or gains in efficiency.
Possible adverse effects include undue concentration of resources, decreased or
unfair competition, conflicts of interest, or unsound banking practices. The
Federal Reserve has determined the following to be permissible activities of
bank holding companies:

               -    factoring accounts receivable;

                                       80

<PAGE>   90
               -    acquiring or servicing loans;

               -    leasing personal property;

               -    conducting discount securities brokerage activities;

               -    performing certain data processing services;

               -    acting as agent or broker in selling credit life insurance
                    and certain other types of insurance in connection with
                    credit transactions; and

               -    performing certain insurance underwriting activities.

               There are no territorial limitations on permissible non-banking
activities of bank holding companies. Despite prior approval, the Federal
Reserve has the power to order a holding company or its subsidiaries to
terminate any activity or to terminate its ownership or control of any
subsidiary when it has reasonable cause to believe that a serious risk to the
financial safety, soundness, or stability of any bank subsidiary of that bank
holding company may result from such activity.

               The banks owned by Union Planters and SBI are members of the
Federal Deposit Insurance Corporation. Their deposits are insured by the Federal
Deposit Insurance Corporation to the extent provided by law. Each bank is also
subject to numerous state and federal statutes and regulations that affect its
business, activities, and operations, and each is supervised and examined by one
or more state or federal bank regulatory agencies.

               The Federal Deposit Insurance Corporation and the applicable
state authority in the case of state-chartered nonmember banks, the Office of
Thrift Supervision in the case of federally chartered thrift institutions, the
Federal Reserve in the case of state-chartered member banks, and the Office of
the Comptroller of the Currency in the case of national banks supervise the
subsidiaries of Union Planters and SBI and regularly examine the operations of
such institutions. They have authority to approve or disapprove mergers,
consolidations, the establishment of branches, and similar corporate actions.
The federal and state banking regulators also have the power to prevent the
continuance or development of unsafe or unsound banking practices or other
violations of law.

PAYMENT OF DIVIDENDS

               Union Planters and SBI are each legal entities separate and
distinct from their banking, thrift, and other subsidiaries. The principal
sources of cash flow of Union Planters and SBI, including cash flow to pay
dividends to their shareholders, are dividends from their subsidiary depository
institutions. There are statutory and regulatory limitations on the payment of
dividends by these subsidiary depository institutions to Union Planters and SBI,
as well as by Union Planters and SBI to their shareholders.

                                       81

<PAGE>   91
               As to the payment of dividends, each of Union Planters'
state-chartered banking subsidiaries is subject to the laws and regulations of
the state in which the bank is located, and to the regulations of the bank's
primary federal regulator. Union Planters' subsidiaries that are thrift
institutions are subject to the Office of Thrift Supervision's capital
distributions regulations, and those subsidiaries of Union Planters and SBI that
are national banks are subject to the regulations of the Office of the
Comptroller of the Currency.

               If the federal banking regulator determines that a depository
institution under its jurisdiction is engaged in or is about to engage in an
unsafe or unsound practice, the regulator may require, after notice and hearing,
that the institution cease and desist from such practice. Depending on the
financial condition of the depository institution, an unsafe or unsound practice
could include the payment of dividends. The federal banking agencies have
indicated that paying dividends that deplete a depository institution's capital
base to an inadequate level would be an unsafe and unsound banking practice.
Under the Federal Deposit Insurance Corporation Improvement Act of 1991, a
depository institution may not pay any dividend if payment would cause it to
become undercapitalized or if it already is undercapitalized. See "-- Prompt
Corrective Action." The federal agencies have also issued policy statements that
provide that bank holding companies and insured banks should generally only pay
dividends out of current operating earnings.

               At September 30,1998, under dividend restrictions imposed under
federal and state laws, Union Planters' banking subsidiaries, without obtaining
governmental approvals, could declare aggregate dividends to Union Planters of
approximately $119 million.

               The payment of dividends by Union Planters and its bank
subsidiaries or SBI may also be affected or limited by other factors, such as
the requirement to maintain adequate capital above regulatory guidelines.

CAPITAL ADEQUACY

               Union Planters, SBI and their banking subsidiaries are required
to comply with the capital adequacy standards established by the Federal Reserve
in the case of Union Planters and SBI, and the appropriate federal banking
regulator in the case of each of the banking subsidiaries of Union Planters and
SBI. There are two basic measures of capital adequacy for bank holding companies
and the depository institutions that they own: a risk-based measure and a
leverage measure. All applicable capital standards must be satisfied for a bank
holding company to be considered in compliance.

               The risk-based capital standards are designed to make regulatory
capital requirements more sensitive to differences in risk profile among
depository institutions and bank holding companies, to account for
off-balance-sheet exposure, and to minimize disincentives for holding liquid
assets. Assets and off-balance-sheet items are assigned to broad risk
categories, each with appropriate weights. The resulting capital ratios
represent capital as a percentage of total risk-weighted assets and
off-balance-sheet items.


                                       82
<PAGE>   92
               The minimum guideline for the ratio ("Total Capital Ratio") of
total capital ("Total Capital") to risk-weighted assets (including certain
off-balance-sheet items, such as standby letters of credit) is 8.0%. At least
half of Total Capital must be composed of common equity, undivided profits,
minority interests in the equity accounts of consolidated subsidiaries,
noncumulative perpetual preferred stock, and a limited amount of cumulative
perpetual preferred stock, less goodwill and certain other intangible assets
("Tier 1 Capital"). The remainder may consist of subordinated debt, other
preferred stock, and a limited amount of loan loss reserves ("Tier 2 Capital").
At September 30, 1998, Union Planters' consolidated Total Capital Ratio and its
Tier 1 Capital Ratio (i.e., the ratio of Tier 1 Capital to risk-weighted assets)
were 17.07% and 13.49%, respectively and SBI's Total Capital Ratio and Tier 1
Capital Ratio were 9.59% and 8.43%, respectively.

               In addition, the Federal Reserve has established minimum leverage
ratio guidelines for bank holding companies. These guidelines provide for a
minimum ratio (the "Leverage Ratio") of Tier 1 Capital to average assets, less
goodwill and certain other intangible assets, of 3.0% for bank holding companies
that meet certain specified criteria, including having the highest regulatory
rating. All other bank holding companies generally are required to maintain a
Leverage Ratio of at least 3.0%, plus an additional cushion of 100 to 200 basis
points. Union Planters' Leverage Ratio at September 30, 1998, was 9.29% and
SBI's Leverage Ratio at September 30, 1998 was 5.93%. The guidelines also
provide that bank holding companies that experience internal growth or make
acquisitions will be expected to maintain strong capital positions substantially
above the minimum supervisory levels without significant reliance on intangible
assets. The Federal Reserve will consider a "tangible Tier 1 Capital Leverage
Ratio" (deducting all intangibles) and other indicia of capital strength in
evaluating proposals for expansion or new activities.

               Each of the banks of Union Planters is subject to risk-based and
leverage capital requirements adopted by its federal banking regulator. Those
requirements are similar to those adopted by the Federal Reserve for bank
holding companies. Banking regulators may establish higher capital requirements
for a particular institution based upon the institution's risk profile
including, without limitation, exposure to interest rate risk. Each of the banks
of Union Planters and SBI was in compliance with those minimum capital
requirements as of September 30, 1998. No federal banking agency has advised
Union Planters, SBI or their bank subsidiaries of any specific minimum capital
ratio requirement applicable to it.

               A bank or thrift that fails to meet its capital guidelines may be
subject to a variety of enforcement remedies and certain other restrictions on
its business. Remedies could include the issuance of a capital directive, the
termination of deposit insurance by the Federal Deposit Insurance Corporation,
and a prohibition on the taking of brokered deposits. As described below,
substantial additional restrictions can be imposed upon Federal Deposit
Insurance Corporation-insured depository institutions that fail to meet their
capital requirements. See "-- Prompt Corrective Action."

               The federal bank regulators have raised the capital requirements
that apply to banks beyond their current levels. The Federal Reserve, the
Federal Deposit Insurance Corporation, and the Office of the Comptroller of the
Currency have amended the risk-based capital standards that

                                       83

<PAGE>   93
calculate changes in a bank's net economic value attributable to increases and
decreases in market interest rates and require banks with excessive interest
rate risk exposure to hold additional amounts of capital against such exposures.
The Office of Thrift Supervision has also included an interest-rate risk
component in its risk-based capital guidelines for savings associations that it
regulates.

SUPPORT OF SUBSIDIARY INSTITUTIONS

               Under Federal Reserve policy, Union Planters and SBI are expected
to act as a source of financial strength for, and commit its resources to
support, each respective Union Planters or SBI bank. This support may be
required at times when Union Planters or SBI may not be inclined to provide it.
In addition, any capital loans by a bank holding company to any of its bank
subsidiaries are subordinate to the payment of deposits and to certain other
indebtedness. In the event of a bank holding company's bankruptcy, any
commitment by the bank holding company to a federal bank regulatory agency to
maintain the capital of a bank subsidiary will be assumed by the bankruptcy
trustee and entitled to a priority of payment.

               A depository institution insured by the Federal Deposit Insurance
Corporation can be held liable for any loss incurred by, or reasonably expected
to be incurred by, the Federal Deposit Insurance Corporation in connection with
the default of a commonly controlled Federal Deposit Insurance
Corporation-insured depository institution or any assistance provided by the
Federal Deposit Insurance Corporation to any commonly controlled Federal Deposit
Insurance Corporation-insured depository institution "in danger of default."
"Default" is defined generally as the appointment of a conservator or receiver,
and "in danger of default" is defined generally as the existence of certain
conditions indicating that a default is likely to occur in the absence of
regulatory assistance. The Federal Deposit Insurance Corporation's claim for
damages is superior to claims of shareholders of the insured depository
institution or its holding company, but is subordinate to claims of depositors,
secured creditors, and holders of subordinated debt (other than affiliates) of
the commonly controlled insured depository institution. SBI and Union Planters'
banks are subject to these cross-guarantee provisions. As a result, any loss
suffered by the Federal Deposit Insurance Corporation in respect of any of SBI
or Union Planters' banks would likely result in assertion of the cross-guarantee
provisions, the assessment of estimated losses against Union Planters' banking
or thrift affiliates, and a potential loss of Union Planters' investments in its
other banks.

PROMPT CORRECTIVE ACTION

               The Federal Deposit Insurance Corporation Improvement Act of 1991
establishes a system of prompt corrective action to resolve the problems of
undercapitalized institutions. Under this system, which became effective in
December 1992, the federal banking regulators are required to establish five
capital categories (well capitalized, adequately capitalized, undercapitalized,
significantly undercapitalized, and critically undercapitalized). With respect
to institutions in the three undercapitalized categories, the regulators must
take certain supervisory actions, and are authorized to take other discretionary
actions. The severity of the actions will depend upon the capital category in
which the institution is placed. Generally, subject to a narrow exception, the

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<PAGE>   94
Federal Deposit Insurance Corporation Improvement Act of 1991 requires the
banking regulator to appoint a receiver or conservator for an institution that
is critically undercapitalized. The federal banking agencies have specified the
relevant capital level for each category.

A depository institution is deemed to be well capitalized if it

               -    has a Total Capital Ratio of 10% or greater;
               -    has a Tier 1 Capital Ratio of 6.0% or greater;
               -    has a Leverage Ratio of 5.0% or greater; and
               -    is not subject to any written agreement, order,
                    capital directive, or prompt corrective action
                    directive issued by its federal banking agency.

A depository institution is considered to be adequately capitalized if it has

               -    a Total Capital Ratio of 8.0% or greater;
               -    a Tier 1 Capital Ratio of 4.0% or greater; and
               -    a Leverage Ratio of 4.0% or greater.

A depository institution is considered to be undercapitalized if it has

               -    a Total Capital Ratio of less than 8.0%; 
               -    a Tier 1 Capital Ratio of less than 4.0%; or 
               -    a Leverage Ratio of less than 4.0%.

A depository institution is considered to be significantly undercapitalized if
it has

               -    a Total Capital Ratio of less than 6.0%; 
               -    a Tier 1 Capital Ratio of less than 3.0%; or 
               -    a Leverage Ratio of less than 3.0%.

               An institution that has a tangible equity capital to assets ratio
equal to or less than 2.0% is deemed to be critically undercapitalized.
"Tangible equity" includes core capital elements counted as Tier 1 Capital for
purposes of the risk-based capital standards, plus the amount of outstanding
cumulative perpetual preferred stock (including related surplus), minus all
intangible assets, with certain exceptions. A depository institution may be
deemed to be in a capitalization category that is lower than is indicated by its
actual capital position if it receives an unsatisfactory examination rating.

               An institution that is categorized as undercapitalized,
significantly undercapitalized, or critically undercapitalized is required to
submit an acceptable capital restoration plan to its appropriate federal banking
agency. In addition, a bank holding company must guarantee that a subsidiary
bank meet its capital restoration plan. This obligation to fund a capital
restoration plan is limited to the lesser of 5.0% of an undercapitalized
subsidiary's assets or the amount required to meet regulatory capital
requirements. Except in accordance with an accepted capital restoration plan or
with the approval of the Federal Deposit Insurance Corporation, undercapitalized

                                       85

<PAGE>   95
institution is also generally prohibited from increasing its average total
assets, making acquisitions, establishing any branches, or engaging in any new
line of business. In addition, its federal banking agency is given authority
with respect to any undercapitalized institution to take any of the actions it
is required to or may take with respect to a significantly undercapitalized
institution if it determines "that those actions are necessary to carry out the
purpose" of the Federal Deposit Insurance Corporation Improvement Act of 1991.

               For those institutions that are significantly undercapitalized or
undercapitalized and either fail to submit an acceptable capital restoration
plan or fail to implement an approved capital restoration plan, its federal
banking agency must require the institution to:

               (1)  sell enough shares, including voting shares, to become
                    adequately capitalized;

               (2)  merge with (or be sold to) another institution (or holding
                    company), but only if grounds exist for appointing a
                    conservator or receiver;

               (3)  restrict certain transactions with its banking affiliates;

               (4)  restrict transactions with bank or non-bank affiliates;

               (5)  restrict interest rates that the institution pays on
                    deposits to "prevailing rates" in the institution's
                    "region;"

               (6)  restrict asset growth or reduce total assets;

               (7)  alter, reduce, or terminate activities;

               (8)  hold a new election of directors;

               (9)  dismiss any director or senior executive officer who held
                    office for more than 180 days immediately before the
                    institution became undercapitalized, provided that in
                    requiring dismissal of a director or senior officer, the
                    agency must comply with certain procedural requirements,
                    including the opportunity for an appeal in which the
                    director or officer will have the burden of proving his or
                    her value to the institution;

               (10) employ "qualified" senior executive officers;

               (11) cease accepting deposits from correspondent depository
                    institutions;

               (12) divest certain nondepository affiliates which pose a danger
                    to the institution; or

               (13) be divested by a parent holding company. In addition,
                    without the prior approval of its federal banking agency, a
                    significantly undercapitalized institution may not pay any
                    bonus to any senior executive officer or increase the rate
                    of compensation for such an officer.



                                       86

<PAGE>   96
                   DESCRIPTION OF UNION PLANTERS CAPITAL STOCK

               Union Planters' charter currently authorizes the issuance of
300,000,000 shares of Union Planters common stock and 10,000,000 shares of Union
Planters Preferred Stock. On October 31, 1998, 136,063,035 shares of Union
Planters common stock were outstanding and approximately 11,819,841 shares were
earmarked for issuance in connection with currently outstanding Union Planters
options, Union Planters' dividend reinvestment plan, two small convertible debt
issues and with respect to conversion rights of currently outstanding Union
Planters Series E preferred stock. In addition, on October 31, 1998, 968,865
shares of Union Planters' 8% Cumulative, Convertible Series E preferred stock,
were outstanding. On October 31, 1998, none of Union Planters' 750,000
authorized shares of Series A preferred stock were issued and outstanding nor is
management aware of the existence of circumstances from which it may be inferred
that such issuance is imminent. THE CAPITAL STOCK OF UNION PLANTERS DOES NOT
REPRESENT OR CONSTITUTE A DEPOSIT ACCOUNT AND IS NOT INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE BANK INSURANCE FUND, THE SAVINGS ASSOCIATION
INSURANCE FUND, OR ANY GOVERNMENTAL AGENCY.

UNION PLANTERS COMMON STOCK

               GENERAL. Shares of Union Planters common stock may be issued at
such time or times and for such consideration (not less than the par value
thereof) as the Union Planters board of directors may deem advisable, subject to
such limitations as may be set forth in the laws of the State of Tennessee,
Union Planters' charter or bylaws or the rules of the New York Stock Exchange.
UPB is the Registrar, Transfer Agent and Dividend Disbursing Agent for shares of
Union Planters common stock. Its address is Union Planters Bank, National
Association, Corporate Trust Department, 1 South Church Street, Belleville,
Illinois 62220.

               DIVIDENDS. Subject to the preferential dividend rights applicable
to outstanding shares of the Union Planters preferred stock and subject to
applicable requirements, if any, with respect to the setting aside of sums for
purchase, retirement, or sinking funds, if any, for all outstanding Union
Planters preferred stock, the holders of the Union Planters common stock are
entitled to receive, to the extent permitted by law, only such dividends as may
be declared from time to time by the Union Planters board of directors.

               Union Planters has the right to, and may from time to time, enter
into borrowing arrangements or issue other debt instruments, the provisions of
which may contain restrictions on payment of dividends and other distributions
on Union Planters common stock and Union Planters preferred stock. Union
Planters has no such arrangements in effect at the date hereof. In December
1996, Union Planters caused to be issued $200,000,000 in aggregate liquidation
amount of 8.20% Capital Trust Pass-through Securities ("Union Planters Capital
Securities") through a Delaware trust subsidiary. Pursuant to the terms of the
governing instruments, Union Planters would be prohibited from paying dividends
on any Union Planters common stock or Union Planters preferred stock if all
quarterly payments on the Union Planters Capital Securities had not been paid in
full. The Union Planters Capital Securities mature in 2026 and may be redeemed
under certain circumstances prior to maturity.


                                       87

<PAGE>   97
               LIQUIDATION RIGHTS. In the event of the voluntary or involuntary
liquidation, dissolution, distribution of assets, or winding-up of Union
Planters, after distribution in full of the preferential amounts required to be
distributed to the holders of Union Planters preferred stock, holders of Union
Planters common stock will be entitled to receive all of the remaining assets of
Union Planters, of whatever kind, available for distribution to shareholders
ratably in proportion to the number of shares of Union Planters common stock
held. The Union Planters board of directors may distribute in kind to the
holders of Union Planters common stock such remaining assets of Union Planters
or may sell, transfer, or otherwise dispose of all or any part of such remaining
assets to any other person or entity and receive payment therefor in cash,
stock, or obligations of such other person or entity, and may sell all or any
part of the consideration so received and distribute any balance thereof in kind
to holders of Union Planters common stock. Neither the merger or consolidation
of Union Planters into or with any other corporation, nor the merger of any
other corporation into Union Planters, nor any purchase or redemption of shares
of stock of Union Planters of any class, shall be deemed to be a dissolution,
liquidation, or winding-up of Union Planters for purposes of this paragraph.

               Because Union Planters is a holding company, its right and the
rights of its creditors and shareholders, including the holders of Union
Planters preferred stock and Union Planters common stock, to participate in the
distribution of assets of a subsidiary on its liquidation or recapitalization
may be subject to prior claims of such subsidiary's creditors except to the
extent that Union Planters itself may be a creditor having recognized claims
against such subsidiary.

               For a further description of Union Planters common stock, see
"EFFECT OF THE MERGER ON RIGHTS OF SHAREHOLDERS."

UNION PLANTERS PREFERRED STOCK

               SERIES A PREFERRED STOCK. Union Planters' charter provides for
the issuance of up to 750,000 shares (subject to adjustment by action of the
Union Planters board of directors) of Series A preferred stock under certain
circumstances involving a potential change in control of Union Planters. None of
such shares are outstanding and management is aware of no facts suggesting that
issuance of such shares may be imminent. The Series A preferred stock is
described in more detail in Union Planters' registration statement on Form 8-A,
dated January 19, 1989, and filed February 1, 1989 (Securities and Exchange
Commission File No. 0-6919) which is incorporated by reference herein.

               SERIES E PREFERRED STOCK. As of October 31, 1998, 968,865 shares
of Series E preferred stock were outstanding. All shares of Series E preferred
stock have a stated value of $25.00 per share. Dividends are payable at the rate
of $0.50 per share per quarter and are cumulative. The Series E preferred stock
is convertible at the rate of 1.25 shares of Union Planters common stock for
each share of Series E preferred stock. The Series E preferred stock is not
subject to any sinking fund provisions and has no preemptive rights. Such shares
have a liquidation preference of $25.00 per share plus unpaid dividends accrued
thereon and, at Union Planters' option and with the prior approval of the
Federal Reserve, are subject to redemption by Union Planters at any time at a
redemption price of $25.00 per share plus any unpaid dividends accrued thereon.
Holders of

                                       88

<PAGE>   98
Series E preferred stock have no voting rights except as required by law and in
certain other limited circumstances. See "CERTAIN REGULATORY CONSIDERATIONS --
Payment of Dividends."


                                  OTHER MATTERS

               As of the date of this proxy statement-prospectus, SBI's board of
directors knows of no matters that will be presented for consideration at the
special meeting other than as described in this proxy statement-prospectus.
However, if any other matters properly come before the special meeting or any
adjournment or postponement of the special meeting and are voted upon, the
enclosed proxy will be deemed to confer discretionary authority to the
individuals named as proxies to vote the shares represented by such proxy as to
any such matters.


                              SHAREHOLDER PROPOSALS

               Union Planters expects to hold its next annual meeting of
shareholders in April 1999, after the merger. Under Securities and Exchange
Commission rules, proposals of Union Planters shareholders intended to be
presented at that meeting must be received by Union Planters at its principal
executive offices no later than the date specified in Union Planters's 1999
annual meeting proxy statement. It is not currently anticipated that SBI will
hold its annual meeting unless the merger should not be consummated. In the
event the merger is not consummated, proposals of SBI shareholders intended to
be presented at that meeting must have been received by SBI at its principal
executive offices no later than March 1, 1999.


                                     EXPERTS

               The consolidated financial statements of Union Planters and
subsidiaries incorporated in this proxy statement-prospectus by reference to
Exhibit 99.1 to Union Planters' September 30, 1998 Quarterly Report on Form
10-Q, have been so incorporated in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
said firm as experts in auditing and accounting.

               The consolidated financial statements of SBI as of December 31,
1997 and the year then ended, included in this proxy statement-prospectus have
been audited by Eskew & Gresham, PSC, independent accountants, as set forth in
their report thereon appearing elsewhere herein and are included in reliance
upon such report given upon the authority of such firm as experts in accounting
and auditing. Eskew & Gresham, PSC subsequently merged with and is succeeded by
Crowe, Chizek and Company, LLP.

               The consolidated financial statements of SBI as of the years
ended December 31, 1996 and December 31, 1995 (and the notes thereto) have been
included in this proxy statement-prospectus in reliance upon the report of Marr,
Miller & Myers, P.S.C., independent certified accountants, given upon the
authority of such firm as experts in accounting and auditing.

                                       89

<PAGE>   99
                                    OPINIONS

               The legality of the shares of Union Planters common stock to be
issued in the merger will be passed upon by E. James House, Jr., Secretary and
Manager of the Legal Department of Union Planters. E. James House, Jr. is an
officer of, and receives compensation from, Union Planters.

               Certain tax consequences of the transaction have been passed upon
by Wyatt, Tarrant & Combs, Memphis, Tennessee.


                       WHERE YOU CAN FIND MORE INFORMATION

               Union Planters files annual, quarterly and current reports, proxy
and information statements, and other information with the Securities and
Exchange Commission (the "SEC") under the Securities Exchange Act of 1934. You
may read and copy this information at the Public Reference Section at the
Securities and Exchange Commission at 450 Fifth Street, N.W., Judiciary Plaza,
Washington, D.C. 20549. You may obtain information on the operation of the
Public Reference Room by calling the Securities and Exchange Commission at
1-800-SEC-0330. The Securities and Exchange Commission maintains an Internet
site that contains reports, proxy and information statements, and other
information about issuers that file electronically with the Securities and
Exchange Commission. The address of that site is http://www.sec.gov. In
addition, you can read and copy this information at the regional offices of the
Securities and Exchange Commission at 7 World Trade Center, 13th Floor, New
York, New York 10048 and Citicorp Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661. You can also inspect reports, proxy and information
statements, and other information about Union Planters at the offices of the New
York Stock Exchange, 20 Broad Street, New York, New York 10005.

               Union Planters filed a registration statement with the Securities
and Exchange Commission under the Securities Act of 1933, as amended, relating
to the Union Planters common stock offered to the SBI shareholders. The
registration statement contains additional information about Union Planters and
the Union Planters common stock. The Securities and Exchange Commission allows
Union Planters to omit certain information included in the registration
statement from this proxy statement-prospectus. The registration statement may
be inspected and copied at the Securities and Exchange Commission's public
reference facilities described above.

               This proxy statement-prospectus incorporates important business
and financial information about Union Planters and SBI that is not included in
or delivered with this proxy statement-prospectus. The following documents filed
with the Securities and Exchange Commission by Union Planters are incorporated
by reference in this proxy statement-prospectus (Securities and Exchange
Commission File No. 1-10160):

               (1)  Union Planters' Annual Report on Form 10-K for the year
                    ended December 31, 1997 (provided that any information
                    included or incorporated by reference in

                                       90

<PAGE>   100
                    response to Items 402(a)(8), (i), (k), or (l) of Regulation
                    S-K promulgated by the Securities and Exchange Commission
                    shall not be deemed to be incorporated herein and is not
                    part of the Registration Statement);

               (2)  Union Planters' Quarterly Report on Form 10-Q for the three
                    months ended March 31, 1998 and the amendment thereto filed
                    on Form 10-Q/A;

               (3)  Union Planters' Quarterly Report on Form 10-Q for the six
                    months ended June 30, 1998;

               (4)  Union Planters' Quarterly Report on Form 10-Q for the nine
                    months ended September 30, 1998 (which includes restated
                    historical consolidated financial statements of Union
                    Planters and related management's discussion and analysis of
                    financial condition and results of operations of operations
                    of Union Planters, giving effect to the acquisitions Union
                    Planters has consummated since December 31, 1997);

               (5)  Union Planters' Current Reports on Form 8-K dated January
                    15, 1998, February 22, 1998, April 16, 1998, July 10, 1998
                    July 16, 1998, September 1, 1998, September 8, 1998, October
                    15, 1998, and October 16, 1998;

               (6)  The description of the current management and board of
                    directors of Union Planters contained in the proxy statement
                    of Union Planters filed pursuant to Section 14(a) of the
                    Exchange Act for Union Planters's Annual Meeting of Share
                    holders held on April 16, 1998;

               (7)  Union Planters' Registration Statement on Form 8-A dated
                    January 19, 1989, filed on February 1, 1989; (Securities and
                    Exchange Commission File No. 0-6919) in connection with
                    Union Planters' designation and authorization of its Series
                    A Preferred Stock; and

               (8)  The description of the Union Planters common stock contained
                    in Union Planters' registration statement under Section
                    12(b) of the Securities Exchange Act of 1934 and any
                    amendment or report filed for the purpose of updating such
                    description.

               Union Planters also incorporates by reference additional
documents filed by it pursuant to Sections 13(a), 13(c), 14, or 15(d) of the
Exchange Act after the date of this proxy statement-prospectus and prior to
final adjournment of the special meeting. Any statement contained in this proxy
statement-prospectus or in a document incorporated or deemed to be incorporated
by reference in this proxy statement-prospectus shall be deemed to be modified
or superseded to the extent that a statement contained herein or in any
subsequently filed document which also is, or is deemed to be, incorporated by
reference herein modifies or supersedes such statement. In particular, reference
is made to the Union Planters' September 30, 1998 Quarterly Report on Form 10-Q,
which includes restated consolidated financial statements and the related
management's discussion and analysis of financial condition and results of
operations of Union Planters, giving

                                       91

<PAGE>   101
effect to the acquisitions Union Planters has consummated since December 31,
1997. See "BUSINESS OF UNION PLANTERS - Recent Developments."

               You may obtain copies of the information incorporated by
reference in this proxy statement-prospectus upon written or oral request. The
inside front cover of this proxy statement-prospectus (page ii) contains
information about how such requests should be made.

               All information contained in this proxy statement-prospectus or
incorporated herein by reference with respect to Union Planters was supplied by
Union Planters, and all information contained in this proxy statement-prospectus
or incorporated herein by reference with respect to SBI was supplied by SBI.


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<PAGE>   102
                                                                      APPENDIX A




                          AGREEMENT AND PLAN OF MERGER

                           DATED AS OF AUGUST 7, 1998

                                     BETWEEN

                           UNION PLANTERS CORPORATION,

                       UNION PLANTERS HOLDING CORPORATION,

                                       and

                             SOUTHEAST BANCORP, INC.










                                       A-1

<PAGE>   103



                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                            Page

         <S>      <C>                                                       <C>
                                    ARTICLE 1
                        TRANSACTIONS AND TERMS OF MERGER....................  1
         1.1      Merger....................................................  1
         1.2      Time and Place of Closing.................................  1
         1.3      Effective Time............................................  1
         1.4      Restructure of Transaction................................  2

                                   ARTICLE 2
                                TERMS OF MERGER.............................  2
         2.1      Charter...................................................  2
         2.2      Bylaws....................................................  2
         2.3      Directors and Officers....................................  2

                                   ARTICLE 3
                           MANNER OF CONVERTING SHARES......................  2
         3.1      Conversion of Shares......................................  2
         3.2      Exchange Ratio Adjustment Provisions......................  3
         3.3      Shares Held by Subject Company or Parent..................  3
         3.4      Fractional Shares.........................................  3
         3.5      Conversion of Stock Options...............................  3

                                   ARTICLE 4
                               EXCHANGE OF SHARES...........................  4
         4.1      Exchange Procedures.......................................  4
         4.2      Rights of Former Subject Company Shareholders.............  5

                                   ARTICLE 5
                 REPRESENTATIONS AND WARRANTIES OF SUBJECT COMPANY..........  5
         5.1      Organization, Standing, and Power.........................  5
         5.2      Authority; No Breach by Agreement.........................  6
         5.3      Capital Stock.............................................  6
         5.4      Subject Company Subsidiaries..............................  7
         5.5      Financial Statements......................................  7
         5.6      Absence of Undisclosed Liabilities........................  8
         5.7      Absence of Certain Changes or Events......................  8
         5.8      Tax Matters...............................................  8
         5.9      Assets....................................................  9
         5.10     Intellectual Property..................................... 10
         5.11     Environmental Matters..................................... 10
         5.12     Compliance With Laws...................................... 11
         5.13     Labor Relations........................................... 11
         5.14     Employee Benefit Plans.................................... 11
         5.15     Material Contracts........................................ 13
         5.16     Legal Proceedings......................................... 13
         5.17     Reports................................................... 13
         5.18     Statements True and Correct............................... 14
</TABLE>


                                           i

<PAGE>   104



<TABLE>
         <S>      <C>                                                       <C>
         5.19     Accounting, Tax, and Regulatory Matters................... 14
         5.20     Articles of Incorporation Provisions; Takeover Laws....... 14

                                   ARTICLE 6
                    REPRESENTATIONS AND WARRANTIES OF PARENT................ 15
         6.1      Organization, Standing and Power.......................... 15
         6.2      Authority; No Breach by Agreement......................... 15
         6.3      Capital Stock............................................. 15
         6.4      Parent Subsidiaries....................................... 16
         6.5      Financial Statements...................................... 16
         6.6      Absence of Undisclosed Liabilities........................ 17
         6.7      Absence of Certain Changes or Events...................... 17
         6.8      Tax Matters............................................... 17
         6.9      Environmental Matters..................................... 17
         6.10     Compliance With Laws...................................... 18
         6.11     Legal Proceedings......................................... 18
         6.12     Reports................................................... 18
         6.13     Statements True and Correct............................... 19
         6.14     Accounting, Tax, and Regulatory Matters................... 19

                                   ARTICLE 7
                    CONDUCT OF BUSINESS PENDING CONSUMMATION................ 19
         7.1      Affirmative Covenants of Subject Company.................. 19
         7.2      Negative Covenants of Subject Company..................... 19
         7.3      Covenants of Parent....................................... 21
         7.4      Adverse Changes in Condition.............................. 21
         7.5      Reports................................................... 22

                                   ARTICLE 8
                              ADDITIONAL AGREEMENTS......................... 22
         8.1      Registration Statement; Proxy Statement; Shareholder 
                    Approval................................................ 22
         8.2      Exchange Listing.......................................... 22
         8.3      Applications.............................................. 22
         8.4      Filings With State Offices................................ 22
         8.5      Agreement as to Efforts to Consummate..................... 22
         8.6      Investigation and Confidentiality......................... 23
         8.7      Press Releases............................................ 23
         8.8      Certain Actions........................................... 23
         8.9      Tax Treatment............................................. 24
         8.10     Agreement of Affiliates................................... 25
         8.11     Employee Benefits and Contracts........................... 25
         8.12     Indemnification........................................... 25

                                   ARTICLE 9
                 CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE.......... 26
         9.1      Conditions to Obligations of Each Party................... 26
         9.2      Conditions to Obligations of Parent....................... 27
         9.3      Conditions to Obligations of Subject Company.............. 28
</TABLE>


                                           ii

<PAGE>   105



<TABLE>
         <S>      <C>                                                       <C>
                                   ARTICLE 10
                                  TERMINATION............................... 30
         10.1     Termination............................................... 30
         10.2     Effect of Termination..................................... 30
         10.3     Non-Survival of Representations and Covenants............. 30

                                   ARTICLE 11
                                  MISCELLANEOUS............................. 31
         11.1     Definitions............................................... 31
         11.2     Expenses.................................................. 37
         11.3     Brokers and Finders....................................... 37
         11.4     Entire Agreement.......................................... 37
         11.5     Amendments................................................ 37
         11.6     Waivers................................................... 37
         11.7     Assignment................................................ 38
         11.8     Notices................................................... 38
         11.9     Governing Law............................................. 39
         11.10     Counterparts............................................. 39
         11.11     Captions................................................. 39
         11.12     Interpretations.......................................... 39
         11.13     Enforcement of Agreement................................. 39
         11.14     Severability............................................. 39
</TABLE>

                                            EXHIBITS

         EXHIBIT 1     PLAN OF MERGER
         EXHIBIT 2     AFFILIATE AGREEMENT
         EXHIBIT 3     FORM OF EMPLOYMENT AGREEMENT
         EXHIBIT 4     FORM OF NON-COMPETITION AGREEMENT

                                       iii
<PAGE>   106



                          AGREEMENT AND PLAN OF MERGER

         THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is made and
entered into as of August 7, 1998, by and between Southeast Bancorp, Inc., a
Kentucky corporation having its principal office located in Corbin, Kentucky
("Subject Company"), Union Planters Holding Corporation, a Tennessee corporation
having its principal office located in Memphis, Tennessee ("Merger Subsidiary"),
and joined in by Union Planters Corporation, a Tennessee corporation having its
principal office located in Memphis, Tennessee ("Parent").

                                    PREAMBLE

         The Boards of Directors of Subject Company, Merger Subsidiary and
Parent are of the opinion that the transactions described herein are in the best
interests of the parties and their respective shareholders. This Agreement and
the Plan of Merger attached hereto at Exhibit 1 and incorporated herein by
reference provide for the acquisition of Subject Company by Parent pursuant to
the merger of Subject Company with and into Merger Subsidiary. At the Effective
Time, the outstanding shares of the common stock of Subject Company shall be
converted into the right to receive shares of the common stock of Parent (except
as provided in Sections 3.1, 3.3 and 3.4 of this Agreement). As a result,
shareholders of Subject Company shall become shareholders of Parent, and
Surviving Corporation shall continue to conduct its business and operations as a
wholly-owned subsidiary of Parent. The transactions described in this Agreement
are subject to the approvals of the shareholders of Subject Company, the FRB,
the KDFI, the TDFI, and other applicable federal and state regulatory
authorities, and the satisfaction of certain other conditions described in this
Agreement. It is the intention of the parties to this Agreement that (i) for
federal income tax purposes this Agreement shall constitute a plan of merger and
the Merger shall qualify as a "reorganization" within the meaning of Section
368(a) of the Internal Revenue Code and (ii) for accounting purposes the Merger
shall qualify for treatment as a pooling-of-interests.

         Certain terms used in this Agreement are defined in Section 11.1 of
this Agreement.

         NOW, THEREFORE, in consideration of the above and the mutual
warranties, representations, covenants, and agreements set forth herein, the
parties agree as follows:

                                    ARTICLE 1
                        TRANSACTIONS AND TERMS OF MERGER

         1.1      Merger. Subject to the terms and conditions of this Agreement
and the Plan of Merger, at the Effective Time, Subject Company shall be merged
with and into Merger Subsidiary in accordance with the provisions of Section
48-21-109 of the TBCA and KRS 271B.11-070 of the KBCA, and with the effect
provided in Section 48-21-108 of the TBCA and KRS 271B.11-060 of the KBCA (the
"Merger"). Merger Subsidiary shall be the Surviving Corporation resulting from
the Merger and shall continue to be governed by the Laws of the State of
Tennessee. The Merger shall be consummated pursuant to the terms of this
Agreement and the Plan of Merger, which have been approved and adopted by the
respective Boards of Directors of Subject Company, Parent and Merger Subsidiary.

         1.2      Time and Place of Closing. The Closing will take place at 9:00
A.M. on the date on which the Effective Time is to occur (or the immediately
preceding day if the Effective Time is to be earlier than 9:00 A.M.), or at such
other time as the Parties, acting through their authorized officers, may
mutually agree. The Closing shall be held at such place as may be mutually
agreed upon by the Parties.

         1.3      Effective Time. The Merger and other transactions contemplated
by this Agreement shall become effective at the time the Articles of Merger
reflecting the Merger shall become effective with the Secretary of State of the
State of Tennessee and the Secretary of State of the Commonwealth of Kentucky
(the "Effective Time"). Subject to the terms and conditions hereof, unless
otherwise mutually agreed upon in writing by the chief executive officers or
chief financial officers of each Party, the Parties shall use their reasonable
efforts to cause the Effective

                            UPC/-S.E. Bancorp Page 1

<PAGE>   107



Time to occur as soon as is reasonably practicable on a date designated by
Parent which date shall be within 30 days following the last to occur of (i) the
effective date of the last required Consent of any Regulatory Authority having
authority over and approving or exempting the Merger (taking into account any
requisite waiting period in respect thereof), (ii) the date on which the
shareholders of Subject Company approve this Agreement, and (iii) the date on
which all other conditions precedent (other than those conditions which relate
to actions to be taken at the Closing) to each Party's obligations hereunder
shall have been satisfied or waived (to the extent waivable by such Party).

         1.4      Restructure of Transaction. Parent shall, in its reasonable
discretion, have the unilateral right to revise the structure of the Merger
contemplated by this Agreement in order to achieve tax benefits or for any other
reason which Parent may deem advisable; provided, however, that Parent shall not
have the right, without the approval of the Board of Directors of Subject
Company and, if required by the KBCA, the holders of the Subject Company Common
Stock, to make any revision to the structure of the Merger which: (i) changes
the amount of the consideration which the holders of shares of Subject Company
Common Stock are entitled to receive (determined in the manner provided in
Section 3.1 of this Agreement); (ii) changes the intended tax free effects of
the Merger to Parent, Subject Company or the holders of shares of Subject
Company Common Stock; (iii) would permit Parent to pay the consideration other
than by delivery of Parent Common Stock registered with the SEC (in the manner
described in Section 4.1 of this Agreement); (iv) would be materially adverse to
the interests of Subject Company or adverse to the holders of shares of Subject
Company Common Stock; or (v) would materially impede or delay consummation of
the Merger. Parent may exercise this right of revision by giving written notice
to Subject Company in the manner provided in Section 11.8 of this Agreement
which notice shall be in the form of an amendment to this Agreement and the Plan
of Merger or in the form of an Amended and Restated Agreement and Plan of
Merger.

                                    ARTICLE 2
                                 TERMS OF MERGER

         2.1      Charter. The Charter of Merger Subsidiary in effect
immediately prior to the Effective Time shall be the Charter of the Surviving
Corporation until otherwise amended or repealed.

         2.2      Bylaws. The Bylaws of Merger Subsidiary in effect immediately
prior to the Effective Time shall be the Bylaws of the Surviving Corporation
until otherwise amended or repealed.

         2.3      Directors and Officers. The directors of Merger Subsidiary in
office immediately prior to the Effective Time, together with such additional
persons as may thereafter be elected, shall serve as the directors of the
Surviving Corporation from and after the Effective Time in accordance with the
Bylaws of the Surviving Corporation. The officers of Merger Subsidiary in office
immediately prior to the Effective Time, together with such additional persons
as may thereafter be elected, shall serve as the officers of the Surviving
Corporation from the Effective Time in accordance with the Bylaws of the
Surviving Corporation.

                                    ARTICLE 3
                           MANNER OF CONVERTING SHARES

         3.1      Conversion of Shares. Subject to the provisions of this
Article 3 (and Article 3 of the Plan of Merger), at the Effective Time, by
virtue of the Merger and without any action on the part of Parent, Merger
Subsidiary, Subject Company, or the shareholders of any of the foregoing, the
shares of the constituent corporations shall be converted as follows:

                  (a)      Each share of Parent Capital Stock, including any
associated Parent Rights, issued and outstanding immediately prior to the
Effective Time shall remain issued and outstanding from and after the Effective
Time.


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<PAGE>   108



                  (b)      Each share of Merger Subsidiary Common Stock issued
and outstanding immediately prior to the Effective Time shall remain issued and
outstanding and shall represent one share of the Surviving Corporation from and
after the Effective Time.

                  (c)      Except for Dissenting Shares, each share of Subject
Company Common Stock, (excluding shares held by Subject Company, any Subject
Company Subsidiary, Parent or any Parent Subsidiary, in each case other than in
a fiduciary capacity or as a result of debts previously contracted) issued and
outstanding at the Effective Time shall cease to be outstanding and shall be
converted into and exchanged for the right to receive Eleven and Eighty-Seven
One Hundredths (11.87) shares of Parent Common Stock (subject to possible
adjustment as set forth in Section 3.2 of this Agreement, the "Exchange Ratio").
Pursuant to the Parent Rights Agreement, each share of Parent Common Stock
issued in connection with the Merger upon conversion of Subject Company Common
Stock shall be accompanied by a Parent Right.

                  (d)      Dissenting Shares shall not be converted pursuant to
Section 3.1(c) in the Merger but, at and after the Effective Time, shall
represent only the right to receive payment in accordance with Subtitle 13 of
the KBCA. If a holder of Dissenting Shares becomes ineligible for payment under
Subtitle 13 of the KBCA, then such holder's Dissenting Shares shall cease to be
Dissenting Shares and shall be converted in the manner set forth in Section
3.1(c) effective as of the Effective Time.

         3.2      Exchange Ratio Adjustment Provisions. The Exchange Ratio set
forth in Section 3.1(c) is based on the understanding that there shall be no
more than 105,308 shares of Subject Company Common Stock outstanding immediately
prior to the Effective Time (assuming, for purposes of this provision, that all
Subject Company Options outstanding had in fact been exercised), and should
there be more than 105,308 shares of Subject Company Common Stock outstanding
(adjusted for Subject Company Options) immediately prior to the Effective Time,
the Exchange Ratio would be proportionately adjusted downward accordingly. In
the event Parent changes the number of shares of Parent Common Stock issued and
outstanding after the date of this Agreement and prior to the Effective Time as
a result of a stock split, stock dividend, subdivision, reclassification,
conversion or similar recapitalization with respect to such stock and the record
date therefor (in the case of a stock dividend) or the effective date thereof
(in the case of a stock split, subdivision, reclassification, conversion or
similar recapitalization for which a record date is not established) shall be
prior to the Effective Time, the Exchange Ratio shall be proportionately
adjusted.

         3.3      Shares Held by Subject Company or Parent. Each of the shares
of Subject Company Common Stock held by Subject Company, any Subject Company
Subsidiary, Parent or any Parent Subsidiary, in each case other than in
fiduciary capacity or as a result of debts previously contracted, shall be
canceled and retired at the Effective Time and no consideration shall be issued
in exchange therefor.

         3.4      Fractional Shares. Notwithstanding any other provision of this
Agreement, each holder of shares of Subject Company Common Stock exchanged
pursuant to the Merger who would otherwise have been entitled to receive a
fractional share of Parent Common Stock (after taking into account all
certificates delivered by such holder) shall receive, in lieu thereof, cash
(without interest) in an amount equal to such fractional share of Parent Common
Stock multiplied by the closing price of such common stock on the NYSE-Composite
Transactions List (as reported by The Wall Street Journal or, if not reported
thereby, any other authoritative source reasonably selected by Parent) on the
last trading day preceding the Effective Time. No such holder will be entitled
to dividends, voting rights, or any other rights as a shareholder in respect of
any fractional shares.

         3.5      Conversion of Stock Options.

         (a)      At the Effective Time, each option to purchase or other right
with respect to shares of Subject Company Common Stock pursuant to stock
options, stock appreciation rights or other rights, including stock awards,
("Subject Company Options") granted by Subject Company under the Subject Company
Stock Agreements, which are outstanding at the Effective Time, whether or not
exercisable, shall be converted into and become options with

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<PAGE>   109



respect to Parent Common Stock, and Parent shall assume each Subject Company
Option, in accordance with the terms of the applicable Subject Company Stock
Agreements, and stock option or other agreement by which it is evidenced, except
that from and after the Effective Time, (i) Parent and its Salary and Benefits
Committee shall be substituted for Subject Company and the committee of Subject
Company's Board of Directors (including, if applicable, the entire Board of
Directors of Subject Company), or other administrator responsible for
administering such Subject Company Stock Agreements, (ii) each Subject Company
Option assumed by Parent may be exercised solely for shares of Parent Common
Stock (or cash in the case of stock appreciation rights), (iii) the number of
shares of Parent Common Stock subject to such Subject Company Option shall be
equal to the number of shares of Subject Company Common Stock subject to such
Subject Company Option immediately prior to the Effective Time multiplied by the
Exchange Ratio and rounding to the nearest whole share (rounding down with
respect to any "incentive stock options"), and (iv) the per share exercise price
under each such Subject Company Option shall be adjusted by dividing the per
share exercise price under each such Subject Company Option by the Exchange
Ratio and rounding to the nearest cent (rounding up with respect to any
"incentive stock options"). Notwithstanding clauses (iii) and (iv) of the first
sentence of this Section 3.5(a), each Subject Company Option that is an
"incentive stock option" shall be adjusted as required by Section 424 of the
Internal Revenue Code, and the regulations promulgated thereunder, so as not to
constitute a modification, extension or renewal of the option, within the
meaning of Section 424(h) of the Internal Revenue Code. Parent and Subject
Company agree to take all necessary steps to effectuate the foregoing provisions
of this Section 3.5.

         (b)      As soon as practicable after the Effective Time, Parent shall
deliver to the holders of the Subject Company Options an appropriate notice
setting forth such participant's rights pursuant thereto and the grants under
such Subject Company Stock Agreements shall continue in effect on the same terms
and conditions (subject to the adjustments required by Section 3.5(a) after
giving effect to the Merger including any acceleration of option vesting
resulting from the Merger), and Parent shall comply with the terms of each
Subject Company Stock Agreement to ensure, subject to the provisions of such
Subject Company Stock Agreement, that Subject Company Options that qualified as
incentive stock options prior to the Effective Time continue to qualify as
incentive stock options after the Effective Time. Within 30 days after the
Effective Time, Parent shall file a registration statement on Form S-8 with
respect to the shares of Parent Common Stock subject to such options and shall
use its reasonable best efforts to maintain the effectiveness of such
registration statements (and maintain the current status of the prospectus or
prospectuses contained therein) for so long as such options remain outstanding.

         (c)      All contractual restrictions or limitations on transfer with
respect to Subject Company Common Stock awarded under the Subject Company Stock
Agreements or any other plan, program, or Contract of Subject Company or any of
the Subject Company Subsidiaries, to the extent that such restrictions or
limitations shall not have already lapsed (whether as a result of the Merger or
otherwise), and except as otherwise expressly provided in such plan, program, or
Contract, shall remain in full force and effect with respect to shares of Parent
Common Stock into which such restricted stock is converted pursuant to Section
3.1 of this Agreement.


                                    ARTICLE 4
                               EXCHANGE OF SHARES

         4.1      Exchange Procedures. Promptly after the Effective Time, Parent
and Subject Company shall cause the exchange agent selected by Parent (the
"Exchange Agent") to mail to the former shareholders of Subject Company
appropriate transmittal materials (which shall specify that delivery shall be
effected, and risk of loss and title to the certificates theretofore
representing shares of Subject Company Common Stock shall pass, only upon proper
delivery of such certificates to the Exchange Agent). Subject Company shall have
the right to review and approve the transmittal materials. The Exchange Agent
may establish reasonable and customary rules and procedures in connection with
its duties, provided such rules and procedures do not have the effect of
limiting or eliminating the obligation of Parent and/or Merger Subsidiary to
deliver the consideration contemplated by Article 3 of this Agreement. After the
Effective Time, each holder of shares of Subject Company Common Stock (other
than Dissenting Shares or shares to be canceled pursuant to Section 3.3 of this
Agreement) issued and outstanding at the

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<PAGE>   110



Effective Time shall surrender the certificate or certificates representing such
shares to the Exchange Agent and shall promptly upon surrender thereof receive
in exchange therefor the consideration provided in Section 3.1(c) of this
Agreement, together with all undelivered dividends and other distributions, if
any, in respect of such shares (without interest thereon) pursuant to Section
4.2 of this Agreement. To the extent required by Section 3.4 of this Agreement,
each holder of shares of Subject Company Common Stock issued and outstanding at
the Effective Time also shall receive, upon surrender of the certificate or
certificates representing such shares, cash in lieu of any fractional share of
Parent Common Stock to which such holder may be otherwise entitled (without
interest). Parent shall not be obligated to deliver the consideration to which
any former holder of Subject Company Common Stock is entitled as a result of the
Merger until such holder surrenders such holder's certificate or certificates
representing the shares of Subject Company Common Stock for exchange as provided
in this Section 4.1. The certificate or certificates of Subject Company Common
Stock so surrendered shall be duly endorsed as the Exchange Agent may reasonably
require. Any other provision of this Agreement notwithstanding, neither Parent,
Merger Subsidiary nor the Exchange Agent shall be liable to a holder of Subject
Company Common Stock for any amounts paid or property delivered in good faith to
a public official pursuant to any applicable abandoned property Law.

         4.2      Rights of Former Subject Company Shareholders. At the
Effective Time, other than with respect to Dissenting Shares, the stock transfer
books of Subject Company shall be closed as to holders of Subject Company Common
Stock immediately prior to the Effective Time and no transfer of Subject Company
Common Stock by any such holder shall thereafter be made or recognized. Until
surrendered for exchange in accordance with the provisions of Section 4.1 of
this Agreement, each certificate theretofore representing shares of Subject
Company Common Stock (other than Dissenting Shares or shares to be canceled
pursuant to Section 3.3 of this Agreement) shall from and after the Effective
Time represent for all purposes only the right to receive the consideration
provided in Sections 3.1(c) and 3.4 of this Agreement in exchange therefor,
subject, however, to the Surviving Corporation's obligations to pay any
dividends or make any other distributions with a record date prior to the
Effective Time which have been declared or made by Subject Company in respect of
such shares of Subject Company Common Stock in accordance with the terms of this
Agreement and which remain unpaid at the Effective Time. In addition, whenever a
dividend or other distribution is declared by Parent on the Parent Common Stock,
the record date for which is at or after the Effective Time, the declaration
shall include dividends or other distributions on all shares of Parent Common
Stock issuable pursuant to this Agreement, but no dividend or other distribution
payable to the holders of record of Parent Common Stock as of any time
subsequent to the Effective Time shall be delivered to the holder of any
certificate representing shares of Subject Company Common Stock issued and
outstanding at the Effective Time until such holder surrenders such certificate
for exchange as provided in Section 4.1 of this Agreement. However, upon
surrender of such Subject Company Common Stock certificate, both a Parent Common
Stock certificate and any undelivered dividends and other distributions payable
hereunder (without interest) shall be delivered and paid with respect to each
share represented by such certificate. In the event any Subject Company Common
Stock certificate shall have been lost, stolen or destroyed, upon the making of
an affidavit of that fact by the person claiming such certificate to be lost,
stolen or destroyed and, if reasonably required by Parent, the posting by such
person of a bond in such amount as Parent or Exchange Agent may reasonably
direct as indemnity against any claim that may be made against it with respect
to such certificate, the Exchange Agent shall issue in exchange for such lost,
stolen or destroyed certificate the shares of Parent Common Stock and cash in
lieu of fractional shares and dividends and other distributions deliverable in
respect thereof pursuant to this Agreement.

                                    ARTICLE 5
                REPRESENTATIONS AND WARRANTIES OF SUBJECT COMPANY

         Subject Company hereby represents and warrants to Parent, except as set
forth on the Subject Company Disclosure Memorandum, as follows:

         5.1      Organization, Standing, and Power. Subject Company is a
corporation duly organized, validly existing, and in good standing under the
Laws of the Commonwealth of Kentucky, and has the corporate power and authority
to carry on its business as now conducted and to own, lease, and operate its
Assets. Subject Company is duly qualified or licensed to transact business as a
foreign corporation in good standing in each of the States of

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<PAGE>   111



the United States and in each foreign jurisdiction where the character of its
Assets or the nature or conduct of its business requires it to be so qualified
or licensed, except for such jurisdictions in which the failure to be so
qualified or licensed is not reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on Subject Company.

         5.2      Authority; No Breach by Agreement. (a) Subject Company has the
corporate power and authority necessary to execute, deliver, and perform its
obligations under this Agreement and the Plan of Merger and to consummate the
transactions contemplated hereby and thereby. The execution, delivery, and
performance of this Agreement and the Plan of Merger, and the consummation of
the transactions contemplated herein and therein, including the Merger, have
been duly and validly authorized by all necessary corporate action (including
valid authorization and adoption of this Agreement by Subject Company's duly
constituted Board of Directors) in respect thereof on the part of Subject
Company, subject to the approval of this Agreement and the Plan of Merger by the
holders of the outstanding shares of Subject Company Common Stock, which is the
only shareholder vote required of Subject Company for approval of this Agreement
and consummation of the Merger by Subject Company. Subject to such requisite
shareholder approval, the receipt of all Consents required from Regulatory
Authorities and the expiration of all mandatory waiting periods, and assuming
due authorization, execution and delivery of this Agreement and the Plan of
Merger by each of Parent and Merger Subsidiary, this Agreement and the Plan of
Merger each represents a legal, valid, and binding obligation of Subject
Company, enforceable against Subject Company in accordance with its terms
(except in all cases as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, receivership, conservatorship,
moratorium, or similar Laws (including provisions of the U.S., Kentucky and
Tennessee Constitutions) affecting the enforcement of creditors' rights
generally and except that the availability of equitable remedies is subject to
the discretion of the court before which any proceeding may be brought).

                  (b)      Neither the execution and delivery of this Agreement
or the Plan of Merger by Subject Company, nor the consummation by Subject
Company of the transactions contemplated hereby, nor compliance by Subject
Company with any of the provisions hereof or thereof, will (i) conflict with or
result in a breach of any provision of the Articles of Incorporation or Bylaws
of Subject Company, or (ii) constitute or result in a Default under, or require
any Consent (excluding Consents required by Law or Order) pursuant to, or result
in the creation of any Lien on any material Asset of Subject Company or any
Subject Company Subsidiary under, any Contract or Permit of Subject Company or
any Subject Company Subsidiary, except for such Defaults and Liens which are
not, and for such Consents, which, if not obtained are not, reasonably likely to
have, individually or in the aggregate, a Material Adverse Effect on Subject
Company, or (iii) subject to receipt of the requisite Consents referred to in
Section 9.1(b) of this Agreement, violate any Law or Order applicable to Subject
Company, its Subsidiaries or any of their respective material Assets.

                  (c)      Other than in connection or compliance with the
provisions of the Securities Laws, applicable state corporate and securities
Laws, and other than Consents required from Regulatory Authorities, and other
than Consents, filings, or notifications which, if not obtained or made, are not
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on Subject Company, no notice to, filing with, or Consent of, any public
body or authority is necessary for the consummation by Subject Company of the
Merger and the other transactions contemplated in this Agreement.

         5.3      Capital Stock. (a) The authorized capital stock of Subject
Company consists solely of (i) 500,000 shares of Subject Company Common Stock,
of which not more than 101,376 shares are issued and outstanding as of the date
of this Agreement (exclusive of treasury shares) and not more than 105,308
shares of Subject Company Common Stock will be issued and outstanding at the
Effective Time (inclusive of all shares of Subject Company Common Stock that
would be issued and outstanding at the Effective Time if all outstanding Subject
Company Options issued pursuant to the Subject Company Stock Agreements had been
exercised prior to the Effective Time), and (ii) 500 shares of Subject Company
Preferred Stock, none of which are issued and outstanding as of the date of this
Agreement and none of which will be issued and outstanding at the Effective
Time. All of the issued and outstanding shares of capital stock of Subject
Company are duly and validly issued and outstanding and are fully

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<PAGE>   112



paid and nonassessable under the KBCA and Subject Company's Articles of
Incorporation and Bylaws. None of the outstanding shares of capital stock of
Subject Company has been issued in violation of any preemptive rights of the
current or past shareholders of Subject Company. As of the date of this
Agreement, there are outstanding options to purchase not more than 3,932 shares
of Subject Company Common Stock in the aggregate.

                  (b)      Other than as set forth in Section 5.3(a) of this
Agreement, there are no shares of capital stock or other equity securities of
Subject Company outstanding and no outstanding Rights relating to the capital
stock of Subject Company.

         5.4      Subject Company Subsidiaries. Subject Company has disclosed in
Section 5.4 of the Subject Company Disclosure Memorandum all of the Subject
Company Subsidiaries that are corporations (identifying its jurisdiction of
incorporation) and all of the Subject Company Subsidiaries that are general or
limited partnerships or other non-corporate entities (identifying the Law under
which such entity is organized, and the amount and nature of the ownership
interest therein of Subject Company Subsidiaries). Except as set forth in
Section 5.4 of the Subject Company Disclosure Memorandum, Subject Company or one
of its wholly-owned Subsidiaries owns all of the issued and outstanding shares
of capital stock (or other equity interests) of each of the Subject Company
Subsidiaries. Except as set forth in Section 5.4 of the Subject Company
Disclosure Memorandum, no capital stock (or other equity interest) of any
Subject Company Subsidiary is or may become required to be issued (other than to
another Subject Company Subsidiary) by reason of any Rights, and there are no
Contracts by which Subject Company or any of the Subject Company Subsidiaries is
bound to issue (other than to Subject Company or another of the Subject Company
Subsidiaries) additional shares of its capital stock (or other equity interests)
or Rights or by which Subject Company or any of the Subject Company Subsidiaries
is or may be bound to transfer any shares of the capital stock (or other equity
interests) of any of Subject Company or any of the Subject Company Subsidiaries
(other than to Subject Company or any of the Subject Company Subsidiaries).
Except as set forth in Section 5.4 of the Subject Company Disclosure Memorandum,
there are no Contracts relating to the rights of Subject Company or any Subject
Company Subsidiary to vote or to dispose of any shares of the capital stock (or
other equity interests) of Subject Company or any Subject Company Subsidiary.
All of the shares of capital stock (or other equity interests) of each Subject
Company Subsidiary held by Subject Company or any Subject Company Subsidiary are
fully paid and nonassessable under the applicable corporation or similar Law of
the jurisdiction in which such Subsidiary is incorporated or organized and are
owned by Subject Company or a Subject Company Subsidiary free and clear of any
Liens. Each Subject Company Subsidiary is either a bank or a corporation, and
each such Subsidiary is duly organized, validly existing, and (as to
corporations) in good standing under the Laws of the jurisdiction in which it is
incorporated or organized, and has the corporate power and authority necessary
for it to own, lease, and operate its Assets and to carry on its business as now
conducted. Each Subject Company Subsidiary is duly qualified or licensed to
transact business as a foreign corporation in good standing in each of the
States of the United States and in each foreign jurisdiction where the character
of its Assets or the nature or conduct of its business requires it to be so
qualified or licensed, except for such jurisdictions in which the failure to be
so qualified or licensed is not reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect on Subject Company. The only Subject
Company Subsidiaries that are a depository institution are The First National
Bank and Trust Company of Corbin and First Bank of East Tennessee, National
Association (the "Banks"). The Banks are each an "insured depository
institution" as defined in Section 3(c)(2) of the Federal Deposit Insurance Act
and applicable regulations thereunder, and the deposits in which are insured by
the Federal Deposit Insurance Corporation to the maximum extent permitted by the
Federal Deposit Insurance Act, as amended, and applicable regulations
thereunder. The Banks are each a member of the Bank Insurance Fund. The minute
books and other organizational documents (and all amendments thereto) for
Subject Company, the Banks, and each other Subject Company Subsidiary that would
qualify as a "Significant Subsidiary" (as such term is defined in Rule 1.02(w)
of Regulation S-X promulgated under the Securities Laws) of Subject Company have
been or will be made available to Parent for its review, and are true and
complete in all material respects as in effect as of the date of this Agreement.

         5.5      Financial Statements. Subject Company has delivered to Parent
(or will deliver, when available, with respect to periods ended after the date
of this Agreement) complete copies of (i) the audited consolidated statements of
financial position (including related notes and schedules, if any) of Subject
Company as of December

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<PAGE>   113



31, 1997, and 1996, and the related statements of operations, stockholders'
equity, and cash flows (including related notes and schedules, if any) for the
fiscal years ended December 31, 1997, 1996 and 1995, (ii) the unaudited
consolidated statements of financial position of Subject Company (including
related notes and schedules, if any) as of and for March 31, 1998, and related
statements of operations, stockholders' equity, and cash flows (including
related notes and schedules, if any) for the three-months ended March 31, 1998
and 1997, (iii) the consolidated statements of financial position of Subject
Company (including related notes and schedules, if any) and related statements
of operations, stockholders' equity, and cash flows (including related notes and
schedules, if any) with respect to any period ending subsequent to March 31,
1998, and prior to the Closing Date (audited if for a fiscal year end), and (iv)
all Call Reports (or similar reports, regardless of name), including any
amendments thereto, filed with any Regulatory Authorities by Subject Company and
the Banks for the years ended December 31, 1997, 1996, and 1995, together with
any correspondence with the SEC or with any other Regulatory Authorities
concerning any of the aforesaid financial statements and Reports (the "Subject
Company Financial Statements"). Such Subject Company Financial Statements (i)
were (or will be) prepared from the Records of Subject Company and/or each
Subject Company Subsidiary; (ii) were (or will be) prepared in all material
respects in accordance with GAAP (or, where applicable, regulatory accounting
principles) consistently applied; (iii) accurately present (or, when prepared,
will present), in all material respects, Subject Company's and each Subject
Company Subsidiary's financial condition and the results of its operations,
changes in stockholders' equity and cash flows at the relevant dates thereof and
for the periods covered thereby, except that the unaudited interim Financial
Statements were or are subject to normal and recurring year-end adjustments
which were not expected to be material in amount or effect; (iv) do contain or
reflect (or, when prepared, will contain and reflect) all necessary adjustments
and accruals for an accurate presentation of Subject Company's and each Subject
Company Subsidiary's financial condition and the results of Subject Company's
and each Subject Company Subsidiary's operations and cash flows for the periods
covered by such financial statements; (v) do contain and reflect (or, when
prepared, will contain and reflect) adequate provisions or allowances, as
reasonably determined by Subject Company management, for loan losses, for ORE
reserves, and for all reasonably anticipatable liabilities and Taxes, with
respect to the periods then ended; and (vi) do contain and reflect (or, when
prepared, will contain and reflect) adequate provisions for all reasonably
anticipated liabilities for Post Retirement Benefits Other Than Pensions
("OPEB") pursuant to SFAS Nos. 106 and 112.

         5.6      Absence of Undisclosed Liabilities. Neither Subject Company
nor any of the Subject Company Subsidiaries has any Liabilities that are
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on Subject Company, except Liabilities which are of such a character or
an amount which, under GAAP, is required to be reserved or accrued against, and
which are accrued or reserved against in the consolidated balance sheets of
Subject Company as of March 31, 1998, included in the Subject Company Financial
Statements made available prior to the date of this Agreement or reflected in
the notes thereto. Neither Subject Company nor any of the Subject Company
Subsidiaries has incurred or paid any Liability since March 31, 1998, except for
such Liabilities incurred or paid (i) in the ordinary course of business
consistent with past business practice or which are not reasonably likely to
have, individually or in the aggregate, a Material Adverse Effect on Subject
Company or (ii) in connection with the transactions contemplated by this
Agreement.

         5.7      Absence of Certain Changes or Events. Since December 31, 1997,
except as disclosed in the Subject Company Financial Statements made available
prior to the date of this Agreement or disclosed in Section 5.7 of the Subject
Company Disclosure Memorandum, there have been no events, changes, or
occurrences which have had, or are reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect on Subject Company.

         5.8      Tax Matters. Except as set forth in Section 5.8 of the Subject
Company Disclosure Memorandum:

                  (a)      All material Tax Returns required to be filed by or
on behalf of Subject Company or any of the Subject Company Subsidiaries have
been timely filed or requests for extensions have been timely filed, granted,
and have not expired for periods ended on or before December 31, 1997, and on or
before the date of the most recent fiscal year end immediately preceding the
Effective Time, and all such Tax Returns filed are complete and accurate in all
material respects. All Taxes shown on filed Tax Returns have been paid. There is
no audit

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<PAGE>   114




examination or refund Litigation with respect to any material Taxes, except as
reserved against in the Subject Company Financial Statements made available
prior to the date of this Agreement. All material Taxes and other material
Liabilities due with respect to completed and settled examinations or concluded
Litigation related to Tax Returns and/or Taxes of Subject Company have been
paid. There are no material Liens with respect to Taxes upon any of the Assets
of Subject Company or any of the Subject Company Subsidiaries.

                  (b)      Neither Subject Company nor any of the Subject
Company Subsidiaries has executed an extension or waiver of any statute of
limitations on the assessment or collection of any Tax due (excluding such
statutes that relate to years currently under examination by the Internal
Revenue Service or other applicable taxing authorities) that is currently in
effect.

                  (c)      Adequate provision, as reasonably determined by
Subject Company management, for any material Taxes due or to become due for
Subject Company or the Subject Company Subsidiaries for the period or periods
through and including the date of the respective Subject Company Financial
Statements has been made and is reflected on such Subject Company Financial
Statements.

                  (d)      Material deferred Taxes of Subject Company and the
Subject Company Subsidiaries have been provided for in accordance with GAAP.

                  (e)      Subject Company and the Subject Company Subsidiaries
are in material compliance with, and the records of Subject Company and each of
the Subject Company Subsidiaries contain all information and documents
(including properly completed Internal Revenue Service Forms W-9) necessary to
comply in all material respects with, all applicable information reporting and
Tax withholding requirements under federal, state, and local Tax Laws, and such
records identify with specificity all accounts subject to backup withholding
under Section 3406 of the Internal Revenue Code.

                  (f)      Neither Subject Company nor any of the Subject
Company Subsidiaries has made any payments, is obligated to make any payments,
or is a party to any Contract that could obligate it to make any payments that
would be disallowed as a deduction under Section 280G or 162(m) of the Internal
Revenue Code.

                  (g)      There has not been an ownership change, as defined in
Internal Revenue Code Section 382(g), of Subject Company or any of the Subject
Company Subsidiaries that occurred during or after any Taxable Period in which
Subject Company or any of the Subject Company Subsidiaries incurred a net
operating loss that carries over to any Taxable Period ending after December 31,
1997, except in connection with the transactions contemplated pursuant to this
Agreement.

                  (h)      Neither Subject Company nor any of the Subject
Company Subsidiaries is a party to any tax allocation or sharing agreement and
neither Subject Company nor any of the Subject Company Subsidiaries has been a
member of an affiliated group filing a consolidated federal income tax return
(other than a group the common parent of which was Subject Company) or has any
material Liability for taxes of any Person (other than Subject Company and the
Subject Company Subsidiaries) under Treasury Regulation Section 1.1502-6 (or any
similar provision of state, local, or foreign Law) as a transferee or successor
or by Contract or otherwise.

         5.9      Assets. Except as disclosed or reserved against in the Subject
Company Financial Statements made available prior to the date of this Agreement,
Subject Company and the Subject Company Subsidiaries have good and indefeasible
title, free and clear of all Liens, to all of their respective material Assets.
All tangible properties used in the businesses of Subject Company and its
Subsidiaries are in good condition, reasonable wear and tear excepted, and are
usable in the ordinary course of business of Subject Company and its
Subsidiaries, except for instances in which the failure to be in such condition
is not reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on Subject Company. All Assets which are material to Subject
Company's business on a consolidated basis, held under leases or subleases by
the Subject Company or any of the Subject Company Subsidiaries, are held under
valid Contracts enforceable in accordance with their respective terms,

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assuming the enforceability with respect to third parties to such Contracts, of
which Subject Company has no reason to believe that any such Contracts are not
enforceable against any such third party thereto (except as enforceability may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium, or
other Laws (including provisions of the U.S., Kentucky and Tennessee
Constitutions) affecting the enforcement of creditors' rights generally and
except that the availability of equitable remedies is subject to the discretion
of the court before which any proceedings may be brought), and each such
Contract is in full force and effect. Subject Company and the Subject Company
Subsidiaries currently maintain insurance in amounts, scope, and coverage which,
in the reasonable opinion of management of Subject Company, are adequate for the
operations of Subject Company and the Subject Company Subsidiaries. Neither
Subject Company nor any of the Subject Company Subsidiaries has received notice
from any insurance carrier that (i) such insurance will be canceled or that
coverage thereunder will be reduced or eliminated, or (ii) premium costs with
respect to such policies of insurance will be substantially increased. There are
presently no claims pending under any such policies of insurance and no notices
have been given by Subject Company or any of the Subject Company Subsidiaries
under such policies.

         5.10     Intellectual Property. All of the Intellectual Property rights
of Subject Company and the Subject Company Subsidiaries are in full force and
effect and, if applicable, constitute legal, valid, and binding obligations of
the respective parties thereto, and there have not been, and, to the Knowledge
of Subject Company, there currently are not, any material Defaults thereunder by
Subject Company or a Subject Company Subsidiary. Subject Company or a Subject
Company Subsidiary owns, is the valid licensee of, or otherwise has the
unrestricted right to use in the manner in which it is or has been used, all
such Intellectual Property rights free and clear of all Liens or claims of
infringement. To the Knowledge of Subject Company, neither Subject Company, any
of the Subject Company Subsidiaries, nor any of their respective predecessors
has infringed the Intellectual Property rights of others (except to the extent
any such infringement will not have a Material Adverse Effect on Subject
Company) and, to the Knowledge of Subject Company, none of the Intellectual
Property rights as used in the business conducted by Subject Company or the
Subject Company Subsidiaries infringes upon or otherwise violates the rights of
any Person, nor has any Person asserted a claim of such infringement. Except as
set forth in Section 5.10 of the Subject Company Disclosure Memorandum, neither
Subject Company nor the Subject Company Subsidiaries is obligated to pay any
royalties to any Person with respect to any such Intellectual Property. Subject
Company or a Subject Company Subsidiary owns or has the valid right to use all
of the Intellectual Property rights which it is presently using. To the
Knowledge of Subject Company, no officer, director, or employee of Subject
Company or the Subject Company Subsidiaries is party to any Contract which
requires such officer, director, or employee to assign any interest in any
Intellectual Property or keep confidential any trade secrets, proprietary data,
customer information, or other business information or which restricts or
prohibits such officer, director, or employee from engaging in activities
competitive with any Person, including Subject Company or any of the Subject
Company Subsidiaries, except any such Contracts which are not reasonably likely
to have, individually in the aggregate, a Material Adverse Effect on Subject
Company.

         5.11     Environmental Matters. Except as set forth in Section 5.11 of
the Subject Company Disclosure Memorandum:

                  (a)      To the Knowledge of Subject Company, each of Subject
Company and the Subject Company Subsidiaries, its Participation Facilities, and
its Operating Properties are, and have been, in compliance with all
Environmental Laws, except for violations which are not reasonably likely to
have, individually or in the aggregate, a Material Adverse Effect on Subject
Company.

                  (b)      To the Knowledge of Subject Company, there is no
Litigation pending or threatened before any court, governmental agency, or
authority or other forum in which Subject Company, any of the Subject Company
Subsidiaries or any of their respective Operating Properties or Participation
Facilities (or Subject Company in respect of such Operating Property or
Participation Facility) has been or, with respect to threatened Litigation, may
be named as a defendant (i) for alleged noncompliance (including by any
predecessor) with any Environmental Law or (ii) relating to the release into the
environment of any Hazardous Material, whether or not occurring at, on, under,
adjacent to, or affecting (or potentially affecting) a site owned, leased, or
operated by Subject Company or

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any of the Subject Company Subsidiaries or any of their respective Operating
Properties or Participation Facilities, except for such Litigation pending or
threatened that is not reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on Subject Company, nor, to the Knowledge
of Subject Company, is there any reasonable basis for any Litigation of a type
described in this sentence.

                  (c)      During the period of (i) Subject Company's or any of
the Subject Company Subsidiaries' ownership or operation of any of their
respective current properties, (ii) Subject Company's or any of the Subject
Company Subsidiaries' participation in the management of any Participation
Facility, or (iii) Subject Company's or any of the Subject Company Subsidiaries'
holding of a security interest in an Operating Property, to the Knowledge of
Subject Company, there have been no releases of Hazardous Material in, on,
under, adjacent to, or affecting (or potentially affecting) such properties,
except such as are not reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on Subject Company. Prior to the period of
(i) Subject Company's or any of the Subject Company Subsidiaries' ownership or
operation of any of their respective current properties, (ii) Subject Company's
or any of the Subject Company Subsidiaries' participation in the management of
any Participation Facility, or (iii) Subject Company's or any of the Subject
Company Subsidiaries' holding of a security interest in an Operating Property,
to the Knowledge of Subject Company, there were no releases of Hazardous
Material in, on, under, or affecting any such property, Participation Facility
or Operating Property, except such as are not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on Subject Company.

         5.12     Compliance With Laws. Subject Company is duly registered as a
bank holding company under the BHC Act. Each of Subject Company and the Subject
Company Subsidiaries has in effect all Permits necessary for it to own, lease,
or operate its material Assets and to carry on its business as now conducted,
except where the failure to hold such Permits would not be reasonably likely to
have, individually or in the aggregate, a Material Adverse Effect on Subject
Company. Neither Subject Company nor any of the Subject Company Subsidiaries:

                  (a)      is in violation of any Laws, Orders, or Permits
applicable to its business or employees conducting its business, except for such
violations which would not be reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on Subject Company; or

                  (b)      has received any notification or communication from
any agency or department of federal, state, or local government or any
Regulatory Authority or the staff thereof (i) asserting that Subject Company or
any of the Subject Company Subsidiaries is in violation of any of the Laws or
Orders which such governmental authority or Regulatory Authority enforces
(excluding violations which would not be reasonably likely to have, individually
or in the aggregate, a Material Adverse Effect on Subject Company), (ii)
threatening to revoke any Permits, or (iii) requiring Subject Company or any of
the Subject Company Subsidiaries to enter into or consent to the issuance of a
cease and desist order, formal agreement, directive, commitment, or memorandum
of understanding, or to adopt any Board of Directors resolution or similar
undertaking, which restricts materially the conduct of its business, or in any
manner relates to its capital adequacy, its credit or reserve policies, its
management, or the payment of dividends.

         5.13     Labor Relations. Neither Subject Company nor any of the
Subject Company Subsidiaries is the subject of any Litigation asserting that
Subject Company or any of the Subject Company Subsidiaries has committed an
unfair labor practice (within the meaning of the National Labor Relations Act or
comparable state Law) or seeking to compel Subject Company or any of the Subject
Company Subsidiaries to bargain with any labor organization as to wages or
conditions of employment, nor is there any strike or other labor dispute
involving Subject Company or any of the Subject Company Subsidiaries, pending
or, to the Knowledge of Subject Company, threatened, nor to the Knowledge of
Subject Company, is there any activity involving Subject Company's or any of the
Subject Company Subsidiaries' employees seeking to certify a collective
bargaining unit or engaging in any other collective bargaining organizational
activity.

         5.14     Employee Benefit Plans. (a) Subject Company has disclosed in
Section 5.14(a) of the Subject Company Disclosure Memorandum, and has delivered
or made available to Parent prior to the execution of this

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Agreement copies of all pension, retirement, profit sharing, deferred
compensation, stock option, employee stock ownership, severance pay, vacation,
bonus, or other material incentive plans, all other written employee programs,
arrangements, or agreements, all medical, vision, dental, or other health plans,
all life insurance plans, and all other material employee benefit or fringe
benefit plans, including "employee benefit plans" as that term is defined in
Section 3(3) of ERISA, currently adopted, maintained by, sponsored in whole or
in part by, or contributed to by Subject Company, the Subject Company
Subsidiaries or any ERISA Affiliate thereof for the benefit of employees,
retirees, dependents, spouses, directors, independent contractors, or other
beneficiaries of Subject Company or any Subject Company Subsidiary and under
which employees, retirees, dependents, spouses, directors, independent
contractors, or other beneficiaries of Subject Company or any Subject Company
Subsidiary are eligible to participate (collectively, the "Subject Company
Benefit Plans"). Any of the Subject Company Benefit Plans which is an "employee
pension benefit plan," as that term is defined in Section 3(2) of ERISA, is
referred to herein as a "Subject Company ERISA Plan." Neither Subject Company
nor any Subject Company Subsidiary maintains any "defined benefit plan" (as
defined in Section 414(j) of the Internal Revenue Code). No Subject Company
ERISA Plan is or has been a multiemployer plan within the meaning of Section
3(37) of ERISA.

                  (b)      All Subject Company Benefit Plans are in material
compliance with the applicable terms of ERISA, the Internal Revenue Code, and
any other applicable Laws the breach or violation of which are reasonably likely
to have, individually or in the aggregate, a Material Adverse Effect on Subject
Company. Each Subject Company ERISA Plan that is intended to be qualified under
Section 401(a) of the Internal Revenue Code has either received a favorable
determination letter from the Internal Revenue Service (and Subject Company is
not aware of any circumstances likely to result in revocation of any such
favorable determination letter) or timely application has been made therefor. To
the Knowledge of Subject Company, neither Subject Company nor any of the Subject
Company Subsidiaries is subject to a material Tax imposed by Section 4975 of the
Internal Revenue Code or a civil penalty imposed by Section 502(i) of ERISA.

                  (c)      No "defined benefit plan" (as defined in Section
414(j) of the Internal Revenue Code) or any "single-employer plan," within the
meaning of Section 4001(a)(15) of ERISA, formerly maintained by Subject Company
or any of the Subject Company Subsidiaries, or the single-employer plan of any
entity which is considered one employer with Subject Company under Section 4001
of ERISA or Section 414 of the Internal Revenue Code or Section 302 of ERISA
(whether or not waived) (an "ERISA Affiliate") has an "accumulated funding
deficiency" within the meaning of Section 412 of the Internal Revenue Code or
Section 302 of ERISA. Neither Subject Company nor any of the Subject Company
Subsidiaries has provided, or, to Subject Company's knowledge, is required to
provide, security to any single-employer plan of an ERISA Affiliate pursuant to
Section 401(a)(29) of the Internal Revenue Code.

                  (d)      Within the six year period preceding the Effective
Time, no material Liability under Subtitle C or D of Title IV of ERISA has been
incurred by Subject Company or any of the Subject Company Subsidiaries with
respect to any current, frozen, or terminated single-employer plan or the
single-employer plan of any ERISA Affiliate. Neither Subject Company nor any of
the Subject Company Subsidiaries has incurred any material withdrawal Liability
with respect to a multiemployer plan under Subtitle E of Title IV of ERISA
(regardless of whether based on contributions of an ERISA Affiliate). No notice
of a "reportable event," within the meaning of Section 4043 of ERISA for which
the 30 day reporting requirement has not been waived, has been required to be
filed for any Subject Company Pension Plan or by any ERISA Affiliate within the
12 month period ending on the date hereof.

                  (e)      Neither Subject Company nor any of the Subject
Company Subsidiaries has any material Liability for retiree health and life
benefits under any of the Subject Company Benefit Plans.

                  (f)      Except as set forth in Section 5.14(f) of the Subject
Company Disclosure Memorandum, neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated hereby will
(i) result in any payment (including severance, unemployment compensation or
golden parachute) becoming due to any director or any employee of Subject
Company or any of the Subject Company Subsidiaries from Subject

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<PAGE>   118



Company or any of the Subject Company Subsidiaries under any Subject Company
Benefit Plan, (ii) materially increase any benefits otherwise payable under any
Subject Company Benefit Plan, or (iii) result in any acceleration of the time of
payment or vesting of any such benefit.

                  (g)      The actuarial present values of all accrued deferred
compensation entitlements (including entitlements under any executive
compensation, supplemental retirement, or employment agreement) of employees and
former employees of any Subject Company Subsidiary and their respective
beneficiaries, other than entitlements accrued pursuant to funded retirement
plans subject to the provisions of Section 412 of the Internal Revenue Code or
Section 302 of ERISA, have been fully reflected on the Subject Company Financial
Statements to the extent required by and in accordance with GAAP.

         5.15     Material Contracts. Except as set forth in Section 5.15 of the
Subject Company Disclosure Memorandum, neither Subject Company, the Subject
Company Subsidiaries, nor any of their respective Assets, businesses or
operations is a party to, or is bound or affected by, or receives benefits
under, (i) any employment, severance, termination, consulting, or retirement
Contract, (ii) any Contract relating to the borrowing of money by Subject
Company or any of the Subject Company Subsidiaries or the guarantee by Subject
Company or any of the Subject Company Subsidiaries of any such obligation (other
than Contracts evidencing deposit liabilities, purchases of federal funds,
fully-secured repurchase agreements, trade payables, and Contracts relating to
borrowings or guarantees made in the ordinary course of business), (iii) any
Contracts which prohibit or restrict Subject Company or any of the Subject
Company Subsidiaries from engaging in any business activities in any geographic
area, line of business, or otherwise in competition with any other Person, (iv)
any Contracts between or among Subject Company and the Subject Company
Subsidiaries, (v) any exchange-traded or over-the-counter swap, forward, future,
option, cap, floor, or collar financial Contract, or any other interest rate or
foreign currency protection Contract (not disclosed in the Subject Company
Financial Statements delivered prior to the date of this Agreement) which is a
financial derivative Contract (including various combinations thereof), and (vi)
any other Contract or amendment thereto that would be required to be filed as an
exhibit to a Subject Company SEC Document filed by Subject Company prior to the
date of this Agreement if Subject Company was required to file SEC Documents
(together with all Contracts referred to in Sections 5.9 and 5.14(a) of this
Agreement, the "Subject Company Contracts"). With respect to each Subject
Company Contract: (i) the Contract is in full force and effect; (ii) neither
Subject Company nor any Subject Company Subsidiary is in material Default
thereunder; (iii) neither Subject Company nor any Subject Company Subsidiary has
repudiated or waived any material provision of any such Contract; and (iv) no
other party to any such Contract is, to the Knowledge of Subject Company, in
Default in any respect or has repudiated or waived any material provision
thereunder.

         5.16     Legal Proceedings. There is no Litigation instituted or
pending, or, to the Knowledge of Subject Company, threatened (or unasserted but
considered probable of assertion and which if asserted would have at least a
reasonable probability of an unfavorable outcome) against Subject Company or any
of the Subject Company Subsidiaries, or against any Asset, employee benefit
plan, interest, or right of any of them, that is reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on Subject Company,
nor are there any Orders of any Regulatory Authorities, other governmental
authorities, or arbitrators outstanding against Subject Company or any of the
Subject Company Subsidiaries. Section 5.16 of the Subject Company Disclosure
Memorandum includes a summary report of all material Litigation as of the date
of this Agreement to which Subject Company or any Subject Company Subsidiary is
a party and which names Subject Company or a Subject Company Subsidiary as a
defendant or cross-defendant.

         5.17     Reports. Since January 1, 1995, or the applicable date of
organization if later, Subject Company and each Subject Company Subsidiary has
timely filed all reports and statements, together with any amendments required
to be made with respect thereto, that it was required to file with (i) the SEC,
including, but not limited to, Forms 10-K, Forms 10-Q, Forms 8-K, and proxy
statements, (ii) other Regulatory Authorities, and (iii) any applicable state
securities or banking authorities, except failures to file which are not
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on Subject Company. As of its respective date (or, if amended or
superseded by a filing prior to the date of this Agreement, then on the date of
such filing), each of such

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<PAGE>   119



reports and documents, including the financial statements, exhibits, and
schedules thereto, complied in all material respects with all applicable Laws.
As of its respective date (or, if amended or superseded by a filing prior to the
date of this Agreement, then on the date of such filing), none of such documents
so filed contained any untrue statement of a material fact, omitted to state a
material fact required to be stated therein, or intentionally omitted to state a
material fact necessary to make the statements made therein, in light of the
circumstances under which they were made, not misleading. Neither Subject
Company nor any of its Subsidiaries is required to file any SEC Documents.

         5.18     Statements True and Correct. None of the information supplied
or to be supplied by Subject Company expressly for inclusion in the Registration
Statement to be filed by Parent with the SEC will, when the Registration
Statement becomes effective, be false or misleading with respect to any material
fact, or omit to state any material fact necessary to make the statements
therein not misleading. None of the information supplied or to be supplied by
Subject Company expressly for inclusion in the Subject Company Proxy Statement
to be mailed to Subject Company's shareholders in connection with the Subject
Company Shareholders' Meeting, and any other documents to be filed by Subject
Company with the SEC or any other Regulatory Authority in connection with the
transactions contemplated hereby, will, at the respective time such documents
are filed, and with respect to the Subject Company Proxy Statement, when first
mailed to the shareholders of Subject Company, be false or misleading with
respect to any material fact, or omit to state any material fact necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading, or, in the case of the Subject Company Proxy Statement or
any amendment thereof or supplement thereto, at the time of the Subject Company
Shareholders' Meeting, be false or misleading with respect to any material fact,
or omit to state any material fact necessary to correct any statement made by
Subject Company in any earlier communication with respect to the solicitation of
any proxy for the Subject Company Shareholders' Meeting. All documents that
Subject Company or any Subject Company Subsidiary is responsible for filing with
any Regulatory Authority in connection with the transactions contemplated hereby
will comply as to form in all material respects with the provisions of
applicable Law.

         5.19     Accounting, Tax, and Regulatory Matters. Neither Subject
Company nor any of the Subject Company Subsidiaries has taken any action or has
any Knowledge of any fact or circumstance relating to Subject Company that is
reasonably likely to (i) prevent the transactions contemplated hereby, including
the Merger, from qualifying for pooling-of-interests accounting treatment or as
a reorganization within the meaning of Section 368(a) of the Internal Revenue
Code, or (ii) materially impede or delay receipt of any Consents of Regulatory
Authorities referred to in Section 9.1(b) of this Agreement.

         5.20     Articles of Incorporation Provisions; Takeover Laws. Subject
Company has taken all action so that the entering into of this Agreement and the
consummation of the Merger and the other transactions contemplated by this
Agreement do not and will not result in the grant of any rights to any Person
under the Articles of Incorporation, Bylaws or other governing instruments of
Subject Company or any Subject Company Subsidiary or restrict or impair the
ability of Parent or any of the Parent Subsidiaries to vote, or otherwise to
exercise the rights of a shareholder with respect to, shares of Subject Company
or any Subject Company Subsidiary. Subject Company has taken all necessary
action to exempt this Agreement and the Plan of Merger from, and the
transactions contemplated hereby and thereby are exempt from, any
"super-majority" voting requirements or the requirements of any "moratorium,"
"fair price," "business combination," "control share," or other anti-takeover
provisions under applicable Laws, or the Articles of Incorporation or Bylaws of
the Subject Company or any Subject Company Subsidiary (collectively, "Takeover
Laws").




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                                    ARTICLE 6
                    REPRESENTATIONS AND WARRANTIES OF PARENT

                  Parent hereby represents and warrants to Subject Company,
except as set forth on Parent's Disclosure Memorandum, as follows:

         6.1      Organization, Standing and Power. Parent and Merger Subsidiary
are each a corporation duly organized, validly existing, and in good standing
under the Laws of the State of Tennessee, and each has the corporate power and
authority to carry on its business as now conducted and to own, lease and
operate its Assets. Both Parent and Merger Subsidiary are each duly qualified or
licensed to transact business as a foreign corporation in good standing in each
of the States of the United States and in each foreign jurisdiction where the
character of its Assets or the nature or conduct of its business requires it to
be so qualified or licensed, except for such jurisdictions in which the failure
to be so qualified or licensed is not reasonably likely to have, individually or
in the aggregate, a Material Adverse Effect on Parent.

         6.2      Authority; No Breach by Agreement. (a) Parent and Merger
Subsidiary each have the corporate power and authority necessary to execute,
deliver and perform its respective obligations under this Agreement and the Plan
of Merger and to consummate the transactions contemplated hereby and thereby.
The execution, delivery and performance of this Agreement and the Plan of Merger
by Parent and Merger Subsidiary and the consummation of the transactions
contemplated herein and therein, including the Merger, have been duly and
validly authorized by all necessary corporate action in respect thereof on the
part of Parent and Merger Subsidiary. Subject to the receipt of all Consents
required from Regulatory Authorities and the expiration of all mandatory waiting
periods, assuming the due authorization, execution and delivery of this
Agreement and the Plan of Merger by Subject Company, this Agreement and the Plan
of Merger each represents a legal, valid, and binding obligation of each of
Parent and Merger Subsidiary, enforceable against each of them in accordance
with its terms (except in all cases as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium, or similar Laws
(including provisions of the U.S., Kentucky and Tennessee Constitutions)
affecting the enforcement of creditors' rights generally and except that the
availability of equitable remedies is subject to the discretion of the court
before which any proceeding may be brought).

                  (b)      Neither the execution and delivery of this Agreement
or the Plan of Merger by Parent and/or Merger Subsidiary, nor the consummation
by Parent and Merger Subsidiary, of the transactions contemplated hereby or
thereby, nor compliance by Parent and Merger Subsidiary with any of the
provisions hereof or thereof will (i) conflict with or result in a breach of any
provision of Parent's Restated Charter of Incorporation or Bylaws or of Merger
Subsidiary's Charter of Incorporation or Bylaws, or (ii) constitute or result in
a Default under, or require any Consent (excluding Consents required by Law or
Order) pursuant to, or result in the creation of any Lien on any material Asset
of Parent or any Parent Subsidiary under, any Contract or Permit of Parent or
any Parent Subsidiary, except for such Defaults and Liens which are not, and for
such Consents which, if not obtained, are not, reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on Parent or Merger
Subsidiary, or (iii) subject to receipt of the requisite Consents referred to in
Section 9.1(b) of this Agreement, violate any Law or Order applicable to Parent
or any Parent Subsidiary or any of their respective material Assets.

                  (c)      Other than in connection or compliance with the
provisions of the Securities Laws, applicable state corporate and securities
Laws, and rules of the NYSE, and other than Consents required from Regulatory
Authorities, and other than Consents, filings, or notifications which, if not
obtained or made, are not reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on Parent, no notice to, filing with, or
Consent of, any public body or authority is necessary for the consummation by
Parent of the Merger and the other transactions contemplated in this Agreement.

         6.3      Capital Stock. The authorized capital stock of Parent consists
solely of (i) 300,000,000 shares of Parent Common Stock, of which approximately
127,129,000 shares were issued and outstanding as of July 31, 1998, and (ii)
10,000,000 shares of Parent Preferred Stock, of which approximately 1,090,866
shares of Parent Series E Preferred Stock were issued and outstanding as of July
31, 1998. Since July 31, 1998 and prior to the date of this Agreement, UPC has
consummated five (5) acquisitions in which it will issue, in the aggregate,
approximately 3.4 million additional shares of Parent Common Stock. All of the
issued and outstanding shares of Parent Capital Stock

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are, and all of the shares of Parent Common Stock to be issued in exchange for
shares of Subject Company Common Stock upon consummation of the Merger, when
issued in exchange for shares of Subject Company Common Stock upon consummation
of the Merger and in accordance with the terms of this Agreement, will be, duly
and validly authorized, issued and outstanding, and fully paid and nonassessable
under the TBCA and Parent's Restated Charter of Incorporation and Bylaws. None
of the outstanding shares of Parent Capital Stock has been, and none of the
shares of Parent Common Stock to be issued in exchange for shares of Subject
Company Common Stock upon consummation of the Merger will be, issued in
violation of any preemptive rights of any Person.

         6.4      Parent Subsidiaries. Parent owns all of the issued and
outstanding capital stock of Merger Subsidiary, and Parent or one of the Parent
Subsidiaries owns all of the issued and outstanding shares of capital stock (or
other equity interests) of each of the other Parent Subsidiaries which would
qualify as a "Significant Subsidiary" (as such term is defined in Rule 1.02(w)
of Regulation S-X promulgated under the Securities Laws) of Parent. No capital
stock (or other equity interest) of any Parent Subsidiary which would qualify as
a Significant Subsidiary of Parent, is or may become required to be issued
(other than to another Parent Subsidiary) by reason of any Rights, and there are
no Contracts by which Parent or any of the Parent Subsidiaries which is a
Significant Subsidiary of Parent, is bound to issue (other than to Parent or any
of the Parent Subsidiaries) additional shares of its capital stock (or other
equity interests) or Rights or by which Parent or any of the Parent Subsidiaries
is or may be bound to transfer any shares of the capital stock (or other equity
interests) of any of Parent or any of the Parent Subsidiaries (other than to
Parent or any of the Parent Subsidiaries). There are no Contracts relating to
the rights of Parent or any Parent Subsidiary which is wholly-owned by Parent or
which would qualify as a Significant Subsidiary of Parent, to vote or to dispose
of any shares of the capital stock (or other equity interests) of any of the
Parent Subsidiaries. All of the shares of capital stock (or other equity
interests) of each Parent Subsidiary which would qualify as a Significant
Subsidiary of Parent and held by Parent or any Parent Subsidiary have been duly
and validly authorized and issued and are fully paid and nonassessable (except
pursuant to 12 U.S.C. Section 55 in the case of national banks and comparable,
applicable state Law, if any, in the case of state depository institutions)
under the applicable corporation or similar Law of the jurisdiction in which
such Subsidiary is incorporated or organized and are owned by Parent or a Parent
Subsidiary free and clear of any Liens. None of the issued and outstanding
shares of capital stock of Merger Subsidiary, and none of the issued and
outstanding stock of any other Parent Subsidiary which qualifies as a
Significant Subsidiary of Parent, has been issued in violation of any preemptive
rights of any Person. Each Parent Subsidiary is either a bank, federal savings
bank, or a savings association, partnership, limited liability company or a
corporation, and each such Parent Subsidiary which qualifies as a Significant
Subsidiary of Parent is duly organized, validly existing and (as to
corporations) in good standing under the Laws of the jurisdiction in which it is
incorporated or organized, and has the corporate power and authority necessary
for it to own, lease, and operate its Assets and to carry on its business as now
conducted. Each Parent Subsidiary which qualifies as a Significant Subsidiary of
Parent is duly qualified or licensed to transact business as a foreign
corporation in good standing in each of the States of the United States and in
each foreign jurisdiction where the character of its Assets or the nature or
conduct of its business requires it to be so qualified or licensed, except for
such jurisdictions in which the failure to be so qualified or licensed is not
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on Parent. The minute book and other organizational documents (and all
amendments thereto) for each of Parent, Merger Subsidiary and each Parent
Subsidiary that qualifies as a Significant Subsidiary of Parent, have been made
available to Subject Company for its review, and are true and complete in all
material respects as in effect as of the date of this Agreement. A true,
accurate and complete list of each Parent Subsidiary is included in Section 6.4
of the Parent Disclosure Memorandum.

         6.5      Financial Statements. Each of the Parent Financial Statements
(including, in each case, any related notes) contained in the Parent SEC
Documents, including any Parent SEC Document filed after the date of this
Agreement until the Effective Time, complied, or will comply, as to form in all
material respects with the applicable published rules and regulations of the SEC
with respect thereto, was prepared, or will be prepared, in accordance with GAAP
applied on a consistent basis throughout the periods involved (except as may be
indicated in the notes to such financial statements or, in the case of unaudited
interim statements, as permitted by Regulation S-X promulgated under the
Securities Laws), and fairly presented, or will fairly present, in all material
respects the consolidated financial position of Parent and the Parent
Subsidiaries as at the respective dates and the consolidated

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<PAGE>   122



results of its operations and cash flows for the periods indicated, except that
the unaudited interim financial statements were or are subject to normal and
recurring year-end adjustments which were not or are not expected to be material
in amount or effect.

         6.6      Absence of Undisclosed Liabilities. Neither Parent nor any of
the Parent Subsidiaries has any Liabilities that are reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on Parent, except
Liabilities which are accrued or reserved against in the consolidated balance
sheets of Parent as of March 31, 1998, included in the Parent Financial
Statements made available prior to the date of this Agreement, or reflected in
the notes thereto. Neither Parent nor any of the Parent Subsidiaries has
incurred or paid any Liability since March 31, 1998, except for such Liabilities
incurred or paid (i) which are not reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect on Parent or (ii) in connection with
the transaction contemplated by this Agreement.

         6.7      Absence of Certain Changes or Events. Since December 31, 1997,
except as disclosed in the Parent SEC Documents made available prior to the date
of this Agreement, there have been no events, changes, or occurrences which have
had, or are reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on Parent.

         6.8      Tax Matters. (a) All material Tax Returns required to be filed
by or on behalf of Parent or any of the Parent Subsidiaries have been timely
filed or requests for extensions have been timely filed, granted, and have not
expired for periods ended on or before December 31, 1997, and on or before the
date of the most recent fiscal year end immediately preceding the Effective
Time, and all such Tax Returns filed are complete and accurate in all material
respects. All Taxes shown on filed Tax Returns have been paid. There is no audit
examination, or refund Litigation with respect to any material Taxes, except as
reserved against in the Parent Financial Statements delivered prior to the date
of this Agreement. All material Taxes and other material Liabilities due with
respect to completed and settled examinations or concluded Litigation related to
Tax Returns and/or Taxes of Parent have been paid. There are no material Liens
with respect to Taxes upon any of the Assets of Parent or any of the Parent
Subsidiaries.

                  (b)      Adequate provision for any material Taxes due or to
become due for Parent or any of the Parent Subsidiaries for the period or
periods through and including the date of the respective Parent Financial
Statements has been made and is reflected on such Parent Financial Statements.

                  (c)      Material deferred Taxes of Parent and the Parent
Subsidiaries have been provided for in accordance with GAAP.

         6.9      Environmental Matters. (a) To the Knowledge of Parent, each of
Parent and the Parent Subsidiaries, its Participation Facilities, and its
Operating Properties are, and have been, in compliance with all Environmental
Laws, except for violations which are not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on Parent.

                  (b)      To the Knowledge of Parent, there is no Litigation
pending or threatened before any court, governmental agency, or authority or
other forum in which Parent or any of the Parent Subsidiaries or any of their
respective Operating Properties or Participation Facilities (or Parent in
respect of such Operating Property or Participation Facility) has been or, with
respect to threatened Litigation, may be named as a defendant (i) for alleged
noncompliance (including by any predecessor) with any Environmental Law or (ii)
relating to the release into the environment of any Hazardous Material, whether
or not occurring at, on, under, adjacent to, or affecting (or potentially
affecting) a site owned, leased, or operated by Parent or any of the Parent
Subsidiaries or any of their respective Operating Properties or Participation
Facilities, except for such Litigation pending or threatened that is not
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on Parent, nor, to the Knowledge of Parent, is there any reasonable basis
for any Litigation of a type described in this sentence.

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<PAGE>   123




                  (c)      During the period of (i) Parent's or any of the
Parent Subsidiaries' ownership or operation of any of their respective current
properties, (ii) Parent's or any of the Parent Subsidiaries' participation in
the management of any Participation Facility, or (iii) Parent's or any of the
Parent Subsidiaries' holding of a security interest in an Operating Property, to
the Knowledge of Parent, there have been no releases of Hazardous Material in,
on, under, adjacent to, or affecting (or potentially affecting) such properties,
except such as are not reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on Parent. Prior to the period of (i)
Parent's or any of Parent Subsidiaries' ownership or operation of any of their
respective current properties, (ii) Parent's or any of Parent Subsidiaries'
participation in the management of any Participation Facility, or (iii) Parent's
or any of Parent Subsidiaries' holding of a security interest in an Operating
Property, to the Knowledge of Parent,there were no releases of Hazardous
Material in, on, under, or affecting any such property, Participation Facility
or Operating Property, except such as are not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on Parent.

         6.10     Compliance With Laws. Parent is duly registered as a bank
holding company under the BHC Act. Each of Parent and the Parent Subsidiaries
has in effect all Permits necessary for it to own, lease, or operate its
material Assets and to carry on its business as now conducted, except where the
failure to hold such permits would not be reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on Parent. Neither
Parent nor any of the Parent Subsidiaries:

                  (a)      is in violation of any Laws, Orders, or Permits
applicable to its business or employees conducting its business, except for such
violations which would not be reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on Parent; or

                  (b)      has received any notification or communication from
any agency or department of federal, state, or local government or any
Regulatory Authority or the staff thereof (i) asserting that Parent or any
Parent Subsidiary is in violation of any of the Laws or Orders which such
governmental authority or Regulatory Authority enforces (excluding violations
which would not be reasonably likely to have, individually or in the aggregate,
a Material Adverse Effect on Parent), (ii) threatening to revoke any Permits, or
(iii) requiring Parent or any Parent Subsidiary to enter into or consent to the
issuance of a cease and desist order, formal agreement, directive, commitment or
memorandum of understanding, or to adopt any Board resolution or similar
undertaking, which restricts materially the conduct of its business, or in any
manner relates to its capital adequacy, its credit or reserve policies, its
management, or the payment of dividends.

         6.11     Legal Proceedings. There is no Litigation instituted or
pending, or, to the Knowledge of Parent, threatened (or unasserted but
considered probable of assertion and which if asserted would have at least a
reasonable probability of an unfavorable outcome) against Parent or any Parent
Subsidiary, or against any Asset, employee benefit plan, interest, or right of
any of them, that is reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on Parent, nor are there any Orders of any
Regulatory Authorities, other governmental authorities, or arbitrators
outstanding against Parent or any Parent Subsidiary.

         6.12     Reports. Since January 1, 1995, or the applicable date of
organization if later, Parent and each Parent Subsidiary has filed all reports
and statements, together with any amendments required to be made with respect
thereto, that it was required to file with (i) the SEC, including, but not
limited to, Forms 10-K, Forms 10-Q, Forms 8-K, and proxy statements, (ii) other
Regulatory Authorities, and (iii) any applicable state securities or banking
authorities, except failures to file which are not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on Parent. As of its
respective date (or, if amended or superseded by a filing prior to the date of
this Agreement, then on the date of such filing), each of such reports and
documents, including, the financial statements, exhibits, and schedules thereto
complied in all material respects with all applicable Laws. As of its respective
date, no Parent SEC Document contained any untrue statement of a material fact
or omitted to state a material fact required to be stated therein or necessary
to make the statements made therein, in light of the circumstances under which
they were made, not misleading.


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<PAGE>   124




         6.13     Statements True and Correct. None of the information supplied
or to be supplied by Parent expressly for inclusion in the Registration
Statement to be filed by Parent with the SEC, will, when the Registration
Statement becomes effective, be false or misleading with respect to any material
fact, or omit to state any material fact necessary to make the statements
therein not misleading. None of the information supplied or to be supplied by
Parent expressly for inclusion in the Subject Company Proxy Statement to be
mailed to Subject Company's shareholders in connection with the Subject Company
Shareholders' Meeting, and any other documents to be filed by Parent or any
Parent Subsidiary with the SEC or any other Regulatory Authority in connection
with the transactions contemplated hereby, will, at the respective time such
documents are filed, and with respect to the Subject Company Proxy Statement,
when first mailed to the shareholders of Subject Company, be false or misleading
with respect to any material fact, or omit to state any material fact necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading, or, in the case of the Subject Company Proxy
Statement or any amendment thereof or supplement thereto, at the time of the
Subject Company Shareholders' Meeting, be false or misleading with respect to
any material fact, or omit to state any material fact necessary to correct any
statement made by Parent in any earlier communication with respect to the
solicitation of any proxy for the Subject Company Shareholders' Meeting. All
documents that Parent or any Parent Subsidiary is responsible for filing with
any Regulatory Authority in connection with the transactions contemplated hereby
will comply as to form in all material respects with the provisions of
applicable Law.

         6.14     Accounting, Tax, and Regulatory Matters. Neither Parent nor
any Parent Subsidiary has taken any action or has any Knowledge of any fact or
circumstance relating to Parent that is reasonably likely to (i) prevent the
transactions contemplated hereby, including the Merger, from qualifying for
treatment as a reorganization within the meaning of Section 368(a) of the
Internal Revenue Code, or (ii) materially impede or delay receipt of any
Consents of Regulatory Authorities referred to in Section 9.1(b) of this
Agreement, or (iii) prevent the transactions contemplated hereby, including the
Merger, from qualifying for pooling-of-interests accounting treatment.

                                    ARTICLE 7
                    CONDUCT OF BUSINESS PENDING CONSUMMATION

         7.1      Affirmative Covenants of Subject Company. Unless the prior
written consent of Parent shall have been obtained, and except as otherwise
expressly contemplated herein or expressly provided for in Section 7.1 of the
Subject Company Disclosure Memorandum, from the date of this Agreement until the
earlier of the Effective Time or the termination of this Agreement, Subject
Company shall and shall cause each of the Subject Company Subsidiaries to (i)
operate its business only in the usual, regular, and ordinary course, consistent
with past practices, (ii) use reasonable efforts to preserve intact its business
organization and Assets and maintain its rights and franchises, and (iii) take
no action which would (a) materially adversely affect the ability of any Party
to obtain any Consents required for the transactions contemplated hereby or
prevent the transactions contemplated hereby, including the Merger, from
qualifying for pooling-of-interests accounting treatment or as a reorganization
within the meaning of Section 368(a) of the Internal Revenue Code, or (b)
materially adversely affect the ability of any Party to perform its covenants
and agreements under this Agreement.

         7.2      Negative Covenants of Subject Company. Except as specifically
permitted by this Agreement or as and to the extent set forth in Section 7.2 of
the Subject Company Disclosure Memorandum, from the date of this Agreement until
the earlier of the Effective Time or the termination of this Agreement, Subject
Company covenants and agrees that it will not do or agree or commit to do, or
permit any of the Subject Company Subsidiaries to do or agree or commit to do,
any of the following without the prior written consent of the chief executive
officer, president, or chief financial officer of Parent, which consent shall
not be unreasonably withheld:

                  (a)      amend the Articles of Incorporation, Bylaws, or other
governing instruments of Subject Company or any Subject Company Subsidiary; or

                  (b)      incur any additional debt obligation for borrowed
money (other than indebtedness of Subject Company or the Subject Company
Subsidiaries to each other) in excess of an aggregate of $100,000 (for Subject

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<PAGE>   125



Company and the Subject Company Subsidiaries on a consolidated basis) except in
the ordinary course of the business of the Subject Company Subsidiaries
consistent with past practices (which shall include, without limitation, for the
Subject Company Subsidiaries that are depository institutions, creation of
deposit liabilities, purchases of federal funds, advances from the Federal
Reserve Bank or Federal Home Loan Bank, and entry into repurchase agreements
fully secured by U.S. government or agency securities), or impose, or suffer the
imposition, on any material Asset of Subject Company or any of the Subject
Company Subsidiaries of any Lien or permit any such Lien to exist (other than in
connection with deposits, repurchase agreements, bankers acceptances, "treasury
tax and loan" accounts established in the ordinary course of business and the
satisfaction of legal requirements in the exercise of trust powers and Liens in
effect as of the date hereof that are disclosed in the Subject Company
Disclosure Memorandum); or

                  (c)      repurchase, redeem, or otherwise acquire or exchange
(other than exchanges in the ordinary course under employee benefit plans),
directly or indirectly, any shares, or any securities convertible into any
shares, of the capital stock of Subject Company or any of the Subject Company
Subsidiaries, or declare or pay any dividend or make any other distribution in
respect of Subject Company's capital stock, provided that Subject Company may
(to the extent legally and contractually permitted to do so), but shall not be
obligated to, declare and pay regular quarterly cash dividends on the shares of
Subject Company Common Stock at a rate not in excess of $1.85 per share, with
usual and regular record and payment dates in accordance with past practice,
provided, that, notwithstanding the provisions of Section 1.3, the Parties shall
cooperate in selecting the Effective Time to ensure that, with respect to the
quarterly period in which the Effective Time occurs, the holders of Subject
Company Common Stock do not become entitled to receive both a dividend in
respect of their Subject Company Common Stock and a dividend in respect of
Parent Common Stock or fail to be entitled to receive any dividend; or

                  (d)      except for this Agreement and pursuant to the Subject
Company Stock Agreements, issue, sell, pledge, encumber, authorize the issuance
of, enter into any Contract to issue, sell, pledge, encumber, or authorize the
issuance of, or otherwise permit to become outstanding, any additional shares of
common stock or any other capital stock of Subject Company or any Subject
Company Subsidiary, or any stock appreciation rights, or any option, warrant,
conversion, or other Right to acquire any such stock, or any security
convertible into any such stock; or

                  (e)      adjust, split, combine or reclassify any capital
stock of Subject Company or any of the Subject Company Subsidiaries or issue or
authorize the issuance of any other securities in respect of or in substitution
for shares of Subject Company Common Stock, or sell, lease, mortgage or
otherwise dispose of or otherwise encumber any shares of capital stock of any
Subject Company Subsidiary (unless any such shares of stock are sold or
otherwise transferred to another Subject Company Subsidiary) or any Asset having
a book value in excess of $50,000 other than in the ordinary course of business
for reasonable and adequate consideration; or

                  (f)      except for purchases of investment securities
acquired in the ordinary course of business consistent with past practice,
purchase any securities or make any material investment, either by purchase of
stock or securities, contributions to capital, Asset transfers, or purchase of
any Assets, in any Person other than a wholly-owned Subsidiary of Subject
Company, or otherwise acquire direct or indirect control over any Person, other
than in connection with (i) foreclosures in the ordinary course of business,
(ii) acquisitions of control by a depository institution Subsidiary in its
fiduciary capacity, or (iii) the creation of new wholly-owned Subsidiaries
organized to conduct or continue activities otherwise permitted by this
Agreement; or

                  (g) grant any increase in compensation or benefits to the
employees or officers of Subject Company or the Subject Company Subsidiaries,
except in the ordinary course of business consistent with past practice or as
required by Law; pay any severance or termination pay or any bonus other than
pursuant to written policies or written Contracts in effect on the date of this
Agreement; enter into or amend any severance agreements with officers of Subject
Company or the Subject Company Subsidiaries; grant any material increase in fees
or other increases in compensation or other benefits to directors of Subject
Company or the Subject Company Subsidiaries; or voluntarily accelerate the
vesting of any stock options or other stock-based compensation or employee
benefits

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<PAGE>   126




(other than the acceleration of vesting which occurs under a benefit plan upon a
change of control of Subject Company); or

                  (h)      enter into or amend any employment Contract between
Subject Company or any Subject Company Subsidiary and any Person (unless such
amendment is required by Law) that Subject Company does not have the
unconditional right to terminate without Liability (other than Liability for
services already rendered), at any time on or after the Effective Time; or

                  (i)      adopt any new employee benefit plan of Subject
Company or the Subject Company Subsidiaries or terminate or withdraw from, or
make any material change in or to, any existing employee benefit plans of
Subject Company or any of the Subject Company Subsidiaries, other than any such
change that is required by Law or that, in the opinion of counsel, is necessary
or advisable to maintain the tax qualified status of any such plan, nor shall
Subject Company or any Subject Company Subsidiary make any distributions from
such employee benefit plans, except as required by Law, by the terms of such
plans, or in a manner consistent with past practices with respect to the
applicable plan; or

                  (j)      make any material change in any Tax or accounting
methods or systems of internal accounting controls, except as may be appropriate
to conform to changes in Tax Laws or regulatory accounting requirements or GAAP;
or

                  (k)      commence any Litigation other than in accordance with
past practice, settle any Litigation involving any Liability of Subject Company
or any Subject Company Subsidiary for material money damages or restrictions
upon the operations of Subject Company or any Subject Company Subsidiary; or

                  (l)      except in the ordinary course consistent with past
practice, enter into, modify, amend, or terminate any material Contract
(excluding any loan Contract) or waive, release, compromise, or assign any
material rights or claims.

         7.3      Covenants of Parent. From the date of this Agreement until the
earlier of the Effective Time or the termination of this Agreement, Parent
covenants and agrees that it shall (i) continue to conduct its business and the
business of the Parent Subsidiaries in a manner designed in its reasonable
judgment to enhance the long-term value of the Parent Common Stock and the
business prospects of Parent and the Parent Subsidiaries, and (ii) take no
action which would (a) materially adversely affect the ability of any Party to
obtain any Consents required for the transactions contemplated hereby without
imposition of a condition or restriction of the type referred to in the last
sentence of Section 9.1(b) of this Agreement or prevent the transactions
contemplated hereby, including the Merger, from qualifying as a reorganization
within the meaning of Section 368(a) of the Internal Revenue Code, or (b)
materially adversely affect the ability of any Party to perform its covenants
and agreements under this Agreement; and (iii) cause to be voted all of the
shares of Merger Subsidiary common stock it owns in favor of the Merger. Parent
further agrees to use its reasonable efforts to consummate the Merger on or
prior to December 31, 1998; provided, however, this covenant shall not be
construed as requiring Parent to take any action, or refuse to take any action,
which it reasonably believes to be in the long-term best interest of Parent and
its Subsidiaries, or to submit or agree to conditions or commitments requested
or required by Regulatory Authorities to which Parent would not otherwise agree
or commit.

         7.4      Adverse Changes in Condition. Each Party agrees to give
written notice promptly to the other Party upon becoming aware of the occurrence
or impending occurrence of any event or circumstance relating to it or any of
its Subsidiaries which (i) is reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on it or (ii) would cause or constitute a
material breach of any of its representations, warranties, or covenants
contained herein or which would prevent the satisfaction of the conditions
precedent set forth in Article 9 of this Agreement, and to use its reasonable
efforts to prevent or promptly to remedy the same.

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<PAGE>   127




         7.5      Reports. Each Party and its Subsidiaries shall file all
reports required to be filed by it with Regulatory Authorities between the date
of this Agreement and the Effective Time and, to the extent permitted by Law,
shall deliver to the other Party copies of all such reports promptly after the
same are filed. If financial statements are contained in any such reports filed
with the SEC, such financial statements will fairly present the consolidated
financial position of the entity filing such statements as of the dates
indicated and the consolidated results of operations, changes in shareholders'
equity, and cash flows of such entity for the periods then ended in accordance
with GAAP (subject in the case of interim financial statements to normal
recurring year end adjustments that are not material). As of their respective
dates, such reports filed with the SEC will comply in all material respects with
the Securities Laws and will not contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading. Any financial statements contained in any other
reports to another Regulatory Authority shall be prepared in accordance with
Laws applicable to such reports.

                                    ARTICLE 8
                              ADDITIONAL AGREEMENTS

         8.1      Registration Statement; Proxy Statement; Shareholder Approval.
Parent shall prepare and file the Registration Statement, of which the Subject
Company Proxy Statement shall form a part, with the SEC, and use its reasonable
efforts to cause the Registration Statement to become effective under the 1933
Act and take any action required to be taken under the applicable state Blue Sky
or securities Laws in connection with the issuance of the shares of Parent
Common Stock upon consummation of the Merger. Subject Company shall furnish all
information concerning it and the holders of its capital stock as Parent may
reasonably request in connection with such action. Subject Company shall call
the Subject Company Shareholders' Meeting, to be held as soon as reasonably
practicable after the Registration Statement is declared effective by the SEC,
for the purpose of voting upon approval of this Agreement and the Plan of Merger
and such other related matters as it deems appropriate. In connection with the
Subject Company Shareholders' Meeting, (i) the Board of Directors of Subject
Company shall recommend (subject to compliance with its fiduciary duties as
advised by counsel) to its shareholders the approval of the Merger, and (ii) the
Board of Directors and officers of Subject Company (subject to compliance with
its or their fiduciary duties as advised by counsel) shall use their reasonable
efforts to obtain shareholder approval of the Merger.

         8.2      Exchange Listing. Parent shall use its reasonable efforts to
list, prior to the Effective Time, on the NYSE, subject to official notice of
issuance, the shares of Parent Common Stock to be issued to the holders of
Subject Company Common Stock pursuant to the Merger, and Parent shall give all
notices and make all filings with the NYSE required in connection with the
transactions contemplated herein.

         8.3      Applications. Parent shall prepare and file, and Subject
Company shall cooperate in the preparation and, where appropriate, filing of,
applications with all Regulatory Authorities having jurisdiction over the
transactions contemplated by this Agreement seeking the requisite Consents
necessary to consummate the transactions contemplated by this Agreement. At
least five days prior to each filing, Parent shall provide Subject Company and
its counsel with copies of such applications. Each of the Parties shall deliver
to each of the other Parties copies of all filings, correspondence and orders
sent by such Party to and copies of all filings, correspondence and orders
received by such Party from all Regulatory Authorities in connection with the
transactions contemplated hereby as soon as practicable upon their becoming
available.

         8.4      Filings With State Offices. Upon the terms and subject to the
conditions of this Agreement, Parent, Merger Subsidiary and Subject Company each
agree to execute and file Articles of Merger with the Secretary of State of the
State of Tennessee and the Secretary of State of the Commonwealth of Kentucky in
connection with the Closing.

         8.5      Agreement as to Efforts to Consummate. Subject to the terms
and conditions of this Agreement, each Party agrees to use, and to cause its
Subsidiaries to use, its reasonable efforts to take, or cause to be taken, all
actions, and to do, or cause to be done, all things necessary, proper, or
advisable under applicable Laws to

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consummate and make effective, as soon as practicable after the date of this
Agreement, the transactions contemplated by this Agreement, including, without
being limited to, using its reasonable efforts to lift or rescind any Order
adversely affecting its ability to consummate the transactions contemplated
herein and to cause to be satisfied the conditions referred to in Article 9 of
this Agreement. Each Party shall use, and shall cause each of its Subsidiaries
to use, its reasonable efforts to obtain all Consents necessary or desirable for
the consummation of the transactions contemplated by this Agreement.

         8.6      Investigation and Confidentiality. (a) Prior to the Effective
Time, each Party shall keep the other Parties advised of all material
developments relevant to its business and to consummation of the Merger and
shall permit the other Parties to make or cause to be made such investigation of
the business and properties of it and its Subsidiaries and of their respective
financial and legal conditions as any other Party reasonably requests, provided
that such investigation shall be reasonably related to the transactions
contemplated hereby and shall not interfere unnecessarily with normal
operations. No Party shall be required to provide access to or to disclose
information where such access or disclosure would violate or prejudice the
rights of such Party's customers, jeopardize any attorney-client privilege or
contravene any Law, rule, regulation, Order, judgment, decree, fiduciary duty or
binding agreement entered into prior to the date of this Agreement. The Parties
will make appropriate substitute disclosure arrangements under circumstances in
which the restrictions of the preceding sentence apply. No investigation by a
Party or its respective Representatives shall affect the representations and
warranties of any other Party.

                  (b)      Each Party will hold, and will cause its respective
Affiliates and their respective officers, directors, employees, agents,
consultants, and other representatives to hold, in strict confidence, unless
compelled to disclose by judicial or administrative process (including without
limitation in connection with obtaining the necessary Consents of Regulatory
Authorities) or by other requirements of Law, all confidential documents and
confidential or proprietary information concerning the other Parties gathered
from the other Parties, or their respective officers, directors, employees,
agents, consultants or Representatives, pursuant to this Agreement, except to
the extent that such documents or information can be shown to have been (a)
previously lawfully known by the Party receiving such documents or information,
(b) in the public domain through no fault of such receiving Party, or (c) later
acquired by the receiving party from other sources not themselves bound by, and
in breach of, a confidentiality agreement. Except as provided in Sections 8.1,
8.2 and 8.3 hereof, no Party will disclose or otherwise provide any such
confidential or proprietary documents or information to any other Person, except
to the Party's auditors, Representatives and other consultants and advisors who
need such documents or information in connection with this Agreement and the
transactions contemplated hereby, and the Parties agree to cause each of the
foregoing to be subject to and bound by the confidentiality provisions hereof.

                  (c)      Subject Company shall use its reasonable efforts to
exercise its rights under confidentiality agreements entered into with Persons
which were considering an Acquisition Proposal with Subject Company to preserve
the confidentiality of the information relative to Subject Company and its
Subsidiaries provided to such Persons and their Affiliates and Representatives.

         8.7      Press Releases. Prior to the Effective Time, Subject Company
and Parent shall consult with each other as to the form and substance of any
press release or other public disclosure materially related to this Agreement or
any other transaction contemplated hereby; provided, that nothing in this
Section 8.7 shall be deemed to prohibit any Party from making any disclosure
which its counsel deems necessary or advisable in order to satisfy such Party's
disclosure obligations imposed by Law.

         8.8      Certain Actions. (a) Except with respect to this Agreement and
the transactions contemplated hereby, after the date of this Agreement, neither
Subject Company, the Subject Company Subsidiaries nor any Representatives
thereof shall directly or indirectly solicit any Acquisition Proposal by any
Person. Except to the extent necessary to comply with the fiduciary duties of
Subject Company's Board of Directors as advised by counsel, Subject Company, the
Subject Company Subsidiaries, or Representatives thereof shall not furnish any
non-public information that it is not legally obligated to furnish, negotiate
with respect to, or enter into any Contract with respect to, any Acquisition
Proposal, but Subject Company may communicate information about such an
Acquisition

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<PAGE>   129



Proposal to its shareholders if and to the extent that it is required to do so
in order to comply with its legal obligations as advised by counsel. Subject
Company shall promptly notify Parent orally and in writing in the event that it
receives any Acquisition Proposal or inquiry related thereto. Subject Company
shall (i) immediately cease and cause to be terminated any existing activities,
discussions, or negotiations with any Persons conducted heretofore with respect
to any of the foregoing, and (ii) direct and use its reasonable efforts to cause
all of its Representatives not to engage in any of the foregoing.

                  (b)      As a condition of and as an inducement to Parent's
entering into this Agreement, Subject Company covenants, acknowledges, and
agrees that it shall be a specific, absolute, and unconditionally binding
condition precedent to Subject Company's entering into a letter of intent,
agreement in principle, or definitive agreement (whether or not considered
binding, non-binding, conditional or unconditional) with any third party with
respect to an Acquisition Proposal, or supporting or indicating an intent to
support an Acquisition Proposal, other than this Agreement and the transactions
contemplated in this Agreement, regardless of whether Subject Company has
otherwise complied with the provisions of Section 8.8(a) hereof, that Subject
Company or such third party which is a party of the Acquisition Proposal shall
have paid Parent, as liquidated damages, the sum of Three Million Dollars
($3,000,000), which sum represents the (i) direct costs and expenses (including,
but not limited to, fees and expenses incurred by Parent's financial or other
consultants, printing costs, investment bankers, accountants, and counsel)
incurred by or on behalf of Parent in negotiating and undertaking to carry out
the transactions contemplated by this Agreement; and (ii) indirect costs and
expenses of Parent in connection with the transactions contemplated by this
Agreement, including Parent's management time devoted to negotiation and
preparation for the transactions contemplated by this Agreement; and (iii)
Parent's loss as a result of the transactions contemplated by this Agreement not
being consummated. Accordingly, Subject Company hereby stipulates and covenants
that prior to Subject Company's entering into a letter of intent, agreement in
principle, or definitive agreement, (whether binding or non-binding, conditional
or unconditional) with any third party with respect to an Acquisition Proposal
or supporting or indicating an intent to support an Acquisition Proposal, either
Subject Company or such third party shall have paid to Parent the amount set
forth above in immediately available funds to satisfy the specific, absolute,
and unconditionally binding condition precedent imposed by this Section 8.8.
Notwithstanding anything to the contrary in this Section 8.8(b), in the event
such Acquisition Proposal should be the result of a hostile takeover of Subject
Company, any sums due Parent hereunder shall be paid only at the closing of the
transactions set forth in such Acquisition Proposal. Parent acknowledges that
under no circumstances shall any officer or director of Subject Company, (unless
such officer or director shall have an interest in a potential acquiring party
in any Acquisition Proposal) be held personally liable to Parent for any amount
of the foregoing payment. On payment of such amount to Parent, Parent shall have
no cause of action or claim (either in law or equity) whatsoever against Subject
Company, or any officer of director of Subject Company, with respect to or in
connection with such Acquisition Proposal or this Agreement.

                  (c)      The requirements, conditions, and obligations imposed
by Section 8.8(b) shall continue in full force and effect from the date of this
Agreement until the earlier of (i) the Effective Time; (ii) September 30, 1999;
or (iii) the date on which this Agreement shall have been terminated (A)
mutually by the Parties pursuant to Section 10.1(a) of this Agreement; (B) by
Subject Company pursuant to Section 10.1(b) or 10.1(c) of this Agreement; (C) by
Subject Company pursuant to Section 10.1(e), unless the failure to consummate
the transactions contemplated by this Agreement by March 31, 1999 results from
or is related to pending or threatened Litigation arising out of or in
connection with the Merger or an Acquisition Proposal related to Subject Company
or any Subject Company Subsidiary, in which case the date shall be extended to
that date which is thirty (30) days after the final termination of such
Litigation or threatened Litigation; or (D) by either Party pursuant to Section
10.1(d)(i) of this Agreement, after which time all of the requirements,
conditions and obligations imposed by Section 8.8(b) shall lapse and be of no
further effect.

         8.9      Tax Treatment. Each of the Parties undertakes and agrees to
use its reasonable efforts to cause the Merger, and to take no action which
would cause the Merger not, to qualify for treatment as a "reorganization"
within the meaning of Section 368(a) of the Internal Revenue Code for federal
income tax purposes.


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<PAGE>   130




         8.10     Agreement of Affiliates. Subject Company has disclosed in
Section 8.10 of the Subject Company Disclosure Memorandum each Person whom it
reasonably believes is an "affiliate" of Subject Company as of the date of this
Agreement for purposes of Rule 145 under the 1933 Act. Subject Company shall use
its reasonable efforts to cause each such Person to deliver to Parent not later
than 40 days prior to the Effective Time, a written agreement, substantially in
the form of Exhibit 2, providing that such Person will not sell, pledge,
transfer, or otherwise dispose of the shares of Subject Company Common Stock
held by such Person except as contemplated by such agreement or by this
Agreement and will not sell, pledge, transfer, or otherwise dispose of the
shares of Parent Common Stock to be received by such Person upon consummation of
the Merger except in compliance with applicable provisions of the 1933 Act and
the rules and regulations thereunder and until such time as financial results
covering at least 30 days of combined operations of Parent and Subject Company
have been published within the meaning of Section 201.01 of the SEC's
Codification of Financial Reporting Policies. If the Merger will qualify for
pooling-of-interests accounting treatment, shares of Parent Common Stock issued
to such affiliates of Subject Company in exchange for shares of Subject Company
Common Stock shall not be transferable until such time as financial results
covering at least 30 days of combined operations of Parent and Subject Company
have been published within the meaning of Section 201.01 of the SEC's
Codification of Financial Reporting Policies, regardless of whether each such
affiliate has provided the written agreement referred to in this Section 8.10
(and Parent shall be entitled to place restrictive legends upon certificates for
shares of Parent Common Stock issued to affiliates of Subject Company pursuant
to this Agreement to enforce the provisions of this Section 8.10). Parent shall
not be required to maintain the effectiveness of the Registration Statement
under the 1933 Act for the purposes of resale of Parent Common Stock by such
affiliates.

         8.11     Employee Benefits and Contracts. Following the Effective Time,
Parent shall provide to officers and employees of the Subject Company and any
Subject Company Subsidiary, employee benefits under employee benefit and welfare
plans of Parent or the Parent Subsidiaries on terms and conditions which when
taken as a whole are substantially similar to those currently provided by Parent
or a Parent Subsidiary to their similarly situated officers and employees. For
purposes of participation, vesting, and benefit accrual under such employee
benefit plans, the service of the employees of the Subject Company and any
Subject Company Subsidiary prior to the Effective Time shall be treated as
service with Parent or a Parent Subsidiary participating in such employee
benefit plans.

         8.12     Indemnification. (a) After the Effective Time, Parent shall
indemnify, defend and hold harmless the present and former directors, officers,
employees, and agents of the Subject Company and any Subject Company Subsidiary
(each, an "Indemnified Party") (including any person who becomes a director,
officer, employee, or agent prior to the Effective Time) against all Liabilities
(including reasonable attorneys' fees, and expenses, judgments, fines and
amounts paid in settlement) arising out of actions or omissions occurring at or
prior to the Effective Time (including the transactions contemplated by this
Agreement) to the full extent permitted under any of Tennessee Law, Subject
Company's Articles of Incorporation or Bylaws as in effect on the date hereof,
including provisions relating to advances of expenses incurred in the defense of
any Litigation. Without limiting the foregoing, in any case in which approval by
Parent is required to effectuate any indemnification, Parent shall direct, at
the election of the Indemnified Party, that the determination of any such
approval shall be made by independent counsel mutually agreed upon between
Parent and the Indemnified Party.

                  (b)      Any Indemnified Party wishing to claim
indemnification under paragraph (a) of this Section 8.12, upon learning of any
such Liability or Litigation, shall promptly notify Parent thereof, provided
that the failure so to notify shall not affect the obligations of Parent under
this Section 8.12 unless and to the extent such failure materially increases
Parent's Liability under this Section 8.12. In the event of any such Litigation
(whether arising before or after the Effective Time), (i) Parent or the
Surviving Corporation shall have the right to assume the defense thereof and
Parent shall not be liable to such Indemnified Parties for any legal expenses of
other counsel or any other expenses subsequently incurred by such Indemnified
Parties in connection with the defense thereof, except that if Parent or the
Surviving Corporation elects not to assume such defense or counsel for the
Indemnified Parties advises that there are substantive issues which raise
conflicts of interest between Parent or the Surviving Corporation and the
Indemnified Parties or between the Indemnified Parties, the Indemnified Parties
may retain counsel satisfactory

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<PAGE>   131



to them, and Parent or the Surviving Corporation shall pay all reasonable fees
and expenses of such counsel for the Indemnified Parties promptly as statements
therefor are received; provided, that Parent shall be obligated pursuant to this
paragraph (b) to pay for only one firm of counsel for all Indemnified Parties in
any jurisdiction, (ii) the Indemnified Parties will cooperate in the defense of
any such Litigation, and (iii) neither Parent nor the Surviving Corporation
shall be liable for any settlement effected without its prior written consent or
have any obligation hereunder to any Indemnified Party when and if a court of
competent jurisdiction shall determine, and such determination shall have become
final, that the indemnification of such Indemnified Party in the manner
contemplated hereby is prohibited by applicable Law.

                  (c)      If Parent or any of its successors or assigns shall
consolidate with or merge into any other Person and shall not be the continuing
or surviving Person of such consolidation or merger, or shall transfer all or
substantially all of its Assets to any Person, then and in each case, proper
provision shall be made so that the successors and assigns of Parent shall
assume the obligations set forth in this Section 8.12.


                                    ARTICLE 9
                CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE

         9.1      Conditions to Obligations of Each Party. The respective
obligations of each Party to perform this Agreement and consummate the Merger
and the other transactions contemplated hereby are subject to the satisfaction
of the following conditions, unless waived by both Parties pursuant to Section
11.6 of this Agreement:

                  (a)      Shareholder Approval. The shareholders of Subject
Company shall have approved this Agreement and the consummation of the
transactions contemplated hereby and thereby, including the Merger, as and to
the extent required by Law, or by the provisions of any governing instruments
(without regard to any shares which are voted pursuant to irrevocable proxies,
the validity of which has been contested by the underlying owner, unless the
underlying owner has given written instructions with respect to the voting of
such shares in connection with this Agreement).

                  (b)      Regulatory Approvals. All Consents of, filings and
registrations with, and notifications to, all Regulatory Authorities required
for consummation of the Merger shall have been obtained or made and shall be in
full force and effect and all waiting periods required by Law shall have
expired. No Consent obtained from any Regulatory Authority which is necessary to
consummate the transactions contemplated hereby shall be conditioned or
restricted in any manner deemed to be unreasonable by Parent.

                  (c)      Legal Proceedings. No court or governmental or
regulatory authority of competent jurisdiction shall have enacted, issued,
promulgated, enforced, or entered by Law or Order (whether temporary,
preliminary, or permanent) or taken any other action which prohibits, restricts,
or makes illegal consummation of the transactions contemplated by this
Agreement.

                  (d)      Registration Statement. The Registration Statement
shall be effective under the 1933 Act, no stop orders suspending the
effectiveness of the Registration Statement shall have been issued, no action,
suit, proceeding, or investigation by the SEC to suspend the effectiveness
thereof shall have been initiated and be continuing, and all necessary approvals
under state securities Laws or the 1933 Act or 1934 Act relating to the issuance
or trading of the shares of Parent Common Stock issuable pursuant to the Merger
shall have been received.

                  (e)      Exchange Listing. The shares of Parent Common Stock
issuable pursuant to the Merger shall have been approved for listing on the
NYSE, subject to official notice of issuance.

                  (f)      Tax Matters. Parent and Subject Company shall have
received a written opinion of counsel from Wyatt, Tarrant & Combs, in form and
substance reasonably satisfactory to Parent and Subject Company, substantially
to the effect that (i) the Merger will constitute a reorganization within the
meaning of Section 368(a)

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<PAGE>   132




of the Internal Revenue Code, (ii) Parent, Merger Subsidiary and Subject Company
will each be "a party to a reorganization" within the meaning of Section 368(b)
of the Internal Revenue Code, (iii) no gain or loss will be recognized by the
shareholders of Subject Company who exchange all of their Subject Company Common
Stock solely for Parent Common Stock pursuant to the Merger (except with respect
to cash received in lieu of a fractional share interest in Parent Common Stock),
(iv) the tax basis of the Parent Common Stock received by shareholders of
Subject Company who exchange Subject Company Common Stock solely for Parent
Common Stock in the Merger will be the same as the tax basis of the Subject
Company Common Stock surrendered in exchange therefor (reduced by any amount
allocable to a fractional share interest for which cash is received), (v) the
holding period of the Parent Common Stock received by shareholders of Subject
Company in the Merger will include the period during which the shares of Subject
Company Common Stock surrendered in exchange therefor were held, provided such
Subject Company Common Stock was held as a capital asset by the holder of such
Subject Company Common Stock at the Effective Time, and (vi) neither Subject
Company nor Parent will recognize gain or loss as a consequence of the Merger.
In rendering such Tax Opinion, such counsel shall require and be entitled to
rely upon representations and covenants of officers of Parent, Subject Company,
shareholders of Subject Company and others reasonably satisfactory in form and
substance to such counsel.

         9.2      Conditions to Obligations of Parent. The obligations of Parent
to perform this Agreement and consummate the Merger and the other transactions
contemplated hereby are subject to the satisfaction of the following conditions,
unless waived by Parent pursuant to Section 11.6(a) of this Agreement:

                  (a)      Representations and Warranties. For purposes of this
Section 9.2(a), the accuracy of the representations and warranties of Subject
Company set forth in this Agreement shall be assessed as of the date of this
Agreement and as of the Effective Time with the same effect as though all such
representations and warranties had been made immediately prior to the Effective
Time (provided that representations and warranties which are confined to a
specific date shall speak only as of such date). The representations and
warranties of Subject Company set forth in Section 5.3 of this Agreement shall
each be true and correct. The representations and warranties of Subject Company
in Sections 5.19 and 5.20 shall be true and correct in all material respects.
There shall not exist inaccuracies in the representations and warranties of
Subject Company set forth in this Agreement (including the representations and
warranties set forth in Sections 5.3, 5.19 and 5.20) such that the aggregate
effect of such inaccuracies has, or is reasonably likely to have, a Material
Adverse Effect on Subject Company, provided that, for purposes of this sentence
only, those representations and warranties which are qualified by references to
"material" or "Material Adverse Effect" or "Knowledge" shall be deemed not to
include such qualifications.

                  (b)      Performance of Agreements and Covenants. Each and all
of the agreements and covenants of Subject Company to be performed and complied
with pursuant to this Agreement and the other agreements contemplated hereby
prior to the Effective Time shall have been duly performed and complied with in
all material respects.

                  (c)      Certificates. Subject Company shall have delivered to
Parent (i) a certificate, dated as of the Effective Time and signed on its
behalf by its chief executive officer and its chief financial officer or
treasurer, to the effect that the conditions of its obligations set forth in
Sections 9.2(a) and 9.2(b) of this Agreement have been satisfied, and (ii)
certified copies of resolutions duly adopted by Subject Company's Board of
Directors and shareholders evidencing the taking of all corporate action
necessary to authorize the execution, delivery, and performance of this
Agreement, and the consummation of the transactions contemplated hereby, all in
such reasonable detail as Parent shall request.

                  (d)      Parent Pooling Letter. Parent shall have received a
letter, dated as of the Effective Time, addressed to it and in a form reasonably
acceptable to it, from Price Waterhouse\Coopers to the effect that the Merger
will qualify for pooling-of-interests accounting treatment.

                  (e)      Consents and Approvals. Subject Company shall have
obtained any and all Consents required for consummation of the Merger (other
than those set forth in Section 9.1(b) of this Agreement) or for the preventing

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<PAGE>   133
of any Default under any Contract or Permit of such Party which, if not obtained
or made, is reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on Subject Company or Parent.

                  (f)      Employment Agreement. James D. Rickard shall have
executed and delivered at Closing an employment agreement substantially similar
to the form of agreement attached hereto as Exhibit 3.

                  (g)      Legal Opinion. Subject Company shall have delivered
to Parent an opinion of counsel, dated as of the Closing Date, addressed to and
in form and substance reasonably satisfactory to Parent, to the effect that:

                                    (i)      Subject Company is a corporation
duly organized, validly existing, and in good standing under the laws of the
Commonwealth of Kentucky;

                                    (ii)     This Agreement, including the Plan
of Merger attached hereto as Exhibit 1, has been duly and validly authorized,
executed and delivered on behalf of Subject Company, and (assuming this
Agreement is a binding obligation of Parent and Merger Subsidiary) constitute a
valid and binding obligation of Subject Company, enforceable in accordance with
its terms, subject as to enforceability to applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and subject to the application of equitable
principles and judicial discretion; and

                                    (iii)    The execution, delivery and
performance of this Agreement and the Plan of Merger, and the consummation of
the transactions contemplated herein and therein, including the Merger, have
been duly and validly authorized by all necessary corporate and shareholder
action in respect thereof on the part of Subject Company.

                  (h)      Non-Compete Agreements. Each of the directors of
Subject Company shall have entered into a Non-Compete Agreement
substantially in the form of Exhibit 4 attached hereto. For directors of either
Subject Company or either Bank, but who are not also officers of one of the
Banks, the term shall be for one year after their termination of service as a
director of Subject Company or one of the Banks. For those directors who are
also officers of one or both of the Banks, the term shall be for two years after
their termination of service as a director or officer, whichever is the latter
date. Noncompetition provisions for Mr. Rickard shall be as contained in his
proposed employment agreement; provided, however, that should Mr. Rickard refuse
to enter into an employment agreement substantially similar to Exhibit 3 hereto
and Parent waive that condition to its obligation to close, this condition shall
apply to Mr. Rickard.

                  (i)      No Material Adverse Effect. Without intending to
limit in any manner the provisions of Section 9.2(a) hereof, there shall have
been no events, changes or occurrences after the date of this Agreement which
have had, individually or in the aggregate, a Material Adverse Effect on Subject
Company.

         9.3      Conditions to Obligations of Subject Company. The obligations
of Subject Company to perform this Agreement and consummate the Merger and the
other transactions contemplated hereby are subject to the satisfaction of the
following conditions, unless waived by Subject Company pursuant to Section
11.6(b) of this Agreement.

                  (a)      Representations and Warranties. For purposes of this
Section 9.3(a), the accuracy of the representations and warranties of Parent set
forth in this Agreement shall be assessed as of the date of this Agreement and
as of the Effective Time with the same effect as though all such representations
and warranties had been made immediately prior to the Effective Time (provided
that representations and warranties which are confined to a specified date shall
speak only as of such date). The representations and warranties of Parent set
forth in Section 6.14(i) and (ii) shall be true and correct in all material
respects. There shall not exist inaccuracies in the representations and
warranties of Parent set forth in this Agreement (including the representations
and warranties set forth in Section 6.14(i) and (ii)) such that the aggregate
effect of such inaccuracies has, or is reasonably likely

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<PAGE>   134



to have, a Material Adverse Effect on Parent; provided that, for purposes of
this sentence only, those representations and warranties which are qualified by
references to "material" or "Material Adverse Effect" or "Knowledge" shall be
deemed not to include such qualifications.

                  (b)      Performance of Agreements and Covenants. Each and all
of the agreements and covenants of Parent and/or Merger Subsidiary to be
performed and complied with by Parent and/or Merger Subsidiary pursuant to this
Agreement and the other agreements contemplated hereby prior to the Effective
Time shall have been duly performed and complied with in all material respects.

                  (c)      Certificates. Parent shall have delivered to Subject
Company (i) a certificate, dated as of the Effective Time and signed on its
behalf by its chief executive officer and its chief financial officer or
treasurer, to the effect that the conditions of its obligations set forth in
Sections 9.3(a) and 9.3(b) of this Agreement have been satisfied, and (ii)
certified copies of resolutions duly adopted by Parent's or Merger Subsidiary's
Boards of Directors evidencing the taking of all corporate action necessary to
authorize the execution, delivery and performance of this Agreement, and the
consummation of the transactions contemplated hereby, including, but not limited
to, actions of Parent as sole shareholder of Merger Subsidiary approving the
Merger, all in such reasonable detail as Subject Company shall request.

                  (d)      Consents and Approvals. Parent and/or Merger
Subsidiary shall have obtained any and all Consents required for consummation of
the Merger (other than those set forth in Section 9.1(b) of this Agreement) or
for the preventing of any Default under any Contract or Permit of such Party
which, if not obtained or made, is reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect on Parent.

                  (e)      Employment Agreement. James D. Rickard shall have
been offered an employment agreement substantially similar to the from of
agreement attached hereto as Exhibit 3.

                  (g)      Legal Opinion. Parent and Merger Subsidiary shall
have delivered to Subject Company an opinion of counsel, dated as of the Closing
Date, addressed to and in form and substance reasonably satisfactory to Subject
Company, to the effect that:

                                    (i)      Parent and Merger Subsidiary are
each a corporation duly organized, validly existing, and in good standing under
the laws of the State of Tennessee;

                                    (ii)     This Agreement, including the Plan
of Merger attached hereto as Exhibit 1, has been duly and validly authorized,
executed and delivered on behalf of Parent and Merger Subsidiary, and (assuming
this Agreement is a binding obligation of Subject Company) constitute a valid
and binding obligation of Parent and Merger Subsidiary, enforceable in
accordance with its terms, subject as to enforceability to applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the
enforcement of creditors' rights generally and subject to the application of
equitable principles and judicial discretion; and

                                    (iii)    The execution, delivery and
performance of this Agreement and the Plan of Merger, and the consummation of
the transactions contemplated herein and therein, including the Merger, have
been duly and validly authorized by all necessary corporate and shareholder
action in respect thereof on the part of Parent and Merger Subsidiary.

                  (h)      No Material Adverse Effect. Without intending to
limit in any manner the provisions of Section 9.2(a) hereof, there shall have
been no events, changes or occurrences after the date of this Agreement which
have had, individually or in the aggregate, a Material Adverse Effect on Parent.



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<PAGE>   135



                                   ARTICLE 10
                                   TERMINATION

         10.1     Termination. Notwithstanding any other provision of this
Agreement, and notwithstanding the approval of this Agreement by the
shareholders of Subject Company, this Agreement may be terminated and the Merger
abandoned at any time prior to the Effective Time:

                  (a)      By mutual consent of the Board of Directors of Parent
and the Board of Directors of Subject Company; or

                  (b)      By the Board of Directors of Parent or the Board of
Directors of Subject Company (provided that the terminating Party is not then in
breach of any representation or warranty contained in this Agreement under the
applicable standard set forth in Section 9.2(a) of this Agreement in the case of
Subject Company and Section 9.3(a) in the case of Parent or in material breach
of any covenant or other agreement contained in this Agreement) in the event of
an inaccuracy of any representation or warranty of the other Party contained in
this Agreement which cannot be or has not been cured within 30 days after the
giving of written notice to the breaching Party of such inaccuracy and which
inaccuracy would provide the terminating Party the ability to refuse to
consummate the Merger under the applicable standard set forth in Section 9.2(a)
of this Agreement in the case of Subject Company and Section 9.3(a) of this
Agreement in the case of Parent; or

                  (c)      By the Board of Directors of Parent or the Board of
Directors of Subject Company (provided that the terminating Party is not then in
breach of any representation or warranty contained in this Agreement under the
applicable standard set forth in Section 9.2(a) of this Agreement in the case of
Subject Company and Section 9.3(a) in the case of Parent or in material breach
of any covenant or other agreement contained in this Agreement) in the event of
a material breach by the other Party of any covenant or agreement contained in
this Agreement which cannot be or has not been cured within 30 days after the
giving of written notice to the breaching Party of such breach; or

                  (d)      By the Board of Directors of Parent or the Board of
Directors of Subject Company in the event (i) any Consent of any Regulatory
Authority required for consummation of the Merger and the other transactions
contemplated hereby shall have been denied by final non-appealable action of
such authority or if any action taken by such authority is not appealed within
the time limit for appeal, or (ii) the shareholders of Subject Company fail to
vote their approval of this Agreement and the transactions contemplated hereby
as required by the KBCA and this Agreement at the Subject Company Shareholders'
Meeting where the transactions were presented to such shareholders for approval
and voted upon; or

                  (e)      By the Board of Directors of Parent or the Board of
Directors of Subject Company in the event that the Merger shall not have been
consummated by March 31, 1999, if the failure to consummate the transactions
contemplated hereby on or before such date is not caused by any willful breach
of this Agreement by the Party electing to terminate pursuant to this Section
10.1(e) or should the failure to consummate by that date be due to or arising
out of Litigation with respect to any Acquisition Proposal to which the Parties,
or any of them, are a Party, then such date shall be extended until 45 days
after the final termination or resolution of such Litigation.

         10.2     Effect of Termination. In the event of the termination and
abandonment of this Agreement pursuant to Section 10.1 of this Agreement, this
Agreement and the Plan of Merger shall become void and have no effect, and none
of Parent, Merger Subsidiary or Subject Company or any of the officers or
directors of any of them shall have any liability of any nature whatsoever under
this Agreement, except that (i) the provisions of this Section 10.2, Section
8.6(b), Section 11.2 and Section 11.3 of this Agreement shall survive any such
termination and abandonment, (ii) Section 8.8 shall be governed by its terms;
and (iii) a termination pursuant to the terms of this Agreement shall not
relieve the breaching Party from Liability for any willful breach of a
representation, warranty, covenant, or agreement.

         10.3     Non-Survival of Representations and Covenants. The respective
representations, warranties, obligations, covenants, and agreements of the
Parties shall not survive the Effective Time except for those covenants and
agreements which by their terms apply in whole or in part after the Effective
Time.


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<PAGE>   136





                                   ARTICLE 11
                                  MISCELLANEOUS

         11.1     Definitions. (a) Except as otherwise provided herein, the
capitalized terms set forth below shall have the following meanings:

         "Acquisition Proposal" with respect to a Party shall mean any tender
offer or exchange offer or any proposal for a merger, acquisition of all of the
stock or assets of, or other business combination involving such Party or any of
its Subsidiaries or the acquisition of a substantial equity interest in, or a
substantial portion of the Assets of, such Party or any of its Subsidiaries.

         "Affiliate" of a Person shall mean any other Person, directly or
indirectly through one or more intermediaries, controlling, controlled by, or
under common control with such Person.

         "Agreement" shall mean this Agreement and the Exhibits delivered
pursuant hereto and incorporated herein by reference.

         "Articles of Merger" shall mean the Articles of Merger to be executed
by Parent, Merger Subsidiary and Subject Company and filed with the Secretary of
State of the State of Tennessee and the Secretary of State of the Commonwealth
of Kentucky relating to the Merger as contemplated by Section 1.1 of this
Agreement.

         "Assets" of a Person shall mean all of the assets, properties,
businesses, and rights of such Person of every kind, nature, character and
description, whether real, personal or mixed, tangible or intangible, accrued or
contingent, or otherwise, wherever located.

         "BHC Act" shall mean the federal Bank Holding Company Act of 1956, as
amended.

         "Closing Date" shall mean the date on which the Closing occurs.

         "Consent" shall mean any consent, approval, authorization, clearance,
exemption, waiver, or similar affirmation by any Person pursuant to any
Contract, Law, Order or Permit.

         "Contract" shall mean any legally binding written or oral agreement,
arrangement, authorization, commitment, contract, indenture, instrument, lease,
obligation, plan, practice, restriction, understanding, or undertaking of any
kind or character, or other document to which any Person is a party or that is
binding on any Person or its capital stock, Assets or business.

         "Default" shall mean (i) any breach or violation of or default under
any Contract, Order, or Permit, (ii) any occurrence of any event that with the
passage of time or the giving of notice or both would constitute a breach or
violation of or default under any Contract, Order, or Permit, or (iii) any
occurrence of any event that with or without the passage of time or the giving
of notice would give rise to a right to terminate or revoke, change the current
terms of, or renegotiate, or to accelerate, increase or impose any Liability
under, any Contract, Order or Permit.

         "Dissenting Shares" shall mean any shares of Subject Company Common
Stock with respect to which the record or beneficial holder has properly
perfected the holder's rights to dissent under Subtitle 13 of Chapter 27IB of
the KBCA.

         "Effective Time" shall have the meaning ascribed to such term in
Section 1.3 of this Agreement.

         "Environmental Laws" shall mean all Laws relating to pollution or
protection of human health or the environment (including ambient air, surface
water, ground water, land surface or subsurface strata) and which are


                            UPC/-S.E. Bancorp Page 31

<PAGE>   137




administered, interpreted or enforced by the United States Environmental
Protection Agency and state and local agencies with jurisdiction over, and
including common law in respect of, pollution or protection of the environment,
including the Comprehensive Environmental Response Compensation and Liability
Act, as amended, 42 U.S.C. 9601 et seq. ("CERCLA"), the Resource Conservation
and Recovery Act, as amended, 42 U.S.C. 6901 et seq.("RCRA"), and other Laws
relating to emissions, discharges, releases, or threatened releases of any
Hazardous Material, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport, or handling of any
Hazardous Material.

         "ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended.

         "ERISA Affiliate" shall mean any trade or business, whether or not
incorporated, that together with the entity under consideration would be deemed
a "single employer" within the meaning of section 4001(b) of ERISA.

         "Exchange Agent" shall have the meaning ascribed to such term in
Section 4.1 of this Agreement.

         "Exchange Ratio" shall have the meaning ascribed to such term in
Section 3.1(c) of this Agreement.

         "Exhibits" shall mean the Exhibits so marked, copies of which are
attached to this Agreement. Such Exhibits are hereby incorporated by reference
herein and made a part hereof.

         "FRB" shall mean the Board of Governors of the Federal Reserve System
or applicable Federal Reserve Bank.

         "GAAP" shall mean generally accepted accounting principles,
consistently applied during the periods involved.

         "Hazardous Material" shall mean (i) any hazardous substance, hazardous
material, hazardous waste, regulated substance, or toxic substance (as those
terms are defined by any applicable Environmental Laws) and (ii) any chemicals,
pollutants, contaminants, petroleum, petroleum products, or oil (and
specifically shall include asbestos requiring abatement, removal, or
encapsulation pursuant to the requirements of governmental authorities and any
polychlorinated biphenyls).

         "HSR Act" shall mean Section 7A of the Clayton Act, as added by Title
II of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and
the rules and regulations promulgated thereunder.

         "Indemnified Party" shall have the meaning ascribed to such term in
Section 8.12 of this Agreement.

         "Intellectual Property" shall mean copyrights, patents, trademarks,
service marks, service names, trade names, applications therefor, technology
rights and licenses, computer software (including any source or object codes
therefor or documentation relating thereto), trade secrets, franchises,
know-how, inventions, and other intellectual property rights.

         "Internal Revenue Code" shall mean the Internal Revenue Code of 1986,
as amended, and the rules and regulations promulgated thereunder.

         "KBCA" shall mean the Kentucky Business Corporation Act.

         "KDFI" shall mean the Department of Financial Institutions of the
Commonwealth of Kentucky.

         "Knowledge" as used with respect to a Person (including references to
such Person being aware of a particular matter) shall mean those facts that are
known by the Chairman, President, Chief Financial Officer, Chief Accounting
Officer, Chief Credit Officer, or General Counsel of such Person.


                            UPC/-S.E. Bancorp Page 32

<PAGE>   138





         "Law" shall mean any code, law, ordinance, regulation, reporting or
licensing requirement, rule, or statute applicable to a Person or its Assets,
Liabilities or business, including those promulgated, interpreted, or enforced
by any Regulatory Authority.

         "Liability" shall mean any direct or indirect, primary or secondary,
liability, indebtedness, obligation, penalty, cost, or expense (including costs
of investigation, collection, and defense), claim, deficiency, guaranty, or
endorsement of or by any Person (other than endorsements of notes, bills,
checks, and drafts presented for collection or deposit in the ordinary course of
business) of any type, whether accrued, absolute or contingent, liquidated or
unliquidated, matured or unmatured, or otherwise.

         "Lien" shall mean any conditional sale agreement, default of title,
easement, encroachment, encumbrance, hypothecation, infringement, lien,
mortgage, pledge, reservation, restriction, security interest, title retention,
or other security arrangement, or any adverse right or interest, charge, or
claim of any nature whatsoever of, on, or with respect to any property or
property interest, other than (i) Liens for current Taxes upon the assets or
properties of a Party or its Subsidiaries which are not yet delinquent, and (ii)
for depository institution Subsidiaries of a Party, pledges to secure deposits,
and other Liens incurred in the ordinary course of banking business.

         "Litigation" shall mean any action, arbitration, cause of action,
claim, complaint, criminal prosecution, demand letter, governmental or other
examination or investigation, hearing, inquiry, administrative or other
proceeding, or notice (written or oral) by any Person alleging potential
Liability or requesting information relating to or affecting a Party, its
business, its Assets (including Contracts related to it), or the transactions
contemplated by this Agreement, but shall not include regular, periodic
examinations of depository institutions and their Affiliates by Regulatory
Authorities.

         "Material Adverse Effect" on a Party shall mean an event, change, or
occurrence which, individually or together with any other event, change, or
occurrence, has a material adverse impact on (i) the financial condition,
business, or results of operations of such Party and its Subsidiaries, taken as
a whole, or (ii) the ability of such Party to perform its obligations under this
Agreement or to consummate the Merger or the other transactions contemplated by
this Agreement in accordance with applicable Law, provided that "Material
Adverse Effect" and "material adverse impact" shall not be deemed to include the
impact of (a) changes in banking and similar Laws of general applicability or
interpretations thereof by courts or governmental authorities, (b) changes in
GAAP or regulatory accounting principles generally applicable to banks and their
holding companies, (c) actions or omissions of a Party (or any of its
Subsidiaries) taken with the prior written consent of the other Party, (d)
changes in economic conditions or interest rates generally affecting financial
institutions, or (e) the direct effects of compliance with this Agreement and/or
the Supplemental Letter (including the expense associated with the vesting of
benefits under the various employee benefit plans of Subject Company as a result
of the Merger constituting a change of control) on the operating performance of
the Parties, including expenses incurred by the Parties in consummating the
transactions contemplated by the Agreement and/or the Supplemental Letter.

         "Merger" shall mean the merger of Subject Company with and into Merger
Subsidiary.

         "Merger Subsidiary" shall mean Union Planters Holding Corporation, a
wholly-owned subsidiary of Parent organized under the Laws of the State of
Tennessee.

         "Merger Subsidiary Common Stock" shall mean the $1.00 par value common
stock of Merger Subsidiary.

         "NASD" shall mean the National Association of Securities Dealers, Inc.

         "NYSE" shall mean the New York Stock Exchange, Inc.

         "1933 Act" shall mean the Securities Act of 1933, as amended.


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<PAGE>   139

         "1934 Act" shall mean the Securities Exchange Act of 1934, as amended.

         "Operating Property" shall mean any property owned by the Party in
question or by any of its Subsidiaries or in which such Party or Subsidiary
holds a security interest, and, where required by the context, includes the
owner or operator of such property, but only with respect to such property.

         "Order" shall mean any administrative decision or award, decree,
injunction, judgment, order, quasi-judicial decision or award, ruling, or writ
of any federal, state, local, or foreign or other court, arbitrator, mediator,
tribunal, administrative agency, or Regulatory Authority.

         "Parent" shall mean Union Planters Corporation, a Tennessee
corporation.

         "Parent Capital Stock" shall mean, collectively, the Parent Common
Stock, the Parent Preferred Stock and any other class or series of capital stock
of Parent.

         "Parent Common Stock" shall mean the $5.00 par value common stock of
Parent.

         "Parent Disclosure Memorandum" shall mean the written information
entitled "Parent Memorandum" delivered prior to the date of this Agreement to
Subject Company describing in reasonable detail the matters contained therein
and, with respect to each disclosure made therein, specifically referencing each
Section of this Agreement under which such disclosure is being made.

         "Parent Financial Statements" shall mean (i) the consolidated balance
sheets (including related notes and schedules, if any) of Parent as of March 31,
1998, and as of December 31, 1997 and 1996, and the related statements of
earnings, changes in shareholders' equity, and cash flows (including related
notes and schedules, if any) for the three months ended March 31, 1998, and for
each of the three years ended December 31, 1997, 1996 and 1995, as filed by
Parent in SEC Documents, and (ii) the consolidated balance sheets of Parent
(including related notes and schedules, if any) and related statements of
earnings, changes in shareholders' equity, and cash flows (including related
notes and schedules, if any) included in SEC Documents filed with respect to
periods ended subsequent to March 31, 1998.

         "Parent Preferred Stock" shall mean the no par value preferred stock of
Parent and shall include the (i) Series A Preferred Stock, and (ii) Series E 8%
Cumulative, Convertible Preferred Stock, of Parent ("Parent Series E Preferred
Stock").

         "Parent Rights" shall mean the preferred stock purchase rights issued
pursuant to the Parent Rights Agreement.

         "Parent Rights Agreement" shall mean that certain Rights Agreement,
dated January 19, 1989, between Parent and Union Planters Bank, National
Association, as Rights Agent.

         "Parent Subsidiaries" shall mean the Subsidiaries of Parent and any
corporation, bank, or other organization acquired as a Subsidiary of Parent in
the future and owned by Parent at the Effective Time.

         "Participation Facility" shall mean any facility or property in which
the Party in question or any of its Subsidiaries participates in the management
and, where required by the context, said term means the owner or operator of
such facility or property, but only with respect to such facility or property.

         "Party" shall mean Subject Company, Merger Subsidiary or Parent, and
"Parties" shall mean, collectively, Subject Company, Merger Subsidiary and
Parent.


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<PAGE>   140




         "Permit" shall mean any federal, state, local, and foreign governmental
approval, authorization, certificate, easement, filing, franchise, license,
notice, permit, or right to which any Person is a party or that is or may be
binding upon or inure to the benefit of any Person or its securities, Assets or
business.

         "Person" shall mean a natural person or any legal, commercial, or
governmental entity, such as, but not limited to, a corporation, general
partnership, joint venture, limited partnership, limited liability company,
trust, business association, group acting in concert, or any person acting in a
representative capacity.

         "Plan of Merger" shall mean the Plan of Merger of even date herewith
entered into by Parent, Merger Subsidiary and Subject Company, in the form of
Exhibit 1.

         "Registration Statement" shall mean the Registration Statement on Form
S-4, or other appropriate form, including any pre-effective or post-effective
amendments or supplements thereto, filed with the SEC by Parent under the 1933
Act with respect to the shares of Parent Common Stock to be issued to the
shareholders of Subject Company in connection with the transactions contemplated
by this Agreement.

         "Regulatory Authorities" shall mean, collectively, the FRB, the TDFI,
the KDFI, all state regulatory agencies having jurisdiction over any of the
Parties or their respective Subsidiaries, the NYSE, and the SEC.

         "Representative" shall mean any investment banker, financial advisor,
attorney, accountant, consultant, or other representative of a Person.

         "Rights" shall mean all arrangements, calls, commitments, Contracts,
options, rights to subscribe to, scrip, warrants, or other binding obligations
of any character whatsoever by which a Person is or may be bound to issue
additional shares of its capital stock or other rights, or securities or rights
convertible into or exchangeable for, shares of the capital stock of a Person.

         "SEC" shall mean the Securities and Exchange Commission.

         "SEC Documents" shall mean all forms, proxy statements, registration
statements, reports, schedules, and other documents filed, or required to be
filed, by a Party or any of its Subsidiaries with the SEC pursuant to the
Securities Laws.

         "Securities Laws" shall mean the 1933 Act, the 1934 Act, the Investment
Company Act of 1940, as amended, the Investment Advisors Act of 1940, as
amended, the Trust Indenture Act of 1939, as amended, and the rules and
regulations of any Regulatory Authority promulgated thereunder.

         "Significant Subsidiary" shall have the meaning ascribed such to such
term in Rule 1-02(w) of Regulation S-X promulgated under the Securities Laws.

         "Subject Company" shall mean Southeast Bancorp, Inc., a Kentucky
corporation.

         "Subject Company Benefit Plans" shall have the meaning ascribed to such
term in Section 5.14(a) of this Agreement.

         "Subject Company Common Stock" shall mean the common stock, no par
value per share, of Subject Company.

         "Subject Company Contracts" shall have the meaning ascribed to such
term in Section 5.15 of this Agreement.


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<PAGE>   141




         "Subject Company Disclosure Memorandum" shall mean the written
information entitled "Subject Company Disclosure Memorandum" delivered prior to
the date of this Agreement to Parent.

         "Subject Company ERISA Plan" shall have the meaning ascribed to such
term in Section 5.14(a) of this Agreement.

         "Subject Company Financial Statements" shall have the meaning ascribed
to such term in Section 5.5 of this Agreement.

         "Subject Company Preferred Stock" shall mean the no par value preferred
stock of Subject Company.

         "Subject Company Proxy Statement" shall mean the proxy statement used
by Subject Company to solicit the approval of its shareholders of the
transactions contemplated by this Agreement, which shall include the prospectus
of Parent relating to the issuance of the Parent Common Stock to holders of
Subject Company Common Stock.

         "Subject Company Shareholders' Meeting" shall mean the meeting of the
shareholders of Subject Company to be held pursuant to Section 8.1 of this
Agreement, including any adjournment or adjournments thereof.

         "Subject Company Options" shall have the meaning ascribed such term in
Section 3.5(a) of the Agreement.

         "Subject Company Stock Agreements", and each, a "Subject Company Stock
Agreement" shall mean the following agreements: Agreement dated May 10, 1994
granting James Rickard options to purchase 1,000 shares of Subject Company
Common Stock at $140.00 per share; Agreement dated December 23, 1996 granting
James Rickard options to purchase 3,000 shares of Subject Company Common Stock
at $221.84 per share; and Agreements dated December 24, 1996, granting Robert
Bryant, Steve Tolliver and Timothy Barnes each the right to purchase 250 shares
of Subject Company Common Stock at $221.84 per share.

         "Subject Company Subsidiaries" shall mean the Subsidiaries of Subject
Company, which shall include Subject Company Subsidiaries described in Section
5.4 of this Agreement and any corporation, bank, or other organization acquired
as a Subsidiary of Subject Company in the future and owned by Subject Company at
the Effective Time.

         "Subsidiaries" shall mean all those corporations, banks, associations,
or other entities of which the entity in question owns or controls 10% or more
of the outstanding equity securities either directly or through an unbroken
chain of entities as to each of which 10% or more of the outstanding equity
securities is owned directly or indirectly by its parent; provided, there shall
not be included any such entity acquired through foreclosure or any such equity
the equity securities of which are owned or controlled in a fiduciary capacity.

         "Supplemental Letter" shall mean the supplemental letter of even date
herewith relating to certain understandings and agreements with respect to
certain employment matters following the Effective Time in addition to those
included in this Agreement.

         "Surviving Corporation" shall mean Merger Subsidiary as the surviving
corporation resulting from the Merger.

         "Takeover Laws" shall have the meaning ascribed to such term in Section
5.20 of this Agreement.

         "Tax" or "Taxes" shall mean all taxes, charges, fees, levies or other
assessments, including, without limitation, all net income, gross income, gross
receipts, sales, use, ad valorem, transfer, franchise, profits, license,
withholding, payroll, employment, excise, estimated, severance, stamp,
occupation, property or other taxes, customs

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<PAGE>   142



duties, fees, assessments or charges of any kind whatsoever, together with any
interest and any penalties, additions to tax or additional amounts imposed by
any taxing authority (domestic or foreign).

         "Tax Returns" shall mean all returns and reports of or with respect to
any Tax which are required to be filed by or with respect to the applicable
Party.

         "TBCA" shall mean the Tennessee Business Corporation Act.

         (b)      Any singular term in this Agreement shall be deemed to include
the plural, and any plural term the singular. Whenever the words "include,"
"includes," or "including" are used in this Agreement, they shall be deemed
followed by the words "without limitation."

         11.2     Expenses. (a) Except as otherwise provided in this Section
11.2 and in Section 8.8, each of the Parties shall bear and pay all direct costs
and expenses incurred by it or on its behalf in connection with the transactions
contemplated hereunder, including filing, registration and application fees,
printing fees, and fees and expenses of its own financial or other consultants,
investment bankers, accountants, and counsel, except that each of the Parties
shall bear and pay the filing fees payable in connection with the Registration
Statement and the Subject Company Proxy Statement and printing and mailing costs
incurred in connection with the printing and mailing of the Registration
Statement and the Subject Company Proxy Statement based on the relative Asset
sizes of the Parties at December 31, 1997.

                  (b)      Nothing contained in this Section 11.2 shall
constitute or shall be deemed to constitute liquidated damages for the willful
breach by a Party of the terms of this Agreement or otherwise limit the rights
of the non-breaching Party.

         11.3     Brokers and Finders. Each of the Parties represents and
warrants that neither it nor any of its officers, directors, employees, or
Affiliates has employed any broker or finder or incurred any Liability for any
financial advisory fees, investment bankers' fees, brokerage fees, commissions,
or finders' fees in connection with this Agreement or the transactions
contemplated hereby, except as disclosed in Section 11.3 of such Party's
Disclosure Memorandum. In the event of a claim by any broker or finder based
upon his or its representing or being retained by or allegedly representing or
being retained by Subject Company or Parent other than those disclosed in the
previous sentence, each of Subject Company and Parent, as the case may be,
agrees to indemnify and hold the other Party harmless of and from any Liability
incurred by such Party in respect of any such claim.

         11.4     Entire Agreement. Except as otherwise expressly provided
herein, this Agreement (including the other documents and instruments referred
to herein, including, but not limited to, the Supplemental Letter) constitutes
the entire agreement between the Parties with respect to the transactions
contemplated hereunder and supersedes all prior arrangements or understandings
with respect thereto, written or oral, between Parent and Subject Company.
Nothing in this Agreement expressed or implied is intended to confer upon any
Person, other than the Parties or their respective successors, any rights,
remedies, obligations, or liabilities under or by reason of this Agreement,
other than as provided in the Supplemental Letter and in Sections 3.5, 8.11 and
8.12 of this Agreement.

         11.5     Amendments. To the extent permitted by Law, this Agreement may
be amended by a subsequent writing signed by each of the Parties upon the
approval of the Boards of Directors of each of the Parties, whether before or
after shareholder approval of this Agreement has been obtained.

         11.6     Waivers. (a) Prior to or at the Effective Time, Parent, acting
through its Board of Directors, chief executive officer, or other authorized
officer, shall have the right to waive any Default in the performance of any
term of this Agreement by Subject Company, to waive or extend the time for the
compliance or fulfillment by Subject Company of any and all of its obligations
under this Agreement, and to waive any or all of the conditions precedent to the
obligations of Parent under this Agreement, except any condition which, if not
satisfied, would 

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<PAGE>   143



result in the violation of any Law. No such waiver shall be effective unless in
writing signed by a duly authorized officer of Parent.

                  (b)      Prior to or at the Effective Time, Subject Company,
acting through its Board of Directors, chief executive officer, or other
authorized officer, shall have the right to waive any Default in the performance
of any term of this Agreement by Parent and/or Merger Subsidiary, to waive or
extend the time for the compliance or fulfillment by Parent and/or Merger
Subsidiary of any and all of its obligations under this Agreement, and to waive
any or all of the conditions precedent to the obligations of Subject Company
under this Agreement, except any condition which, if not satisfied, would result
in the violation of any Law. No such waiver shall be effective unless in writing
signed by a duly authorized officer of Subject Company.

                  (c)      The failure of any Party at any time or times to
require performance of any provision hereof shall in no manner affect the right
of such Party at a later time to enforce the same or any other provision of this
Agreement. No waiver of any condition or of the breach of any term contained in
this Agreement in one or more instances shall be deemed to be or construed as a
further or continuing waiver of such condition or breach of a waiver of any
other condition or of the breach of any other term of this Agreement.

         11.7     Assignment. Except in accordance with Section 1.4 of this
Agreement, neither this Agreement nor any of the rights, interests, or
obligations hereunder shall be assigned by any Party hereto (whether by
operation of Law or otherwise) without the prior written consent of the other
Party. Subject to the preceding sentence, this Agreement will be binding upon,
inure to the benefit of and be enforceable by the Parties and their respective
successors and assigns.

         11.8     Notices. All notices or other communications which are
required or permitted hereunder shall be in writing and sufficient if delivered
by hand, by facsimile transmission, by registered or certified mail, postage
prepaid, or by courier or overnight carrier, to the person at the addresses set
forth below (or at such other address as may be provided hereunder), and shall
be deemed to have been delivered as of the date so delivered:

Subject Company:                         Southeast Bancorp, Inc.
                                         100 North Main Street
                                         Corbin, KY  40701
                                         Attention:  James D. Rickard, CEO
                                         Telephone Number: (606) 528-2500
                                         Telecopy Number: (606) 528-4649
                                         
Copy to Subject Company Counsel:         Stoll, Keenon & Park, LLP
                                         201 E. Main Street, Suite 1000
                                         Lexington, KY 40507
                                         Attention:  J. David Smith, Jr., Esq.
                                         Telephone Number: (606) 231-3062
                                         Telecopy Number: (606)  253-1093
                                         
Parent:                                  Union Planters Corporation
                                         7130 Goodlett Farms Parkway
                                         Memphis, Tennessee  38018
                                         Attention:  Jackson W. Moore
                                         Telecopy Number:  (901) 580-2939
                                         Telephone Number: (901) 580-6093


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<PAGE>   144



Copy to Parent Counsel:                  Union Planters Corporation
                                         7130 Goodlett Farms Parkway
                                         Memphis, Tennessee  38018
                                         Attention:  E. James House, Jr., Esq.
                                         Telecopy Number:  (901) 580-2939
                                         Telephone Number: (901) 580-6596
                                                      and
                                         
                                         Wyatt, Tarrant & Combs
                                         6075 Poplar Avenue, Suite 650
                                         Memphis, Tennessee 38017
                                         Attention:  R. Nash Neyland, Esq.
                                         Telecopy Number:  (901) 537-1010
                                         Telephone Number: (901) 537-1023


         11.9     Governing Law. This Agreement shall be governed by and
construed in accordance with the Laws of the State of Tennessee, without regard
to any applicable conflicts of Laws.

         11.10    Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.

         11.11    Captions. The captions contained in this Agreement are for
reference purposes only and are not part of this Agreement.

         11.12    Interpretations. Neither this Agreement nor any uncertainty or
ambiguity herein shall be construed or resolved against any Party, whether under
any rule of construction or otherwise. No Party to this Agreement shall be
considered the draftsman. The Parties acknowledge and agree that this Agreement
has been reviewed, negotiated, and accepted by all Parties and their attorneys
and shall be construed and interpreted according to the ordinary meaning of the
words used so as fairly to accomplish the purposes and intentions of all Parties
hereto.

         11.13    Enforcement of Agreement. The Parties agree that time is of
the essence in the performance of their respective obligations under this
Agreement. The Parties hereto agree that irreparable damage would occur in the
event that any of the provisions of this Agreement was not performed in
accordance with its specific terms or was otherwise breached. It is accordingly
agreed that the Parties shall be entitled to an injunction or injunctions to
prevent breaches of this Agreement and to enforce specifically the terms and
provisions hereof in any court of the United States or any state having
jurisdiction, this being in addition to any other remedy to which they are
entitled at law or in equity.

         11.14    Severability. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be interpreted
to be only so broad as is enforceable.


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<PAGE>   145



                  IN WITNESS WHEREOF, each of the Parties has caused this
Agreement to be executed on its behalf and its corporate seal to be hereunto
affixed and attested by officers thereunto as of the day and year first above
written.

ATTEST:                          SOUTHEAST BANCORP, INC


By: /s/ David N. Huff            By: /s/ James D. Rickard
   -------------------------        -----------------------------------------
   David N. Huff, President         James D. Rickard, Chief Executive Officer


[CORPORATE SEAL]



ATTEST:                          UNION PLANTERS CORPORATION

By: /s/ E. James House, Jr.      By: /s/ Benjamin W. Rawlins, Jr.
   -------------------------        ---------------------------------
   E. James House, Jr.              Benjamin W. Rawlins, Jr.
   Secretary                        Chairman & Chief Executive Officer



ATTEST:                          UNION PLANTERS HOLDING CORPORATION


By: /s/ E. James House, Jr.      By: /s/ Jackson W. Moore
   -------------------------        ---------------------------------
   E. James House, Jr.              Jackson W. Moore
   Secretary                        President & Chief Operating Officer
                             

[CORPORATE SEAL]



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<PAGE>   146



                                                                      APPENDIX B

                                 PLAN OF MERGER

                                       of

                             SOUTHEAST BANCORP, INC.

                                  with and into

                       UNION PLANTERS HOLDING CORPORATION











<PAGE>   147

                                 PLAN OF MERGER
                                       OF
                             SOUTHEAST BANCORP, INC.
                                  WITH AND INTO
                       UNION PLANTERS HOLDING CORPORATION

         Pursuant to this Plan of Merger ("Plan of Merger"), Southeast Bancorp,
Inc. ("Subject Company"), a corporation organized and existing under the laws of
the Commonwealth of Kentucky, shall be merged with and into Union Planters
Holding Corporation ("Merger Subsidiary"), a corporation organized and existing
under the laws of the State of Tennessee and which is a wholly-owned subsidiary
of Union Planters Corporation ("Parent").

         Except as otherwise provided herein, the capitalized terms set forth
below shall have the meanings ascribed thereto in that certain merger agreement
dated as of August 7, 1998 between Parent, Merger Subsidiary and Subject Company
(the "Agreement"), of which this Plan of Merger is Exhibit 1.

                                    ARTICLE 1
                                 TERMS OF MERGER

         1.1      Merger. Subject to the terms and conditions of this Plan of
Merger and the Agreement, at the Effective Time, Subject Company shall be merged
with and into Merger Subsidiary in accordance with the provisions of Section
48-21-109 of the TBCA and KRS 271B.11-070 of the KBCA, and with the effect
provided in Section 48-21-108 of the TBCA and KRS 271B.11-060 of the KBCA (the
"Merger"). Merger Subsidiary shall be the Surviving Corporation resulting from
the Merger and shall continue to be governed by the Laws of the State of
Tennessee. The Merger shall be consummated pursuant to the terms of the
Agreement and this Plan of Merger, which have been approved and adopted by the
respective Boards of Directors of Subject Company, Parent and Merger Subsidiary.

         1.2      Time and Place of Closing. The Closing will take place at 9:00
A.M. on the date on which the Effective Time is to occur (or the immediately
preceding day if the Effective Time is to be earlier than 9:00 A.M.), or at such
other time as the Parties, acting through their chief executive officers or
chief financial officers, may mutually agree. The Closing shall be held at such
place as may be mutually agreed upon by the Parties.

         1.3      Effective Time. The Merger and other transactions contemplated
by the Agreement and this Plan of Merger shall become effective at the time the
Articles of Merger reflecting the Merger shall become effective with the
Secretary of State of the State of Tennessee and the Commonwealth of Kentucky
(the "Effective Time").

         1.4      Restructure of Transaction. Subject to the terms of the
Agreement, Parent shall, in its reasonable discretion, have the unilateral right
to revise the structure of the Merger contemplated by the Agreement and this
Plan of Merger in order to achieve tax benefits or for any other reason which
Parent may deem advisable.

                                    ARTICLE 2
                                 TERMS OF MERGER

         2.1      Charter. The Charter of Merger Subsidiary in effect
immediately prior to the Effective Time shall be the Charter of the Surviving
Corporation until otherwise amended or repealed.

         2.2      Bylaws. The Bylaws of Merger Subsidiary in effect immediately
prior to the Effective Time shall be the Bylaws of the Surviving Corporation
until otherwise amended or repealed.

         2.3      Directors and Officers. The directors of Merger Subsidiary in
office immediately prior to the Effective Time, together with such additional
persons as may thereafter be elected, shall serve as the directors of the


                               Plan of Merger - 1

<PAGE>   148




Surviving Corporation from and after the Effective Time in accordance with the
Bylaws of the Surviving Corporation. The officers of Merger Subsidiary in office
immediately prior to the Effective Time, together with such additional persons
as may thereafter be elected, shall serve as the officers of the Surviving
Corporation from the Effective Time in accordance with the Bylaws of the
Surviving Corporation.

                                    ARTICLE 3
                           MANNER OF CONVERTING SHARES

         3.1      Conversion of Shares. Subject to the provisions of this
Article 3 (and Article 3 of the Agreement), at the Effective Time, by virtue of
the Merger and without any action on the part of Parent, Merger Subsidiary,
Subject Company, or the shareholders of any of the foregoing, the shares of the
constituent corporations shall be converted as follows:

                  (a)      Each share of Parent Capital Stock, including any
associated Parent Rights, issued and outstanding immediately prior to the
Effective Time shall remain issued and outstanding from and after the Effective
Time.

                  (b)      Each share of Merger Subsidiary Common Stock issued
and outstanding immediately prior to the Effective Time shall remain issued and
outstanding and shall represent one share of the Surviving Corporation from and
after the Effective Time.

                  (c)      Except for Dissenting Shares, each share of Subject
Company Common Stock (excluding shares held by Subject Company, any Subject
Company Subsidiary, Parent or any Parent Subsidiary, in each case other than in
a fiduciary capacity or as a result of debts previously contracted) issued and
outstanding at the Effective Time shall cease to be outstanding and shall be
converted into and exchanged for the right to receive Eleven and Eighty-Seven
One Hundredths (11.87) shares of Parent Common Stock (subject to possible
adjustment as set forth in Section 3.2 of the Agreement, the "Exchange Ratio").
Pursuant to the Parent Rights Agreement, each share of Parent Common Stock
issued in connection with the Merger upon conversion of Subject Company Common
Stock shall be accompanied by a Parent Right.

                  (d)      Dissenting Shares shall not be converted pursuant to
Section 3.1(c) in the Merger but, at and after the Effective Time, shall
represent only the right to receive payment in accordance with Subtitle 13 of
the KBCA. If a holder of Dissenting Shares becomes ineligible for payment under
Subtitle 13 of the KBCA, then such holder's Dissenting Shares shall cease to be
Dissenting Shares and shall be converted in the manner set forth in Section
3.1(c) effective as of the Effective Time.

         3.2      Exchange Ratio Adjustment Provisions. The Exchange Ratio set
forth in Section 3.2(c) of this Plan of Merger (and Section 3.2(c) of the
Agreement) is based on the understanding that there shall be no more than
105,308 shares of Subject Company Common Stock outstanding immediately prior to
the Effective Time (assuming, for purposes of this provision, that all Subject
Company Options outstanding had in fact been exercised), and should there be
more than 105,308 shares of Subject Company Common Stock outstanding (adjusted
for Subject Company Options) immediately prior to the Effective Time, the
Exchange Ratio would be proportionately adjusted downward accordingly. In the
event Parent changes the number of shares of Parent Common Stock issued and
outstanding after the date of this Agreement and prior to the Effective Time as
a result of a stock split, stock dividend, subdivision, reclassification,
conversion or similar recapitalization with respect to such stock and the record
date therefor (in the case of a stock dividend) or the effective date thereof
(in the case of a stock split, subdivision, reclassification, conversion or
similar recapitalization for which a record date is not established) shall be
prior to the Effective Time, the Exchange Ratio shall be proportionately
adjusted.

         3.3      Shares Held by Subject Company or Parent. Each of the shares
of Subject Company Common Stock held by Subject Company, any Subject Company
Subsidiary, Parent or any Parent Subsidiary, in each case 


                               Plan of Merger - 2

<PAGE>   149




other than in fiduciary capacity or as a result of debts previously contracted,
shall be canceled and retired at the Effective Time and no consideration shall
be issued in exchange therefor.

         3.4      Fractional Shares. Notwithstanding any other provision of this
Plan of Merger, each holder of shares of Subject Company Common Stock exchanged
pursuant to the Merger who would otherwise have been entitled to receive a
fractional share of Parent Common Stock (after taking into account all
certificates delivered by such holder) shall receive, in lieu thereof, cash
(without interest) in an amount equal to such fractional share of Parent Common
Stock multiplied by the closing price of such common stock on the NYSE-Composite
Transactions List (as reported by The Wall Street Journal or, if not reported
thereby, any other authoritative source reasonably selected by Parent) on the
last trading day preceding the Effective Time. No such holder will be entitled
to dividends, voting rights, or any other rights as a shareholder in respect of
any fractional shares.

         3.5      Conversion of Stock Options.

                  (a)      At the Effective Time, each option to purchase or
other right with respect to shares of Subject Company Common Stock pursuant to
stock options, stock appreciation rights or other rights, including stock
awards, ("Subject Company Options") granted by Subject Company under the Subject
Company Stock Agreements, which are outstanding at the Effective Time, whether
or not exercisable, shall be converted into and become options with respect to
Parent Common Stock, and Parent shall assume each Subject Company Option, in
accordance with the terms of the applicable Subject Company Stock Agreements,
and stock option or other agreement by which it is evidenced, except that from
and after the Effective Time, (i) Parent and its Salary and Benefits Committee
shall be substituted for Subject Company and the committee of Subject Company's
Board of Directors (including, if applicable, the entire Board of Directors of
Subject Company), or other administrator responsible for administering such
Subject Company Stock Agreements, (ii) each Subject Company Option assumed by
Parent may be exercised solely for shares of Parent Common Stock (or cash in the
case of stock appreciation rights), (iii) the number of shares of Parent Common
Stock subject to such Subject Company Option shall be equal to the number of
shares of Subject Company Common Stock subject to such Subject Company Option
immediately prior to the Effective Time multiplied by the Exchange Ratio and
rounding to the nearest whole share (rounding down with respect to any
"incentive stock options"), and (iv) the per share exercise price under each
such Subject Company Option shall be adjusted by dividing the per share exercise
price under each such Subject Company Option by the Exchange Ratio and rounding
to the nearest cent (rounding up with respect to any "incentive stock options").
Notwithstanding clauses (iii) and (iv) of the first sentence of this Section
3.5(a), each Subject Company Option that is an "incentive stock option" shall be
adjusted as required by Section 424 of the Internal Revenue Code, and the
regulations promulgated thereunder, so as not to constitute a modification,
extension or renewal of the option, within the meaning of Section 424(h) of the
Internal Revenue Code. Parent and Subject Company agree to take all necessary
steps to effectuate the foregoing provisions of this Section 3.5.

                  (b)      As soon as practicable after the Effective Time,
Parent shall deliver to the holders of the Subject Company Options an
appropriate notice setting forth such participant's rights pursuant thereto and
the grants under such Subject Company Stock Agreements shall continue in effect
on the same terms and conditions (subject to the adjustments required by Section
3.5(a) after giving effect to the Merger including any acceleration of option
vesting resulting from the Merger), and Parent shall comply with the terms of
each Subject Company Stock Agreement to ensure, subject to the provisions of
such Subject Company Stock Agreement, that Subject Company Options that
qualified as incentive stock options prior to the Effective Time continue to
qualify as incentive stock options after the Effective Time. Within 30 days
after the Effective Time, Parent shall file a registration statement on Form S-8
with respect to the shares of Parent Common Stock subject to such options and
shall use its reasonable best efforts to maintain the effectiveness of such
registration statements (and maintain the current status of the prospectus or
prospectuses contained therein) for so long as such options remain outstanding.

                  (c)      All contractual restrictions or limitations on
transfer with respect to Subject Company Common Stock awarded under the Subject
Company Stock Agreements or any other plan, program, or Contract of Subject
Company or any of the Subject Company Subsidiaries, to the extent that such
restrictions or limitations shall not

                               Plan of Merger - 3

<PAGE>   150



have already lapsed (whether as a result of the Merger or otherwise), and except
as otherwise expressly provided in such plan, program, or Contract, shall remain
in full force and effect with respect to shares of Parent Common Stock into
which such restricted stock is converted pursuant to Section 3.1 of this
Agreement.


                                    ARTICLE 4
                               EXCHANGE OF SHARES

         4.1      Exchange Procedures. Promptly after the Effective Time, Parent
and Subject Company shall cause the exchange agent selected by Parent (the
"Exchange Agent") to mail to the former shareholders of Subject Company
appropriate transmittal materials (which shall specify that delivery shall be
effected, and risk of loss and title to the certificates theretofore
representing shares of Subject Company Common Stock shall pass, only upon proper
delivery of such certificates to the Exchange Agent). Subject Company shall have
the right to review and approve the transmittal materials. The Exchange Agent
may establish reasonable and customary rules and procedures in connection with
its duties, provided such rules and procedures do not have the effect of
limiting or eliminating the obligation of Parent and/or Merger Subsidiary to
deliver the consideration contemplated by Article 3 of this Plan of Merger.
After the Effective Time, each holder of shares of Subject Company Common Stock
(other than Dissenting Shares or shares to be canceled pursuant to Section 3.3
of this Plan of Merger) issued and outstanding at the Effective Time shall
surrender the certificate or certificates representing such shares to the
Exchange Agent and shall promptly upon surrender thereof receive in exchange
therefor the consideration provided in Section 3.1(c) of this Plan of Merger,
together with all undelivered dividends and other distributions, if any, in
respect of such shares (without interest thereon) pursuant to Section 4.2 of
this Plan of Merger. To the extent required by Section 3.4 of this Plan of
Merger, each holder of shares of Subject Company Common Stock issued and
outstanding at the Effective Time also shall receive, upon surrender of the
certificate or certificates representing such shares, cash in lieu of any
fractional share of Parent Common Stock to which such holder may be otherwise
entitled (without interest). Parent shall not be obligated to deliver the
consideration to which any former holder of Subject Company Common Stock is
entitled as a result of the Merger until such holder surrenders such holder's
certificate or certificates representing the shares of Subject Company Common
Stock for exchange as provided in this Section 4.1. The certificate or
certificates of Subject Company Common Stock so surrendered shall be duly
endorsed as the Exchange Agent may reasonably require. Any other provision of
the Agreement or this Plan of Merger notwithstanding, neither Parent, Merger
Subsidiary nor the Exchange Agent shall be liable to a holder of Subject Company
Common Stock for any amounts paid or property delivered in good faith to a
public official pursuant to any applicable abandoned property Law.

         4.2      Rights of Former Subject Company Shareholders. At the
Effective Time, other than with respect to Dissenting Shares, the stock transfer
books of Subject Company shall be closed as to holders of Subject Company Common
Stock immediately prior to the Effective Time and no transfer of Subject Company
Common Stock by any such holder shall thereafter be made or recognized. Until
surrendered for exchange in accordance with the provisions of Section 4.1 of
this Plan of Merger, each certificate theretofore representing shares of Subject
Company Common Stock (other than Dissenting Shares or shares to be canceled
pursuant to Section 3.3 of this Plan of Merger) shall from and after the
Effective Time represent for all purposes only the right to receive the
consideration provided in Sections 3.1(c) and 3.4 of this Plan of Merger in
exchange therefor, subject, however, to the Surviving Corporation's obligations
to pay any dividends or make any other distributions with a record date prior to
the Effective Time which have been declared or made by Subject Company in
respect of such shares of Subject Company Common Stock in accordance with the
terms of this Plan of Merger and which remain unpaid at the Effective Time. In
addition, whenever a dividend or other distribution is declared by Parent on the
Parent Common Stock, the record date for which is at or after the Effective
Time, the declaration shall include dividends or other distributions on all
shares of Parent Common Stock issuable pursuant to this Plan of Merger, but no
dividend or other distribution payable to the holders of record of Parent Common
Stock as of any time subsequent to the Effective Time shall be delivered to the
holder of any certificate representing shares of Subject Company Common Stock
issued and outstanding at the Effective Time until such holder surrenders such
certificate for exchange as provided in Section 4.1 of this Plan of Merger.
However, upon surrender of such Subject Company Common Stock

                               Plan of Merger - 4

<PAGE>   151




certificate, both a Parent Common Stock certificate and any undelivered
dividends and other distributions payable hereunder (without interest) shall be
delivered and paid with respect to each share represented by such certificate.
In the event any Subject Company Common Stock certificate shall have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the person
claiming such certificate to be lost, stolen or destroyed and, if reasonably
required by Parent, the posting by such person of a bond in such amount as
Parent may reasonably direct as indemnity against any claim that may be made
against it with respect to such certificate, the Exchange Agent shall issue in
exchange for such lost, stolen or destroyed certificate the shares of Parent
Common Stock and cash in lieu of fractional shares and dividends and other
distributions deliverable in respect thereof pursuant to this Plan of Merger.

                                    ARTICLE 5
                                  MISCELLANEOUS

         5.1      Conditions Precedent. Consummation of the Merger by Merger
Subsidiary shall be conditioned on the satisfaction of or waiver by Parent of
the conditions precedent to the Merger set forth in Sections 9.1 and 9.2 of the
Agreement. Consummation of the Merger by Subject Company shall be conditioned on
the satisfaction of, or waiver by Subject Company of, of the conditions
precedent to the Merger set forth in Sections 9.1 and 9.3 of the Agreement.

         5.2      Termination. This Plan of Merger may be terminated at any time
prior to the Effective Time by the Parties hereto as provided in Article 10 of
the Agreement.

         5.3      Amendments. To the extent permitted by Law, this Plan of
Merger may be amended by a subsequent writing signed by each of the Parties upon
the approval of the Boards of Directors of each of the Parties, whether before
or after shareholder approval of the Agreement and this Plan of Merger has been
obtained; provided, that after any such approval by the holders of Subject
Company Common Stock, there shall be made no amendment that modifies in any
material respect the consideration to be received by the Subject Company
shareholders.

         5.4      Assignment. Except as expressly contemplated hereby, neither
this Plan of Merger nor the Agreement, nor any of the rights, interests, or
obligations hereunder or thereunder shall be assigned by any Party hereto
(whether by operation of Law or otherwise) without the prior written consent of
the other Party. Subject to the preceding sentence, the Agreement and this Plan
of Merger will be binding upon, inure to the benefit of and be enforceable by
the Parties and their respective successors and assigns.

         5.5      Governing Law. This Plan of Merger shall be governed by and
construed in accordance with the Laws of the State of Tennessee, without regard
to any applicable conflicts of Laws.

         5.6      Counterparts. This Plan of Merger may be executed in two or
more counterparts, each of which shall be deemed to be an original, but all of
which together shall constitute one and the same document.

         5.7      Captions. The captions contained in this Plan of Merger are
for reference purposes only and are not part of this Plan of Merger.




                               Plan of Merger - 5

<PAGE>   152



                  IN WITNESS WHEREOF, each of the Parties hereto has duly
executed and delivered this Plan of Merger or has caused this Plan of Merger to
be executed and delivered in its name and on its behalf by its representatives
thereunto duly authorized, all as of the date first written above.

ATTEST:                         Southeast Bancorp, Inc.

By:  /s/ David N. Huff          By:      /s/  James D. Rickard
  -------------------------            -----------------------------------------
  David N. Huff, President             James D. Rickard, Chief Executive Officer


[CORPORATE SEAL]



ATTEST:                         UNION PLANTERS CORPORATION

By:  /s/  E. James House, Jr.   By:      /s/ Benjamin W. Rawlins, Jr.
  ---------------------------          -----------------------------------------
  E. James House, Jr., Secretary       Benjamin W. Rawlins, Jr.
                                       Chairman & Chief Executive Officer



ATTEST:                         UNION PLANTERS HOLDING CORPORATION


By:  /s/  E. James House, Jr.   By:      /s/ Jackson W. Moore
  ---------------------------          -----------------------------------------
  E. James House, Jr., Secretary         Jackson W. Moore
                                         President & Chief Operating Officer

[CORPORATE SEAL]

















                               Plan of Merger - 6

<PAGE>   153



                                                                      APPENDIX C





                        INDEX TO SOUTHEAST BANCORP, INC.
                              FINANCIAL STATEMENTS




<TABLE>
<S>                                                                                       <C>
Report of Independent Auditors..........................................................  C-2

Report of Independent Auditors..........................................................  C-3

Consolidated Balance Sheets as of September 30, 1998 (Unaudited),
  December 31, 1997 and December 31, 1996...............................................  C-4

Consolidated Statements of Income for the Nine Months Ended
  September 30, 1998 and 1997 (Unaudited) and the Years Ended
  December 31, 1997, 1996 and 1995......................................................  C-5

Consolidated Statements of Stockholders' Equity for the Nine Months
  Ended September 30, 1998 (Unaudited) and the Years Ended
  December 31, 1997, 1996 and 1995......................................................  C-7

Consolidated Statements of Cash Flows for the Nine Months
  Ended September 30, 1998 and 1997 (Unaudited) and the Years
  Ended December 31, 1997, 1996 and 1995................................................  C-8

Notes to Consolidated Financial Statements..............................................  C-10
</TABLE>









                                       C-1

<PAGE>   154


                         REPORT OF INDEPENDENT AUDITORS


Board of Directors
Southeast Bancorp, Inc.
Corbin, Kentucky


We have audited the accompanying consolidated balance sheet of Southeast
Bancorp, Inc. as of December 31, 1997, and the related consolidated statements
of income, changes in stockholders' equity and cash flows for the year 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 audit.

We conducted our audit 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 audit provides a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Southeast Bancorp,
Inc. at December 31, 1997, and the results of its operations and its cash flows
for the year then ended, in conformity with generally accepted accounting
principles.



Eskew & Gresham, PSC

Lexington, Kentucky
February 11, 1998



                                      C-2
<PAGE>   155


                         REPORT OF INDEPENDENT AUDITORS


Board of Directors
Southeast Bancorp, Inc.
Corbin, Kentucky


We have audited the accompanying consolidated balance sheet of Southeast
Bancorp, Inc. as of December 31, 1996, and the related consolidated statements
of income, changes in stockholders' equity and cash flows for the years ended
December 31, 1996 and 1995. 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.

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 referred to above present
fairly, in all material respects, the financial position of Southeast Bancorp,
Inc. at December 31, 1996, and the results of its operations and its cash flows
for the years ended December 31, 1996 and 1995, in conformity with generally
accepted accounting principles.



Marr, Miller & Myers, PSC

Corbin, Kentucky
January 6, 1997



                                      C-3
<PAGE>   156


                            SOUTHEAST BANCORP, INC.
                          CONSOLIDATED BALANCE SHEETS


<TABLE>
<CAPTION>
                                                            September 30, 1998               December 31
        ASSETS                                                 (unaudited)              1997               1996
<S>                                                         <C>                    <C>                 <C>
Cash and cash equivalents:
   Cash and due from banks                                     $  9,433,849        $ 10,203,996        $  6,494,377
   Federal funds sold                                             3,620,000             709,000                   0
                                                               ------------        ------------        ------------
     Total cash and cash equivalents                           $ 13,053,849        $ 10,912,996        $  6,494,377
Deposits in other banks                                             754,486           1,277,073                   0
Investment securities:
   Available for sale                                            63,450,775          54,232,391          17,380,931
   Held to maturity                                                       0                   0          29,938,505
Loans                                                           241,944,840         244,530,516         156,543,522
Allowance for loans losses                                       (2,996,821)         (2,911,734)         (1,999,625)
                                                               ------------        ------------        ------------
Net loans                                                       238,948,019         241,618,782         154,543,897
Premises and equipment                                            8,074,659           8,064,983           3,656,114
Federal Home Loan Bank stock                                      2,170,900           2,065,200           1,529,400
Federal Reserve Bank stock                                          392,050             284,750             192,000
Deferred income taxes                                                     0                   0             195,674
Interest receivable                                               2,720,542           2,677,699           1,919,211
Goodwill                                                          5,372,386           5,542,039                   0
Other assets                                                        938,392           1,349,173             451,143
                                                               ------------        ------------        ------------

TOTAL ASSETS                                                   $335,876,058        $328,025,086        $216,301,252
        LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
   Demand - non-interest bearing                               $ 25,086,266        $ 24,185,387        $ 18,419,614
   Demand - interest bearing                                     56,467,992          46,525,577          30,079,262
   Savings                                                       15,377,657          18,456,789          12,157,922
   Time deposits                                                165,031,907         170,515,011         112,960,545
                                                               ------------        ------------        ------------
     Total deposits                                            $261,963,822        $259,682,764        $173,617,343
Federal funds purchased and securities sold under
   agreements to repurchase                                      17,489,273          17,000,272          10,494,931
Federal Home Loan Bank advances                                  17,857,964          13,250,938           8,922,987
Note payable                                                      7,730,553           8,810,000                   0
Other borrowed funds                                              3,463,605           2,233,014           1,745,796
Interest payable                                                    867,008             680,788             608,949
Deferred income taxes                                               637,269             842,590                   0
Other liabilities                                                   276,092             460,680             342,251
                                                               ------------        ------------        ------------
   Total liabilities                                           $310,285,586        $302,961,046        $195,732,257

STOCKHOLDERS' EQUITY:
   Series A Preferred stock, 500 shares authorized,
     20 shares (1997) issued and outstanding                   $          0        $  2,000,000        $          0
   Common stock, no par value, 500,000 shares authorized,
     101,408 shares (1998) 100,558 shares (1997) and
     100,544 shares (1996) issued and outstanding                 6,049,405           5,926,313           5,897,976
   Net unrealized gain (loss) on securities available for
     sale, net of tax                                               540,400             199,401             (39,537)
   Retained earnings                                             19,000,667          16,938,326          14,710,556
                                                               ------------        ------------        ------------
     Total stockholders' equity                                $ 25,590,472        $ 25,064,040        $ 20,568,995

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                     $335,876,058        $328,025,086        $216,301,252
</TABLE>


                See notes to consolidated financial statements.



                                      C-4
<PAGE>   157


                            SOUTHEAST BANCORP, INC.
                       CONSOLIDATED STATEMENTS OF INCOME


<TABLE>
<CAPTION>
                                         Nine Months Ended September 30                Year Ended December 31
                                              1998             1997            1997            1996               1995
                                           (unaudited)      (unaudited)

<S>                                         <C>              <C>              <C>              <C>                <C>
INTEREST INCOME:
   Loans, including fees                    $17,111,409      $12,918,559      $18,558,511      $13,575,772        $12,289,362
   Investment securities:
     Taxable                                  1,833,942        1,724,473        2,192,380        2,600,862          2,866,323
     Non-taxable                                627,021          416,996          589,688          502,707            468,155
   Federal funds sold                           214,740          138,543          184,659          111,395            164,389
   Deposits in other banks                       49,625                0           89,762            1,729                  0
   Other                                        130,342           58,028          151,574          116,139            108,411
                                            -----------      -----------      -----------      -----------        -----------
                                            $19,967,079      $15,256,599      $21,766,574      $16,908,604        $15,896,640
INTEREST EXPENSE:
   Deposits                                 $ 8,631,892      $ 6,509,548      $ 9,400,077      $ 7,066,203        $ 6,711,799
   Federal funds purchased and
     securities sold under agreements
     to repurchase                              607,900          414,467          603,057          468,720            666,967
   Note payable                                 486,116          161,958          327,567                0                  0
   Other borrowed funds                         931,271          411,057          562,981          593,303            630,798
                                            -----------      -----------      -----------      -----------        -----------
                                            $10,657,179      $ 7,497,030      $10,893,682      $ 8,128,226        $ 8,009,564

Net interest income                         $ 9,309,900      $ 7,759,569      $10,872,892      $ 8,780,378        $ 7,887,076
Provision for loan losses                       409,112          396,275          587,206          371,866            889,510
                                            -----------      -----------      -----------      -----------        -----------

Net interest income after provision
  for loan losses                           $ 8,900,788      $ 7,363,294      $10,285,686      $ 8,408,512        $ 6,997,566

OTHER INCOME:
   Service charges and fees                 $ 1,301,655      $   997,739      $ 1,411,098      $   673,301        $   592,701
   Securities gains (losses), net                 5,126           13,364           12,447           (3,580)            37,872
   Other                                        130,629          167,045          250,766          142,778            109,807
                                            -----------      -----------      -----------      -----------        -----------
                                            $ 1,437,410      $ 1,178,148      $ 1,674,311      $   812,499        $   740,380
OTHER EXPENSES:
   Salaries and employee benefits           $ 2,932,543      $ 2,429,850      $ 3,609,749      $ 2,649,653        $ 2,500,991
   Occupancy expense                            490,658          433,280          534,419          461,368            387,665
   Furniture and equipment expense              609,120          507,720          626,234          617,844            549,337
   Taxes other than payroll and income          184,085          168,671          264,954          197,000            189,131
   Marketing                                    125,306          181,213          281,427          162,672            158,733
   Directors fees                               159,654          155,815          194,225          157,775            110,525
   Professional fees                            556,201          187,575          281,628          172,879            147,337
   Goodwill amortization                        169,573           54,896          109,791                0                  0
   Other                                      1,427,838          840,986        1,484,540          936,161            862,766
                                            -----------      -----------      -----------      -----------        -----------
                                            $ 6,654,978      $ 4,960,006      $ 7,386,967      $ 5,355,352        $ 4,906,485

Income before income taxes                  $ 3,683,220      $ 3,581,436      $ 4,573,030      $ 3,865,659        $ 2,831,461
Provision for income taxes                    1,014,784        1,109,170        1,505,567        1,137,809            766,232
                                            -----------      -----------      -----------      -----------        -----------

NET INCOME                                  $ 2,668,436      $ 2,472,266      $ 3,067,463      $ 2,727,850        $ 2,065,229
</TABLE>



                                      C-5
<PAGE>   158


                            SOUTHEAST BANCORP, INC.
                 CONSOLIDATED STATEMENTS OF INCOME (CONTINUED)

<TABLE>
<CAPTION>
                                            Nine Months Ended September 30               Year Ended December 31
                                                1998             1997            1997            1996               1995
                                           (unaudited)      (unaudited)

<S>                                         <C>              <C>              <C>              <C>                <C>
OTHER COMPREHENSIVE INCOME
   (LOSS), NET OF TAX:
   Change in unrealized gain (loss)
     on securities                          $   346,125      $    65,901      $   251,385      $   (79,372)       $   330,669
   Reclassification of realized amount           (5,126)         (13,364)         (12,447)           3,580            (37,872)
                                            -----------      -----------      -----------      -----------        -----------

   Net unrealized gain (loss)
     recognized in comprehensive
     income                                 $   340,999      $    52,537      $   238,938      $   (75,792)       $   292,797
                                            -----------      -----------      -----------      -----------        -----------

COMPREHENSIVE INCOME                        $ 3,009,435      $ 2,524,803      $ 3,306,401      $ 2,652,058        $ 2,358,026



Basic Earnings Per Share                    $     25.99      $     24.14      $     29.64      $     27.12        $     20.55
Diluted Earnings Per Share                  $     25.64      $     24.02      $     29.46      $     27.02        $     20.49
</TABLE>


                See notes to consolidated financial statements.



                                      C-6
<PAGE>   159


                            SOUTHEAST BANCORP, INC.
           CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
                  YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
                NINE MONTHS ENDED SEPTEMBER 30, 1998 (UNAUDITED)


<TABLE>
<CAPTION>
                                                                                      Net Unrealized                     Total
                                                    Preferred           Common          Gain (Loss)      Retained     Stockholders'
                                                      Stock             Stock          on Securities     Earnings        Equity

<S>                                                <C>               <C>               <C>             <C>             <C>
Balances, January 1, 1995                          $          0      $  5,875,200      $   (256,542)   $ 11,219,037    $ 16,837,695
Net income                                                    0                 0                 0       2,065,229       2,065,229
Net change in unrealized gain (loss)
   on securities available for sale, net
   of tax                                                     0                 0           292,797               0         292,797
Dividends paid on common stock
   ($5.80 per share)                                          0                 0                 0        (582,784)       (582,784)
                                                   ------------      ------------      ------------    ------------    ------------
Balances, December 31, 1995                        $          0      $  5,875,200      $     36,255    $ 12,701,482    $ 18,612,937

Sale of 160 shares of common stock                            0            29,600                 0               0          29,600
Purchase of 96 shares of common stock                         0            (6,824)                0         (14,754)        (21,578)
Net income                                                    0                 0                 0       2,727,850       2,727,850
Net change in unrealized gain (loss)
   on securities available for sale, net
   of tax                                                     0                 0           (75,792)              0         (75,792)
Dividends paid on common stock
   ($7.00 per share)                                          0                 0                 0        (704,022)       (704,022)
                                                   ------------      ------------      ------------    ------------    ------------
Balances, December 31, 1996                        $          0      $  5,897,976      $    (39,537)   $ 14,710,556    $ 20,568,995

Issuance of preferred stock                           2,000,000                 0                 0               0       2,000,000
Sale of 180 shares of common stock                            0            39,537                 0               0          39,537
Purchase of 166 shares of common stock                        0           (11,200)                0         (27,935)        (39,135)
Net income                                                    0                 0                 0       3,067,463       3,067,463
Net change in unrealized gain (loss)
   on securities available for sale, net
   of tax                                                     0                 0           238,938               0         238,938
Dividends paid on preferred stock                             0                 0                 0         (88,027)        (88,027)
Dividends paid on common stock
   ($7.20 per share)                                          0                 0                 0        (723,731)       (723,731)
                                                   ------------      ------------      ------------    ------------    ------------
Balances, December 31, 1997                        $  2,000,000      $  5,926,313      $    199,401    $ 16,938,326    $ 25,064,040

Retirement of preferred stock (unaudited)            (2,000,000)                0                 0               0      (2,000,000)
Sale of 850 shares of common stock
   (unaudited)                                                0           123,092                 0               0         123,092
Net income (unaudited)                                        0                 0                 0       2,668,436       2,668,436
Net change in unrealized gain (loss)
   on securities available for sale, net
   of tax (unaudited)                                         0                 0           340,999               0         340,999
Dividends paid on preferred stock (unaudited)                 0                 0                 0         (44,945)        (44,945)
Dividends paid on common stock
   ($5.55 per share) (unaudited)                              0                 0                 0        (561,150)       (561,150)
                                                   ------------      ------------      ------------    ------------    ------------
BALANCES, SEPTEMBER 30, 1998 (unaudited)           $          0      $  6,049,405      $    540,400    $ 19,000,667    $ 25,590,472
</TABLE>


                See notes to consolidated financial statements.



                                      C-7
<PAGE>   160


                            SOUTHEAST BANCORP, INC.
                     CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                  Nine Months Ended September 30                 Year Ended December 31
                                                      1998             1997             1997            1996               1995
                                                  (unaudited)      (unaudited)
<S>                                              <C>              <C>              <C>             <C>              <C>
CASH FLOWS FROM OPERATING
 ACTIVITIES:
   Net income                                    $  2,668,436     $  2,472,266     $  3,067,463    $  2,727,850     $  2,065,229
   Adjustments to reconcile net income to
    net cash provided by operating activities:
       Depreciation and amortization                  663,175          430,952          600,693         447,220          398,130
       Net premium amortization
         on investment securities                       2,881            2,520           24,210          26,891           99,147
       Provision for loan losses                      409,112          396,275          587,206         371,866          889,510
       Deferred income taxes                         (380,987)         314,055          190,998          61,882          128,211
       Federal Home Loan Bank stock
         dividends                                   (105,700)         (89,500)        (133,900)       (102,400)               0
       Net realized (gains) losses on sales 
         and calls of investment securities            (5,126)         (13,364)         (12,447)          3,580           37,872
       Changes in:
         Interest receivable                          (42,843)        (251,259)        (125,958)       (101,899)        (132,754)
         Other assets                                (268,860)          68,272          (26,275)         35,229            4,749
         Interest payable                             186,220           68,117          (12,564)         13,765          160,113
         Other liabilities                           (184,588)        (138,241)        (191,570)            (50)         (37,717)
                                                 ------------     ------------     ------------    ------------     ------------
           Net cash provided by operating
              activities                         $  2,941,720     $  3,260,093     $  3,967,856    $  3,483,934     $  3,536,746

CASH FLOWS FROM INVESTING
 ACTIVITIES:
   Purchases of securities held to maturity      $          0     $          0     $          0    $ (9,076,360)    $(12,129,667)
   Purchases of securities available for sale     (27,820,875)      (7,379,419)     (18,113,908)     (3,980,312)      (4,993,125)
   Proceeds from sales of securities
     available for sale                             5,005,126        8,399,904       15,540,344       3,048,799        3,579,013
   Proceeds from principal payments and
    maturities of securities held to maturity               0                0                0      10,223,884        7,000,000
   Proceeds from principal payments and
    maturities of securities available for sale    14,116,275        3,499,432        6,110,382       9,857,750        2,000,000
   Net decrease (increase) in deposits in
     other banks                                      522,587        3,833,031        2,555,958               0          425,000
   Net change in loans                              2,039,330      (23,924,879)     (28,113,376)    (20,944,558)      (8,064,427)
   Net purchases of premises and equipment           (503,198)        (516,357)      (1,073,121)       (488,804)        (762,494)
   Purchases of Federal Home Loan Bank stock                0                0                0               0          (90,900)
   Purchases of Federal Reserve Bank stock           (107,300)               0                0               0                0
   Proceeds from sale of real estate
     acquired through foreclosure                     901,962           12,010                0         185,525          107,657
   Cash payment related to acquisition, net
    of cash received                                        0      (12,303,518)     (12,303,518)              0                0
                                                 ------------     ------------     ------------    ------------      -----------
     Net cash used in investing activities       $ (5,846,093)     (28,379,796)    $(35,397,239)   $(11,174,076)    $(12,928,943)

CASH FLOWS FROM FINANCING
 ACTIVITIES:
   Net change in deposits                        $  2,281,058      $19,506,211      $14,528,848    $  7,964,746     $ 12,757,211
   Net change in federal funds purchased and
     securities sold under agreements to
     repurchase                                       489,001        2,075,069        6,505,341      (1,201,016)        (760,671)
   Proceeds from note payable                               0       10,000,000       10,000,000               0                0
   Payments on note payable                        (1,079,447)        (875,000)      (1,190,000)              0                0
   Advances from Federal Home Loan Bank            14,000,000                0        7,000,000               0                0
   Payments on Federal Home Loan Bank
     advances                                      (9,392,974)        (499,987)      (2,672,049)       (635,143)        (635,143)
</TABLE>



                                      C-8
<PAGE>   161


                            SOUTHEAST BANCORP, INC.
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                  (CONTINUED)

<TABLE>
<CAPTION>

                                                Nine Months Ended September 30            Year Ended December 31
                                                      1998           1997          1997           1996            1995
                                                  (unaudited)    (unaudited)

<S>                                             <C>             <C>            <C>            <C>            <C>
   Net change in other borrowed funds              1,230,591         15,204        487,218              0         36,496
   Issuance (redemption) of preferred
     stock                                        (2,000,000)     2,000,000      2,000,000              0              0
   Proceeds from sale of common stock                123,092         38,437         39,537         29,600              0
   Purchase of common stock                                0        (39,135)       (39,135)       (21,578)             0
   Dividends paid                                   (606,095)      (587,905)      (811,758)      (704,022)      (582,784)
                                                 -----------    -----------    -----------    -----------    -----------
     Net cash provided by financing activities   $ 5,045,226    $31,632,894    $35,848,002    $ 5,432,587    $10,815,109

Net increase (decrease) in cash and cash
  equivalents                                    $ 2,140,853    $ 6,513,191    $ 4,418,619    $(2,257,555)   $ 1,422,912

Cash and cash equivalents at beginning
  of period                                       10,912,996      6,494,377      6,494,377      8,751,932      7,329,020
                                                 -----------    -----------    -----------    -----------    -----------

CASH AND CASH EQUIVALENTS
  AT END OF PERIOD                               $13,053,849    $13,007,568    $10,912,996    $ 6,494,377    $ 8,751,932

SUPPLEMENTAL DISCLOSURES OF
 CASH FLOW INFORMATION:
   Cash paid during the year for -
     Interest expense                            $10,470,959    $ 7,344,510    $10,906,246    $ 8,114,461    $ 7,849,451
     Income taxes                                $ 1,100,000    $ 1,019,130    $ 1,419,130    $   988,159    $   616,258

SUPPLEMENTAL SCHEDULE OF
  NON-CASH INVESTING ACTIVITIES:
     Loans transferred to real estate acquired
       through foreclosure                       $   222,321    $   772,344    $   755,128    $    38,525    $   121,500
     Reclassification of securities held to
         maturity as available for sale          $         0    $29,938,505    $29,938,505    $         0    $         0
</TABLE>


                See notes to consolidated financial statements.



                                      C-9


<PAGE>   162


                            SOUTHEAST BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                     YEARS ENDED DECEMBER 31, 1997 AND 1996



1.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         A. Basis of Presentation - The consolidated financial statements
include the accounts of Southeast Bancorp, Inc. (the Company) and its
wholly-owned subsidiaries, First National Bank and Trust Company (First
National) and First Bank of East Tennessee, N.A. (First Bank). All material
intercompany transactions and balances have been eliminated.

         B. Nature of Operations - The Company is a bank holding company and is
subject to regulation by the Federal Reserve. The Banks operate under National
charters, and provide full banking services, including trust services. The
Banks are subject to regulation of the Office of the Comptroller of the
Currency and the Federal Deposit Insurance Corporation.

         C. Estimates in 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 and liabilities and disclosure of contingent assets and liabilities
at the date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ from
those estimates.

         D. Cash and Cash Equivalents - For purposes of reporting cash flows,
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.

         E. Investment Securities - The Banks classify their investment
security portfolios into three categories: trading securities, securities
available for sale and securities held to maturity. Fair value adjustments are
made to the securities based on their classification with the exception of the
held to maturity category. The Banks have no investments classified as trading
or held to maturity securities.

         All investment securities are classified as available for sale and are
carried at fair value. Adjustments from amortized cost to fair value are
recorded in stockholders' equity, net of related income tax, under net
unrealized gain (loss) on securities available for sale. The adjustment is
computed on the difference between fair value and cost, adjusted for
amortization of premiums and accretion of discounts, which are recorded as
adjustments to interest income on a constant yield method.

         Gains or losses on dispositions are based on the net proceeds and the
adjusted carrying amount of the securities sold, using the specific
identification method.

         F. Loans - Loans are stated at the amount of unpaid principal, reduced
by unearned interest and an allowance for loan losses. Unearned interest is
recognized as income using a method which approximates the interest method.
Interest income on other loans is recognized on the accrual basis except for
those loans on a nonaccrual income status. The accrual of interest on impaired
loans is discontinued when management believes, after consideration of economic
and business conditions and collection efforts, that the borrowers' financial
conditions are such that collection of interest is doubtful. When interest
accrual is discontinued, interest income is subsequently recognized only to the
extent cash payments are received.



                                     C-10
<PAGE>   163


                            SOUTHEAST BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                     YEARS ENDED DECEMBER 31, 1997 AND 1996
                                  (CONTINUED)



1.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

         The allowance for loan losses is established through a provision for
loan losses charged to expense. The allowance is an amount that management
believes will be adequate to absorb possible losses on existing loans that may
become uncollectible, based on evaluations of the collectibility of loans and
prior loan loss experience. The evaluations take into consideration such
factors as changes in the nature and volume of the loan portfolio, overall
portfolio quality, review of specific problem loans, and current economic
conditions that may affect the borrowers' abilities to pay. Loans are charged
against the allowance for loan losses when management believes that the
collectibility of the principal is unlikely.

         The allowance for loan losses on impaired loans is determined using
the present value of estimated future cash flows of the loan, discounted at the
loan's effective interest rate or the fair value of the underlying collateral.
A loan is considered to be impaired when it is probable that all principal and
interest amounts will not be collected according to the loan contract. The
entire change in present value of expected cash flows is reported as provision
for loan losses in the same manner in which impairment initially was recognized
or as a reduction in the amount of provision for loan losses that otherwise
would be reported.

         G. Premises and Equipment - Premises and equipment are stated at cost
less accumulated depreciation. Depreciation is recorded principally by
straight-line and accelerated methods over the estimated useful lives of the
premises and equipment.

         H. Income Taxes - The Company and the Banks file a consolidated income
tax return. The Banks are charged or credited an amount equal to the tax that
would have been applicable on a separate return basis.

         The Company uses the liability method for computing deferred income
taxes. Under the liability method, deferred income taxes are based on the
change in the deferred tax liability or asset established for the expected
future tax consequences of differences in the financial reporting and tax bases
of assets and liabilities. The differences relate principally to the allowance
for loan losses, unrealized gain (loss) on investment securities available for
sale, Federal Home Loan Bank stock, discount accretion on investment
securities, bank premises and equipment, and deferred compensation.

         I. Trust Department - Revenues from trust department services are
recorded on the accrual basis. Securities and other properties, except cash
deposits, held by the trust department in a fiduciary or agency capacity are
not included in the financial statements since such items are not assets of the
Bank.

         J. Real Estate Acquired Through Foreclosure - Real estate properties,
other than Company premises, acquired through, or in lieu of, loan foreclosures
are initially recorded at fair value at the date of acquisition. Any reduction
to fair value from the carrying value of the related loan at the time of
acquisition is accounted for as a loan loss. After acquisition, a valuation
allowance reduces the reported amount to the lower of the initial amount or
fair value less costs to sell. Expenses, gains and losses on disposition, and
changes in the valuation allowance are reported in other expenses.

         K. Marketing - The Company charges all marketing expenses to
operations when incurred. No amounts have been established for any future
benefits relative to these expenditures.



                                     C-11
<PAGE>   164


                            SOUTHEAST BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                     YEARS ENDED DECEMBER 31, 1997 AND 1996
                                  (CONTINUED)



1.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

         L. Per Share Information - In 1997, the Company adopted Statement of
Financial Accounting Standards (SFAS) No. 128, "Earnings Per Share" under which
basic and diluted earnings per share are computed. All prior amounts have been
restated to be comparable. Basic earnings per share is based on net income
divided by the weighted average number of shares outstanding during the period.
Diluted earnings per share shows the dilutive effect of additional common
shares issuable under stock options. Adoption of the Statement did not change
the earnings per share amounts previously reported by the Company for prior
periods.

         N. Comprehensive Income - The Company adopted SFAS No. 130, "Reporting
Comprehensive Income" effective for the interim period ended September 30,
1998. This Standard requires reporting of comprehensive income, defined as
changes in equity other than those resulting from investments by or
distributions to stockholders. Net income, plus or minus "other comprehensive
income" results in comprehensive income. The only item of other comprehensive
income applicable to the Company is the change in unrealized gain or loss on
securities available for sale. Comprehensive income is reported on the
statement of income. Periods prior to September 30, 1998 were restated to meet
the current reporting format.

         O. Recent Accounting Pronouncements - In June 1997, the Financial
Accounting Standards Board issued SFAS No. 131, "Disclosures about Segments of
an Enterprise and Related Information". This standard changes the way public
companies report information about operating segments in annual financial
statements and requires that those companies report selected information about
operating segments in interim financial reports. It also establishes standards
for related disclosures about products and services, geographic areas, and
major customers. Operating segments are parts of a company for which separate
information is available which is evaluated regularly by the chief operating
decision maker in deciding how to allocate resources and in evaluating
performance. Required disclosures for operating segments include total segment
revenues, total segment profit or loss, and total segment assets. The standard
also requires disclosures regarding revenues derived from products and service
(or similar groups of products or services), countries in which the company
derives revenue or holds assets, and about major customers, regardless of
whether this information is used in operating decision making. The Company is
required to adopt the disclosure requirements in its 1998 annual report, and in
interim periods in 1999. The 1999 interim period disclosures are required to
include comparable 1998 information.

         On June 16, 1998, the Financial Accounting Standards Board issued SFAS
No. 133, "Accounting for Derivative Instruments and Hedging Activities". This
new standard requires companies to record derivatives on the balance sheet as
assets or liabilities at fair value. Depending on the use of the derivative and
whether it qualifies for hedge accounting, gains or losses resulting from
changes in the values of those derivatives would either be recorded as a
component of net income or as a change in stockholders' equity. The Corporation
is required to adopt this new standard January 1, 2000. Management has not yet
determined the impact of this standard.

         P. Unaudited Financial Statements - Financial information at September
30, 1998 and for the nine months ended September 30, 1998 and 1997 is
unaudited. In the opinion of management of the Company, all adjustments
necessary for a fair presentation of such financial information have been
included. All such adjustments are of a normal recurring nature. The statements
of income, cash flows and changes in stockholders' equity for the nine months
ended September 30, 1998 are not necessarily indicative of the statements of
income, cash flows and changes in stockholders' equity which may be expected
for the year ending December 31, 1998.



                                     C-12
<PAGE>   165


                            SOUTHEAST BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                     YEARS ENDED DECEMBER 31, 1997 AND 1996
                                  (CONTINUED)



1.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

         M. Reclassifications - Certain reclassifications have been made in the
financial statements to conform to the current presentation.

2.       RESTRICTIONS ON CASH AND DUE FROM BANKS

         Included in cash and due from banks are certain non-interest bearing
deposits that are held at the Federal Reserve or maintained in vault cash in
accordance with average balance requirements specified by the Federal Reserve
Board of Governors. The average balance requirement was $1,095,000 at December
31, 1997.

3.       ACQUISITION

         On July 1, 1997, the Company acquired all of the outstanding shares of
First Bank of East Tennessee, N. A., Lafollette, Tennessee, for cash. The total
acquisition cost was $18,690,203, which exceeded the fair value of tangible
assets acquired by $5,651,831. This excess "goodwill" is being amortized on a
straight line basis over 25 years. This combination was accounted for as a
purchase and the results of operations of First Bank are included in the
consolidated financial statements from July 1, 1997.

         The fair value of assets acquired and liabilities assumed as of the
acquisition date are as follows:

<TABLE>
<CAPTION>
                                              (In thousands)
         <S>                                  <C>
         Assets
           Cash and due from banks               $ 6,387
           Deposits in other banks                 3,833
           Investment securities                  10,097
           Net loans                              60,304
           Premises and equipment                  3,827
           Other assets                            1,243
                                                 -------
              Total assets                       $85,691

         Liabilities
           Deposits                              $71,537
           Other liabilities                       1,116
                                                 -------
              Total liabilities                  $72,653

         Net assets acquired                     $13,038

         Cash consideration                       18,690
                                                 -------
         Cost in excess of net assets acquired   $ 5,652
</TABLE>

         In connection with the acquisition of First Bank, the Company entered
into a consulting and non-competition agreement with the former president of
First Bank. The agreement requires semiannual payments of $25,000 through June
30, 2002. The Company recognized $25,000 of expense in 1997 related to this
agreement.



                                     C-13
<PAGE>   166


                            SOUTHEAST BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                     YEARS ENDED DECEMBER 31, 1997 AND 1996
                                  (CONTINUED)



4.       INVESTMENT SECURITIES

         During 1997, the Banks sold certain investment securities previously
classified as held to maturity. As a result, all investment securities have
been reclassified as available for sale. The effect of the reclassification was
to decrease unrealized gains and losses on securities by $56,284 which is
included in the net change in unrealized gain (loss) on securities available
for sale in the statement of changes in stockholders' equity.

         Amortized cost and fair value of investment securities available for
sale at December 31, 1997 are as follows:

<TABLE>
<CAPTION>
                                           Amortized      Unrealized      Unrealized        Fair
                                             Cost           Gains           Losses          Value

<S>                                      <C>              <C>             <C>            <C>
U. S. Treasury securities                $ 4,157,627      $  29,140       $  (3,883)     $ 4,182,884
Obligations of U. S. government
   agencies                               15,437,167         35,508         (69,149)      15,403,526
Obligations of states and political
   subdivisions                           15,513,166        293,344         (17,269)      15,789,241
Asset-backed securities                   18,819,080        114,716         (77,056)      18,856,740
                                         -----------      ---------       ---------      -----------
                                         $53,927,040      $ 472,708       $(167,357)     $54,232,391
</TABLE>

         Amortized cost and fair value of investment securities by category at
December 31, 1996 are as follows:

<TABLE>
<CAPTION>
                                           Amortized      Unrealized      Unrealized        Fair
                                             Cost           Gains           Losses          Value

<S>                                      <C>              <C>             <C>            <C>
Available for sale:
   U. S. Treasury securities             $ 8,996,142      $  45,916       $ (29,245)     $ 9,012,813
   Obligations of U. S. government
         agencies                          6,507,014          8,066         (36,355)       6,478,725
   Asset-backed securities                 1,937,743          4,723         (53,073)       1,889,393
                                         -----------      ---------       ---------      -----------
     Total available for sale            $17,440,899      $  58,705       $(118,673)     $17,380,931


Held to maturity:
   Obligations of U. S. government
         agencies                        $18,894,052      $  25,605       $(196,686)     $18,722,971
   Obligations of states and
     political subdivisions                9,409,575        135,176         (67,900)       9,476,851
   Asset-backed securities                 1,634,878         18,625               0        1,653,503
                                         -----------      ---------       ---------      -----------
     Total available for sale            $29,938,505      $ 179,406       $(264,586)     $29,853,325
</TABLE>



                                     C-14
<PAGE>   167


                            SOUTHEAST BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                     YEARS ENDED DECEMBER 31, 1997 AND 1996
                                  (CONTINUED)



4.       INVESTMENT SECURITIES (CONTINUED)

         The amortized cost and fair value of investment securities at December
31, 1997, by contractual maturity, are shown below. Expected maturities will
differ from contractual maturities because borrowers may have the right to call
or prepay obligations with or without call or prepayment penalties.

<TABLE>
<CAPTION>
                                                            Amortized        Fair
                                                              Cost           Value

         <S>                                              <C>            <C>
         Due in one year or less                          $ 9,687,729    $ 9,678,405
         Due after one year through five years             12,107,529     12,169,196
         Due after five years through ten years             9,738,722      9,894,300
         Due after ten years                                3,573,980      3,633,750
                                                          -----------    -----------
                                                          $35,107,960    $35,375,651
         Asset-backed securities                           18,819,080     18,856,740
                                                          -----------    -----------
                                                          $53,927,040    $54,232,391
</TABLE>

  Information about sales of available for sale securities is as follows:


<TABLE>
<CAPTION>
                                           1997               1996           1995

         <S>                           <C>                <C>            <C>
         Proceeds from sales           $ 15,540,344       $ 3,048,799    $ 3,579,013
         Realized gains                      22,367             3,357         37,872
         Realized losses                      9,920             6,937              0
</TABLE>

         Investment securities having an approximate carrying value of
$35,933,000 and $35,287,000 at December 31, 1997 and 1996, respectively, were
pledged to secure public deposits, trust deposits and for other purposes as
required or permitted by law.

5.       LOANS

         Major classifications of loans are summarized as follows:

<TABLE>
<CAPTION>
                                                 December 31
                                            1997               1996

         <S>                           <C>                <C>
         Commercial                    $114,597,721       $ 86,913,014
         Residential real estate         88,456,116         39,077,047
         Consumer                        41,251,522         30,340,516
         Other                              225,157            212,945
                                       ------------       ------------
                                       $244,530,516       $156,543,522
</TABLE>



                                     C-15
<PAGE>   168


                             SOUTHEAST BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                     YEARS ENDED DECEMBER 31, 1997 AND 1996
                                  (CONTINUED)

5.       LOANS (CONTINUED)

         Changes in the allowance for loan losses were as follows:

<TABLE>
<CAPTION>

                                                          1997              1996                1995
         <S>                                          <C>               <C>               <C>
         Balance, beginning of year                   $ 1,999,625       $ 1,800,000       $ 2,050,000
             Acquired balance                             805,717                 0                 0
             Loans charged off                           (677,000)       (1,113,329)       (1,239,477)
             Recoveries                                   196,186           941,088            99,967
             Provision for loan losses                    587,206           371,866           889,510
                                                      -----------       -----------       -----------
         Balance, end of year                         $ 2,911,734       $ 1,999,625       $ 1,800,000
</TABLE>

         Impaired loans consisted of the following as of and for the year end
December 31:

<TABLE>
<CAPTION>

                                                          1997            1996            1995
         <S>                                             <C>             <C>             <C>
         Impaired loans                                  $ 889,000       $ 360,000       $  784,000
         Average balance during the year                   889,000         483,000        1,984,000
         Amount of allowance for loan losses
           allocated                                       171,000          50,000          298,000
         Interest income recognized                          5,000               0                0
         Cash-basis income recognized                        5,000               0                0
</TABLE>

         In the normal course of business, the Bank makes loans to officers and
directors, and companies in which they have a beneficial ownership. At December
31, 1997 and 1996 these individuals were indebted to the Bank in the aggregate
amount of $4,178,000 and $3,079,000. Activity during 1997 and 1996 consisting of
new loans of $1,361,000 and $374,000 and repayments of $262,000 and $159,000,
respectively. Additionally, one member of the Board of Directors is engaged in a
business which has installment contracts with full and/or partial endorsements
which totaled $425,585 and $576,402 at December 31, 1997 and 1996, respectively.

6.       BANK PREMISES AND EQUIPMENT

         Bank premises and equipment are summarized as follows:

<TABLE>
<CAPTION>

                                                       December 31
                                                  1997              1996

         <S>                                  <C>               <C>
         Land                                 $ 1,736,340       $  536,340
         Buildings and improvements             6,171,827        3,787,416
         Furniture and equipment                4,606,339        3,263,210
         Construction in progress                       0           27,768
                                              -----------       ----------
                                              $12,514,506       $7,614,734
         Less accumulated depreciation          4,449,523        3,958,620
                                              -----------       ----------
                                              $ 8,064,983       $3,656,114
</TABLE>

           Depreciation and amortization expense on Bank premises and equipment
amounted to $490,902, $447,220 and $398,130 in 1997, 1996 and 1995,
respectively.



                                      C-16
<PAGE>   169

                             SOUTHEAST BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                     YEARS ENDED DECEMBER 31, 1997 AND 1996
                                  (CONTINUED)


7.       DEPOSITS

           The total amount of time deposits with balances of $100,000 or more
at December 31, 1997 and 1996 totaled $49,771,000 and $33,040,000, respectively.

         At December 31, 1997, the scheduled maturities of time deposits are as
follows:

<TABLE>
         <S>                                                                 <C>
         Due in one year or less                                             $   127,388,508
         Due after one year through two years                                     27,226,299
         Due after two years through three years                                  10,218,905
         Due after three years through five years                                  5,562,071
         Due after five years                                                        119,228
                                                                             ---------------
                                                                             $   170,515,011
</TABLE>

         Certain directors and executive officers of the Company and companies
in which they have beneficiary ownership are deposit customers of the Banks. The
amount of those deposits was approximately $8,617,000 at December 31, 1997.

8.       SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE

         Securities sold under agreements to repurchase generally mature within
one to four days from the transaction date. The securities underlying the
agreements are maintained in a third-party custodian's account under a written
custodial agreement. Information concerning securities sold under agreements to
repurchase is summarized as follows:

<TABLE>

                                                                            1997               1996
         <S>                                                         <C>                 <C>
         Average daily balance during the year                       $      9,826,443    $     9,270,396

         Average interest rate during the year                                   5.32%              5.06%

         Maximum month-end balance during the year                   $     11,704,315    $    11,149,320
</TABLE>




                                      C-17
<PAGE>   170

                             SOUTHEAST BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                     YEARS ENDED DECEMBER 31, 1997 AND 1996
                                  (CONTINUED)


9.       FEDERAL HOME LOAN BANK ADVANCES

         Advances from the Federal Home Loan Bank were borrowed under a blanket
agreement for advances. At December 31, 1997, the advances have interest rates
ranging from 5.15% to 6.45% and maturities ranging from August 1, 1998 through
March 1, 2009. Scheduled principal repayments associated with the advances are
as follows:

<TABLE>
<CAPTION>
         <S>                                                                 <C>
         Year ending December 31,
               1998                                                          $      6,802,331
               1999                                                                   668,643
               2000                                                                   710,191
               2001                                                                   754,325
               2002                                                                   801,208
               Thereafter                                                           3,514,240
                                                                             ----------------
                                                                             $     13,250,938
</TABLE>

         The advances are collateralized by Federal Home Loan Bank stock and
first mortgage loans amounting to at least 150% of outstanding borrowings, or
approximately $19,900,000 at December 31, 1997.

10.      NOTE PAYABLE

         The note payable is a term note with a commercial bank bearing interest
at the LIBOR rate plus 1.5% (7.16% at December 31, 1997), payable in quarterly
installments of $345,000 plus interest, secured by all of the common stock of
First National and First Bank, and maturing on June 26, 2004.

         The required principal payments on the note for the five years
subsequent to December 31, 1997 are as follows:

<TABLE>
              <S>                                           <C>
              1998                                          $  1,380,000
              1999                                             1,380,000
              2000                                             1,380,000
              2001                                             1,380,000
              2002                                             1,380,000
              Thereafter                                       1,910,000
                                                            ------------
                Total                                       $  8,810,000
</TABLE>


         Under the terms of the related loan agreement the Company must meet
certain financial covenants. The Company was in compliance with all of the
covenants at December 31, 1997.



                                      C-18
<PAGE>   171

                             SOUTHEAST BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                     YEARS ENDED DECEMBER 31, 1997 AND 1996
                                  (CONTINUED)


11.      INCOME TAXES

         The provision for income taxes is summarized as follows:

<TABLE>
<CAPTION>

                                                   1997                1996               1995
         <S>                                 <C>                <C>                 <C>
         Current                             $     1,211,172    $      1,075,927    $       638,021
         Deferred                                    294,395              61,882            128,211
                                             ---------------    ----------------    ---------------
                                             $     1,505,567    $      1,137,809    $       766,232
</TABLE>


         The provision for income taxes differs from the amount computed at the
statutory rate as follows:

<TABLE>
<CAPTION>

                                                                1997           1996         1995
         <S>                                                    <C>            <C>          <C>
         Federal statutory rate                                 34.0%          34.0%        34.0%

         Increase (decrease) resulting from:
           Tax-exempt interest income                           (3.9)          (3.7)        (4.7)
           Acquisition intangibles                              (0.5)           0.0          0.0
           Other                                                 3.3           (0.9)        (2.2)
                                                               -----          -----        -----

         Effective rate                                         32.9%          29.4%        27.1%
                                                               =====          =====        =====
</TABLE>

         The tax effects of temporary differences that give rise to the deferred
tax assets and deferred tax liabilities are as follows:

<TABLE>
<CAPTION>

                                                              1997           1996
         <S>                                              <C>                <C>
         Deferred tax assets:
           Allowance for loan losses                      $   773,526    $   429,333
           Unrealized loss on securities                            -         20,368
           Other                                               35,968         71,543
                                                          -----------    -----------
                                                              809,494        521,244

         Deferred tax liabilities:
           Depreciation                                    (1,107,480)      (188,192)
           FHLB dividends                                    (211,352)       (91,324)
           Other                                             (230,530)       (46,054)
           Unrealized gain on securities                     (102,722)             -
                                                          -----------    -----------
                                                           (1,652,084)      (325,570)
                                                          -----------    -----------

           Net deferred tax asset (liability)             $  (842,590)   $   195,674
                                                          ===========    ===========
</TABLE>




                                      C-19
<PAGE>   172

                             SOUTHEAST BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                     YEARS ENDED DECEMBER 31, 1997 AND 1996
                                  (CONTINUED)


12.      EMPLOYEE BENEFIT PLANS

         The Company has a 401(k) plan for all eligible employees. The plan
specifies that the Company will match 100% of each eligible employee's
contribution up to 4% of compensation. The total expense for 1997, 1996 and 1995
was $73,923, $48,331 and $46,512, respectively.

         The Banks have a partially self-insured health insurance program
covering substantially all employees. Due to obtaining stop-loss insurance, the
maximum annual cost to the Banks is estimated at $224,000. For the year ended
December 31, 1997 and 1996, net of employee contributions, $109,000 and
$127,000, respectively has been charged to expense and $210,000 and $178,000,
respectively, has been paid out for claims. This plan was adopted in November
1995. Total health insurance expense recognized in 1995 was $142,000.

         First National has an unfunded deferred compensation agreement with
certain employees that provides additional benefits upon retirement. The
employees must meet ten years of service before any benefits are vested. If the
employee dies before making a retirement election, the benefits under these
agreements are forfeited. The present value of the minimum amount vested under
the agreement as of December 31, 1997 and 1996 is $80,908 and $102,446,
respectively, which is reflected in other liabilities.

13.      STOCK OPTION PLAN

         The Company has a stock option plan, which is accounted for in
accordance with Accounting Principles Board Opinion (APB) No. 25, "Accounting
for Stock Issued to Employees", and related interpretations. Under the plan, the
Company grants certain officers stock option awards which vest and become fully
exercisable over periods of seven to ten years. The exercise price of each
option, which has a seven to ten year life, was equal to the market price of the
Company's stock on the date of grant; therefore, no compensation expense was
recognized. As of December 31, 1997, no shares have been exercised or forfeited
under this plan.

         A summary of stock options outstanding at December 31, 1997 is as
follows:

<TABLE>
<CAPTION>

                                                                                 Weighted
                                                              Options          Option Price
         <S>                                                 <C>               <C>
         Granted during 1994                                     1,000          $   140.00
         Granted during 1996                                     3,750              221.84
                                                             ---------
         Outstanding at December 31, 1997                        4,750              204.61

         Weighted remaining contractual life                 8.2 years

         Eligible for exercise
           From $140.00 per share                                  600
           From $221.84 per share                                2,175
                                                             ---------
                                                                 2,775
</TABLE>


         Pro forma net income under SFAS No. 123 "Accounting for Stock Based
Compensation" for 1997 and 1996 would decrease approximately $88,000 ($.87 per
share) and $2,000 ($.02 per share). The fair value for these options was
estimated as of grant date using a Black-Scholes option pricing model with
assumptions of a risk-free interest rate of 6.50%, an expected dividend yield of
3.16% and an expected life of 9 years which resulted in an estimated value of
approximately $42 per share. For purposes of this pro 


                                      C-20
<PAGE>   173

                             SOUTHEAST BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                     YEARS ENDED DECEMBER 31, 1997 AND 1996
                                  (CONTINUED)

forma disclosure, the resulting estimated fair value was expensed over the
vesting period on a straight line basis. No pro forma expense was recognized in
1995 as this standard only applies to shares granted during and after 1995.

14.      LIMITATION ON BANK DIVIDENDS

         The Company's principal source of funds for dividend payments and debt
service is dividends received from the Banks. Banking regulations limit the
amount of dividends that may be paid without prior approval of regulatory
agencies. Under these regulations, the amount of dividends that may be paid in
any calendar year are limited to the current year's net profits, as defined,
combined with the retained net profits of the preceding two years. During 1998,
First National could, without prior approval, declare dividends when 1998 net
profits exceed $922,000. There are no dividends available to be paid from First
Bank without prior approval.

15.      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 Cash Equivalents - For those short-term instruments, the
carrying amount is a reasonable estimate of fair value.

         Deposits in Other Banks - The fair value of deposits in other banks is
estimated by discounting the future cash flows using the rates currently offered
for deposits of similar remaining maturities.

         Investment Securities - For investment securities, fair values are
based on quoted market prices or dealer quotes.

         Loans - The fair value of fixed rate loans is estimated by discounting
the 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. For variable rate loans, the carrying amount is a reasonable
estimate of fair value.

         Federal Home Loan Bank and Federal Reserve Bank Stock - The carrying
amount is a reasonable estimate of fair value for these restricted stocks as
they can only be redeemed with the Federal Home Loan Bank or the Federal Reserve
Bank.

         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 certificates of deposit and
individual retirement accounts is estimated by discounting the future cash flows
using the rates currently offered for deposits of similar remaining maturities.

         Federal Funds Purchased and Securities Sold Under Agreements to
Repurchase - These instruments are agreements that are generally short-term in
nature and the carrying value is a reasonable estimate of fair value.

         Federal Home Loan Bank Advances - Rates currently available to the
Company for advances with similar terms and remaining maturities are used to
estimate fair value of existing debt.


                                      C-21
<PAGE>   174

                             SOUTHEAST BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                     YEARS ENDED DECEMBER 31, 1997 AND 1996
                                  (CONTINUED)


15.      DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS
           (CONTINUED)

         Note Payable - The note payable bears interest at a variable rate and
the carrying amount is a reasonable estimate of fair value.

         Other Borrowed Funds - Other borrowed funds are generally short-term in
nature. The interest rate on the Company's other borrowed funds is variable and
the carrying amount is a reasonable estimate of fair value.

         Commitments to Extend Credit and Standby Letters of Credit - The fair
value of commitments to extend credit and standby letters of credit is based on
the difference between the interest rate at which the Company is committed to
make the loans and the current rates at which similar loans would be made to
borrowers with similar credit ratings and for the same remaining maturities,
adjusted for the estimated volume of loan commitments and letters of credit
actually expected to be funded. The fair value of such items is not material.

         The fair values of the Company's financial instruments at December 31
are as follows:

<TABLE>
<CAPTION>

                                                             1997                                    1996
                                                 Carrying                Fair            Carrying              Fair
                                                  Amount                Value             Amount               Value
<S>                                           <C>                 <C>                 <C>                 <C>
Financial assets:
   Cash and cash equivalents                  $  10,912,996       $  10,913,000       $   6,494,377       $   6,494,000
   Deposits in other banks                        1,277,073           1,277,000                   0                   0
   Investment securities                         54,232,391          54,232,000          47,319,436          47,234,000
   Loans                                        244,530,516         241,189,000         156,543,522         156,529,000
   Less: allowance for loan
     losses                                      (2,911,734)         (2,912,000)         (1,999,625)         (2,000,000)
   FHLB stock                                     2,065,200           2,065,000           1,529,400           1,529,000
   Federal Reserve Bank stock                       284,750             285,000             192,000             192,000
                                              -------------       -------------       -------------       -------------
                                              $ 310,391,192       $ 307,049,000       $ 210,079,110       $ 209,978,000

Financial liabilities:
   Deposits                                   $(259,682,764)      $(260,720,000)      $(173,617,343)      $(173,616,000)
   Federal funds purchased
     and securities sold under
     agreements to repurchase                   (17,000,272)        (17,000,000)        (10,494,931)        (10,495,000)
   FHLB advances                                (13,250,938)        (13,251,000)         (8,922,987)         (8,923,000)
   Note payable                                  (8,810,000)         (8,810,000)                  0                   0
   Other borrowed funds                          (2,233,014)         (2,233,000)         (1,745,796)         (1,746,000)
                                              -------------       -------------       -------------       -------------
                                              $(300,976,988)      $(302,014,000)      $(194,781,057)      $(194,780,000)
</TABLE>


                                      C-22
<PAGE>   175
                             SOUTHEAST BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                     YEARS ENDED DECEMBER 31, 1997 AND 1996
                                  (CONTINUED)


16.      OPERATING LEASES

         First National leases certain furniture, fixtures and equipment under a
lease expiring July 30, 2001. The lease provides annual rental payments of
$60,650. The total minimum rental commitment at December 31, 1997 is due as
follows:

<TABLE>
         <S>                                        <C>
         1998                                       $    60,650
         1999                                            60,650
         2000                                            60,650
         2001                                            35,379
                                                    -----------
                                                    $   217,329
</TABLE>

         The Banks lease certain other equipment under operating leases which
expire annually. The leases generally provide for annual renewal options at the
fair rental value and require payment of the property taxes and insurance on the
equipment. The total rental expense for operating leases amounted to $68,298,
$52,851 and $13,890 for the years ended December 31, 1997, 1996 and 1995,
respectively.

17.      FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK

         The Banks are party to financial instruments with off-balance sheet
risk in the normal course of business to meet the financing needs of their
customers. The financial instruments are commitments to extend credit and
standby letters of credit. The Banks use the same credit policies in making
conditional obligations as for on-balance sheet instruments.

         At December 31, 1997 and 1996, the Banks had the following financial
instruments, whose contract amounts represented credit risk:

<TABLE>
<CAPTION>

                                                                1997                1996
         <S>                                             <C>                 <C>
         Standby letters of credit                       $      2,370,000    $     1,428,000

         Commitments to extend credit                    $     23,510,000    $     5,614,000
</TABLE>

         Standby letters of credit represent conditional commitments issued by
the Banks to guarantee the performance of a customer to a third party. The
credit risk involved in issuing letters of credit is essentially the same as
that involved in extending loans to customers. The Banks hold primarily
certificates of deposit and real estate as collateral supporting those
commitments for which collateral is deemed necessary.



                                      C-23
<PAGE>   176
                             SOUTHEAST BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                     YEARS ENDED DECEMBER 31, 1997 AND 1996
                                  (CONTINUED)



17.      FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK
         (CONTINUED)

         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. The Banks evaluate each customer's
creditworthiness on a case-by-case basis. 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, marketable securities, inventory, property and
equipment, and income-producing properties.

18.      SIGNIFICANT GROUP CONCENTRATIONS OF CREDIT

         The Banks grant commercial, consumer and residential loans to customers
located primarily in Whitley and surrounding counties in Kentucky and Campbell
and surrounding counties in Tennessee. Although the Banks have a diversified
loan portfolio, a substantial portion of their debtors' ability to honor their
contracts is dependent upon the local economies in the markets they serve.

19.      EARNINGS PER SHARE

         A reconciliation of the numerators and denominators of the earnings per
common share and earnings per common share assuming dilution computations for
1997 and 1996 is presented below.

<TABLE>
<CAPTION>

                                               Nine Months Ended September 30        Year Ended December 31
                                                   1998            1997          1997         1996         1995
                                                   ----            ----          ----         ----         ----
                                                       (Unaudited)
<S>                                            <C>            <C>            <C>          <C>           <C>       
Earnings Per Share:                                               
   Net income available to common
     stockholders                              $ 2,623,491    $ 2,427,088    $ 2,979,436  $ 2,727,850   $ 2,065,229

   Weighted average common shares
     outstanding                                   100,935        100,524        100,512      100,584       100,498

   Earnings per share                          $     25.99    $     24.14    $     29.64  $     27.12   $     20.55

Earnings Per Share Assuming Dilution:
   Net income available to common
     stockholders                              $ 2,623,491    $ 2,427,088    $ 2,979,436  $ 2,727,850   $ 2,065,229

   Weighted average common shares
     outstanding                                   100,935        100,524        100,512      100,584       100,498
   Add dilutive effects of assumed exercise
     of stock options                                1,366            525            627          369           282
                                               -----------    -----------    -----------  -----------   -----------

                                                   102,301        101,049        101,139      100,953       100,780

   Earnings per share assuming dilution        $     25.64    $     24.02    $     29.46  $     27.02   $     20.49
</TABLE>




                                      C-24
<PAGE>   177
                             SOUTHEAST BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                     YEARS ENDED DECEMBER 31, 1997 AND 1996
                                  (CONTINUED)



20.      CAPITAL ACCOUNTS

         During 1997, the Company's Board of Directors amended its Articles of
Incorporation to authorize 500 shares of no par value, perpetual preferred
stock. Also during 1997, the Board authorized the issuance of 20 shares of
preferred stock designated as "Series A Preferred Stock" and bearing a
noncumulative dividend rate equal to the Wall Street Journal prime rate (8.50%
at December 31, 1997). The shares are redeemable at the option of the Company at
any time at a price of $100,000 per share. In January 1998, the Company redeemed
10 of the outstanding shares. In July 1998, the Company redeemed the remaining
10 shares outstanding.

21.      CONTINGENT LIABILITIES

         The Banks are defendants in legal actions arising from normal business
activities. Management believes these actions are without merit or that the
ultimate liability, if any, resulting from them will not materially affect the
Company's consolidated financial statements.

22.      REGULATORY MATTERS

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

         Quantitative measures established by regulation to ensure capital
adequacy require the Company and the Banks to maintain minimum amounts and
ratios (set forth in the table below) of Total and Tier I capital (as defined in
the regulations) to risk-weighted assets (as defined), and of Tier I capital to
average assets (as defined). Management believes, as of December 31, 1997, that
the Company and the Banks meet all capital adequacy requirements to which they
are subject.




                                      C-25
<PAGE>   178
                             SOUTHEAST BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                     YEARS ENDED DECEMBER 31, 1997 AND 1996
                                  (CONTINUED)



22.        REGULATORY MATTERS (CONTINUED)

         As of December 31, 1997, the most recent notification from the Office
of the Comptroller of the Currency categorized the Company as adequately
capitalized and the Banks as well capitalized under the regulatory framework for
prompt corrective action. To be categorized as well capitalized, the Banks must
maintain minimum Total risk-based, Tier I risk-based, and Tier I leverage ratios
as set forth in the table. There are no conditions or events since that
notification that management believes have changed the institutions' category.

<TABLE>
<CAPTION>

                                                                                                        To Be Well
                                                                                                       Capitalized
                                                                                                       Under Prompt
                                                                                For Capital             Corrective
                                                          Actual             Adequacy Purposes       Action Provisions
                                                    Amount       Ratio       Amount     Ratio        Amount       Ratio
<S>                                            <C>               <C>     <C>            <C>      <C>              <C>
As of December 31, 1997
- -----------------------
Consolidated:
   Total Capital (to Risk-Weighted Assets)     $  22,234,334     9.25%   $ 19,221,280   8.00%    $  24,026,600    10.00%
   Tier I Capital (to Risk-Weighted Assets)       19,322,600     8.04       9,610,640   4.00        14,415,960     6.00
   Tier I Capital (to Average Assets)             19,322,600     7.76      12,816,520   4.00        16,020,650     5.00

 First National:
   Total Capital (to Risk-Weighted Assets)     $  19,795,719    11.29%   $ 14,024,080   8.00%    $  17,530,100    10.00%
   Tier I Capital (to Risk-Weighted Assets)       17,620,719    10.05       7,012,040   4.00        10,518,060     6.00
   Tier I Capital (to Average Assets)             17,620,719     6.03       9,258,400   4.00        11,573,000     5.00

 First Bank:
  Total Capital (to Risk-Weighted Assets)      $   8,959,307    13.79%   $  5,197,200   8.00%    $   6,496,500    10.00%
  Tier I Capital (to Risk-Weighted Assets)         8,222,573    12.66       2,598,600   4.00         3,897,900     6.00
  Tier I Capital (to Average Assets)               8,222,573     9.24       3,558,120   4.00         4,447,650     5.00


As of December 31, 1996 
- -----------------------
Consolidated:
   Total Capital (to Risk-Weighted Assets)     $  22,589,100    14.52%   $ 12,443,600   8.00%    $  15,554,500    10.00%
   Tier I Capital (to Risk-Weighted Assets)       20,644,787    13.27       6,221,800   4.00         9,332,700     6.00
   Tier I Capital (to Average Assets)             20,644,787     9.65       8,557,320   4.00        10,696,650     5.00

 First National:
   Total Capital (to Risk-Weighted Assets)     $  20,073,313    12.91%   $ 12,443,600   8.00%    $  15,554,500    10.00%
   Tier I Capital (to Risk-Weighted Assets)       18,129,000    11.66       6,221,800   4.00         9,332,700     6.00
   Tier I Capital (to Average Assets)             18,129,000     8.49       8,537,320   4.00        10,671,650     5.00
</TABLE>






                                      C-26
<PAGE>   179
                             SOUTHEAST BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                     YEARS ENDED DECEMBER 31, 1997 AND 1996
                                  (CONTINUED)



23.     PARENT COMPANY

         Condensed financial information for the parent company only is
presented as follows:

                                 Balance Sheets

<TABLE>
<CAPTION>

                                                         December 31
                                                    1997             1996
<S>                                             <C>              <C>
    Assets
Cash                                            $ 2,141,778      $  2,480,001
Investment in First National                     17,793,469        18,088,994
Investment in First Bank                         13,791,263                 0
Other assets                                        161,962                 0
                                                -----------      ------------
  Total assets                                  $33,888,472      $ 20,568,995

      Liabilities and Stockholders' Equity
Note payable                                    $ 8,810,000      $          0
Other liabilities                                    14,432                 0
                                                -----------      ------------
  Total liabilities                             $ 8,824,432      $          0

Preferred stock                                 $ 2,000,000      $          0
Common stock                                      5,926,313         5,897,976
Unrealized gain (loss) on securities                199,401           (39,537)
Retained earnings                                16,938,326        14,710,556
                                                -----------      ------------
  Total stockholders' equity                    $25,064,040      $ 20,568,995

TOTAL LIABILITIES AND STOCKHOLDERS'
  EQUITY                                        $33,888,472      $ 20,568,995
</TABLE>



                                      C-27
<PAGE>   180
                             SOUTHEAST BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                     YEARS ENDED DECEMBER 31, 1997 AND 1996
                                  (CONTINUED)



23.      PARENT COMPANY (CONTINUED)

                              Statements of Income

<TABLE>
<CAPTION>

                                                           Year Ended December 31
                                                   1997              1996               1995
<S>                                            <C>               <C>               <C>
         Income
  Dividends from subsidiaries                  $ 8,723,732       $ 3,194,424       $  582,784
  Other                                             59,000                52              188
                                               -----------       -----------       ----------
    Total                                      $ 8,782,732       $ 3,194,476       $  582,972

Expenses
  Interest expense                             $   327,567       $         0       $        0
  Professional fees                                 36,496            22,222            3,071
  Other                                             77,463               557               45
                                               -----------       -----------       ----------
    Total expenses                             $   441,526       $    22,779       $    3,116

Income before distributions in excess of
  earnings of subsidiaries                     $ 8,341,206       $ 3,171,697       $  579,856

Distributions in excess of (equity in
  undistributed) earnings of subsidiaries       (5,403,802)         (443,847)       1,485,373
                                               -----------       -----------       ----------

Income before income taxes                     $ 2,937,404       $ 2,727,850       $2,065,229

Provision for income taxes                        (130,059)                0                0
                                               -----------       -----------       ----------

NET INCOME                                     $ 3,067,463       $ 2,727,850       $2,065,229
</TABLE>




                                      C-28
<PAGE>   181
                             SOUTHEAST BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                     YEARS ENDED DECEMBER 31, 1997 AND 1996
                                  (CONTINUED)



23.      PARENT COMPANY (CONTINUED)

                            Statements of Cash Flows

<TABLE>
<CAPTION>

                                                                                          Year Ended December 31

                                                                               1997               1996               1995
<S>                                                                        <C>                <C>               <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net income                                                              $  3,067,463       $ 2,727,850       $ 2,065,229
   Adjustments to reconcile net income to net cash
     provided by operating activities:
       Distributions in excess of (equity in undistributed)
         earnings of subsidiaries                                             5,403,802           443,847        (1,485,373)
       Change in other assets                                                  (161,962)                0                 0
       Change in other liabilities                                               14,432                 0                 0
                                                                           ------------       -----------       -----------
         Net cash provided by operating activities                         $  8,323,735       $ 3,171,697       $   579,856

CASH FLOWS FROM INVESTING ACTIVITIES:
   Cash payment related to acquisition                                     $(18,690,203)      $         0       $         0

CASH FLOWS FROM FINANCING ACTIVITIES:
   Proceeds from note payable                                              $ 10,000,000       $         0       $         0
   Repayment of note payable                                                 (1,190,000)                0                 0
   Reimbursement from subsidiary                                                 29,601                 0                 0
   Issuance of preferred stock                                                2,000,000                 0                 0
   Proceeds from sale of common stock                                            39,537            29,600                 0
   Purchase of common stock                                                     (39,135)          (21,578)                0
   Dividends paid                                                              (811,758)         (704,022)         (582,784)
                                                                           ------------       -----------       -----------
     Net cash provided by (used in) financing activities                   $ 10,028,245       $  (696,000)      $  (582,784)

Net (decrease) increase in cash                                            $   (338,223)      $ 2,475,697       $    (2,928)

Cash at beginning of year                                                     2,480,001             4,304             7,232
                                                                           ------------       -----------       -----------

CASH AT END OF YEAR                                                        $  2,141,778       $ 2,480,001       $     4,304
</TABLE>





                                      C-29
<PAGE>   182



                                                                      APPENDIX D




                    STIFEL, NICOLAUS & COMPANY, INCORPORATED

                                FAIRNESS OPINION

                            DATED NOVEMBER ____, 1998











                                       D-1

<PAGE>   183






               [STIFEL NICOLAUS & COMPANY INCORPORATED LETTERHEAD]



                               November ___, 1998



Board of Directors
Southeast Bancorp, Inc.
Corbin, Kentucky


Members of the Board:

               You have requested our opinion as to the fairness from a
financial point of view to the shareholders of Southeast Bancorp, Inc.
("Southeast") of the exchange ratio (the "Exchange Ratio") of 11.870 shares of
common stock, par value $5.00 per share, of Union Planters Corporation ("Union
Planters") to be exchanged for each share of common stock, no par value, of
Southeast pursuant to the terms of the Agreement and Plan of Merger, dated as of
August 7, 1998 (the "Agreement") by and between Southeast and Union Planters.
For the purposes of our opinion, we have assumed that the merger of Southeast
with Union Planters pursuant to this Agreement (the "Merger") will constitute a
tax-free reorganization as contemplated by the Agreement and the Merger will
qualify as a pooling of interests for accounting purposes.

               Stifel, Nicolaus & Company, Incorporated ("Stifel"), as part of
its investment banking services, is regularly engaged in the independent
valuation of businesses and securities in connection with mergers, acquisitions,
underwritings, sales and distributions of listed and unlisted securities,
private placements and valuations for estate, corporate and other purposes. We
are familiar with Southeast and Union Planters and have completed our financial
analysis of this transaction. In the ordinary course of its business, Stifel
actively trades equity securities of Union Planters for its own account and for
the accounts of its customers and, accordingly, may at any time hold a long or
short position in such securities. Stifel has performed various investment
banking services for Union Planters from time to time in the past, and expects
to render such services to Union Planters and its subsidiaries and affiliates in
the future.

               In rendering our opinion, we have reviewed, among other things:
the August 7, 1998 draft of the Agreement; the financial statements of Southeast
and Union Planters included in their respective Annual Reports for the 5 years
ended December 31, 1997, and their respective Quarterly Reports for the quarter
ended March 31, 1998; certain internal financial analyses and forecasts for
Southeast prepared by its management; certain internal financial forecasts for
Southeast; and certain pro forma financial forecasts for Southeast and Union
Planters on a

                                       D-2

<PAGE>   184
combined basis, giving effect to the Merger, prepared by the management of
Southeast utilizing Southeast's internal financial forecasts and publicly
available consensus analyst estimates for Union Planters. We have conducted
conversations with Southeast's senior management regarding recent developments
and management's financial forecasts for Southeast. In addition, we have spoken
to members of Southeast's senior management and Union Planters' senior
management regarding factors which affect each entity's business. We have
reviewed analysts' forecasts for Union Planters used by the management of
Southeast in preparing pro forma financial forecasts for the combined company
resulting from the merger. We have also compared certain financial and
securities data of Southeast and Union Planters with various other companies
whose securities are traded in public markets, reviewed the historical stock
prices and trading volumes of the common stock of Union Planters, reviewed the
financial terms of certain other business combinations and conducted such other
financial studies, analyses and investigations as we deemed appropriate for
purposes of this opinion. We also took into account our assessment of general
economic, market and financial conditions and our experience in other
transactions, as well as our experience in securities valuations and our
knowledge of the commercial banking industry generally.

               In rendering our opinion, we have relied upon and assumed,
without independent verification, the accuracy and completeness of all of the
financial and other information that was provided to us or that was otherwise
reviewed by us and have not assumed any responsibility for independently
verifying any of such information. With respect to the financial forecasts
supplied to us (including without limitation, projected cost savings and
operating synergies resulting from the Merger), we have assumed that they were
reasonably prepared on the basis reflecting the best currently available
estimates and judgments of the management of Southeast as to the future
operating and financial performance of Southeast, that they would be realized in
the amounts and time periods estimated and that they provided a reasonable basis
upon which we could form our opinion. Stifel also assumed, with Southeast's
consent, that the analysts forecasts for Union Planters used in preparing the
pro forma financial forecasts for the combined company resulting from the merger
would be realized in the amounts and time periods estimated and that they would
provide a reasonable basis upon which Stifel could form its opinion. We also
assumed that there were no material changes in the assets, liabilities,
financial condition, results of operations, business or prospects of either
Southeast or Union Planters since the date of the last financial statements made
available to us. We have also assumed, without independent verification and with
Southeast's consent, that the aggregate allowances for loan losses set forth in
the financial statements of Southeast and Union Planters are in the aggregate
adequate to cover all such losses. We did not make or obtain any independent
evaluation, appraisal or physical inspection of Southeast's or Union Planters'
assets or liabilities, the collateral securing any of such assets or
liabilities, or the collectibility of any such assets nor did we review loan or
credit files of Southeast or Union Planters. We relied on advice of Southeast's
counsel and accountants as to all legal and accounting matters with respect to
Southeast, the Agreement and the transactions and other matters contained or
contemplated therein. We have assumed, with Southeast's consent, that there are
no factors that would delay or subject to any adverse conditions any necessary
regulatory or governmental approval and that all conditions to the Merger will
be satisfied and not waived.

               Our opinion is necessarily based on economic, market, financial
and other conditions as they exist on, and on the information made available to
us as of, the date of this letter. Our opinion

                                       D-3

<PAGE>   185
is directed to the Board of Directors of Southeast for its information and
assistance in connection with its consideration of the financial terms of the
Merger and does not constitute a recommendation to any shareholder as to how
such shareholder should vote on the proposed transaction, nor have we expressed
any opinion as to the prices at which any securities of Southeast or Union
Planters might trade in the future. Except as required by applicable law,
including without limitation federal securities laws, our opinion may not be
published or otherwise used or referred to, nor shall any public reference to
Stifel be made, without our prior written consent.

               Based upon the foregoing and such other factors as we deem
relevant, we are of the opinion, as of the date hereof, that the Exchange Ratio
pursuant to the Agreement is fair to the holders of Southeast Common Stock from
a financial point of view.

                                              Very truly yours,


                                              STIFEL, NICOLAUS & COMPANY,
                                              INCORPORATED









                                       D-4

<PAGE>   186



                                                                      APPENDIX E




                               SUBTITLE 13 OF THE

                        KENTUCKY BUSINESS CORPORATION ACT








                                       E-1

<PAGE>   187

                        SUBTITLE 13. DISSENTERS' RIGHTS
                 RIGHT TO DISSENT AND OBTAIN PAYMENT FOR SHARES

          271B.13-010. Definitions. As used in this subtitle:
          
          (1)  "Corporation" means the issuer of the shares held by a 
dissenter, except that in the case of a merger where the issuing corporation is 
not the surviving corporation, then after consummation of the merger, 
"Corporation" shall mean the surviving corporation.

          (2)  "Dissenter" means a shareholder who is entitled to dissent from 
corporate action under KRS 271B.13-020 and who exercises that right when and in 
the manner required by KRS 271B.13-200 to 271B.13-280.
          
          (3)  "Fair value," with respect to a dissenter's shares, means the
value of the shares immediately before the effectuation of the corporate action
to which the dissenter objects, excluding any appreciation or depreciation in
anticipation of the corporate action unless exclusion would be inequitable. In
any transaction subject to the requirements of KRS 271B.12-210 or exempted by
KRS 271B.12-220(2), "fair value" shall be at least an amount required to be paid
under KRS 271B.12-220(2) in order to be exempt from the requirements of
KRS271B.12-210.

          (4)  "Interest" means interest from the effective date of the 
corporate action until the date of payment, at the average rate currently paid 
by the corporation on its principal bank loans or, if none, at a rate that is 
fair and equitable under all the circumstances.

          (5)  "Record shareholder" means the person in whose name shares are 
registered in the records of a corporation or the beneficial owner of shares 
to the extent of the rights granted by a nominee certificate on file with a 
corporation.

          (6)  "Beneficial shareholder" means the person who is a beneficial 
owner of shares held in a voting trust or by a nominee as the record 
shareholder.

          (7)  "Shareholder" means the record shareholder or the beneficial 
shareholder.

          271B.13-020. Right to dissent. (1) A shareholder shall be entitled to 
dissent from, and obtain payment of the fair value of his shares in the event 
of, any of the following corporate actions:

          (a) Consummation of a plan of merger to which the corporation is a 
party:


                                      E-2
<PAGE>   188

     1.   If shareholder approval is required for the merger by KRS 271B.11-030
or the articles of incorporation and the shareholder is entitled to vote on the 
merger; or

     2.   If the corporation is a subsidiary that is merged with its parent 
under KRS 271B.11-040;

          (b) Consummation of a plan of share exchange to which the 
corporation is a party as the corporation whose shares will be acquired, if the 
shareholder is entitled to vote on the plan;

          (c) Consummation of a sale or exchange of all, or substantially all, 
of the property of the corporation other than in the usual and regular course 
of business, if the shareholder is entitled to vote on the sale or exchange, 
including a sale in dissolution, but not including a sale pursuant to court 
order or a sale for cash pursuant to a plan by which all or substantially all 
of the net proceeds of the sale will be distributed to the shareholders within 
one (1) year after the date of sale;

          (d) An amendment of the articles of incorporation that materially and 
adversely affects rights in respect of a dissenter's shares because it:

     1.   Alters or abolishes a preferential right of the shares to a 
distribution or in dissolution;

     2.   Creates, alters, or abolishes a right in respect of redemption, 
including a provision respecting a sinking fund for the redemption or 
repurchase, of the shares;

     3.   Excludes or limits the right of the shares to vote on any matter 
other than a limitation by dilution through issuance of shares or other 
securities with similar voting rights; or

     4.   Reduces the number of shares owned by the shareholder to a fraction 
of a share if the fractional share so created is to be acquired for cash under 
KRS 271B.6-040;

          (e) Any transaction subject to the requirements of KRS 271B.12-210 or 
exempted by KRS 271B.12-220(2); or

          (f) Any corporate action taken pursuant to a shareholder vote to the 
extent the articles of incorporation, bylaws, or a resolution of the board of 
directors provides that voting or nonvoting shareholders are entitled to 
dissent and obtain payment for their shares.

          (2) A shareholder entitled to dissent and obtain payment for his 
shares under this chapter shall not challenge the corporate action creating his 
entitlement unless the action is unlawful or fraudulent with respect to the 
shareholder or the corporation.

          271B.13-030.  Dissent by nominees and beneficial owners. (1) A record 
shareholder may assert dissenters' rights as to fewer than all the shares 
registered in his name only if he shall dissent with respect to all shares  
beneficially owned by any one (1) person and notify the corporation 


                                      E-3
<PAGE>   189
in writing of the name and address of each person on whose behalf he asserts
dissenters' rights. The rights of a partial dissenter under this subsection
shall be determined as if the shares as to which he dissents and his other 
shares were registered in the names of different shareholders.

          (2)  A beneficial shareholder may assert dissenters' rights as to 
shares held on his behalf only if:

          (a)  He submits to the corporation the record shareholder's written 
consent to the dissent not later than the time the beneficial shareholder 
asserts dissenters' rights; and

          (b)  He does so with respect to all shares of which he is the 
beneficial shareholder or over which he has power to direct the vote.

                  PROCEDURE FOR EXERCISE OF DISSENTERS' RIGHTS

          271B.13-200.  Notice of dissenters' rights. (1) If proposed corporate
action creating dissenters' rights under KRS 271B.13-020 is submitted to a vote
at a shareholders' meeting, the meeting notice must state that shareholders are
or may be entitled to assert dissenters' rights under this subtitle and the
corporation shall undertake to provide a copy of this subtitle to any
shareholder entitled to vote at the shareholders' meeting upon request of that
shareholder.

          (2)  If corporate action creating dissenters' rights under 
KRS 271B.13-020 is taken without a vote of shareholders, the corporation shall 
notify in writing all shareholders entitled to assert dissenters' rights that 
the action was taken and send them the dissenters' notice described in 
KRS 271B.13-220.

          271B.13-210. Notice of intent to demand payment. (1) If proposed 
corporate action creating dissenters' rights under KRS 271B.13-020 is submitted 
to a vote at a shareholders' meeting, a shareholder who wishes to assert 
dissenters' rights:

          (a)  Shall deliver to the corporation before the vote is taken 
written notice of his intent to demand payment for his shares if the proposed 
action is effectuated; and

          (b)  Shall not vote his shares in favor of the proposed action.

          (2)  A shareholder who does not satisfy the requirements of 
subsection (1) of this section shall not be entitled to payment for his shares 
under this chapter.

          271B.13-220. Dissenters' notice. (1) If proposed corporate action 
creating dissenters' rights under KRS 271B.13-020 is authorized at a 
shareholders' meeting, the corporation shall deliver a written dissenters' 
notice to all shareholders who satisfied the requirements of KRS 271B.13-210. 


                                      E-4
<PAGE>   190
          (2)  The dissenters' notice shall be sent no later than ten (10) days 
after the date the proposed corporate action was authorized by the 
shareholders, or, if no shareholder authorization was obtained, by the board of 
directors, and shall:

          (a)  State where the payment demand must be sent and where and when 
certificates for certificated shares must be deposited;

          (b)  Inform holders of uncertificated shares to what extent transfer 
of the shares will be restricted after the payment demand is received;

          (c)  Supply a form for demanding payment that includes the date of 
the first announcement to news media or to shareholders of the terms of the 
proposed corporate action and requires that the person asserting dissenters' 
rights certify whether or not he acquired beneficial ownership of the shares 
before that date;

          (d)  Set a date by which the corporation must receive the payment
demand, which date may not be fewer than thirty (30), nor more than sixty (60)
days after the date the notice provided in subsection (1) of this section is
delivered; and

          (e)  Be accompanied by a copy of this subtitle.

          271B.13-230.  Duty to demand payment. (1) A shareholder who is sent a 
dissenters' notice described in KRS 271B.13-220 shall demand payment, certify 
whether he acquired beneficial ownership of the shares before the date required 
to be set forth in the dissenters' notice pursuant to subsection (2)(c) of KRS 
271B.13-220, and deposit his certificates in accordance with the terms of the 
notice.

          (2)  The shareholder who demands payment and deposits his share 
certificates under subsection (1) of this section shall retain all other rights 
of a shareholder until these rights are cancelled or modified by the taking of 
the proposed corporate action.

          (3)  A shareholder who does not demand payment or deposit his share 
certificates where required, each by the date set in the dissenters' notice, 
shall not be entitled to payment for his shares under this subtitle.

          271B.13-240. Share restrictions.  (1) The corporation may restrict 
the transfer of uncertificated shares from the date the demand for their 
payment is received until the proposed corporate action is taken or the 
restrictions released under KRS 271B.13-260.

          (2)  The person for whom dissenters' rights are asserted as to 
uncertificated shares shall retain all other rights of a shareholder until these
rights are cancelled or modified by the taking of the proposed corporate 
action.


                                      E-5
<PAGE>   191
          271B.13-250.  Payment.  (1)  Except as provided in KRS 271B.13-270, as
soon as the proposed corporate action is taken, or upon receipt of a payment
demand, the corporation shall pay each dissenter who complied with KRS
271B.13-230 the amount the corporation estimates to be the fair value of his
shares, plus accrued interest.


          (2)  The payment shall be accompanied by:


          (a)  The corporation's balance sheet as of the end of a fiscal year
ending not more than sixteen (16) months before the date of payment, an income
statement for that year, a statement of changes in shareholders' equity for that
year, and the latest available interim financial statements, if any;


          (b)  A statement of the corporation's estimate of the fair value of
the shares;


          (c)  An explanation of how the interest was calculated; and


          (d)  A statement of the dissenter's right to demand payment under KRS
271B.13-280.


          271B.13-260.  Failure to take action.  (1)  If the corporation does
not take the proposed action within sixty (60) days after the date set for
demanding payment and depositing share certificates, the corporation shall
return the deposited certificates and release the transfer restrictions imposed
on uncertificated shares.


          (2)  If after returning deposited certificates and releasing transfer
restrictions, the corporation takes the proposed action, it shall send a new
dissenters' notice under KRS 271B.13-220 and repeat the payment demand
procedure.


          271B.13-270.  After-acquired shares.  (1)  A corporation may elect to
withhold payment required by KRS 271B.13-250 from a dissenter unless he was the
beneficial owner of the shares before the date set forth in the dissenters'
notice as the date of the first announcement to news media or to shareholders of
the terms of the proposed corporate action.


          (2)  To the extent the corporation elects to withhold payment under
subsection (1) of this section, after taking the proposed corporate action, it
shall estimate the fair value of the shares, plus accrued interest, and shall
pay this amount to each dissenter who agrees to accept it in full satisfaction
of his demand. The corporation shall send with its offer a statement of its
estimate of the fair value of the shares, an explanation of how the interest was
calculated, and a statement of the dissenter's right to demand payment under KRS
271B.13-280.


          271B.13-280.  Procedure if shareholder dissatisfied with payment or
offer.  (1)  A dissenter may notify the corporation in writing of his own
estimate of the fair value of his shares and amount of interest due, and demand
payment of his estimate (less any payment under KRS 271B.13-250), 


                                      E-6
<PAGE>   192
or reject the corporation's offer under KRS 271B.13-270 and demand payment of 
the fair value of his shares and interest due, if:

          (a)  The dissenter believes that the amount paid under KRS 
271B.13-250 or offered under KRS 271B.13-270 is less than the fair value of his 
shares or that the interest due is incorrectly calculated;

          (b)  The corporation fails to make payment under KRS 271B.13-250 
within sixty (60) days after the date set for demanding payment; or

          (c)  The corporation, having failed to take the proposed action, does 
not return the deposited certificates or release the transfer restrictions 
imposed on uncertificated shares within sixty (60) days after the date set for 
demanding payment.

          (2)  A dissenter waives his right to demand payment under this 
section unless he shall notify the corporation of his demand in writing under 
subsection (1) of this section within thirty (30) days after the corporation 
made or offered payment for his shares.


                          JUDICIAL APPRAISAL OF SHARES


          271B.13-300 Court action.  (1) If a demand for payment under KRS 
271B.13-280 remains unsettled, the corporation shall commence a proceeding 
within sixty (60) days after receiving the payment demand and petition the 
court to determine the fair value of the shares and accrued interest. If the 
corporation does not commence the proceeding within the sixty (60) day period, 
it shall pay each dissenter whose demand remains unsettled the amount demanded.

          (2)  The corporation shall commence the proceeding in the circuit 
court of the county where a corporation's principal office (or, if none in this 
state, its registered office) is located. If the corporation is a foreign 
corporation without a registered office in this state, it shall commence the 
proceeding in the county in this state where the registered office of the 
domestic corporation merged with or whose shares were acquired by the foreign 
corporation was located.

          (3)  The corporation shall make all dissenters (whether or not 
residents of this state) whose demands remain unsettled parties to the 
proceeding as in an action against their shares and all parties shall be 
served with a copy of the petition. Nonresidents may be served by registered or 
certified mail or by publication as provided by law.

          (4)  The jurisdiction of the court in which the proceeding is 
commenced under subsection (2) of this section shall be plenary and exclusive. 
The court may appoint one (1) or more persons as appraisers to receive evidence 
and recommend decision on the question of fair value. The appraisers have the 
powers described in the order appointing them, or in any amendment to it. The 
dissenters shall be entitled to the same discovery rights as parties in other 
civil proceedings.

                                      E-7
<PAGE>   193
          (5)  Each dissenter made a party to the proceeding shall be entitled 
to judgment:

          (a)  For the amount, if any, by which the court finds the fair value 
of his shares, plus interest, exceeds the amount paid by the corporation; or

          (b)  For the fair value, plus accrued interest, of his after-acquired 
shares for which the corporation elected to withhold payment under KRS 
271B.13-270.

          271B.13-310. Court costs and counsel fees. (1) The court in an 
appraisal proceeding commenced under KRS 271B.13-300 shall determine all costs 
of the proceeding, including the reasonable compensation and expenses of 
appraisers appointed by the court. The court shall assess the costs against the 
corporation, except that the court may assess costs against all or some of the 
dissenters, in amounts the court finds equitable, to the extent the court finds 
the dissenters acted arbitrarily, vexatiously, or not in good faith in 
demanding payment under KRS 271B.13-280.

          (2)  The court may also assess the fees and expenses of counsel and 
experts for the respective parties, in amounts the court finds equitable:

          (a)  Against the corporation and in favor of any or all dissenters, 
if the court finds the corporation did not substantially comply with the 
requirements of KRS 271B.13-200 to 271B.13-28.
          
          (b)  Against either the corporation or a dissenter, in favor of any 
other party, if the court finds that the party against whom the fees and 
expenses are assessed acted arbitrarily, vexatiously, or not in good faith with 
respect to the rights provided by this subtitle. 

          (3)  If the court finds that the services of counsel for any 
dissenter were of substantial benefit to other dissenters similarly situated, 
and that the fees for those services should not be assessed against the 
corporation, the court may award to these counsel reasonable fees to be paid 
out of the amounts awarded the dissenters who were benefited.

                                      E-8
<PAGE>   194



                                     PART II
                     INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 20.       INDEMNIFICATION OF DIRECTORS AND OFFICERS.

The Restated Charter of the Registrant provides as follows:

TWELFTH:       INDEMNIFICATION OF CERTAIN PERSONS:

               To the fullest extent permitted by Tennessee law, the Corporation
may indemnify or purchase and maintain insurance to indemnify any of its
directors, officers, employees or agents and any persons who may serve at the
request of the Corporation as directors, officers, employees, trustees or agents
of any other corporation, firm, association, national banking association,
state-chartered bank, trust company, business trust, organization or any other
type of entity whether or not the Corporation shall have any ownership interest
in such entity. Such indemnification(s) may be provided for in the Bylaws, or by
resolution of the Board of Directors or by appropriate contract with the person
involved.

Article V, INDEMNIFICATION, of the Registrant's Amended and Restated Bylaws
provides as follows:

               The Corporation does hereby indemnify its directors and officers
to the fullest extent permitted by the laws of the State of Tennessee and by
ARTICLE TWELFTH of its Charter. The Corporation may indemnify any other person
to the extent permitted by the Charter and by applicable law.

               Indemnification of corporate directors and officers is governed
by Sections 48-18-501 through 48-18-509 of the Tennessee Business Corporation
Act (the "Act"). Under the Act, a person may be indemnified by a corporation
against judgments, fines, amounts paid in settlement and reasonable expenses
(including attorneys' fees) actually and necessarily incurred by him in
connection with any threatened or pending suit or proceeding or any appeal
thereof (other than an action by or in the right of the corporation), whether
civil or criminal, by reason of the fact that he is or was a director or officer
of the corporation or is or was serving at the request of the corporation as a
director or officer, employee or agent of another corporation of any type or
kind, domestic or foreign, if such director or officer acted in good faith for a
purpose which he reasonably believed to be in the best interest of the
corporation and, in criminal actions or proceedings only, in addition, had no
reasonable cause to believe that his conduct was unlawful. A Tennessee
corporation may indemnify a director or officer thereof in a suit by or in the
right of the corporation against amounts paid in settlement and reasonable
expenses, including attorneys' fees, actually and necessarily incurred as a
result of such suit unless such director or officer did not act in good faith or
with the degree of diligence, care and skill which ordinarily prudent men
exercise under similar circumstances and in like positions.

               A person who has been wholly successful, on the merits or
otherwise, in the defense of any of the foregoing types of suits or proceedings
is entitled to indemnification for the foregoing

                                       -1-

<PAGE>   195
amounts. A person who has not been wholly successful in any such suit or
proceeding may be indemnified only upon the order of a court or a finding that
the director or officer met the required statutory standard of conduct by (i) a
majority vote of a disinterested quorum of the Board of Directors, (ii) the
Board of Directors based upon the written opinion of independent legal counsel
to such effect, or (iii) a vote of the shareholders.


                                       -2-

<PAGE>   196
ITEM 21.   EXHIBITS.

               The following exhibits are filed herein or have been, as noted,
previously filed:


<TABLE>
<CAPTION>
Exhibit
No.                                                          Description
- --------------------------             ---------------------------------------------------------------
<S>                                    <C>
        2.1                            Agreement and Plan of Merger, dated as of August 7, 1998,
                                       by and between Union Planters Corporation, Union Planters
                                       Holding Corporation and Southeast Bancorp, Inc. (Included
                                       as Appendix A to the Proxy Statement included as part of this
                                       Registration Statement.)
        2.2                            Plan of Merger of Southeast Bancorp, Inc. into and with
                                       Union Planters Holding Corporation.  (Included as Appendix
                                       B to the Proxy Statement included as part of this Registration
                                       Statement.)
        4.1                            Restated Charter of Union Planters Corporation.
                                       (Incorporated by reference to Exhibit 3(a) to the Quarterly
                                       Report on Form 10-Q of Union Planters for the fiscal quarter
                                       ended March 31, 1998 (File No. 1-10160).)
        4.2                            Amended and Restated Bylaws of Union Planters
                                       Corporation.  (Incorporated by reference to Exhibit 3(b) to the
                                       Annual Report on Form 10-K of Union Planters for the fiscal
                                       year ended December 31, 1996 (File No. 1-10160).)
        5.1                            Opinion of E. James House, Jr., Secretary and Manager of the
                                       Legal Department of Union Planters Corporation, as to the
                                       validity of the shares of Union Planters Common Stock.
        8.1                            Opinion of Wyatt, Tarrant & Combs as to federal income tax
                                       consequences.
       23.1                            Consent of PricewaterhouseCoopers LLP.
       23.2                            Consent of Marr, Miller & Myers, P.S.C., independent
                                       auditors for Southeast Bancorp, Inc.
       23.3                            Consent of Crowe, Chizek & Company, LLP.
       23.4                            Consent of Stifel, Nicolaus & Company, Inc.
       23.5                            Consent of E. James House, Jr., Secretary and Manager of the
                                       Legal Department of Union Planters Corporation (included in
                                       Exhibit 5.1).
       23.6                            Consent of Wyatt Tarrant & Combs (included in Exhibit 8.1).
       24.1                            Power of Attorney (contained on the signature page hereof).
       99.1                            Form Proxy Appointment Card of Southeast Bancorp, Inc.

</TABLE>

                                       -3-

<PAGE>   197
ITEM 22.   UNDERTAKINGS.

               The undersigned Registrant hereby undertakes:

               (1) That, for purposes of determining any liability under the
Securities Act of 1933, each filing of the Registrant's annual report pursuant
to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 that is
incorporated by reference in the registration statement 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.

               (2) That for purposes of determining any liability under the
Securities Act of 1933, the information omitted from the form of prospectus
filed as part of this registration statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the Registrant 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.

               (3) That for the purpose of determining any liability under the
Securities Act of 1933, 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.

               (4) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 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 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 Act and will
be governed by the final adjudication of such issue.

               (5) To respond to requests for information that is incorporated
by reference into the prospectus pursuant to Items 4, 10(b), 11, or 13 of this
Form S-4, within one business day of receipt of such request, and to send the
incorporated documents by first class mail or other equally prompt means. This
includes information contained in documents filed subsequent to the effective
date of the registration statement through the date of responding to the
request.

               (6) To supply by means of a post-effective amendment all
information concerning a transaction, and the company being acquired involved
therein, that was not the subject of and included in the registration statement
when it became effective.


                                       -4-

<PAGE>   198



               (7) That prior to any public reoffering of the securities
registered hereunder through the use of a prospectus which is a part of this
registration statement, by any person or party who is deemed to be an
underwriter within the meaning of Rule 145(c), the issuer undertakes that such
reoffering prospectus will contain the information called for by the applicable
registration form with respect to reofferings by persons who may be deemed
underwriters, in addition to the information called for by the other items of
the applicable form.

               (8) That every prospectus: (i) that is filed pursuant to
Paragraph (7) immediately preceding, or (ii) that purports to meet the
requirements of Section 10(a)(3) of the Act and is used in connection with an
offering of securities subject to Rule 415, will be filed as a part of an
amendment to the registration statement and will not be used until such
amendment is effective, and that, for purposes of determining any liability
under the Securities Act of 1933, each such post-effective amendment 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-

<PAGE>   199



                                   SIGNATURES

               Pursuant to the requirements of the Securities Act of 1933, the
Registrant has duly caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Memphis,
State of Tennessee on this the 15th day of October, 1998.

                                           REGISTRANT

                                           UNION PLANTERS CORPORATION


                                           By:  /s/ Benjamin W. Rawlins, Jr.
                                               ------------------------------
                                                  Benjamin W. Rawlins, Jr.
                                                  Chairman of the Board and
                                                  Chief Executive Officer

               We, the undersigned directors and officers of Union Planters
Corporation do hereby constitute and appoint E. James House, Jr. and M. Kirk
Walters, and each of them, our true and lawful attorneys-in-fact and agents,
with full power of substitution and resubstitution, for us and in our name,
place and stead, in any and all capacities, to sign any and all amendments to
this Registration Statement and to file the same, with all exhibits thereto, and
other documents in connection therewith, with the Securities and Exchange
Commission, and we do hereby ratify and confirm all that said attorneys-in-fact
and agents, or their substitutes, may lawfully do or cause to be done by virtue
hereof.

               Pursuant to the requirements of the Securities Act of 1933, as
amended, this registration statement has been signed below by the following
persons in the capacities and at the dates indicated.

<TABLE>
<CAPTION>
               SIGNATURES                            TITLE                                       DATE
               ----------                            -----                                       ----
<S>                                         <C>                                            <C> 
/s/  Benjamin W. Rawlins, Jr.               Chairman of the Board,                         October 15, 1998
- ---------------------------------            Chief Executive Officer, Director
        Benjamin W. Rawlins, Jr.             (Principal Executive Officer)

/s/ Jackson W. Moore                        President, Chief Operating Officer,            October 15, 1998
- ---------------------------------            Director
        Jackson W. Moore

/s/ John W. Parker                          Executive Vice President and                   October 15, 1998
- ---------------------------------            Chief Financial Officer
        John W. Parker                       (Principal Financial Officer)

/s/     M. Kirk Walters                     Senior Vice President, Treasurer,              October 15, 1998
- ---------------------------------            and Chief Accounting Officer
        M. Kirk Walters
</TABLE>

                                       -6-

<PAGE>   200
<TABLE>
<CAPTION>
               SIGNATURES                            TITLE                                       DATE
               ----------                            -----                                       ----
<S>                                         <C>                                            <C> 
/s/     Marvin E. Bruce                     Director                                       October 15, 1998
- ----------------------------------
        Marvin E. Bruce

/s/     George W. Bryan                     Director                                       October 15, 1998
- ----------------------------------
        George W. Bryan

/s/     James E. Harwood                    Director                                       October 15, 1998
- ----------------------------------
        James E. Harwood

/s/     Parnell S. Lewis, Jr.               Director                                       October 15, 1998
- ----------------------------------
        Parnell S. Lewis, Jr.

/s/     C.J. Lowrance, III                  Director                                       October 15, 1998
- ----------------------------------
        C.J. Lowrance, III

/s/     Stanley D. Overton                  Director                                       October 15, 1998
- ----------------------------------
        Stanley D. Overton

/s/     Dr. V. Lane Rawlins                 Director                                       October 15, 1998
- ----------------------------------
        Dr. V. Lane Rawlins

/s/     Donald F. Schuppe                   Director                                       October 15, 1998
- ----------------------------------
        Donald F. Schuppe

/s/     David M. Thomas                     Director                                       October 15, 1998
- ----------------------------------
        David M. Thomas

/s/     Spence L. Wilson                    Director                                       October 15, 1998
- ----------------------------------
        Spence L. Wilson
</TABLE>


                                       -7-

<PAGE>   201



                                  EXHIBIT INDEX

               The following exhibits are filed herein or have been, as noted,
previously filed:



<TABLE>
<CAPTION>
    Exhibit                            Description
      No.
- ----------------- ---------------------------------------------------------------------
<S>               <C>   

     2.1          Agreement and Plan of Merger, dated as of August 7, 1998, by and                  
                  between Union Planters Corporation, Union Planters Holding Corporation            
                  and Southeast Bancorp, Inc. (Included as Appendix A to the Proxy                  
                  Statement included as part of this Registration Statement.)                       
     2.2          Plan of Merger of Southeast Bancorp, Inc. into and with Union Planters            
                  Holding Corporation. (Included as Appendix B to the Proxy Statement               
                  included as part of this Registration Statement.)                                 
     4.1          Restated Charter of Union Planters Corporation. (Incorporated by                  
                  reference to Exhibit 3(a) to the Quarterly Report on Form 10-Q of                 
                  Union Planters for the fiscal quarter ended March 31, 1998, File No.              
                  1-10160.)                                                                         
     4.2          Amended and Restated Bylaws of Union Planters Corporation.                        
                  (Incorporated by reference to Exhibit 3(b) to the Annual Report on                
                  Form 10-Q of Union Planters for the quarter ended March 31, 1998 (File            
                  No. 1-10160).                                                                     
     5.1          Opinion of E. James House, Jr., Secretary and Manager of the Legal                
                  Department of Union Planters Corporation, as to the validity of the               
                  shares of Union Planters Common Stock.                                            
     8.1          Opinion of Wyatt, Tarrant & Combs as to federal income tax                        
                  consequences.                                                                     
     23.1         Consent of PricewaterhouseCoopers LLP.                                            
     23.2         Consent of Marr, Miller & Myers, P.S.C., independent auditors for                 
                  Southeast Bancorp, Inc.                                                           
     23.3         Consent of Crowe, Chizek & Company, LLP.                                           
     23.4         Consent of Stifel, Nicolaus & Company, Inc.                                       
     23.5         Consent of E. James House, Jr., Secretary and Manager of the Legal                
                  Department of Union Planters Corporation (included in Exhibit 5.1).               
     23.6         Consent of Wyatt Tarrant & Combs (included in Exhibit 8.1).                       
     24.1         Power of Attorney (contained on the signature page hereof).                       
     99.1         Form Proxy Appointment Card of Southeast Bancorp, Inc.                            
                                                                                                    
</TABLE>
                  

<PAGE>   1

                                                                     EXHIBIT 5.1



                         OPINION OF E. JAMES HOUSE, JR.
                            AS TO VALIDITY OF SHARES


October 15, 1998

Union Planters Corporation
7130 Goodlett Farms Parkway
Memphis, Tennessee  38018

      Re: 1,250,005 Shares of the Common Stock, $5.00 Par Value Per Share of 
          Union Planters Corporation, a Tennessee Corporation ("Union Planters")

Gentlemen:

               The undersigned has participated in the preparation of a
registration statement on Form S-4 (the "Registration Statement") for filing
with the Securities and Exchange Commission in respect to not more than
1,250,005 shares of Union Planters's common stock, $5.00 par value per share
("Union Planters Common Stock") which may be issued by Union Planters pursuant
to an Agreement and Plan of Merger dated as of August 7, 1998, by and among
Union Planters, Union Planters Holding Corporation ("UP Holding") and Southeast
Bancorp, Inc. ("Southeast") (the "Agreement").

               For purposes of rendering the opinion expressed herein, the
undersigned has examined Union Planters's corporate charter and all amendments
thereto; Union Planters's bylaws and amendments thereto; the Agreement and such
of Union Planters's corporate records as the undersigned has deemed necessary
and material to rendering the undersigned's opinion. The undersigned has relied
upon certificates of public officials and representations of Union Planters
officials, and has assumed that all documents examined by the undersigned as
originals are authentic, that all documents submitted to the undersigned as
photocopies are exact duplicates of original documents, and that all signatures
on all documents are genuine.

               Further, the undersigned is familiar with and has supervised all
corporate action taken in connection with the authorization of the issuance and
offering of the subject securities.

               Based upon and subject to the foregoing and subsequent
assumptions, qualifications and exceptions, it is the undersigned's opinion
that:


<PAGE>   2

                           1.   Union Planters is a duly organized and validly
               existing corporation in good standing under the laws of the State
               of Tennessee and has all requisite power and authority to issue,
               sell and deliver the subject securities, and to carry on its
               business and own its property; and

                           2.   The shares of Union Planters Common Stock to be
               issued by Union Planters pursuant to the Merger have been duly
               authorized and when issued by Union Planters in accordance
               therewith, such shares of Union Planters Common Stock will be
               fully paid and nonassessable.

               The opinion expressed above is limited by the following
assumptions, qualifications and exceptions.

                           (a)  The undersigned is licensed to practice law only
               in the State of Tennessee and expresses no opinion with respect
               to the effect of any laws other than those of the State of
               Tennessee and of the United States of America.

                           (b)  The opinion stated herein is based upon 
               statutes, regulations, rules, court decisions and other
               authorities existing and effective as of the date of this
               opinion, and the undersigned undertakes no responsibility to
               update or supplement said opinion in the event of or in response
               to any subsequent changes in the law or said authorities, or upon
               the occurrence after the date hereof of events or circumstances
               that, if occurring prior to the date hereof, might have resulted
               in a different opinion.

                           (c)  This opinion is limited to the legal matters
               expressly set forth herein, and no opinion is to be implied or
               inferred beyond the legal matters expressly so addressed.

               The undersigned hereby consents to the undersigned being named as
a party rendering a legal opinion under the caption "Opinions" in the Prospectus
constituting part of the Registration Statement and to the filing of this
opinion with the Securities and Exchange Commission as well as all state
regulatory bodies and jurisdictions where qualification is sought for the sale
of the subject securities.

               The undersigned is an officer of, and receives compensation from
Union Planters and therefore is not independent from Union Planters.

                                        Very truly yours,

                                        UNION PLANTERS CORPORATION

                                        By:  /s/ E. James House, Jr.  
                                            ------------------------------------
                                              E. James House, Jr.


                                       -2-



<PAGE>   1

                                                                     EXHIBIT 8.1


                                   TAX OPINION

                       [WYATT, TARRANT & COMBS LETTERHEAD]





                                 November 19, 1998



Board of Directors
Union Planters Corporation
7130 Goodlett Farms Parkway
Memphis, Tennessee  38018

Gentlemen:

               We have acted as counsel to Union Planters Corporation, a
Tennessee corporation ("Union Planters"), in connection with (i) the proposed
merger (the "Merger") of Southeast Bancorp, Inc. a Kentucky corporation
("Southeast"), with and into Union Planters Holding Corporation, a Tennessee
corporation and a wholly-owned subsidiary of Union Planters ("UP Holdings"),
pursuant to the terms of the Agreement and Plan of Merger by and between Union
Planters, UP Holdings and Southeast dated August 7, 1998 (the "Merger
Agreement") and related Plan of Merger between Union Planters, UP Holdings and
Southeast (collectively, the "Plan of Reorganization"), and (ii) the filing of
the registration statement by Union Planters on Form S-4 (together with all
amendments and exhibits thereto through the date hereof, the "Registration
Statement"), under the Securities Act of 1933, as amended (the "Act"), covering
the shares of Union Planters common stock ("Union Planters Common Stock") to be
issued pursuant to the Plan of Reorganization. Capitalized terms used but not
defined herein shall have the meanings assigned to them in the Registration
Statement.

               In rendering this opinion we have examined such documents as we
have deemed relevant or necessary, including without limitation, the Plan of
Reorganization and the Registration Statement. In our examination, we have
assumed the genuineness of all signatures, the due execution and delivery of all
documents, the legal capacity of all natural persons, the authenticity of all
documents submitted to us as originals, the conformity to original documents of
all documents submitted to us as certified, conformed or copies, and the
authenticity of the originals of such copies.

               As to factual matters, in rendering this opinion, we have relied
solely on and have assumed the present and continuing truth and accuracy of (i)
the description of the facts relating to the Merger contained in the Plan of
Reorganization and Registration Statement, (ii) the factual representations and
warranties contained in the Plan of Reorganization and Registration Statement
and related documents and agreements, and (iii) the factual matters addressed by
representations from certain executive


<PAGE>   2

officers of Union Planters, UP Holdings and Southeast contained in letters to
us dated November 18, 1998 and November 19, 1998 (the "Representation Letters").
The Representation Letters address various factual matters relevant to the
qualification of the Merger as a tax-deferred reorganization under Section
368(a) of the Internal Revenue Code of 1986, as amended. The initial and
continuing truth and accuracy of all such factual matters constitutes an
integral basis for, and a material condition to, this opinion.

               The scope of this opinion is limited strictly to the matters set
forth below and no other opinion may be implied or inferred beyond such matters.
Without limiting the foregoing sentence, we express no opinion as to (i) any of
the local, state, foreign or other federal tax consequences resulting from the
Merger, (ii) the federal income tax consequences to shareholders of Southeast
subject to special rules under the Internal Revenue Code, such as foreign
persons, tax-exempt organizations, insurance companies, financial institutions,
dealers in stocks and securities, and persons who do not own such stock as a
capital asset, (iii) the federal income tax consequences affecting shares of
Southeast common stock ("Southeast Common Stock") acquired upon exercise of
stock options, stock purchase plan rights or otherwise as compensation; (iv) the
tax consequences to holders of warrants, options or other rights to acquire
shares of Southeast Common Stock; (v) the tax consequences of the parties to the
Merger Agreement of the inclusion in income of the amount of the bad-debt
reserve maintained by Southeast and/or its subsidiaries and any other amounts
resulting from any required change in accounting methods; and (vi) the tax
consequences of the parties to the Merger Agreement of any income and deferred
gain recognized pursuant to Treasury Regulations issued under Section 1502 of
the Internal Revenue Code.

               Subject to the qualifications, assumptions and conditions 
provided herein, we are of the opinion that:

               1.  The acquisition by UP Holdings of substantially all of the
assets of Southeast in exchange for shares of Union Planters Common Stock and
the assumption of liabilities of Southeast pursuant to the Merger will
constitute a reorganization within the meaning of Section 368(a) of the Internal
Revenue Code.

               2.  Southeast, Union Planters and UP Holdings will each be "a
party to a reorganization" within the meaning of Section 368(b) of the Internal
Revenue Code.

               3.  No gain or loss will be recognized by Southeast as a result 
of the Merger.

               4.  No gain or loss will be recognized by UP Holdings or Union 
Planters as a result of the Merger.

               5.  No gain or loss will be recognized by the shareholders of
Southeast as a result of the exchange of Southeast Common Stock for Union
Planters Common Stock pursuant to the Merger, except that a gain or loss will be
recognized on the receipt of any cash in lieu of a fractional share. Assuming
that the Southeast Common Stock is a capital asset in the hands of the
respective Southeast shareholders, any gain or loss recognized as a result of
the receipt of cash in lieu of a fractional share will be a capital gain or loss
equal to the difference between the cash received and that portion of the
holder's tax basis in the Southeast Common Stock allocable to the fractional
share.


                                      -2-
<PAGE>   3


               6.  The tax basis of Union Planters Common Stock to be received
by the shareholders of Southeast will be the same as the tax basis of the
Southeast Common Stock surrendered in exchange therefor (reduced by any amount
allocable to a fractional share interest for which cash is received).

               7.  The holding period of the Union Planters Common Stock to be
received by shareholders of Southeast will include the holding period of the
Southeast Common Stock surrendered in exchange therefor, provided the Southeast
shares were held as a capital asset by the shareholders of Southeast on the date
of the exchange.

               8.  A shareholder of Southeast who perfects his dissenter's
rights and who receives payment of the fair market value of his shares of
Southeast Common Stock will be treated as having received such payment in
redemption of such stock. Such redemption will be subject to the conditions and
limitations of Section 302 of the Internal Revenue Code.

               This opinion is based on the Internal Revenue Code, the Treasury
Regulations promulgated thereunder, judicial decisions and administrative
pronouncements of the Internal Revenue Service ("IRS"), all existing and in
effect on the date of this opinion and all of which are subject to change at any
time, possibly retroactively. Any such change could materially alter the
conclusions reached in this opinion. We undertake no obligation to you or any
other person to give notice of any such change. As noted above, this opinion is
limited strictly to the matters expressly stated herein and no other opinion may
be implied or inferred beyond such matters. You should realize that this opinion
is not binding on the IRS or the courts.

               This opinion is provided to you solely for purposes of complying
with the requirements of Item 21(a) of Form S-4 under the Act and Section 9.1(f)
of the Merger Agreement. We hereby consent to the use of this opinion as an
exhibit to the Registration Statement, to the disclosure and summarization of
the opinion in the Registration Statement, including in the proxy
statement/prospectus included therein, and to the reference to this Firm in the
Registration Statement under the caption "Legal Matters." In giving this consent
we do not thereby admit that we come within the category of persons whose
consent is required under Section 7 of the Act or the rules and regulations of
the Securities and Exchange Commission promulgated thereunder.

                                        Very truly yours,
 
                                        /s/ Wyatt, Tarrant & Combs

                                        WYATT, TARRANT & COMBS


                                      -3-

<PAGE>   1
                                                                    EXHIBIT 23.1


                       CONSENT OF INDEPENDENT ACCOUNTANTS


         We hereby consent to the incorporation by reference in the Proxy
Statement/Prospectus constituting part of this Registration Statement on Form
S-4 of Union Planters Corporation of our report dated October 15, 1998, which
appears on page B-2 of Exhibit 99.1 in the Quarterly Report on Form 10-Q for the
quarter ended September 30, 1998 of Union Planters Corporation. We also consent
to the reference to us under the heading "Experts" in such Proxy
Statement/Prospectus.


/s/ PricewaterhouseCoopers LLP
- ----------------------------------
PRICEWATERHOUSECOOPERS LLP
Memphis, Tennessee
November 16, 1998



<PAGE>   1

                                                                    EXHIBIT 23.2


                       CONSENT OF INDEPENDENT ACCOUNTANTS

         We hereby consent to the use in the Proxy Statement-Prospectus
constituting part of this Registration Statement on Form S-4 of Union Planters
Corporation of our report dated January 6, 1997, relating to the financial
statements of Southeast Bancorp, Inc., appearing in the Proxy
Statement-Prospectus, which is part of this Registration Statement. We also
consent to the reference to us under the heading "Experts" in such Proxy
Statement-Prospectus, as follows: The consolidated financial statements of SBI
as of the years ended December 31, 1996 and December 31, 1995 (and the notes
thereto) have been included in this Proxy Statement-Prospectus in reliance upon
the report of Marr, Miller & Myers, P.S.C., independent certified accountants,
given upon the authority of such firm as experts in accounting and auditing.


 /s/ Marr, Miller & Myers, P.S.C.         
- ------------------------------------
Marr, Miller & Myers, P.S.C.
Corbin, Kentucky
November 12, 1998



<PAGE>   1


                                                                    EXHIBIT 23.3


                       CONSENT OF INDEPENDENT ACCOUNTANTS


         We consent to the inclusion in the Proxy Statement/Prospectus forming a
part of the Registration Statement on Form S-4 filed by Union Planters
Corporation of the report of Eskew & Gresham, PSC dated February 11, 1998 on
their audit of the consolidated financial statements of Southeast Bancorp, Inc.
as of and for the year ended December 31, 1997. We also consent to the reference
to their firm under the caption "Experts" in the Proxy Statement/Prospectus.

/S/ Crowe, Chizek and Company LLP
- -------------------------------------------------------------------
Crowe, Chizek and Company LLP (successor to Eskew & Gresham, PSC)
Lexington, Kentucky
November 18, 1998



<PAGE>   1


                                                                    EXHIBIT 23.4

                          CONSENT OF FINANCIAL ADVISOR


         We hereby consent to the use of our opinion included as Appendix D to
the Proxy Statement/Prospectus included in the Registration Statement on Form
S-4 relating to the proposed merger of Southeast Bancorp, Inc. with and into
Union Planters Holding Corporation, and to the reference to our firm name under
the caption "Description of Transaction - Opinions of Southeast's Financial
Advisors" in such Proxy Statement/Prospectus. In giving such consent, we do not
admit and we disclaim that we come within the category of persons whose consent
is required under Section 7 of the Securities Act of 1933, as amended, or the
Rules and Regulations of the Securities and Exchange Commission thereunder.

STIFEL, NICOLAUS & COMPANY, INCORPORATED

 /s/  Patrick Koster  
- -------------------------
By:    Patrick Koster
First Vice President

St. Louis, Missouri
November 18, 1998



<PAGE>   1


                                                                    EXHIBIT 99.1

                             SOUTHEAST BANCORP, INC.


         The undersigned hereby constitutes and appoints Joyce Seeley and James
T. Ohler, or either of them, as proxies, each with full power of substitution,
to vote the number of shares of common stock of Southeast Bancorp, Inc.
("Southeast") which the undersigned would be entitled to vote if personally
present at the Special Meeting of the shareholders of Southeast to be held in
the boardroom of the principal office of Southeast located at 100 North Main
Street, Corbin, Kentucky 40702, at 9:00 a.m., local time, on December 30, 1998,
and at any adjournment or postponement thereof (the "Special Meeting") upon the
proposals described in the Proxy Statement/Prospectus and the Notice of Special
Meeting of Shareholders, both dated November ___, 1998, the receipt of which is
acknowledged in the manner specified below.

1. MERGER. To consider and vote upon a proposal to approve an Agreement and Plan
of Merger, dated as of August 7, 1998 (the "Agreement"), by and between
Southeast, Union Planters Corporation, a Tennessee corporation ("Union
Planters"), and Union Planters Holding Corporation ("UPHC"), a wholly-owned
subsidiary or Union Planters, and the related Plan of Merger (the "Plan of
Merger"), by and between Southeast and UPHC, pursuant to which (i) Southeast
will merge (the "Merger") with and into UPHC, with the effect that UPHC shall be
the corporation surviving from the Merger, and (ii) each share of the no par
value common stock of Southeast ("Southeast Common Stock") issued and
outstanding at the effective time of the Merger will be converted into 11.87
shares of the $5.00 par value common stock of Union Planters and the associated
"Preferred Share Rights" (as defined in the accompanying Proxy
Statement/Prospectus), and cash in lieu of any fractional share, all as more
fully described in the accompanying Proxy Statement/Prospectus.

                        FOR [ ] AGAINST [ ] ABSTAIN [ ]

2. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the Special Meeting.

THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR PROPOSAL 1 ABOVE.

Please sign exactly as name appears below. When shares are held jointly, both
should sign. When signing as attorney, executor, administrator, trustee or
guardian, please give full title as such. If a corporation, please sign in full
corporate name by President or other authorized officer. If a partnership,
please sign in partnership name by authorized person.

                                DATED: ____________________, 1998


                                -------------------------------------------
                                Signature

                                -------------------------------------------
                                Signature if held jointly


              THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF
                             SOUTHEAST BANCORP, INC.
                    AND MAY BE REVOKED PRIOR TO ITS EXERCISE.



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