<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 30, 1995
Registration No. 33-
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------
FORM S-4
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
--------------------
MAGNA GROUP, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 6712 37-0996453
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification
Number)
One Magna Place
1401 South Brentwood Boulevard
St. Louis, Missouri 63144-1401
(314) 963-2500
(Address, including ZIP code, and telephone number, including area
code, of registrant's principal executive offices)
--------------------
G. THOMAS ANDES
Chairman and Chief Executive Officer
Magna Group, Inc.
One Magna Place
1401 South Brentwood Boulevard
St. Louis, Missouri 63144-1401
(314) 963-2500
(Name, address, including ZIP code, and telephone number, including
area code, of agent for service)
--------------------
Copy to:
GERARD K. SANDWEG, JR., ESQ. LARRY K. HARRIS, ESQ.
Thompson & Mitchell Suelthaus & Walsh, P.C.
One Mercantile Center 7733 Forsyth, 12th Floor
St. Louis, Missouri 63101 St. Louis, Missouri 63105
(314) 231-7676 (314) 727-7676
--------------------
Approximate date of commencement of proposed sale of the securities to
the public: As soon as practicable after the effective date of this
Registration Statement.
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. / /
--------------------
<TABLE>
CALCULATION OF REGISTRATION FEE
===================================================================================================================================
<CAPTION>
Title of each class of Amount to be Proposed maximum Proposed maximum Amount of
securities to be registered registered offering price per unit aggregate offering price <F2> registration fee
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $2.00 par value <F1> 650,240 shares N/A $14,244,000 $4,911.76
===================================================================================================================================
<FN>
<F1> Includes one attached Preferred Share Purchase Right per
share.
<F2> Estimated solely for purposes of computing the Registration
Fee pursuant to the provisions of Rule 457(f) and based
upon the $14,244,000 aggregate book value of (i) 157,063
shares of Class I Voting Common Stock, $1.00 par value, of
River Bend Bancshares, Inc. ("River Bend"), (ii) 785,315
shares of Class II Non-Voting Common Stock, $1.00 par
value, of River Bend and (iii) 5,991 shares of Class A
Preferred Stock, $100 par value, of River Bend as of
October 31, 1995.
</TABLE>
--------------------
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 1933 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
MAGNA GROUP, INC.
<TABLE>
CROSS REFERENCE SHEET FURNISHED PURSUANT TO ITEM 501(b)
OF REGULATION S-K SHOWING HEADING OR LOCATION IN PROSPECTUS
OF INFORMATION REQUIRED BY ITEMS IN PART I OF FORM S-4
-----------------------------------------------------------
<CAPTION>
Form S-4 Item Number and Caption Heading or Location in Prospectus
- -------------------------------- ---------------------------------
<S> <C>
A. Information about the Transaction
1. Forepart of Registration Statement Facing Page; Cross Reference Sheet; Outside
and Outside Front Cover Page of Front Cover Page of Prospectus
Prospectus
2. Inside Front and Outside Back Cover Available Information; Incorporation of
Pages of Prospectus Certain Information by Reference; Table of
Contents
3. Risk Factors, Ratio of Earnings to Summary Information; Pro Forma Financial
Fixed Charges and Other Information Information
4. Terms of the Transaction Summary Information; Incorporation of
Certain Information by Reference; Terms of
the Merger; Certain Federal Income Tax
Consequences of the Merger; Information
Regarding Magna Stock
5. Pro Forma Financial Information Not Applicable
6. Material Contacts with the Company Summary Information; Terms of the Merger
Being Acquired
7. Additional Information Required for Not Applicable
Reoffering by Persons and Parties Deemed
to be Underwriters
8. Interests of Named Experts and Counsel Legal Matters
9. Disclosure of Commission Position on Not Applicable
Indemnification for Securities Act
Liabilities
- i -
<PAGE> 3
<CAPTION>
Form S-4 Item Number and Caption Heading or Location in Prospectus
- -------------------------------- ---------------------------------
<S> <C>
B. Information About the Registrant
10. Information with Respect to S-3 Incorporation of Certain Information by
Registrants Reference; Summary Information; Information
Regarding Magna Stock
11. Incorporation of Certain Information Incorporation of Certain Information by
by Reference Reference
12. Information with Respect to S-2 or Not Applicable
S-3 Registrants
13. Incorporation of Certain Information Not Applicable
by Reference
14. Information with Respect to Registrants Not Applicable
Other Than S-2 or S-3 Registrants
C. Information About the Company Being Acquired
15. Information with Respect to S-3 Companies Not Applicable
16. Information with Respect to S-2 or S-3 Not Applicable
Companies
17. Information with Respect to Companies Summary Information; Information Regarding
Other Than S-2 or S-3 Companies River Bend
D. Voting and Management Information
18. Information if Proxies, Consents or Information Regarding Special Meeting;
Authorizations are to be Solicited Incorporation of Certain Information by
Reference; Information Regarding River Bend
19. Information if Proxies, Consents or Not Applicable
Authorizations are not to be Solicited or
in an Exchange Offer
</TABLE>
- ii -
<PAGE> 4
[RIVER BEND LETTERHEAD]
---------------, 199-
Dear Shareholder:
You are cordially invited to attend a Special Meeting of
Shareholders (the "Special Meeting") of River Bend Bancshares, Inc.
("River Bend") on ------------, -----------------, 1996. The
Special Meeting will be held at the main banking house of Illinois
State Bank and Trust, 347 West Main Street, East Alton, Illinois,
62024, commencing at --:----- -.m. local time.
At the Special Meeting, shareholders will be asked to
consider and vote upon a proposal to approve an Agreement and Plan
of Reorganization, as amended, and the related Plan of Merger
(collectively, the "Merger Agreements") providing for the merger
(the "Merger") of River Bend with and into Landmark Bancshares
Corporation ("Landmark"), a wholly owned subsidiary of Magna Group,
Inc. ("Magna"). Upon consummation of the Merger, (i) the aggregate
of all issued and outstanding shares of Class A Preferred Stock,
$100.00 par value, of River Bend will be converted into the right
to receive an amount in cash equal to $599,100 and (ii) the
aggregate of all issued and outstanding shares of Class I Voting
Common Stock, $1.00 par value, of River Bend ("Class I Common
Stock") and Class II Non-Voting Common Stock, $1.00 par value, of
River Bend ("Class II Common Stock") will be converted into the
right to receive (A) 550,240 shares of Common Stock, $2.00 par
value, of Magna ("Magna Common Stock"), (B) an amount in cash equal
to $11,668,175 and (C) an undivided beneficial interest in a
certain parcel of real estate, consisting of two acres more or less
(items (A) and (B) are subject to certain limitations and
adjustments, as more fully described in the accompanying Proxy
Statement/Prospectus). Each holder of Class I Common Stock and
Class II Common Stock will have the opportunity to elect the
portion of the total merger consideration that they will receive in
Magna Common Stock and the portion they will receive in cash,
subject to adjustment in certain circumstances.
Enclosed are the following items relating to the Special
Meeting and the Merger:
1. Proxy Statement/Prospectus;
2. Proxy card (on white paper);
3. Election form (on yellow paper); and
4. A pre-addressed return envelope to River Bend for
the proxy card and election form.
THE BOARD OF DIRECTORS OF RIVER BEND HAS DETERMINED THAT
THE MERGER IS IN THE BEST INTEREST OF RIVER BEND AND ITS
SHAREHOLDERS AND UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE
"FOR" THE PROPOSAL TO APPROVE THE MERGER AGREEMENTS.
The affirmative vote of the holders of at least two-
thirds of the outstanding shares of each class of River Bend stock
is required to approve the Merger Agreements. In addition to the
approval of the Merger Agreements by the shareholders of River
Bend, the Merger is subject to certain other conditions, including,
among others, bank regulatory approval.
Shareholders are urged to read carefully the accompanying
Proxy Statement/Prospectus which describes the Merger and related
matters in more detail.
<PAGE> 5
It is important that your shares be represented at the
Special Meeting, whether or not you plan to attend in person.
Therefore, we ask that you please complete, date and sign the
enclosed white proxy card and mail it as soon as possible in the
enclosed postage-paid envelope so that your shares will be
represented at the Special Meeting. If you attend the Special
Meeting, you may vote in person if you wish, even if you have
previously submitted your proxy card. It is important that holders
of Class I Common Stock and Class II Common Stock complete and mail
the yellow election form (failure to timely file a properly
completed election form will result in you receiving approximately
equal portions of cash and Magna Common Stock as consideration in
the Merger). To be effective, the election form must be properly
completed and received by River Bend by not later than 5:00 p.m. on
- ---------------, 1996.
If you need assistance in completing your white proxy
card or yellow election form, or if you have any questions about
the Proxy Statement/Prospectus, please feel free to contact Sue
Keener at (618) 258-4040.
Sincerely,
JOHN G. HELMKAMP, JR.
President
<PAGE> 6
RIVER BEND BANCSHARES, INC.
AN ILLINOIS CORPORATION
--------------------
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON ---------------, 1996
--------------------
NOTICE IS HEREBY GIVEN that a Special Meeting of
Shareholders (the "Special Meeting") of River Bend Bancshares, Inc.
("River Bend") will be held at the main banking house of Illinois
State Bank and Trust, 347 West Main Street, East Alton, Illinois
62024, on ------------, ------------, 1996, at --:00 -.m., local
time, for the following purposes:
(1) To consider and vote upon a proposal to approve
an Agreement and Plan of Reorganization, as amended, and
the related Plan of Merger (collectively, the "Merger
Agreements"), and each of the transactions contemplated
thereby, pursuant to which River Bend will be merged (the
"Merger") with and into Landmark Bancshares Corporation
("Landmark"), a wholly owned subsidiary of Magna Group,
Inc. ("Magna"), in a transaction which will result in the
business and operations of River Bend being continued
through Landmark, and whereby, upon consummation of the
Merger, (i) the aggregate of all issued and outstanding
shares of Class A Preferred Stock, $100.00 par value, of
River Bend will be converted into the right to receive an
amount in cash equal to $599,100 and (ii) the aggregate
of all issued and outstanding shares of Class I Voting
Common Stock, $1.00 par value, of River Bend and Class II
Non-Voting Common Stock, $1.00 par value, of River Bend
will be converted into the right to receive (A) 550,240
shares of Common Stock, $2.00 par value, of Magna ("Magna
Common Stock"), (B) an amount in cash equal to
$11,668,175 and (C) an undivided beneficial interest in
a certain parcel of real estate, consisting of two acres
more or less (items (A) and (B) are subject to certain
limitations and adjustments, as more fully described in
the accompanying Proxy Statement/Prospectus).
(2) To transact such other business as may properly
come before the Special Meeting or any adjournments or
postponements thereof.
Pursuant to the By-Laws of River Bend, the Board of
Directors has fixed the close of business on --------------, 199-
as the record date (the "Record Date") for determination of
shareholders entitled to notice of and to vote at the Special
Meeting and at any adjournments or postponements thereof.
Accordingly, only holders of record of River Bend stock at the
Record Date are entitled to notice of and to vote at the Special
Meeting and at any adjournments or postponements thereof.
WHETHER OR NOT YOU EXPECT TO ATTEND THE SPECIAL MEETING,
PLEASE COMPLETE, DATE AND SIGN THE ENCLOSED WHITE PROXY CARD AND
RETURN IT TO RIVER BEND IN THE ACCOMPANYING ENVELOPE. HOLDERS OF
CLASS I COMMON STOCK AND/OR CLASS II COMMON STOCK SHOULD ALSO
COMPLETE, DATE AND SIGN THE ENCLOSED YELLOW ELECTION FORM AND
RETURN IT TO RIVER BEND.
By Order of the Board of Directors
HARLEY T. GODARD
Secretary
East Alton, Illinois
- -----------------, 199-
<PAGE> 7
*******************************************************************************
* INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A *
* REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE *
* SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR *
* MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT *
* BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR *
* THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE *
* SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE *
* UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS *
* OF ANY SUCH STATE. *
*******************************************************************************
SUBJECT TO COMPLETION, DATED NOVEMBER 30, 1995
MAGNA GROUP, INC.
PROSPECTUS
--------------------
RIVER BEND BANCSHARES, INC.
PROXY STATEMENT
SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON -------------, 1996
--------------------
This Prospectus of Magna Group, Inc. ("Magna") relates to
up to 650,240 shares of Common Stock, $2.00 par value, and attached
Preferred Share Purchase Rights (the "Rights"), of Magna (the
Common Stock and Rights are collectively referred to herein as the
"Magna Common Stock"), to be issued to the shareholders of River
Bend Bancshares, Inc., an Illinois corporation ("River Bend"), upon
consummation of the proposed merger (the "Merger") of River Bend
with and into Landmark Bancshares Corporation, a Missouri
corporation and wholly owned subsidiary of Magna ("Landmark").
Upon receipt of the requisite shareholder and regulatory approvals,
the Merger will be consummated pursuant to the terms of the
Agreement and Plan of Reorganization dated as of October 11, 1995, as
amended (the "Reorganization Agreement"), by and between Magna and River
Bend and the related Plan of Merger (the "Plan") by and between
Landmark and River Bend (the Reorganization Agreement and the Plan
are collectively referred to herein as the "Merger Agreements").
This Prospectus also serves as the Proxy Statement of River Bend
for use in connection with a special meeting of shareholders of
River Bend (the "Special Meeting"), which will be held on
- ---------------, 1996, at the time and place and for the purpose
stated in the Notice of Special Meeting of Shareholders
accompanying this Proxy Statement/Prospectus.
Upon consummation of the Merger, the business and
operations of River Bend will be continued through Landmark and (i)
the aggregate of all issued and outstanding shares of Class A
Preferred Stock, $100.00 par value, of River Bend ("Preferred
Stock") will be converted into the right to receive an amount in
cash equal to $599,100 (the "Preferred Cash Distribution") and (ii)
the aggregate of all issued and outstanding shares of Class I
Voting Common Stock, $1.00 par value, of River Bend ("Class I
Common Stock") and Class II Non-Voting Common Stock, $1.00 par
value, of River Bend ("Class II Common Stock") will be converted
into the right to receive (A) 550,240 shares of Magna Common Stock
(the "Stock Distribution"), (B) an amount in cash equal to
$11,668,175 (the "Common Cash Distribution" and, collectively with
the Stock Distribution, the "Election Consideration") and (C) an
undivided beneficial interest in an Illinois land trust holding a
certain parcel of real estate consisting of two acres, more or less
(the "Real Estate Distribution" and, collectively with the Stock
Distribution and the Common Cash Distribution, the "Common Stock
Consideration;" the Preferred Cash Distribution and the Common
Stock Consideration are collectively referred to herein as the
"Merger Consideration;" the Preferred Stock, the Class I Common
Stock and the Class II Common Stock are collectively referred to
herein as the "River Bend Stock"). Each holder of Class I Common
Stock and/or Class II Common Stock will have the opportunity to
elect the portion of the total value of the Election Consideration
(computed based upon the Magna Share Value (as defined
hereinafter)) that they will receive as Magna Common Stock and the
portion they will receive in cash, subject to certain adjustments,
as more fully described in detail at pages --- to --- of this Proxy
Statement/Prospectus. Shareholders failing to make a timely
election will be deemed to have elected to receive their Election
Consideration in equal proportions of cash and Magna Common Stock.
Elections are made by properly completing and delivering to River
Bend the yellow election form, which accompanies this Proxy
Statement/Prospectus, and must be received by River Bend by no
later than 5:00 p.m. on ---------------, 1996. See "TERMS OF THE
MERGER - General
<PAGE> 8
Description of the Merger." No fractional shares of Magna Common Stock
will be issued in the Merger, but cash will be paid in lieu of
fractional shares. See "TERMS OF THE MERGER - Fractional Shares."
The Merger is intended to qualify as a reorganization
under the Internal Revenue Code of 1986, as amended (the "Code").
The Merger is intended to achieve certain tax-deferral benefits for
federal income tax purposes for River Bend shareholders with
respect to shares of Magna Common Stock they receive in the Merger.
See "SUMMARY INFORMATION - Federal Income Tax Consequences in
General" and "CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE
MERGER." See "TERMS OF THE MERGER - General Description of the
Merger."
Magna Common Stock is traded in the over-the-counter
market and its quotations are reported on the Nasdaq National
Market. On November 29, 1995, the last sale price for Magna
Common Stock as reported by the Nasdaq National Market was $24.38.
This Proxy Statement/Prospectus, the Notice of Special
Meeting of Shareholders, the form of proxy and the election form
were first mailed to the shareholders of River Bend on or about
- ----------, 199-.
--------------------
THE ABOVE MATTERS ARE DISCUSSED IN DETAIL IN THIS PROXY
STATEMENT/PROSPECTUS. THE PROPOSED MERGER IS A COMPLEX
TRANSACTION. SHAREHOLDERS OF RIVER BEND ARE STRONGLY URGED TO READ
AND CONSIDER CAREFULLY THIS PROXY STATEMENT/PROSPECTUS IN ITS
ENTIRETY.
THE SECURITIES OFFERED HEREBY ARE NOT SAVINGS ACCOUNTS,
DEPOSITS OR OTHER OBLIGATIONS OF ANY BANK OR NON-BANK SUBSIDIARY
AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION,
THE BANK INSURANCE FUND, THE SAVINGS ASSOCIATION INSURANCE FUND OR
ANY OTHER FEDERAL OR STATE GOVERNMENTAL AGENCY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROXY STATEMENT/PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
All information contained in this Proxy
Statement/Prospectus with respect to Magna has been supplied by
Magna and all information with respect to River Bend has been
supplied by River Bend.
--------------------
The date of this Proxy Statement/Prospectus is -------------, 199-.
- 2 -
<PAGE> 9
AVAILABLE INFORMATION
---------------------
Magna is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"),
and, in accordance therewith, files reports, proxy statements and
other information with the Securities and Exchange Commission (the
"Commission"). Such reports, proxy statements and other
information filed by Magna with the Commission can be inspected and
copied at the Commission's office at Room 1024, Judiciary Plaza,
450 Fifth Street, N.W., Washington, D.C. 20549 and the Commission's
Regional Offices located at Suite 1300, Seven World Trade Center,
New York, New York 10048 and Suite 1400, Northwestern Atrium
Center, 500 West Madison Street, Chicago, Illinois 60661. Copies
of such materials can also be obtained from the Public Reference
Section of the Commission at 450 Fifth Street, N.W., Washington,
D.C. 20549, at prescribed rates. Magna Common Stock is quoted on
the Nasdaq National Market, and such reports, proxy statements and
other information concerning Magna are available from Magna,
without charge, upon written or oral request to Gary D. Hemmer,
Executive Vice President, Administration, 1401 South Brentwood
Boulevard, St. Louis, Missouri 63144-1401, telephone (314) 963-
2500.
This Proxy Statement/Prospectus does not contain all of
the information set forth in the Registration Statement on Form S-4
and exhibits thereto (the "Registration Statement") covering the
securities offered hereby which has been filed by Magna with the
Commission. As permitted by the rules and regulations of the
Commission, this Proxy Statement/Prospectus omits certain
information contained or incorporated by reference in the
Registration Statement. Statements contained in this Proxy
Statement/Prospectus as to the contents of any contract or other
document are not necessarily complete and in each instance
reference is made to the copy of such contract or other document
filed as an exhibit to the Registration Statement. For such
further information, reference is made to the Registration
Statement.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
-------------------------------------------------
THIS PROXY STATEMENT/PROSPECTUS INCORPORATES DOCUMENTS BY
REFERENCE WHICH ARE NOT PRESENTED HEREIN OR DELIVERED HEREWITH.
DOCUMENTS RELATING TO MAGNA, EXCLUDING EXHIBITS UNLESS SPECIFICALLY
INCORPORATED THEREIN, ARE AVAILABLE, WITHOUT CHARGE, UPON WRITTEN
OR ORAL REQUEST TO GARY D. HEMMER, EXECUTIVE VICE PRESIDENT,
ADMINISTRATION, MAGNA GROUP, INC., ONE MAGNA PLACE, 1401 SOUTH
BRENTWOOD BOULEVARD, ST. LOUIS, MISSOURI 63144-1401; TELEPHONE
NUMBER (314) 963-2500. IN ORDER TO ENSURE TIMELY DELIVERY OF THE
DOCUMENTS, ANY REQUEST SHOULD BE MADE BY ---------------, 1996.
The following documents filed with the Commission by
Magna under the Exchange Act are incorporated herein by reference:
(a) Magna's Report on Form 10-K for the year ended
December 31, 1994.
(b) Magna's Reports on Form 10-Q for the quarters ended
March 31, 1995, June 30, 1995 and September 30,
1995.
(c) The description of Magna Common Stock set forth in
Magna's Registration Statement on Form S-1 (File
No. 2-96545) filed on March 20, 1985, including any
amendment or report filed for the purpose of
updating such description.
- 3 -
<PAGE> 10
(d) The description of Magna's Preferred Share Purchase
Rights set forth in Item 1 of Magna's Registration
Statement on Form 8-A (File No. 0-8234) filed
November 11, 1988, including any amendment or
report filed for the purpose of updating such
description.
All documents filed by Magna pursuant to Sections 13(a),
13(c), 14 and 15(d) of the Exchange Act after the date hereof and
through the date of the Special Meeting shall be deemed to be
incorporated by reference herein and made a part hereof from the
date any such document is filed. The information relating to Magna
contained in this Proxy Statement/Prospectus does not purport to be
complete and should be read together with the information in the
documents incorporated by reference herein. Any statement
contained in a document incorporated or deemed to be incorporated
by reference herein shall be deemed to be modified or superseded
for purposes of this Proxy Statement/Prospectus to the extent that
a statement contained herein or in any other subsequently filed
document which also is or is deemed to be incorporated by reference
herein modifies or supersedes such statement. Any such statement
so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Proxy
Statement/Prospectus.
Any statements contained in this Proxy
Statement/Prospectus involving matters of opinion, whether or not
expressly so stated, are intended as such and not as
representations of fact.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR
TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROXY
STATEMENT/PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY
MAGNA OR RIVER BEND. THIS PROXY STATEMENT/PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY
ANY SECURITIES OTHER THAN THE SHARES OF MAGNA COMMON STOCK TO WHICH
IT RELATES OR AN OFFER TO ANY PERSON IN ANY JURISDICTION WHERE SUCH
AN OFFER WOULD BE UNLAWFUL. NEITHER THE DELIVERY OF THIS PROXY
STATEMENT/PROSPECTUS NOR ANY DISTRIBUTION OF SECURITIES PURSUANT
HERETO SHALL IMPLY OR CREATE AN IMPLICATION THAT THERE HAS BEEN NO
CHANGE IN THE AFFAIRS OF MAGNA OR RIVER BEND OR ANY OF THEIR
SUBSIDIARIES OR IN THE INFORMATION SET FORTH HEREIN SUBSEQUENT TO
THE DATE HEREOF.
- 4 -
<PAGE> 11
<TABLE>
TABLE OF CONTENTS
-----------------
<CAPTION>
Page
----
<S> <C>
AVAILABLE INFORMATION. . . . . . . . . . . . . . . . . . . . . 3
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE. . . . . . . 3
SUMMARY INFORMATION. . . . . . . . . . . . . . . . . . . . . . 8
Business of Magna . . . . . . . . . . . . . . . . . . . . 8
Business of Landmark. . . . . . . . . . . . . . . . . . . 8
Business of River Bend. . . . . . . . . . . . . . . . . . 8
The Merger. . . . . . . . . . . . . . . . . . . . . . . . 9
Accounting Treatment. . . . . . . . . . . . . . . . . . . 12
Special Meeting of River Bend Shareholders. . . . . . . . 12
Certain Agreements. . . . . . . . . . . . . . . . . . . . 12
Background of and Reasons for the Merger. . . . . . . . . 13
Opinion of Financial Advisor of River Bend. . . . . . . . 13
Interests of Certain Persons in the Merger and
Indemnification . . . . . . . . . . . . . . . . . . . . 13
Federal Income Tax Consequences in General. . . . . . . . 13
Regulatory Approvals. . . . . . . . . . . . . . . . . . . 14
Dissenters' Rights. . . . . . . . . . . . . . . . . . . . 14
Markets and Market Prices . . . . . . . . . . . . . . . . 14
Comparative Per Share Data. . . . . . . . . . . . . . . . 15
Summary Financial Data. . . . . . . . . . . . . . . . . . 16
INFORMATION REGARDING SPECIAL MEETING. . . . . . . . . . . . . 20
General . . . . . . . . . . . . . . . . . . . . . . . . . 20
Date, Time and Place. . . . . . . . . . . . . . . . . . . 20
Record Date; Vote Required. . . . . . . . . . . . . . . . 20
Voting and Revocation of Proxies. . . . . . . . . . . . . 21
Solicitation of Proxies . . . . . . . . . . . . . . . . . 21
TERMS OF THE MERGER. . . . . . . . . . . . . . . . . . . . . . 22
General Description of the Merger . . . . . . . . . . . . 22
Description of Land Trust . . . . . . . . . . . . . . . . 25
Opinion of Financial Advisor of River Bend. . . . . . . . 26
Certain Agreements. . . . . . . . . . . . . . . . . . . . 27
Background of the Merger. . . . . . . . . . . . . . . . . 28
Reasons for the Merger; Board Recommendations . . . . . . 29
Conditions to Consummation of the Merger. . . . . . . . . 30
Termination, Amendment and Waiver of the Reorganization
Agreement . . . . . . . . . . . . . . . . . . . . . . . 32
Interests of Certain Persons in the Merger and
Indemnification . . . . . . . . . . . . . . . . . . . . 32
Effective Time. . . . . . . . . . . . . . . . . . . . . . 33
Surrender of Stock Certificates and Receipt of Merger
Consideration . . . . . . . . . . . . . . . . . . . . . 33
Fractional Shares . . . . . . . . . . . . . . . . . . . . 34
Certain Regulatory Approvals. . . . . . . . . . . . . . . 34
Business Pending the Merger . . . . . . . . . . . . . . . 35
Accounting Treatment. . . . . . . . . . . . . . . . . . . 36
CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER. . . . . 36
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<CAPTION>
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<S> <C>
RIGHTS OF DISSENTING SHAREHOLDERS OF RIVER BEND. . . . . . . . 42
PRO FORMA FINANCIAL INFORMATION. . . . . . . . . . . . . . . . 43
Comparative Per Share Data. . . . . . . . . . . . . . . . 43
INFORMATION REGARDING RIVER BEND . . . . . . . . . . . . . . . 45
Business of River Bend. . . . . . . . . . . . . . . . . . 45
Distribution of Average Assets, Liabilities and
Stockholders' Equity and Interest Rates . . . . . . . . 45
Interest Differential . . . . . . . . . . . . . . . . . . 48
Investment Portfolio. . . . . . . . . . . . . . . . . . . 48
Loan Portfolio. . . . . . . . . . . . . . . . . . . . . . 49
Other Interest-Bearing Assets . . . . . . . . . . . . . . 51
Summary of Loan Loss Experience . . . . . . . . . . . . . 51
Deposits. . . . . . . . . . . . . . . . . . . . . . . . . 52
Return on Equity and Assets . . . . . . . . . . . . . . . 53
Properties. . . . . . . . . . . . . . . . . . . . . . . . 53
Legal Proceedings . . . . . . . . . . . . . . . . . . . . 53
Management's Discussion and Analysis of Financial Condition
and Results of Operations of River Bend . . . . . . . . . 53
Introduction. . . . . . . . . . . . . . . . . . . . . . 53
Net Income Analysis . . . . . . . . . . . . . . . . . . 53
Net Interest Income . . . . . . . . . . . . . . . . . . 54
Provision for Loan Losses . . . . . . . . . . . . . . . 55
Noninterest Income. . . . . . . . . . . . . . . . . . . 56
Noninterest Expense . . . . . . . . . . . . . . . . . . 56
Income Taxes. . . . . . . . . . . . . . . . . . . . . . 56
Liquidity and Interest Rate Sensitivity . . . . . . . . 57
Capital Adequacy. . . . . . . . . . . . . . . . . . . . 59
Risk Management . . . . . . . . . . . . . . . . . . . . . 60
Impact of New Accounting Pronouncements . . . . . . . . . 61
Effect of Inflation . . . . . . . . . . . . . . . . . . . 64
Security Ownership of Certain Beneficial Owners and
Management. . . . . . . . . . . . . . . . . . . . . . . 65
INFORMATION REGARDING MAGNA STOCK. . . . . . . . . . . . . . . 66
General . . . . . . . . . . . . . . . . . . . . . . . . . 66
Preferred Stock . . . . . . . . . . . . . . . . . . . . . 66
Magna Common Stock. . . . . . . . . . . . . . . . . . . . 67
Preferred Share Purchase Rights Plan. . . . . . . . . . . 68
Reservation of Shares . . . . . . . . . . . . . . . . . . 68
Other Matters . . . . . . . . . . . . . . . . . . . . . . 68
Restrictions on Resale of Magna Common Stock by
Affiliates. . . . . . . . . . . . . . . . . . . . . . . 69
Comparison of the Rights of Stockholders of Magna and
Shareholders of River Bend. . . . . . . . . . . . . . . 69
SUPERVISION AND REGULATION . . . . . . . . . . . . . . . . . . 71
Regulatory Approvals of the Merger. . . . . . . . . . . . 71
General Regulatory Considerations . . . . . . . . . . . . 72
Certain Transactions with Affiliates. . . . . . . . . . . 73
Payment of Dividends. . . . . . . . . . . . . . . . . . . 73
Capital Adequacy. . . . . . . . . . . . . . . . . . . . . 73
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<PAGE> 13
<CAPTION>
Page
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<S> <C>
FDIC Insurance Assessments. . . . . . . . . . . . . . . . 74
Support of Subsidiary Bank. . . . . . . . . . . . . . . . 75
FIRREA and FDICIA . . . . . . . . . . . . . . . . . . . . 75
Depositor Preference Statute. . . . . . . . . . . . . . . 76
The Interstate Banking and Community Development
Legislation . . . . . . . . . . . . . . . . . . . . . . 77
RELATIONSHIP WITH INDEPENDENT ACCOUNTANTS. . . . . . . . . . . 77
LEGAL MATTERS. . . . . . . . . . . . . . . . . . . . . . . . . 77
EXPERTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
OTHER MATTERS. . . . . . . . . . . . . . . . . . . . . . . . . 78
STOCKHOLDER PROPOSALS. . . . . . . . . . . . . . . . . . . . . 78
RIVER BEND BANCSHARES, INC. CONSOLIDATED FINANCIAL
STATEMENTS. . . . . . . . . . . . . . . . . . . . . . . . 79
ANNEXES
Annex A - Land Trust Agreement dated as of November 30,
1995 . . . . . . . . . . . . . . . . . . . . . . . . . A-1
Annex B - Dissenters' Rights Provisions of the Illinois
Business Corporation Act of 1983, as amended. . . . . .B-1
</TABLE>
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<PAGE> 14
SUMMARY INFORMATION
-------------------
The following is a summary, which is necessarily
incomplete, of certain important terms of the proposed Merger and
related information discussed elsewhere in this Proxy
Statement/Prospectus or in documents incorporated by reference
herein. This summary does not purport to be complete and is
qualified in its entirety by reference to the more detailed
information which appears elsewhere in this Proxy
Statement/Prospectus and the documents incorporated by reference
herein. Shareholders of River Bend are urged to read this Proxy
Statement/Prospectus in its entirety.
BUSINESS OF MAGNA
Magna, a Delaware corporation, was organized in 1974
and is a registered bank holding company under the Federal Bank
Holding Company Act of 1956, as amended ("BHCA"). Magna
currently owns, indirectly, all of the capital stock of Magna
Bank, National Association, a national banking association which
operates from more than 100 community banking locations serving
Missouri and Illinois ("Magna Bank").
Magna primarily serves consumers and small- to mid-
sized businesses in its markets as a "super community bank," a
company whose business centers on a customer-focused community
banking orientation, has cost efficiencies that do not compromise
quality and offers a broad product line that permits a full-
service customer relationship. As of September 30, 1995, Magna
reported, on a consolidated basis, assets of $4.9 billion,
deposits of $3.8 billion, total loans of $3.2 billion and
stockholders' equity of $428.8 million. Magna had 27,881,344
shares of its Common Stock issued and outstanding as of such
date.
The principal executive offices of Magna are located at
One Magna Place, 1401 South Brentwood Boulevard, St. Louis,
Missouri 63144-1401 and its telephone number is (314) 963-2500.
BUSINESS OF LANDMARK
Landmark, a Missouri corporation and wholly owned
subsidiary of Magna, was incorporated in 1992 and is a registered
bank holding company under the BHCA. Landmark currently owns all
of the issued and outstanding shares of capital stock of Magna
Bank.
The principal executive offices of Landmark are located
at One Magna Place, 1401 South Brentwood Boulevard, St. Louis,
Missouri 63144-1401 and its telephone number is (314) 963-2500.
BUSINESS OF RIVER BEND
River Bend, an Illinois corporation, was incorporated
in 1985 and is a registered bank holding company under the BHCA.
River Bend currently owns all of the issued and outstanding
shares of capital stock of Illinois State Bank and Trust, an
Illinois state-chartered bank ("Illinois State Bank"), which
operates from three locations in Madison County, Illinois. As of
September 30, 1995, River Bend reported, on a consolidated basis,
assets of $159.8 million, deposits of $140.7 million, total loans
of $50.5 million and shareholders' equity of $14.1 million.
River Bend had 157,063 shares of Class I Common Stock, 785,315
shares of Class II Common Stock and 5,991 shares of Preferred
Stock outstanding as of such date. See "INFORMATION REGARDING
RIVER BEND."
- 8 -
<PAGE> 15
The principal executive offices of River Bend are
located at 347 West Main Street, East Alton, Illinois 62024 and
its telephone number is (618) 258-4010.
THE MERGER
Subject to the satisfaction of the terms and conditions
set forth in the Merger Agreements, at the Effective Time (as
hereinafter defined), River Bend will be merged with and into
Landmark and, upon consummation of the Merger, River Bend's
corporate existence will terminate and Landmark will continue as
the surviving entity. Simultaneously with the effectiveness of
the Merger, (i) the aggregate of all issued and outstanding
shares of Preferred Stock will be converted into the right to
receive the Preferred Cash Distribution and (ii) the aggregate of
all issued and outstanding shares of Class I Common Stock and
Class II Common Stock will be converted into the right to receive
(A) the Stock Distribution, (B) the Common Cash Distribution and
(C) the Real Estate Distribution.
Each holder of Class I Common Stock and/or Class II
Common Stock will have the opportunity to elect the composition
of their proportionate interest in the Election Consideration
(subject to certain adjustments), by specifying what percentage
of the value of the Election Consideration to be received by the
holder will be the Stock Distribution and what percentage will be
the Common Cash Distribution. For this purpose, the Stock
Distribution will be valued at a price (the "Magna Share Value")
equal to the average per share closing price of Magna Common
Stock as reported on the Nasdaq National Market for the five
business days preceding the three business days preceding the
Closing Date (as hereinafter defined). Enclosed with this Proxy
Statement/Prospectus is a yellow Election Form for Use by Holders
of River Bend Bancshares, Inc. Common Stock (the "Election Form")
whereby holders of Class I Common Stock and holders of Class II
Common Stock may make their election. TO BE EFFECTIVE, SUCH
ELECTION FORM MUST BE PROPERLY COMPLETED AND DULY EXECUTED BY THE
RIVER BEND SHAREHOLDER AND RECEIVED BY RIVER BEND NO LATER THAN
5:00 P.M., LOCAL TIME, ON -------------------------- (THE
"ELECTION DEADLINE"). Any holder of Class I Common Stock and/or
Class II Common Stock who fails to deliver a properly completed
and duly executed Election Form to River Bend by the Election
Deadline will be deemed to have made no election (a "No
Election," in which case, such holder's shares will be deemed to
be "No Election Shares"). Holders of No Election Shares will be
deemed to have elected to receive 50% of their proportionate
interests in the Election Consideration as Stock Distribution and
50% as Common Cash Distribution.
Each separate entity on River Bend's list of
shareholders will be presumed to represent a separate and
distinct holder of Class I Common Stock or Class II Common Stock.
As a consequence, if any person or entity holds shares of Class
I Common Stock and/or shares of Class II Common Stock titled in
two or more different names (e.g., individually, as trustee or
jointly with a spouse), a properly completed Election Form must
be filed for each name or set of names under which such shares
are titled. An Election Form may be revoked or changed by the
record holder of the underlying shares upon written notice by
such person to River Bend at or prior to the Election Deadline.
The actual Election Consideration that will be paid to
each holder of Class I Common Stock and/or Class II Common Stock
upon consummation of the Merger may differ from the proportions
of the Election Consideration elected by such shareholder in the
event that holders of Class I Common Stock and holders of Class
II Common Stock elect either (A) more cash than equals the Common
Cash Distribution or (B) more Magna Common Stock than equals the
Stock Distribution. In such event, the type of consideration
oversubscribed will be apportioned among the holders by pro-
rating that consideration, in proportion to the amounts elected
by the holders, so that the sum of the
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<PAGE> 16
amount of that form of consideration equals the amount available
to be received by the holders of certificates representing shares
of Class I Common Stock and Class II Common Stock, in the aggregate.
The remainder of each holder's proportionate interest in the Election
Consideration will be in the form of the undersubscribed Election
Consideration, in an amount such that the fair market value of
all Election Consideration to be received by such holder (valuing
the Stock Distribution portion at a per share value equal to the
Magna Share Value) will equal the proportionate amount of the
Election Consideration to which such holder is entitled.
The number of shares of Magna Common Stock and the
amount of cash that will comprise the Stock Distribution and the
Common Cash Distribution, respectively, may be adjusted in the
event the number of shares of Magna Common Stock to be issued
pursuant to the Merger would be insufficient to allow Thompson &
Mitchell, counsel to Magna, to render an opinion that the Merger
would qualify as a reorganization under Section 368 of the Code
for federal income tax purposes (the "Opinion"). In such event,
the Stock Distribution will be increased by such minimum number
of additional shares of Magna Common Stock, as determined by
Thompson & Mitchell in its reasonable judgment (the "Opinion
Adjustment"), that will be required for Thompson & Mitchell to
deliver the Opinion. In the event the number of shares of Magna
Common Stock that comprises the Stock Distribution is increased,
the Common Cash Distribution will be reduced by an amount equal
to (A) the number of additional shares of Magna Common Stock
required to be issued in order for Thompson & Mitchell to deliver
the Opinion multiplied by (B) $21.75.
The Merger Agreements also provide that the Common Cash
Distribution and the Preferred Cash Distribution are subject to
the following adjustments in the event the Merger is not
consummated on or before February 29, 1996:
(1) An amount shall be added to the Common Cash
Distribution equal to (A) the product of (i) the sum of all
dividends declared by Magna on a single share of Magna
Common Stock for stockholders of record of Magna for the
period beginning March 1, 1996 and ending the day prior to
the Closing Date and (ii) the number of shares of Magna
Common Stock comprising the Stock Distribution (after taking
account of the Opinion Adjustment) less (B) the aggregate
amount of dividends declared by River Bend on shares of
Class I Common Stock and Class II Common Stock during such
period plus (C) the product of (i) the Common Cash
Consideration (after taking account of the Opinion
Adjustment) multiplied by (ii) (1) the Federal funds rate as
published in The Wall Street Journal, Midwest Edition, as
such rate varies from time to time, divided by (2) 365 days
multiplied by (iii) the number of days, inclusive, from
February 29, 1996 to the day prior to the Closing Date.
(2) An amount shall be added to the Preferred
Cash Distribution equal to the product of (i) the Preferred
Cash Distribution times (ii) (1) the Federal funds rate as
published in The Wall Street Journal, Midwest Edition, as
such rate varies from time to time, divided by (2) 365 days
multiplied by (iii) the number of days, inclusive, from
February 29, 1996 to the day prior to the Closing Date.
Holders of Class I Common Stock and/or Class II Common
Stock will also receive in exchange for their shares of stock
beneficial interests in a trust (the "Land Trust") that, as of
the Effective Time, will be the record owner of that certain
parcel of land, consisting of two acres more or less, that is
located in Eastgate Plaza, East Alton, Illinois and is identified
by Parcel ID No. 19-1-08-17-20-401-002.001 (the "Eastgate
Parcel"). With respect to the Land Trust, each share of Class I
- 10 -
<PAGE> 17
Common Stock and Class II Common Stock will be treated equally
and the holders thereof will receive an interest in the Land
Trust that is in proportion to the total number of shares of
Class I Common Stock and Class II Common Stock that are
outstanding immediately prior to the Effective Time. Any
beneficial interest that would otherwise be distributed to
holders of shares as to which dissenters' rights are then being
pursued will be distributed to them if and when such dissenters'
rights are no longer being pursued; and if such holders complete
the dissent process such that they are not to receive the Common
Stock Consideration, then such interests in the Land Trust will
be distributed to Magna. See "RIGHTS OF DISSENTING SHAREHOLDERS
OF RIVER BEND."
The trustee of the Land Trust is John G. Helmkamp, Jr. (the
"Trustee") who will hold the Real Estate Consideration subject to the
Land Trust Agreement dated November 30, 1995, which is attached hereto
as Annex A (the "Land Trust Agreement"). Holders of Class I Common
-------
Stock and/or Class II Common Stock are urged to read the Land Trust
Agreement in its entirety. See "TERMS OF THE MERGER - Description of
Land Trust."
Magna Trust Company, the transfer agent for Magna
Common Stock, has been selected as the exchange agent (the
"Exchange Agent") for purposes of effecting the conversion of
Class I Common Stock, Class II Common Stock and Preferred Stock
into the Merger Consideration upon consummation of the Merger.
As soon as practicable after consummation of the Merger, the
Exchange Agent will mail a letter of transmittal (including
instructions setting forth the procedures for exchanging
certificates representing shares of River Bend Stock for the
appropriate Merger Consideration) to each record holder as of the
Effective Time. Upon surrender to the Exchange Agent of such
certificate(s), together with a duly completed and executed
letter of transmittal, such holder will receive the Merger
Consideration to which such holder is entitled under the Merger
Agreements. See "TERMS OF THE MERGER - Surrender of Stock
Certificates and Receipt of Merger Consideration."
Upon consummation of the Merger, the business and
operations of River Bend will be continued through Landmark.
Assuming the issuance of 550,240 shares of Magna Common Stock in
the Merger in conversion of the Class I Common Stock and Class II
Common Stock, and based upon 27,881,344 shares of Magna Common
Stock outstanding as of September 30, 1995, the former
shareholders of River Bend would control 1.94% of the total
voting power of the Magna Common Stock.
The Merger Agreements provide that consummation of the
Merger is subject to certain terms and conditions, including
receipt of the requisite shareholder and regulatory approvals and
the Opinion. The Merger will be consummated and become effective
on the date and at the time (the "Effective Time") that a
Certificate of Merger is issued by each of the Secretary of State
of the State of Illinois and the Secretary of State of the State
of Missouri in accordance with the provisions of Illinois and
Missouri law, respectively. The Effective Time will occur on
such date (the "Closing Date") as Magna determines after the
satisfaction or waiver of all conditions to the Merger on the
last business day of a calendar month in which the last of the
following events occurs (i) the receipt of the requisite approval
of the Merger Agreements by the shareholders of River Bend at the
Special Meeting and (ii) the receipt of the approvals of the
Board of Governors of the Federal Reserve System (the "Federal
Reserve Board") and the Illinois Commissioner of Banks and Trust
Companies (the "Illinois Commissioner"), and the expiration of
any waiting period after such approvals required by law or
regulation, or such earlier or later date as may be agreed to by
the parties in writing following all required regulatory
approvals.
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<PAGE> 18
The Merger Agreements may be terminated at any time
prior to the Closing Date by the mutual written consent of the
parties or, unilaterally, by either party upon the occurrence of
certain events or if the Merger is not consummated by June 30,
1996. See "TERMS OF THE MERGER - Conditions to Consummation of
the Merger" and "- Termination, Amendment and Waiver of the
Reorganization Agreement."
ACCOUNTING TREATMENT
The Merger will be accounted for under the purchase
method of accounting. See "TERMS OF THE MERGER - Accounting
Treatment."
SPECIAL MEETING OF RIVER BEND SHAREHOLDERS
The Special Meeting will be held on -----------,
- ------, 1996, at ----- -.m., local time, at ------------------,
- -----------------------------------, East Alton, Illinois, 62024.
Approval of the Merger Agreements by the River Bend shareholders
requires the affirmative vote of the holders of at least two-
thirds of the outstanding shares of Class I Common Stock, Class
II Common Stock and Preferred Stock, each voting as a separate
class. Only holders of record of River Bend Stock at the close
of business on ----------------, 199- (the "Record Date") will be
entitled to notice of, and to vote at, the Special Meeting. On
the Record Date, there were 157,063 shares of Class I Common
Stock, 785,315 shares of Class II Common Stock and 5,991 shares
of Preferred Stock outstanding.
As of the Record Date, directors and executive officers
of River Bend and their affiliates owned beneficially an
aggregate of 120,371 shares of Class I Common Stock, 539,131
shares of Class II Common Stock and 5,696 shares of Preferred
Stock, representing 76.6%, 68.7% and 95.1%, respectively, of the
shares entitled to vote at the Special Meeting. Certain
shareholders of River Bend have granted irrevocable proxies to a
representative of Magna to vote their shares of River Bend Stock
for the approval of the Merger Agreements. Such proxies cover
76.86%, 71.53% and 69.25% of the outstanding shares of Class I
Common Stock, Class II Common Stock and Preferred Stock,
respectively. See "TERMS OF THE MERGER - Certain Agreements."
THE BOARD OF DIRECTORS OF RIVER BEND BELIEVES THAT THE
MERGER IS IN THE BEST INTEREST OF RIVER BEND AND ITS SHAREHOLDERS
AND, ACCORDINGLY, UNANIMOUSLY RECOMMENDS THAT THE HOLDERS OF
RIVER BEND STOCK VOTE "FOR" APPROVAL OF THE MERGER AGREEMENTS.
CERTAIN AGREEMENTS
In connection with the execution of the Reorganization
Agreement, certain shareholders of River Bend, each of whom is a
member of the Board of Directors of River Bend or is affiliated
with a member of the Board of Directors of River Bend, solely in
their individual capacities as owners or holders of the power to
vote shares of River Bend Stock, executed a voting agreement (the
"Voting Agreement") and individual irrevocable proxies
(collectively, the "Irrevocable Proxies") with respect to 120,724
shares of Class I Common Stock, 561,765 shares of Class II Common
Stock and 4,149 shares of Preferred Stock, representing 76.86%,
71.53% and 69.25% respectively, of the shares outstanding as of
the date hereof. The Irrevocable Proxies are held by a
representative of Magna who will vote such shares "FOR" the
proposal to approve the Merger Agreements. See "TERMS OF THE
MERGER - Certain Agreements." Under Illinois law, the Merger
Agreements must be approved by
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<PAGE> 19
the affirmative vote of at least two-thirds of the outstanding shares
of each class of River Bend Stock voting separately as a class.
BACKGROUND OF AND REASONS FOR THE MERGER
The Board of Directors of River Bend believes that the
Merger is in the best interest of River Bend and its
shareholders. In the course of reaching its determination to
approve the Merger and to recommend the approval of the Merger
Agreements to the shareholders of River Bend, the Board of
Directors, without assigning any relative or specific weights,
considered a number of factors, including (i) the Merger
Consideration to be received, (ii) the tax-deferred nature of
certain portions of the Merger Consideration and (iii) the other
terms of the Merger Agreements. See "TERMS OF THE MERGER -
Reasons for the Merger; Board Recommendations."
Magna's Board of Directors believes that the Merger
will enhance Magna's ability to continue to compete effectively
in Madison County, Illinois, by expanding its presence in this
area through the addition of an established banking organization
with locations and a customer base which complement Magna's
existing franchise. See "TERMS OF THE MERGER - Reasons for the
Merger; Board Recommendations."
OPINION OF FINANCIAL ADVISOR OF RIVER BEND
The Board of Directors of River Bend has retained
Fister & Associates, Inc. ("F&A") to act as its financial advisor
in connection with the Merger. On September 29, 1995, F&A
delivered an oral opinion to the Board of Directors of River
Bend, which was orally reaffirmed on October 9, 1995, stating
that on and as of such date, the consideration to be received by
the shareholders of River Bend upon consummation of the Merger
was fair, from a financial point of view. As compensation for
its services in connection with the Merger, F&A will receive a
fee of $260,500 upon consummation of the Merger. River Bend and,
to the best of River Bend's knowledge, the affiliates of River
Bend, did not issue any instructions to F&A in connection with
its oral opinion, or impose any limitations upon the scope of the
investigation by F&A. F&A's opinion was directed to the Board of
Directors of River Bend and did not constitute a recommendation
to any River Bend shareholder as to how such shareholder should
vote at the Special Meeting. See "TERMS OF THE MERGER - Opinion
of Financial Advisor of River Bend."
INTERESTS OF CERTAIN PERSONS IN THE MERGER AND INDEMNIFICATION
Upon consummation of the Merger, Magna will extend an
invitation to Mr. John G. Helmkamp, Jr., President and Chief
Executive Officer of River Bend, to be appointed to the Board of
Directors of Magna. In addition, Magna has agreed to indemnify
Mr. Helmkamp against certain claims or liabilities to which he
may become subject as a result of being named in this Proxy
Statement/Prospectus as a prospective director of Magna. See
"TERMS OF THE MERGER - Interests of Certain Persons in the Merger
and Indemnification."
FEDERAL INCOME TAX CONSEQUENCES IN GENERAL
Thompson & Mitchell, Magna's legal counsel, has delivered
its opinion to the effect that assuming the Merger occurs in
accordance with the Merger Agreement and conditioned on the accuracy
of certain representations made by Magna, River Bend and certain
shareholders of River
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<PAGE> 20
Bend, the Merger will constitute a "reorganization" for federal income
tax purposes and that, accordingly, gain realized, if any, upon the
receipt of Magna Common Stock, cash and real estate will be taxable,
but only to the extent of the cash and real estate received. Cash
received in lieu of fractional shares may also give rise to taxable
income. RIVER BEND SHAREHOLDERS ARE URGED TO CONSULT THEIR OWN TAX
ADVISORS TO DETERMINE THE SPECIFIC TAX CONSEQUENCES OF THE MERGER TO
SUCH SHAREHOLDERS, INCLUDING THE APPLICABILITY OF VARIOUS STATE, LOCAL
AND FOREIGN TAX LAWS. See "CERTAIN FEDERAL INCOME TAX CONSEQUENCES
OF THE MERGER."
REGULATORY APPROVALS
Applications will be filed with the Federal Reserve
Board and the Illinois Commissioner for approval of the proposed
Merger. The Merger cannot be consummated until receipt of these
approvals and the requisite waiting period has lapsed after the
receipt of the approval of the Federal Reserve Board. In
reviewing the Merger, the Federal Reserve Board will consider
various factors, including possible anticompetitive effects of
the Merger, and will examine the financial and managerial
resources and future prospects of the combined organization. The
United States Department of Justice has the right to initiate
litigation challenging the Merger upon antitrust grounds during
the 15-day period after approval of the application by the
Federal Reserve Board. No assurance can be given that the
required regulatory approvals will be obtained. See "TERMS OF
THE MERGER - Certain Regulatory Approvals" and "SUPERVISION AND
REGULATION."
DISSENTERS' RIGHTS
Under Illinois law if the Merger is consummated, a
holder of Class I Common Stock, Class II Common Stock and/or
Preferred Stock may dissent from the Merger and receive payment
of the "fair value" of such shares in cash by following certain
procedures set forth in Sections 11.65 and 11.70 of the Illinois
Business Corporation Act of 1983, as amended (the "Illinois
Statute"), the text of which are attached hereto as Annex B.
-------
Failure to follow such procedures may result in a loss of
dissenters' rights. Any River Bend shareholder returning a blank
executed proxy card will be deemed to have approved the Merger
Agreements, thereby waiving any such dissenters' rights. See
"RIGHTS OF DISSENTING SHAREHOLDERS OF RIVER BEND."
Consummation of the Merger is contingent upon the
holders of less than nine percent of the River Bend Stock
exercising their dissenters' rights under the Illinois Statute.
MARKETS AND MARKET PRICES
Magna Common Stock is quoted on the Nasdaq National
Market under the symbol "MAGI." The last sales price reported
for Magna Common Stock on October 10, 1995, the last trading date
preceding public announcement of the Merger, was $24.25. There
is no established public trading market for River Bend Stock.
The following table sets forth, for the periods indicated, the
high and low trading prices of Magna Common Stock on the Nasdaq
National Market and the high and low trading prices of Class I
Common Stock and Class II Common Stock known to management of
River Bend. Management of River Bend does not have knowledge of
the prices paid in all transactions involving its shares and has
not necessarily verified the prices indicated in the table with
both parties to the relevant transaction. Because of the lack of
an established public market for shares of Class I Common Stock
and Class II Common Stock, the prices indicated may not reflect
the prices which would be paid for such shares on an active
market. To the best knowledge of management of River
- 14 -
<PAGE> 21
Bend, there were no sales of Class I Common Stock or Class II Common
Stock in 1995 up to the date of this Proxy Statement/Prospectus.
<TABLE>
<CAPTION>
Magna<F1> River Bend<F2>
------------------------ -----------------------------------------------------------
Cash Class I Common Stock Class II Common Stock Cash
Dividend -------------------- --------------------- Dividend
High Low Declared High Low High Low Declared
1993 ---- --- -------- ---- --- ---- --- --------
- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
First Quarter $19.00 $15.75 $.18 $ 11.51 $ 11.06 $ 11.51 $ 11.06 $ --
Second Quarter 17.88 15.75 .18 12.27 12.27 12.27 12.27 --
Third Quarter 19.13 16.00 .18 <F3> <F3> <F3> <F3> --
Fourth Quarter 20.25 18.13 .18 <F3> <F3> <F3> <F3> --
1994
- ----
First Quarter 20.50 18.13 .19 <F3> <F3> <F3> <F3> .08
Second Quarter 20.38 17.63 .19 14.15 10.00 14.15 10.00 .08
Third Quarter 21.38 19.00 .19 <F3> <F3> <F3> <F3> .08
Fourth Quarter 21.50 16.75 .19 <F3> <F3> 15.27 15.27 .09
1995
- ----
First Quarter 20.75 17.13 .20 <F3> <F3> <F3> <F3> .09
Second Quarter 22.38 20.00 .20 <F3> <F3> <F3> <F3> .09
Third Quarter 25.50 21.00 .20 <F3> <F3> <F3> <F3> .09
Fourth Quarter (through
November 24, 1995) 26.38 23.50 .20 <F3> <F3> <F3> <F3> .09
<FN>
- --------------
<F1> For a recent sale price of Magna Common Stock, see the
cover of this Proxy Statement/Prospectus.
<F2> Effective March 7, 1994, River Bend amended its Articles
of Incorporation and effected a recapitalization whereby
each share of $10.00 par value common stock was exchanged
for one share of Class I Common Stock and five shares of
Class II Common Stock. The per share amounts for all
periods prior to the recapitalization have been restated
to reflect this change.
<F3> No trades known to the management of River Bend.
</TABLE>
COMPARATIVE PER SHARE DATA
The following table sets forth for the periods indicated
selected historical per share data of Magna and River Bend and the
corresponding pro forma and pro forma equivalent per share amounts
giving effect to the proposed Merger. The data presented is based
upon the consolidated financial statements and related notes of
Magna and River Bend included in this Proxy Statement/Prospectus or
in documents incorporated herein by reference. The assumptions
used in the preparation of this table appear in the footnotes
following the table. See "PRO FORMA FINANCIAL INFORMATION." This
data is not necessarily indicative of the results of the future
operations of the combined organization or the actual results that
would have occurred if the Merger had been consummated prior to the
periods indicated.
- 15 -
<PAGE> 22
The pro forma combined consolidated amounts included in
the table below assume that the Merger is accounted for as a
purchase. See "TERMS OF THE MERGER - Accounting Treatment."
<TABLE>
<CAPTION>
Magna River Bend
Reported Reported<F1> Pro Forma Combined<F2> Pro Forma Equivalent<F3>
-------- ------------ ---------------------- ------------------------
<S> <C> <C> <C> <C>
Book Value per Common Share:
December 31, 1994 $13.49 $12.60 $13.71 $15.08
September 30, 1995 15.38 14.30 15.55 17.10
Cash Dividends Declared per Common Share:
Year ended December 31, 1994 .76 .33 .76 .84
Nine months ended September 30, 1995 .60 .27 .60 .66
Earnings per Common Share (fully diluted):
Year ended December 31, 1994 1.66 2.06 1.65 1.81
Nine months ended September 30, 1995 1.31 1.46 1.03 1.43
Market Price per Common Share:
At October 10, 1995<F4> 24.25 15.27 -- --
At -----------, 1995<F4> 15.27 -- --
<FN>
- ------------------
<F1> Effective March 7, 1995, River Bend amended its Articles
of Incorporation and effected a recapitalization whereby
each share of $10 par value common stock was exchanged for
one share of Class I Common Stock and five shares of Class
II Common Stock. The number of shares issued and
outstanding and the per share amounts for all periods prior
to the recapitalization have been restated to reflect this
change.
<F2> Includes the effect of pro forma adjustments related to
River Bend.
<F3> Assumes that a share of River Bend common stock is
converted solely into shares of Magna Common Stock and
assumes a market value of Magna Common Stock of $24.00, the
last sale price as reported on the Nasdaq National Market
as of November 20, 1995.
<F4> The market value of Magna Common Stock disclosed as of
October 10, 1995, the last trading day preceding the public
announcement of the proposed acquisition, and as of
------------, 1995, the latest available date prior to the
mailing of the Proxy Statement/Prospectus, is based on the
last sale price as reported on the Nasdaq National Market.
There are no publicly available quotations of River Bend
Stock. The market price per share of River Bend common
stock disclosed is the price paid per share of Class II
Common Stock in a transaction occurring in the fourth
quarter of 1994, the last transaction in River Bend common
stock for which a price is known to management of River
Bend.
</TABLE>
SUMMARY FINANCIAL DATA
The following tables set forth for the periods indicated
certain summary historical consolidated financial information for
Magna and River Bend. The balance sheet data and income statement
data of Magna included in the summary financial data for the five
years ended December 31, 1994 are taken from audited consolidated
financial statements of Magna as of and for such years. The
balance sheet data and income statement data of River Bend are
taken from the audited financial statements of River Bend as of and
for the three years ended December 31, 1994 and the unaudited
financial statements of River Bend as of and for the two years
ended December 31, 1991. The balance sheet data and income
statement data included in the summary financial data as of and for
the nine months ended September 30, 1995 and 1994 are taken from
the unaudited consolidated financial statements of Magna and River
Bend, as of and for such periods. These data include all
adjustments which are, in the opinion of the respective managements
of Magna and River Bend, necessary for a fair presentation of
- 16 -
<PAGE> 23
these periods and are of a normal recurring nature. The following
summary financial information should be read in conjunction with
the consolidated financial statements of Magna and River Bend, and
the related notes thereto, included herein or in documents
incorporated herein by reference, and in conjunction with the
unaudited pro forma combined consolidated financial information,
including the notes thereto, appearing elsewhere in this Proxy
Statement/Prospectus. See "INCORPORATION OF CERTAIN INFORMATION BY
REFERENCE" and "PRO FORMA FINANCIAL INFORMATION."
- 17 -
<PAGE> 24
<TABLE>
MAGNA GROUP, INC.
SUMMARY FINANCIAL DATA
<CAPTION>
Nine Months Ended
September 30 Year Ended December 31
----------------------- ----------------------------------------------------------
1995 1994 1994 1993 1992 1991 1990
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
EARNINGS (THOUSANDS)
Interest income . . . . . . . . . . $ 255,769 $ 209,411 $ 289,561 $ 244,288 $ 274,312 $ 197,714 $ 214,230
Interest expense. . . . . . . . . . 119,455 83,366 116,742 99,025 127,539 108,627 127,154
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net interest income . . . . . . . . 136,314 126,045 172,819 145,263 146,773 89,087 87,076
Provision for loan losses . . . . . 7,491 3,000 4,900 9,589 20,544 29,468 10,886
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net interest income after provision
for loan losses. . . . . . . . . . 128,823 123,045 167,919 135,674 126,229 59,619 76,190
Non-interest income . . . . . . . . 35,302 35,665 47,503 45,840 38,184 21,936 22,280
Non-interest expense. . . . . . . . 110,110 112,542 150,213 131,321 129,767 78,127 79,012
Income tax expense (benefit). . . . 16,846 13,994 20,179 12,706 5,539 (410) 2,418
Extraordinary item less applicable tax -- -- -- -- (830) -- --
Cumulative effect adjustment of
accounting change. . . . . . . . . -- -- -- -- 1,915 -- 1,076
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net income. . . . . . . . . . . . . $ 37,169 $ 32,174 $ 45,030 $ 37,487 $ 30,192 $ 3,838 $ 18,116
========== ========== ========== ========== ========== ========== ==========
PER COMMON SHARE
Primary net income per share:
Income before extraordinary item and
cumulative effect adjustment . . $ 1.34 $ 1.22 $ 1.69 $ 1.53 $ 1.36 $ .28 $ 1.27
Extraordinary item . . . . . . . . -- -- -- -- (.04) -- --
Cumulative effect adjustment . . . -- -- -- -- .09 -- .08
Net income . . . . . . . . . . . . 1.34 1.22 1.69 1.53 1.41 .28 1.35
Fully diluted net income per share:
Income before extraordinary item and
cumulative effect adjustment . . 1.31 1.20 1.66 1.50 1.33 .28 1.24
Extraordinary item . . . . . . . . -- -- -- -- (.04) -- --
Cumulative effect adjustment . . . -- -- -- -- .09 -- .07
Net income . . . . . . . . . . . . 1.31 1.20 1.66 1.50 1.38 .28 1.31
Dividends declared. . . . . . . . . .60 .57 .76 .72 .68 .68 .65
Book value per common share . . . . 15.38 13.52 13.49 14.02 13.39 12.72 13.83
ENDING BALANCE SHEET DATA (THOUSANDS)
Total assets. . . . . . . . . . . . $4,859,067 $4,466,152 $4,638,502 $4,128,462 $3,728,525 $3,777,304 $2,319,536
Securities. . . . . . . . . . . . . 1,361,331 1,232,199 1,217,174 1,213,673 1,088,410 932,670 629,537
Loans, net of unearned income . . . 3,170,943 2,889,003 2,968,201 2,564,466 2,272,180 2,479,163 1,471,035
Reserve for loan losses . . . . . . 41,630 42,907 43,991 40,065 38,194 55,976 16,673
Deposits. . . . . . . . . . . . . . 3,779,936 3,659,034 3,672,755 3,494,825 3,224,661 3,334,623 1,984,853
Long-term debt. . . . . . . . . . . 93,747 104,834 104,453 32,062 35,195 35,932 25,293
Stockholders' equity. . . . . . . . 428,829 371,597 371,312 360,649 322,295 249,640 186,425
Common shares outstanding . . . . . 27,881 27,488 27,512 25,729 24,074 19,471 13,479
SELECTED RATIOS<F1>
Return on average assets. . . . . . 1.07% 1.02% 1.05% 1.02% .81% .17% .79%
Return on average equity. . . . . . 12.46 11.96 12.41 11.25 10.88 2.04 10.25
Net interest rate margin<F2>. . . . 4.35 4.45 4.49 4.45 4.47 4.56 4.43
Average stockholders' equity to
average total assets . . . . . . . 8.59 8.54 8.48 9.06 7.47 8.34 7.74
Loan reserve to total loans . . . . 1.31 1.49 1.48 1.56 1.68 2.26 1.13
Loan reserve to non-performing loans 104.24 98.26 119.21 78.49 57.87 52.42 48.10
<FN>
- -------------------
<F1> Ratios for the nine months ended September 30, 1995 and 1994 are
annualized.
<F2> Based on interest income on a fully tax-equivalent basis assuming an
income tax rate of 35%.
</TABLE>
- 18 -
<PAGE> 25
<TABLE>
RIVER BEND BANCSHARES, INC.
SUMMARY FINANCIAL DATA
<CAPTION>
Nine Months Ended
September 30 Year Ended December 31
----------------- ----------------------------------------------------------
1995 1994 1994 1993 1992 1991 1990
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
EARNINGS (THOUSANDS)
Interest income . . . . . . . . . . $ 8,015 $ 7,592 $ 10,196 $ 10,629 $ 12,448 $ 12,962 $ 11,409
Interest expense. . . . . . . . . . 3,633 3,186 4,290 4,514 6,016 7,965 7,569
----------- ---------- ---------- ---------- ---------- ---------- ----------
Net interest income . . . . . . . . 4,382 4,406 5,906 6,115 6,432 4,997 3,840
Provision for loan losses . . . . . 72 80 80 120 108 191 191
----------- ---------- ---------- ---------- ---------- ---------- ----------
Net interest income after provision
for loan losses. . . . . . . . . . 4,310 4,326 5,826 5,995 6,324 4,806 3,649
Non-interest income . . . . . . . . 584 566 820 712 770 646 584
Non-interest expense. . . . . . . . 2,875 2,792 3,841 3,916 3,753 3,510 3,063
Income tax expense. . . . . . . . . 569 590 787 828 1,030 525 227
Cumulative effect adjustment of
accounting change. . . . . . . . . -- -- -- (11) -- -- --
----------- ---------- ---------- ---------- ---------- ---------- ----------
Net income. . . . . . . . . . . . . $ 1,450 $ 1,510 $ 2,018 $ 1,952 $ 2,311 $ 1,417 $ 943
=========== ========== ========== ========== ========== ========== ==========
PER COMMON SHARE<F1>
Net income. . . . . . . . . . . . . $ 1.46 $ 1.53 $ 2.06 $ 2.07 $ 2.30 $ 1.43 $ .92
Dividends declared. . . . . . . . . .27 .24 .33 -- -- -- --
Book value per common share . . . . 14.30 12.40 12.60 11.26 9.22 6.92 5.51
ENDING BALANCE SHEET DATA (THOUSANDS,
EXCEPT SHARES)
Total assets. . . . . . . . . . . . $ 159,825 $ 163,780 $ 157,562 $ 161,814 $ 160,246 $ 151,408 $ 142,923
Securities. . . . . . . . . . . . . 96,485 101,432 95,577 94,013 86,820 83,125 73,783
Loans, net of unearned discount . . 50,531 50,597 51,442 52,781 59,553 55,205 52,161
Reserve for loan losses . . . . . . 862 1,054 831 936 905 824 739
Deposits. . . . . . . . . . . . . . 140,687 146,148 141,426 145,372 145,182 138,117 130,411
Long-term debt. . . . . . . . . . . 2,368 2,631 2,565 3,026 3,552 4,078 4,520
Shareholders' equity. . . . . . . . 14,073 12,289 12,472 11,207 9,284 7,117 5,788
Common shares outstanding . . . . . 942,378 942,378 942,378 942,378 942,378 942,378 942,378
SELECTED RATIOS<F2>
Return on average assets. . . . . . 1.22% 1.24% 1.25% 1.22% 1.48% 0.97% 0.77%
Return on average equity. . . . . . 14.57 17.14 17.04 19.05 28.18 21.96 17.63
Net interest rate margin<F3>. . . . 4.13 4.06 4.10 4.29 4.64 3.64 3.39
Average shareholders' equity to
average total assets . . . . . . . 8.37 7.22 7.31 6.38 5.27 4.41 4.37
Loan reserve to total loans . . . . 1.71 2.08 1.62 1.77 1.52 1.49 1.42
Loan reserve to non-performing loans 888.66 521.78 388.32 233.42 101.69 173.11 155.91
<FN>
- --------------
<F1> Effective March 7, 1994, River Bend amended its Articles of
Incorporation and effected a recapitalization whereby each share of
$10 par value common stock was exchanged for one share of Class I
Common Stock and five shares of Class II Common Stock. The number of
shares issued and outstanding and per share amounts for all periods
prior to the recapitalization have been restated to reflect this
change.
<F2> Ratios for the nine months ended September 30, 1995 and 1994 are
annualized.
<F3> Based on interest income on a fully tax-equivalent basis assuming an
income tax rate of 34%.
</TABLE>
- 19 -
<PAGE> 26
INFORMATION REGARDING SPECIAL MEETING
-------------------------------------
GENERAL
This Proxy Statement/Prospectus is being furnished to
holders of River Bend Stock in connection with the solicitation of
proxies by the Board of Directors of River Bend for use at the
Special Meeting and any adjournments or postponements thereof at
which the shareholders of River Bend will consider and vote upon a
proposal to approve the Merger Agreements, and each of the
transactions contemplated thereby, and consider and vote upon any
other business which may properly be brought before the Special
Meeting or any adjournments or postponements thereof. Each copy of
this Proxy Statement/Prospectus is accompanied by the Notice of
Special Meeting of Shareholders of River Bend, a white proxy card,
a yellow Election Form and related instructions and a self-
addressed return envelope to River Bend for the white proxy card
and the yellow Election Form.
This Proxy Statement/Prospectus is also furnished by Magna to
each holder of River Bend Stock as a prospectus in connection with
the issuance by Magna of shares of Magna Common Stock upon the
consummation of the Merger. This Proxy Statement/Prospectus and
the Notice of Special Meeting of Shareholders, white proxy card,
yellow Election Form and related materials are being first mailed
to shareholders of River Bend on or about -----------, 199-.
DATE, TIME AND PLACE
The Special Meeting will be held at the main banking
house of Illinois State Bank, 347 West Main Street,
- ---------------------------, ------------------------, East Alton,
Illinois, 62024 on --------------, --------------, 1996, at --:00
- -.m., local time.
RECORD DATE; VOTE REQUIRED
The Board of Directors has fixed the close of business on
- ---------------, 199-, as the record date for the determination of
shareholders of River Bend entitled to receive notice of and to
vote at the Special Meeting. On the Record Date, 157,063 shares of
Class I Common Stock, 785,315 shares of Class II Common Stock and
5,991 shares of Preferred Stock were issued and outstanding. Only
holders of record of River Bend Stock on the Record Date are
entitled to vote at the Special Meeting. No shares of River Bend
Stock can be voted at the Special Meeting unless the record holder
is present in person or represented by proxy at the Special
Meeting.
Each share of River Bend Stock is entitled to one vote on
each matter properly brought before the Special Meeting. The
affirmative vote of the holders of at least two-thirds of the
outstanding shares of Class I Common Stock, Class II Common Stock
and Preferred Stock, each voting as a separate class, is required
to approve the Merger Agreements.
As of the Record Date, the directors and executive
officers of River Bend and their affiliates owned beneficially an
aggregate of 120,371 shares of Class I Common Stock, 539,131 shares
of Class II Common Stock and 5,696 shares of Preferred Stock,
representing approximately 76.6%, 68.7% and 95.1% of the
outstanding shares of Class I Common Stock, Class II Common Stock
and Preferred Stock, respectively, entitled to vote at the Special
Meeting. Each of the directors and executive officers of River
Bend and their affiliates have indicated their intention to vote
for approval of the Merger Agreements.
- 20 -
<PAGE> 27
For information regarding the execution of a voting
agreement and irrevocable proxies with respect to 120,724 shares of
Class I Common Stock, 561,765 shares of Class II Common Stock and
4,149 shares of Preferred Stock, representing 76.86%, 71.53% and
69.25%, respectively, of the total shares entitled to vote at the
Special Meeting, see "TERMS OF THE MERGER - Certain Agreements."
VOTING AND REVOCATION OF PROXIES
Proxies for use at the Special Meeting accompany this
Proxy Statement/Prospectus. Shareholders may use the proxy if they
are unable to attend the Special Meeting in person or wish to have
their shares voted by proxy even if they attend the Special
Meeting. Shares of River Bend Stock represented by a proxy
properly signed and returned to River Bend at, or prior to, the
Special Meeting, unless subsequently revoked, will be voted at the
Special Meeting in accordance with instructions thereon. If a
proxy is properly signed and returned and the manner of voting is
not indicated on the proxy, any shares of River Bend Stock
represented by such proxy will be voted "FOR" the Merger
Agreements. Failure to return a properly executed proxy card or to
vote in person at the Special Meeting will have the practical
effect of a vote against the Merger Agreements, but will NOT
perfect a shareholder's dissenter's rights. See "RIGHTS OF
DISSENTING SHAREHOLDERS OF RIVER BEND."
Proxies marked to abstain from voting will be treated as
shares that are present at the Special Meeting for purposes of
determining the presence of a quorum but as unvoted for purposes of
determining the base number of shares on a particular proposal. If
a broker or other nominee holder indicates on the proxy card that
it does not have discretionary authority to vote the shares it
holds of record on a proposal, those shares will not be considered
as voted for purposes of determining the approval of shareholders
on a particular proposal, but will be considered as present at the
Special Meeting for purposes of determining the presence of a
quorum.
Any proxy given pursuant to this solicitation may be
revoked at any time prior to the voting thereof by filing with the
Secretary of River Bend a written revocation or a duly executed
proxy bearing a later date. A holder of River Bend Stock may
withdraw the proxy at the Special Meeting at any time before it is
exercised by electing to vote in person; however, attendance at the
Special Meeting will not in and of itself constitute a revocation
of the proxy.
SOLICITATION OF PROXIES
In addition to solicitation by mail of proxies from
shareholders of River Bend Stock, proxies also may be solicited by
personal interview, telephone and facsimile by directors, officers
and employees of River Bend, who will not be specifically
compensated for such services. Banks, brokerage houses and other
institutions, nominees or fiduciaries will be requested to forward
the soliciting materials to their principals and obtain
authorization for the execution of proxies. All costs of
soliciting proxies, assembling and mailing the Proxy
Statement/Prospectus and all papers which now accompany or
hereafter may supplement the same, as well as reasonable out-of-
pocket expenses incurred by such banks, brokerage houses and other
institutions, nominees or fiduciaries for forwarding proxy
materials to and obtaining proxies from their principals will be
borne by River Bend.
River Bend will bear its own expenses in connection with
soliciting proxies, except that Magna will pay all Commission and
other regulatory filing fees incurred in connection with the Merger
and the printing and mailing expenses with respect to the Proxy
Statement/Prospectus.
SHAREHOLDERS OF RIVER BEND STOCK ARE REQUESTED TO
COMPLETE, DATE AND SIGN THE ACCOMPANYING WHITE PROXY CARD AND
RETURN IT PROMPTLY IN THE ENCLOSED POSTAGE-PREPAID ENVELOPE, EVEN
IF THEY PLAN TO ATTEND THE SPECIAL MEETING.
- 21 -
<PAGE> 28
TERMS OF THE MERGER
-------------------
The following is a summary of the material terms and
conditions of the Merger Agreements, which documents are
incorporated by reference herein. This summary is qualified in its
entirety by the full text of the Merger Agreements, which are
incorporated herein by this reference. Magna, upon written
request, will furnish a copy of the Merger Agreements, excluding
any schedules thereto, without charge, to any person who receives
a copy of this Proxy Statement/Prospectus. Such requests should be
directed to Gary D. Hemmer, Executive Vice President,
Administration, Magna Group, Inc., One Magna Place, 1401 South
Brentwood Boulevard, St. Louis, Missouri 63144-1401.
GENERAL DESCRIPTION OF THE MERGER
Subject to the satisfaction of the terms and conditions
set forth in the Merger Agreements, River Bend will be merged with
and into Landmark. Upon consummation of the Merger, River Bend's
corporate existence will terminate and Landmark will continue as
the surviving entity. Simultaneously with the effectiveness of the
Merger, (i) the aggregate of all issued and outstanding shares of
Preferred Stock will be converted into the right to receive the
Preferred Cash Distribution and (ii) the aggregate of all issued
and outstanding shares of Class I Common Stock and Class II Common
Stock will be converted into the right to receive (A) the Stock
Distribution, (B) the Common Cash Distribution and (C) the Real
Estate Distribution.
Each holder of Class I Common Stock and/or Class II
Common Stock will have the opportunity to elect the composition of
their proportionate interest in the Election Consideration (subject
to certain adjustments), by specifying what percentage of the value
of the Election Consideration to be received by such holder will be
the Stock Distribution and what percentage will be the Common Cash
Distribution. For this purpose, the Stock Distribution will be
valued at the Magna Share Value. Enclosed with this Proxy
Statement/Prospectus is a yellow Election Form whereby holders of
Class I Common Stock and/or Class II Common Stock may make such an
election. In order for an Election Form to be deemed to be
effective, such Election Form must be properly completed and duly
executed by the River Bend shareholder and received by River Bend
by the Election Deadline (5:00 p.m. local time on ------, 1996.
Each separate entity on River Bend's list of shareholders
will be presumed to represent a separate and distinct holder of
Class I Common Stock or Class II Common Stock. As a consequence,
if any person or entity holds shares of Class I Common Stock and/or
Class II Common Stock titled in two or more different names (e.g.,
individually, as trustee or jointly with a spouse), a properly
completed Election Form must be filed for each name or set of names
under which shares are titled. Any Election Form may be revoked or
changed by the record owner of the underlying shares by delivery of
written notice by such person to River Bend at or prior to the
Election Deadline.
Any holder of Class I Common Stock and/or Class II Common
Stock who fails to deliver a properly completed and duly executed
Election Form to River Bend by the Election Deadline will be deemed
to have made a No Election, in which case, such holder's shares
will be deemed to be No Election Shares. Any holder of No Election
Shares will be deemed to have elected to receive 50% of their
proportionate interest in the Election Consideration as Stock
Distribution and 50% as Common Cash Distribution.
The actual Merger Consideration that will be paid to each
holder of Class I Common Stock and/or Class II Common Stock upon
consummation of the Merger may differ from the proportions of the
Election Consideration elected by such shareholder in the event
that holders of Class I Common
- 22 -
<PAGE> 29
Stock and holders of Class II Common Stock elect either (A) more cash
than equals the Common Cash Distribution or (B) more Magna Common
Stock than equals the Stock Distribution. In such event, the type of
consideration oversubscribed will be apportioned among the holders by
pro-rating that consideration, in proportion to the amounts elected by
the holders, so that the sum of the amount of that form of
consideration equals the amount available to be received by the
holders of certificates representing shares of Class I Common Stock
and Class II Common Stock, in the aggregate. The remainder of each
holder's proportionate interest in the Election Consideration will
be in the form of the undersubscribed Election Consideration, in an
amount such that the fair market value of all Election
Consideration to be received by such holder (valuing the Stock
Distribution portion at a per share value equal to the Magna Share
Value) will equal the proportionate amount of the Election
Consideration to which such holder is entitled.
The number of shares of Magna Common Stock and the amount
of cash that will comprise the Stock Distribution and the Common
Cash Distribution, respectively, may be adjusted in the event the
number of shares of Magna Common Stock to be issued pursuant to the
Merger would be insufficient to allow Thompson & Mitchell, counsel
to Magna, to render the Opinion. In such event, the Stock
Distribution will be increased by such minimum number of additional
shares of Magna Common Stock, as determined by Thompson & Mitchell
in its reasonable judgment, as will be required for Thompson &
Mitchell to deliver the Opinion. In the event the number of shares
of Magna Common Stock that comprises the Stock Distribution is so
increased, the Common Cash Distribution will be reduced by an
amount equal to (A) the number of additional shares of Magna Common
Stock required to be issued in order for Thompson & Mitchell to
deliver the Opinion multiplied by (B) $21.75. Magna and River Bend
have agreed upon this value solely for the purpose of the Merger
Agreements and no assurance can be given that the fair market value
of a share of Magna Common Stock, on the date the Opinion
Adjustment, if any, is made, will be equal to $21.75. The fair
market value of Magna Common Stock on such date may be greater than
or less than $21.75 due to numerous market factors.
The Merger Agreements also provide that the Common Cash
Distribution and the Preferred Cash Distribution are subject to the
following adjustments in the event the Merger is not consummated on
or before February 29, 1996:
(1) An amount shall be added to the Common Cash
Distribution equal to (A) the product of (i) the sum of all
dividends declared by Magna on a single share of Magna Common
Stock for stockholders of record of Magna for the period
beginning March 1, 1996 and ending the day prior to the
Closing Date and (ii) the number of shares of Magna Common
Stock comprising the Stock Distribution (after taking account
of the Opinion Adjustment) less (B) the aggregate amount of
dividends declared by River Bend on shares of Class I Common
Stock and Class II Common Stock during such period plus (C)
the product of (i) the Common Cash Consideration (after taking
account of the Opinion Adjustment) multiplied by (ii) (1) the
Federal funds rate as published in The Wall Street Journal,
Midwest Edition, as such rate varies from time to time,
divided by (2) 365 days multiplied by (iii) the number of
days, inclusive, from February 29, 1996 to the day prior to
the Closing Date.
(2) An amount shall be added to the Preferred Cash
Distribution equal to the product of (i) the Preferred Cash
Distribution times (ii) (1) the Federal funds rate as
published in The Wall Street Journal, Midwest Edition, as such
rate varies from time to time, divided by (2) 365 days
multiplied by (iii) the number of days, inclusive, from
February 29, 1996 to the day prior to the Closing Date.
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Holders of Class I Common Stock and/or Class II Common
Stock will also receive in exchange for their shares of stock,
beneficial interests in the Land Trust that, as of the Effective
Time, will be the record owner of the Eastgate Parcel. With
respect to the Land Trust, each share of Class I Common Stock and
Class II Common Stock will be treated equally and the holders
thereof will receive an undivided beneficial interest in the Land
Trust that is in proportion to the total number of shares of Class
I Common Stock and/or Class II Common Stock held by such holder to
the total number of shares of Class I Common Stock and Class II
Common Stock that are outstanding immediately prior to the
Effective Time. Any beneficial interest that would otherwise be
distributed to holders of shares as to which dissenters' rights are
then being pursued will be distributed to them if and when such
dissenters' rights are no longer being pursued; and if such holders
have completed the dissent process such that they are not to
receive the Common Stock Consideration, then such interests in the
Land Trust will be distributed to Magna. See "RIGHTS OF DISSENTING
SHAREHOLDERS OF RIVER BEND" and "- Description of Land Trust."
The Merger Agreement provides that the Land Trust contain
terms acceptable to Magna providing that Magna and the subsidiaries
of Magna and River Bend be indemnified and held harmless for any
and all tax liability in excess of $90,000 that Magna, River Bend
or any subsidiary of Magna or River Bend may incur by reason of the
distribution of the Land Trust from Landmark or the payment of
interests in the Land Trust to the former holders of Class I Common
Stock and/or Class II Common Stock.
Upon consummation of the Merger, the business and
operations of River Bend will be continued through Landmark.
Assuming the issuance of 550,240 shares of Magna Common Stock in
the Merger in conversion of the Class I Common Stock and Class II
Common Stock, and based upon 27,881,344 shares of Magna Common
Stock outstanding as of September 30, 1995, the former shareholders
of River Bend would control 1.94% of the total voting power of the
Magna Common Stock.
Following the Closing Date, each shareholder of River
Bend will be required to submit to the Exchange Agent a properly
executed letter of transmittal and surrender to the Exchange Agent
the stock certificate(s) formerly representing the shares of River
Bend Stock held by such shareholder in order to receive the Merger
Consideration to which such shareholder is entitled. As soon as
practicable following the Closing Date, the Exchange Agent will
mail to each River Bend shareholder a notice of consummation of the
Merger and a form of letter of transmittal, together with
instructions and a return envelope to facilitate the exchange of
such holder's certificate(s) formerly representing River Bend Stock
for the Merger Consideration. No interest will be accrued or paid
on the Common Cash Distribution or the Preferred Cash Distribution,
nor will dividends or other distributions be paid to a former River
Bend shareholder with respect to the Stock Distribution until such
shareholder's letter of transmittal and stock certificates formerly
representing River Bend Stock, or documentation reasonably
acceptable to the Exchange Agent in lieu of lost, stolen or
destroyed certificates, is delivered to the Exchange Agent.
Following surrender of certificates formerly representing River
Bend Stock in accordance with the instructions of the Exchange
Agent, the holders of newly-issued Magna certificates will be paid,
without interest, any dividends or other distributions with respect
to the shares of Magna Common Stock, the record date for which is
after the Effective Time (less any taxes that may have been imposed
thereon). See "- Surrender of Stock Certificates and Receipt of
Merger Consideration." No fractional shares of Magna Common Stock
will be issued in the Merger, but cash will be paid in lieu of such
fractional shares, such cash being calculated by multiplying the
holder's fractional share interest by $21.75. See "- Fractional
Shares." The shares of Magna Common Stock to be issued as the
Stock Distribution pursuant to the Merger will be freely
transferable except by certain shareholders of River Bend who are
deemed to be "affiliates" of River Bend. The shares of Magna
Common Stock issued as the Stock Distribution to such affiliates
will be restricted in their transferability in accordance with the
rules and
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<PAGE> 31
regulations promulgated by the Commission. See "INFORMATION REGARDING
MAGNA STOCK - Restrictions on Resale of Magna Common Stock by
Affiliates."
DESCRIPTION OF LAND TRUST
Pursuant to the terms of the Merger Agreements, upon
consummation of the Merger, holders of Class I Common Stock and/or
Class II Common Stock will receive in exchange for their shares of
stock, in addition to their proportionate interest in the Election
Consideration, beneficial interests in the Land Trust that, as of
the Effective Time, will be the record owner of the Eastgate
Parcel. With respect to the Land Trust, each share of Class I
Common Stock and Class II Common Stock will be treated equally and
the holders thereof will receive an undivided beneficial interest
in the Land Trust that is in proportion to the total number of
shares of Class I Common Stock and/or Class II Common Stock held by
such holder to the total number of shares of Class I Common Stock
and Class II Common Stock that are outstanding immediately prior to
the Effective Time. Any beneficial interest that would otherwise
be distributed to holders of shares as to which dissenters' rights
are then being pursued will be distributed to them if and when such
dissenters' rights are no longer being pursued; and if such holders
have completed the dissent process such that they are not to
receive the Common Stock Consideration, then such interests in the
Land Trust will be distributed to Magna. See "RIGHTS OF DISSENTING
SHAREHOLDERS."
Pursuant to the terms of the Land Trust Agreement, the
interest of any beneficiary under the Land Trust shall consist
solely of (i) a power of direction to deal with the title to the
property held by the Land Trust and to manage and control such
property and (ii) the right to receive the proceeds from rentals
and from mortgages, sales or other dispositions of the property
held by the Land Trust; provided, however, no beneficiary shall
have any right, title or interest in or to any portion of the
Eastgate Parcel, but only an interest in the earnings, avails and
proceeds of such property. The death of any beneficiary under the
Land Trust shall not terminate the Land Trust or in any manner
affect the powers of the Trustee. The Land Trust Agreement may not
be revoked or modified prior to thirty-six months after the date on
which the beneficial interests are first distributed to the holders
of Class I Common Stock and/or Class II Common Stock without the
written consent of River Bend, or any successor thereto, and the
Trustee, and thereafter, if the beneficial interests in the Land
Trust are owned by persons other than River Bend, only by the
written consent of the Trustee and persons holding seventy percent
(70%) or more of the beneficial interests in the Land Trust.
Pursuant to the Land Trust Agreement, in the event Magna,
River Bend or any of their subsidiaries (collectively, the
"Entities") incurs any tax liability (including any interest,
penalties or additions thereto) in excess of $90,000 by reason of
the distribution of the beneficial interests in the Land Trust from
River Bend, or any successor thereto, to the holders of Class I
Common Stock and/or Class II Common Stock, then the Trustee shall
indemnify and hold harmless each Entity to the extent the Entities
have collectively paid a tax liability in excess of $90,000 with
respect to such distribution, but only to the extent of that
portion of the tax liability in excess of $90,000 in the aggregate.
If the Eastgate Parcel is sold within 36 months after the
date on which River Bend, or any successor thereto, first
distributes the beneficial interests in the Land Trust to the
holders of Class I Common Stock and/or Class II Common Stock, the
Trustee shall not during such thirty-six month period disburse any
funds in excess of an amount equal to two-thirds of the difference of
(i) the net proceeds from the sale of the Eastgate Parcel less (ii)
$340,000. After such thirty-six month period, the Trustee may
disburse the remaining balance of the sale proceeds in accordance with
the directions of the holders of the beneficial interest in the Land
Trust; provided, however, with the consent of Magna, the Trustee may
distribute such retained proceeds at an earlier date.
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<PAGE> 32
It will be the obligation of each beneficiary under the
Land Trust to file any reports and to pay any and all taxes
required with respect to the earnings, avails and proceeds of the
Eastgate Parcel or growing out of such beneficiary's interest under
the Land Trust. The Trustee shall only be obligated to rent or
sell the Eastgate Parcel upon direction from persons holding seventy
percent (70%) or more of the beneficial interests in the Land Trust.
In case the Trustee shall (i) make any advance of money on account of
the Land Trust, (ii) be made a party to any litigation in
connection with the Land Trust or (iii) be liable to pay any sum of
money on account of the Land Trust, the beneficiaries of the Land
Trust, jointly and severally, shall pay on demand to the Trustee,
with interest thereon at the rate of eight percent per annum, all
such disbursements or advances on payments made by the Trustee,
including the Trustee's expenses. Alternatively, the Trustee may
elect to receive such sums out of the proceeds from the sale of the
Eastgate Parcel for any sums advanced by the Trustee on behalf of
the Land Trust (plus interest). The Trustee shall be paid $100
in consideration for his services in connection with the Land
Trust. The full text of the Land Trust Agreement is attached as
Annex A to this Proxy Statement/Prospectus and is incorporated
- --------
herein by reference in its entirety. HOLDERS OF CLASS I COMMON
STOCK AND/OR CLASS II COMMON STOCK ARE URGED TO READ THE LAND TRUST
AGREEMENT IN ITS ENTIRETY.
OPINION OF FINANCIAL ADVISOR OF RIVER BEND
The Board of Directors of River Bend has retained F&A to
act as financial advisor to the Board of Directors in connection
with the Merger. On September 29, 1995, F&A delivered an oral
opinion to the Board of Directors of River Bend, which was orally
reaffirmed on October 9, 1995, stating that on and as of such date,
the consideration to be paid to the holders of River Bend Stock in
the Merger was fair, from a financial point of view, to such shareholders.
River Bend and, to the best knowledge of River Bend, the affiliates of
River Bend did not issue any instructions to F&A in connection with
its oral opinion, or impose any limitations upon the scope of the
investigation by F&A. F&A's oral opinion was directed to the Board of
Directors of River Bend and does not constitute a recommendation to
any River Bend shareholder as to how such shareholder should vote at
the Special Meeting.
F&A, an investment banking firm located in St. Louis, has
had substantial experience in valuing banks and bank holding
companies and in assisting management of community bank holding
companies in successfully entering into transactions with larger
acquirors. River Bend's decision to retain F&A as financial
advisor was based upon River Bend's previous experience with F&A;
the familiarity of F&A with the management, operations and
financial condition of River Bend; and F&A's reputation, experience
and familiarity with the banking industry and with merger and
acquisition transactions. Over the past six years, F&A has
counseled River Bend and its Chief Executive Officer with respect
to such matters as officers' and directors' compensation, the
valuation of River Bend Stock and financial matters pertaining to
River Bend's banking activities. During such period, F&A was
compensated on an hourly basis at the rate of $175.00 per hour with
no contingent fees applicable.
In the course of delivering its oral opinion to the Board
of Directors of River Bend, representatives of F&A reviewed with
the Board of Directors and discussed a variety of matters including
its methodology of valuing bank holding company shares based upon
actual sales of similar size organizations that have been
announced within a reasonable period of time prior to the delivery
of its opinion; its experience in handling sales of similar size
corporations; the factors surrounding the activities of River Bend
in its market area and how it would enhance and enlarge the
activities of Magna; and the benefits that would accrue to the
shareholders of River Bend as a result of the Merger.
As compensation for its services in connection with the
Merger, F&A will be paid a fee of $260,500 upon consummation of the
Merger.
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<PAGE> 33
CERTAIN AGREEMENTS
In connection with the execution of the Reorganization
Agreement, certain shareholders, acting solely in their individual
capacities as owners or holders of the power to vote shares of
River Bend Stock, executed the Voting Agreement and the Irrevocable
Proxies with respect to 120,724 shares of Class I Common Stock,
561,765 shares of Class II Common Stock and 4,149 shares of
Preferred Stock, representing 76.86%, 71.53% and 69.25%
respectively, of the shares outstanding as of the date hereof
(collectively, the "Shares").
Pursuant to the terms of the Voting Agreement, the
shareholders agreed as follows:
1. At any meeting of River Bend shareholders
called to vote upon the Merger and the Merger Agreements or at
any adjournments or postponements thereof or in any other
circumstances upon which such vote or other approval of the
shareholders of River Bend of the Merger and the Merger
Agreements is sought, the shareholders severally shall vote
(or cause to be voted) the Shares in favor of the Merger and
the Merger Agreements.
2. At any meeting of River Bend shareholders or at
any adjournments or postponements thereof or in any other
circumstance upon which such vote or approval of the
shareholders of River Bend is sought, the shareholders shall
vote (or cause to be voted) the Shares against any proposal or
transaction which would in any manner impede, frustrate,
prevent or nullify the Merger, the Merger Agreements or any of
the other transactions contemplated by the Merger Agreements.
3. During the period commencing on the date of the
Voting Agreement and ending on the earlier of either (a) the
date that the Reorganization Agreement terminates in
accordance with its terms or (b) the Effective Time, each
shareholder shall not "transfer" (which term shall include,
without limitation, for the purposes of the Voting Agreement,
any sale, gift or pledge) any or all of such shareholder's
Shares or any interest therein, except pursuant to the Merger,
unless the transferee agrees in writing with Magna that such
transferee has acquired such Shares or interest subject to the
Irrevocable Proxy.
4. Each of the shareholders severally represented
and warranted to Magna that such shareholder is the beneficial
and record owner of, and has power and authority to dispose
of, and the unrestricted right to vote, such shares of River
Bend Stock.
Pursuant to the terms of the Irrevocable Proxies, the
shareholders irrevocably granted to Magna and appointed Carolyn B.
Ryseff, agent for Magna, with full power of substitution, their
proxy to vote the Shares:
1. In favor of (i) the Merger, (ii) the execution
and delivery of the Reorganization Agreement and approval of
the principal terms thereof, and (iii) each of the other
transactions contemplated by the Reorganization Agreement; and
2. Against any proposal or transaction which would
in any manner impede, frustrate, prevent or nullify the
Merger, the Reorganization Agreement or any of the other
transactions contemplated by the Reorganization Agreement.
The Irrevocable Proxies terminate upon the first to occur of (a)
the Effective Time, or (b) the date upon which the Reorganization
Agreement is terminated in accordance with its terms.
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<PAGE> 34
BACKGROUND OF THE MERGER
During the fourth quarter of 1994 senior management of
River Bend began addressing the future of the corporation in light
of increased economic and other competitive pressures on small,
single-bank holding companies, and the current trends of
acquisitions and consolidations of banking organizations within
River Bend's service area.
Also during this period, the Board of Directors, pursuant
to River Bend's obligation under certain buy-sell agreements with
its shareholders to obtain an annual report as to the value of its
shares, and in order to enable a shareholder to determine the value
of a minority interest intended to be transferred to a charitable
remainder trust and a grantor retained annuity trust, engaged two
independent parties to conduct an appraisal of the value of the
shares of River Bend and of the value of a minority position with
respect to River Bend as of December 31, 1994. The appraisers used
various and differing methodologies. One appraiser determined that
the value of each share of Class I Common Stock and Class II Common
Stock was $22 per share, assuming that the whole entity were to be
sold. The other appraiser determined, assuming that the whole entity
were to be sold, that the value of the same stock was $26.37 per
share. This information was known to the Board of Directors when, in
April 1995, expressions of interest were sought from certain financial
institutions, as discussed below.
In February 1995, management of River Bend interviewed
two investment banking firms with the purpose of choosing one such
firm to assist in the selection of a list of potential transaction
partners and developing a strategy for obtaining the best value
reasonably available to the shareholders of River Bend, in the
event the Board of Directors decided to enter into a transaction.
This process involved in-person interviews, telephone conferences,
discussion of past clients and transactions, checking references,
discussion of current market conditions and negotiation of the fee
to be paid. After completing this process River Bend engaged F&A
on March 20, 1995.
By letter dated March 28, 1995, F&A presented to River
Bend a substantial list of potential acquirors, and from that list
River Bend selected ten entities to initially contact (one of which
was Magna). Among the characteristics that caused River Bend to
select these companies were, in River Bend's judgment, that these
entities were the most likely, of the larger group, to: (i) be
interested in acquiring River Bend; (ii) have the wherewithal and
inclination to pay a fair price for River Bend; (iii) be well
received by River Bend's employees, customers and community; and
(iv) be able to obtain the requisite regulatory approvals. In
early April 1995, F&A sent letters to these institutions,
soliciting expressions of interest. Over the next two weeks, seven
institutions expressed interest and requested detailed information
on River Bend, including a substantial amount of financial
information and descriptions of management and area demographics.
Further direct contact was then made with each of the
identified entities, and by early June the group was narrowed down
to three (including Magna). Lengthy discussions were held with
each of these three institutions, each of which conducted a
substantial amount of due diligence. F&A conducted the face-to-
face negotiations, meeting separately with each of three bidders
and then with management of River Bend to discuss progress and
determine future strategy. Each bidder engaged in a full
negotiation process, including face-to-face meetings as well as
telephone negotiations. Management of River Bend gave
representatives of each of the bidders a tour of River Bend's
facilities and its service areas. Eventually each of the three
bidders made an offer to acquire River Bend. The Board of
Directors reviewed these offers and determined that Magna's offer
represented the best value reasonably available.
After the negotiation of the definitive Reorganization
Agreement with Magna, the Board of Directors of River Bend reviewed
the Reorganization Agreement in detail on September 29, 1995, and
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<PAGE> 35
again on October 9, 1995. At the September 29, 1995 meeting, the
structure of the transaction and the various terms of the
Reorganization Agreement were reviewed, and a representative of F&A
discussed the method and nature of the negotiations. The
representative of F&A also stated that, in the opinion of F&A, the
consummation of the Merger under the terms of the Reorganization
Agreement would be fair to all the shareholders of River Bend from
a financial point of view. The Board of Directors thereafter
adjourned to consider further the Reorganization Agreement after
taking the opportunity to review its terms and the other
information presented to it.
After completing its review on October 9, 1995, the Board
of Directors of River Bend unanimously concluded that the proposed
Merger is in the best interest of the shareholders of River Bend,
as well as River Bend's other constituencies. Magna and River Bend
executed the Reorganization Agreement on October 11, 1995.
REASONS FOR THE MERGER; BOARD RECOMMENDATIONS
RIVER BEND'S REASONS AND BOARD RECOMMENDATIONS. The
Board of Directors believes that the Merger is in the best interest
of River Bend and its shareholders. In the course of reaching its
determination the Board of Directors determined that the Merger
would result in a combined entity that was (i) committed to serving
the banking and other financial needs of River Bend's depositors,
employees, customers and community; (ii) capable of competing more
effectively with larger financial institutions that have exerted
increased competitive pressure on River Bend; and (iii) well
capitalized and capable of enjoying significant market penetration
throughout the greater St. Louis banking market.
The River Bend Board of Directors believes that the
Merger will provide the holders of Class I Common Stock and/or
Class II Common Stock with an opportunity to receive a significant
premium over the book value of their shares immediately prior to
the announcement of the Merger. The Board of Directors noted that
the entire premium over book value to be paid by Magna would be
shared, on a pro rata basis, by all of the holders of Class I
Common Stock and Class II Common Stock.
The Board of Directors of River Bend also considered that
to the extent that River Bend's shareholders receive shares of
Magna Common Stock, such shareholders will participate in the
expanded opportunities for growth and profitability made possible
by the Merger, and the ability of the combined organization to pay
greater dividends than those received from River Bend. In
addition, the Merger is generally intended to afford certain tax-
deferral benefits for income tax purposes for those River Bend
shareholders who receive shares of Magna Common Stock in the
Merger. Such shareholders of River Bend who receive shares of
Magna Common Stock in the Merger will hold an equity interest in a
substantially larger and more diversified bank holding company than
they presently do, and the shares will be part of an active and
liquid trading market, the Nasdaq National Market.
FOR THE REASONS SET FORTH ABOVE, THE BOARD OF DIRECTORS
OF RIVER BEND BELIEVES THAT THE MERGER IS IN THE BEST INTEREST OF
THE SHAREHOLDERS OF RIVER BEND AND, ACCORDINGLY, UNANIMOUSLY
RECOMMENDS THAT THE HOLDERS OF RIVER BEND STOCK VOTE "FOR" APPROVAL
OF THE MERGER AGREEMENTS.
MAGNA'S REASONS AND BOARD RECOMMENDATION. In view of the
increasingly competitive banking and financial service industry,
the Board of Directors of Magna has determined that it is desirable
to expand Magna's presence in Madison County, Illinois. Magna's
Board of Directors believes that one of the most effective and
efficient means to achieve this expanded presence is through the
acquisition of an established banking organization. Primarily as
a result of Magna's Board of Directors' assessment of the value of
River Bend's franchise, its asset size and the compatibility of the
businesses of the two
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<PAGE> 36
organizations, Magna determined to pursue discussions with River Bend.
Magna's Board of Directors believes that the Merger will enhance
Magna's ability to continue to compete effectively in Madison County,
Illinois, as it will expand Magna's presence in this area through the
addition of an established banking organization with locations and a
customer base which complement Magna's existing franchise.
CONDITIONS TO CONSUMMATION OF THE MERGER
The respective obligations of Magna and River Bend to
consummate the Merger are subject to the satisfaction of certain
mutual conditions, including the following:
(1) The Merger Agreements shall be approved by the
holders of at least two-thirds of the outstanding shares
of Class I Common Stock, Class II Common Stock and
Preferred Stock, each voting as a separate class, at the
Special Meeting.
(2) The transactions contemplated by the Merger
Agreements shall be approved by the Federal Reserve
Board, the Illinois Commissioner and any other required
banking authorities, without any condition or requirement
which would have a material adverse effect on the
business, operations, properties, assets or financial
condition of Magna or River Bend, all conditions required
to be satisfied shall be satisfied, and all waiting
periods relating to such approvals shall have expired.
(3) Neither River Bend nor Magna shall be subject
to any order, decree or injunction of a court or agency
of competent jurisdiction which enjoins or prohibits the
consummation of the Merger.
(4) The Registration Statement of which this Proxy
Statement/Prospectus is a part, registering shares of
Magna Common Stock to be issued in the Merger, shall have
been declared effective and not be subject to a stop
order or any threatened stop order and all state
securities and blue sky permits or approvals required to
consummate the transactions contemplated by the Merger
Agreements shall have been received.
(5) River Bend and Magna shall have received the
Opinion of Thompson & Mitchell regarding certain federal
income tax matters.
River Bend's obligation to consummate the Merger is
subject to the satisfaction, unless waived or otherwise
contemplated by the Merger Agreements, of certain other conditions,
including the following:
(1) The representations and warranties of Magna
made in the Reorganization Agreement shall be true and
correct in all material respects as of October 11, 1995
and as of the Closing (as hereinafter defined) as though
made at and as of the Closing, all obligations required
to be performed by Magna prior to the Closing shall have
been performed in all material respects and River Bend
shall have received a signed certificate from an officer
of Magna, signing solely in their capacity as an officer
of Magna, to that effect.
(2) Magna and Magna's subsidiaries shall have
obtained all material permits, authorizations, consents,
waivers, clearances or approvals required on their part
for the lawful consummation of the Merger without any
condition which would have a material adverse effect on
the business, operations, properties, assets or financial
condition of
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<PAGE> 37
Magna after the Effective Time, all conditions imposed by
the terms of such approvals shall have been satisfied and
all waiting periods relating to such permits,
authorizations, consents, waivers, clearances or approvals
shall have expired.
(3) Thompson & Mitchell, counsel to Magna, shall
have delivered to River Bend an opinion regarding certain
legal matters.
(4) Magna shall have executed and delivered to John
G. Helmkamp, Jr. the Supplemental Agreement (as defined
hereinafter). See "- Interests of Certain Persons in the
Merger and Indemnification."
Magna's obligation to consummate the Merger is subject to
the satisfaction, unless waived or otherwise contemplated by the
Merger Agreements, of certain other conditions, including the
following:
(1) The representations and warranties of River
Bend made in the Reorganization Agreement shall be true
and correct in all material respects as of October 11,
1995 and as of the Closing, as though made at and as of
the Closing, all obligations required to be performed by
River Bend prior to the Closing shall have been performed
in all material respects and Magna shall have received a
signed certificate from the Chairman or President of
River Bend, signing solely in their capacity as an
officer of River Bend, to that effect.
(2) River Bend and Illinois State Bank shall have
obtained all material permits, authorizations, consents,
waivers, clearances or approvals required on their part
for the lawful consummation of the Merger without any
condition which would have a material adverse effect on
the business, operations, properties, assets or financial
condition of Magna after the Effective Time, all
conditions imposed by the terms of such approvals shall
have been satisfied and all waiting periods relating to
such permits, authorizations, consents, waivers,
clearances or approvals shall have expired.
(3) Suelthaus & Walsh, P.C., counsel to River Bend,
shall have delivered to Magna an opinion regarding
certain legal matters.
(4) Holders of less than nine percent of the River
Bend Stock shall have taken such steps as are then
possible to dissent from the Merger.
(5) Magna shall have received from each of the
affiliates of River Bend an executed agreement with
respect to certain limitations on the transfer of shares
of Magna Common Stock they are to receive in the Merger.
(6) Magna shall have received from River Bend a
certified list of shareholders of River Bend, dated as of
the Closing Date.
(7) John G. Helmkamp, Jr. shall have executed and
delivered to Magna the Supplemental Agreement. See "-
Interests of Certain Persons in the Merger and
Indemnification."
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<PAGE> 38
TERMINATION, AMENDMENT AND WAIVER OF THE REORGANIZATION AGREEMENT
The Reorganization Agreement may be terminated at any
time prior to the Effective Time by mutual consent of the Boards of
Directors of River Bend and Magna. The Board of Directors of
either River Bend or Magna may terminate the Reorganization
Agreement if: (i) the Merger has not been consummated prior to
June 30, 1996 for a reason other than the failure of the
terminating party to comply with its obligations under the
Reorganization Agreement; (ii) the Federal Reserve Board or the
Illinois Commissioner has denied approval of the Merger and such
denial has become final and nonappealable; or (iii) in the event of
a material breach by the other party of any representation,
warranty or agreement contained in the Reorganization Agreement,
which breach is not waived or cured within 60 days after written
notice to the breaching party. No assurance can be given that the
Merger will be consummated before June 30, 1996 or that Magna or
River Bend will not elect to terminate the Reorganization Agreement
if the Merger has not been consummated before such date. The Board
of Directors of Magna may unilaterally terminate the Reorganization
Agreement if: (i) River Bend's Board of Directors approves a
business combination with a third party, withdraws or modifies in
a manner adverse to Magna its approval or recommendation of the
Reorganization Agreement, otherwise takes any public position
inconsistent with such recommendation, or resolves to do any of the
foregoing, and, upon any such termination, Magna shall promptly be
paid the sum of $1,000,000 by River Bend as full liquidated
damages; or (ii) at the Special Meeting (including any adjournment
thereof) the shareholders of River Bend fail to approve the Merger
Agreements. The Board of Directors of River Bend may unilaterally
terminate the Reorganization Agreement if the Board of Directors of
Magna approves the execution of a definitive agreement with respect
to a merger, consolidation, tender or exchange offer or other
business combination with a third party whereby the third party is
acquiring control of Magna and in connection with which Magna
refuses to consummate the Merger. In such an event, River Bend
shall promptly be paid the sum of $1,000,000 by Magna.
Any provision of the Reorganization Agreement may be (i)
waived in writing at any time by the party that is, or whose
shareholders are, entitled to the benefits thereof or (ii) amended
or modified at any time by written agreement of the parties,
whether before or after the Special Meeting; provided, however,
that after the approval of the Merger Agreements by the
shareholders of River Bend at the Special Meeting no amendment
shall reduce the amount or change the form of the consideration to
be delivered to River Bend's shareholders.
INTERESTS OF CERTAIN PERSONS IN THE MERGER AND INDEMNIFICATION
Upon consummation of the Merger, Magna will extend an
invitation to Mr. John G. Helmkamp, Jr., President and Chief
Executive Officer of River Bend, to be appointed to the Board of
Directors of Magna. In connection with such appointment, Magna has
agreed to indemnify and hold harmless Mr. Helmkamp from and against
any and all losses, claims, damages, expenses or liabilities, joint
or several, including legal fees and expenses, to which he may
become subject under Section 11(a)(3) of the Securities Act,
insofar as such losses, claims, damages, expenses or liabilities
arise out of or are based upon any untrue statement, or alleged
untrue statement, of a material fact in the written information
furnished by Magna, or are based upon the omission, or alleged
omission by Magna, to state a material fact required to be stated,
or necessary to make the statements contained in such information
not misleading, except as may be limited by the rules and
regulations of the Commission.
A condition to each party's obligation to consummate the
Merger is that Magna and Mr. Helmkamp execute and deliver an
agreement (the "Supplemental Agreement") that provides that Magna
will (i) allow Mr. Helmkamp and his wife and children to
participate in Magna's medical health insurance plan, at Mr.
Helmkamp's sole cost and expense, and (ii) provide Mr. Helmkamp
with an office, telephone,
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<PAGE> 39
mail and secretarial service until Mr. Helmkamp attains the age of 65.
The Supplemental Agreement also requires that Mr. Helmkamp agree not
to become associated with any business enterprise in substantial
direct competition with Magna for a period ending three years after
Mr. Helmkamp ceases to be a member of the Board of Directors of Magna.
Magna and River Bend also have agreed to indemnify each
other against any claims or liabilities to which any such party may
become subject under federal or state securities laws or
regulations, to the extent that such claim or liability arises out
of information furnished to the party subject to such liability by
the other party, or out of an omission by such other party to state
a necessary or material fact in the Registration Statement of which
this Proxy Statement/Prospectus is a part.
EFFECTIVE TIME
The Merger will be consummated and become effective at
the date and at the time of the closing (the "Closing"), which
shall take place promptly after the satisfaction or waiver of all
conditions to the Merger on a date to be fixed by Magna on the last
business day of a calendar month in which the last of the following
events occurs (i) the receipt of the requisite approval of the
Merger Agreements by the shareholders of River Bend at the Special
Meeting and (ii) the receipt of the approvals of the Federal
Reserve Board and the Illinois Commissioner, and the expiration of
any waiting period after such approvals required by law or
regulation, or such later date as may be agreed to by the parties
in writing.
SURRENDER OF STOCK CERTIFICATES AND RECEIPT OF MERGER CONSIDERATION
At the Effective Time, each outstanding share of River
Bend Stock will be converted into the right to receive the Merger
Consideration attributable to such share in accordance with the
elections and adjustments described above. See "- General
Description of the Merger." Each holder of River Bend Stock, upon
submission to the Exchange Agent of a properly executed letter of
transmittal and surrender to the Exchange Agent of the stock
certificate(s) formerly representing shares of River Bend Stock,
will be entitled to receive the Merger Consideration to which such
shareholder is entitled.
As soon as practicable after the Effective Time, the
Exchange Agent will mail to each former River Bend shareholder of
record as of the Effective Time, notification of the consummation
of the Merger. The Exchange Agent will also provide a letter of
transmittal and instructions as to the procedure for the surrender
of the stock certificates evidencing the River Bend Stock.
Following the Effective Time, it will be the
responsibility of each holder of River Bend shares to submit all
certificates formerly evidencing such holder's shares of River Bend
Stock to the Exchange Agent. In addition, following the Effective
Time, no interest will be accrued or paid on the Common Cash
Distribution or the Preferred Cash Distribution and no dividends or
other distribution will be paid to a River Bend shareholder on the
Common Stock Distribution until such shareholder's properly
completed letter of transmittal and stock certificates formerly
representing River Bend Stock, or, in lieu thereof, such evidence
of a lost, stolen or destroyed certificate and/or such insurance
bond as the Exchange Agent may reasonably require in accordance
with customary exchange practices, are delivered to the Exchange
Agent. All dividends or other distributions on the Common Stock
Distribution declared between the Effective Time and the date of
the surrender of a River Bend stock certificate will be held for
the benefit of the shareholder and will be paid to the shareholder,
without interest thereon, upon the surrender of such stock
certificate or documentation and/or insurance bond in lieu thereof.
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<PAGE> 40
After the Effective Time, there will be no further
transfers on the records of River Bend of River Bend stock
certificates and, if such certificates are presented to Magna for
transfer, they will be cancelled against delivery of the Merger
Consideration.
FRACTIONAL SHARES
No fractional shares of Magna Common Stock will be issued
to the shareholders of River Bend in connection with the Merger.
Each holder of River Bend Stock who otherwise would have been
entitled to receive a fraction of a share of Magna Common Stock
shall receive in lieu thereof cash in an amount equal to the
holder's fractional share interest multiplied by $21.75. River
Bend and Magna have agreed upon this value as a matter of
convenience and no assurance can be given that the fair market
value of a fractional share on the Closing Date will be equal to
such fractional share multiplied by $21.75. The fair market value
of Magna Common Stock on the Closing Date may be greater than or
less than $21.75 due to numerous market factors.
CERTAIN REGULATORY APPROVALS
In addition to the approval of the Merger Agreements by
the River Bend shareholders, the obligations of the parties to
effect the Merger are subject to prior approval of the Federal
Reserve Board and the Illinois Commissioner. As a bank holding
company, Magna is subject to regulation under the BHCA. The Merger
is subject to approval by the Federal Reserve Board under Section 3
of the BHCA. Under the BHCA, the Federal Reserve Board may
withhold approval of the Merger if, among other things, it
determines that the effect of the Merger would be to substantially
lessen competition in the relevant market. In addition, the
Federal Reserve Board must consider whether the combined
organization meets the requirements of the Community Reinvestment
Act of 1977, as amended, by assessing the involved entities'
respective records of meeting the credit needs of the local
communities in which they are chartered, consistent with the safe
and sound operation of such institutions. In its review, the
Federal Reserve Board must also examine the financial and
managerial resources and future prospects of the combined
organization and analyze the capital structure and soundness of the
resulting entity. The Federal Reserve Board has the authority to
deny an application if it concludes that the combined organization
would have inadequate capital.
The Merger is also subject to the prior approval of the
Illinois Commissioner, who must determine the following: (i) that
the general character of Magna's management is such as to assure
reasonable promise of successful, safe and sound operation of
Illinois State Bank; (ii) that the future earnings prospects, upon
consummation of the Merger are favorable; and (iii) that any prior
involvement by Magna, or by the proposed management personnel of
any other financial institution, whether as stockholder, director,
officer or customer, was conducted in a safe and sound manner.
Magna will file applications with the Federal Reserve
Board and the Illinois Commissioner for approval to acquire River
Bend. The Merger cannot be consummated prior to receipt of such
approvals and the passage of any applicable waiting periods. There
can be no assurance that required regulatory approvals for the
Merger will be obtained, and, if the Merger is approved, as to the
date of such approvals or whether the approvals will contain any
unacceptable conditions. There can likewise be no assurance that
the United States Department of Justice will not challenge the
Merger. See "SUPERVISION AND REGULATION."
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<PAGE> 41
BUSINESS PENDING THE MERGER
The Reorganization Agreement provides that, during the
period from October 11, 1995 to the Effective Time, River Bend will
operate and carry on its business diligently and solely in the
ordinary and usual course consistent with past practices and use
its best efforts to maintain and preserve its business
organization, including its present relationships with its
employees and customers and others having business relationships
with it.
In addition, the Reorganization Agreement provides that
from October 11, 1995 to the Effective Time, subject to applicable
laws, River Bend will not, and will not permit Illinois State Bank
to, without the prior written consent of Magna:
(1) Incur any material liabilities or material
obligations, whether directly or by way of guaranty,
including any obligation for borrowed money whether or
not evidenced by a note, bond, debenture or similar
instrument, except in the ordinary course of business
consistent with past practice, except for a payment to
F&A for services rendered in connection with the
Reorganization. Notwithstanding the foregoing, River
Bend may, with the prior written consent of Magna,
terminate the Illinois State Bank of East Alton Defined
Benefit Plan and Trust, Plan No. 001.
(2) Grant any increase in the rate of pay of any of
its employees, nor grant any increase in the salaries of
any officer, employee or agent, nor enter into any bonus,
profit-sharing, incentive compensation payment, pension,
retirement, medical, hospitalization, life insurance or
other insurance plan or plans, or other contracts or
commitments, which increase(s) in any amount the benefits
or compensation of any such officer, employee or agent;
except, however, in each such case ordinary increases not
unusual in character or amount made in the ordinary
course of business. Notwithstanding the foregoing, River
Bend may pay bonuses to its employees that are consistent
with past practice.
(3) Enter into any employment contract or
collective bargaining agreement, or employ, directly or
indirectly, any broker or finder or incur any liability
for any financial advisor, broker or finder fees or
commissions in connection with the Reorganization
Agreement or the transactions contemplated thereby, or
with respect to any merger, business combination, sale of
assets or securities or similar transactions.
(4) Declare or pay any dividend or make any sale
of, or distribution in respect of, or grant any options
or rights with respect to, its capital stock or other
securities or directly or indirectly redeem, purchase or
otherwise acquire any of its capital stock or other
securities, except for the payment of dividends by
Illinois State Bank to River Bend; provided, however,
River Bend may pay a dividend, to the extent not
previously paid, of $0.09 per share for each of the
fourth quarter of 1995 and the first and second quarters
of 1996 with respect to each share of Class I Common
Stock and Class II Common Stock; further provided, the
record date for any dividend to be paid shall be the
record date for dividends payable with respect to shares
of Magna Common Stock for the quarter in which the River
Bend dividend is to be paid and no dividend shall be
declared or paid by River Bend for any quarter in which
the shareholders of River Bend would be stockholders of
record of Magna for the purpose of receiving the Magna
dividend payment for such quarter. Notwithstanding the
foregoing, River Bend may declare and
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<PAGE> 42
pay a dividend of $12.00 per share during the first quarter
of 1996 with respect to each share of Preferred Stock.
(5) Make any amendments to or changes in its
Articles of Incorporation or By-laws.
(6) Perform any act, or attempt to do any act, or
permit any act or omission to act, which will cause a
breach of any material contract, commitment or obligation
to which it is a party.
(7) Subject to advice of counsel with respect to
its fiduciary obligations, encourage, solicit or initiate
offers from or negotiate with, or provide information or
assistance to, any party other than Magna with respect to
a merger, sale of assets, offer to purchase outstanding
stock or similar transaction involving it, the River Bend
Stock or its assets; provided, however, that if it or any
of its advisors receives, from time to time, an inquiry,
proposal, plan, offer, bid or contract from any third
party with respect to any of the foregoing, it will
promptly notify Magna, and will promptly furnish Magna
with a copy of any document received or a summary of any
other communication with respect thereto.
(8) Authorize, recommend, propose or announce an
intention to authorize, recommend or propose, or enter
into an agreement with respect to, any merger,
consolidation or business combination, any acquisition of
a material amount of assets or securities or any release
or relinquishment of any material contract rights not in
the ordinary course of business other than as
contemplated in the Merger Agreement.
(9) Except in a fiduciary capacity, purchase or
sell any shares of Magna Common Stock.
(10) Agree in writing or otherwise to do any of the
foregoing.
ACCOUNTING TREATMENT
The Merger will be accounted for under the purchase
method of accounting. Accordingly, data regarding the financial
condition and results of operations of River Bend will be included
in Magna's consolidated financial statements on and after the
Closing Date.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
---------------------------------------
OF THE MERGER
-------------
The following discussion is based upon an opinion of
Thompson & Mitchell, counsel to Magna ("Counsel"), and except as
otherwise indicated, reflects Counsel's opinion. The discussion is
a general summary of the material United States federal income tax
("federal income tax") consequences of the Merger to certain River
Bend shareholders and does not purport to be a complete analysis or
listing of all potential tax considerations or consequences
relevant to a decision whether to vote for the approval of the
Merger. The discussion does not address all aspects of federal
income taxation that may be applicable to River Bend shareholders
in light of their status or personal investment circumstances, nor
does it address the federal income tax consequences of the Merger
that are applicable to River Bend shareholders subject to special
federal income tax treatment including (without limitation) foreign
persons,
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<PAGE> 43
insurance companies, tax-exempt entities, retirement plans, dealers in
securities, persons who acquired their River Bend Stock pursuant to
the exercise of employee stock options or otherwise as compensation,
and persons who hold their River Bend Stock as part of a "straddle",
"hedge" or "conversion transaction". The discussion addresses neither
the effect of any applicable state, local or foreign tax laws, nor the
effect of any federal tax laws other than those pertaining to the
federal income tax. IN VIEW OF THE INDIVIDUAL NATURE OF FEDERAL
INCOME TAX CONSEQUENCES, RIVER BEND SHAREHOLDERS ARE URGED TO CONSULT
THEIR OWN TAX ADVISORS TO DETERMINE THE SPECIFIC TAX CONSEQUENCES OF
THE MERGER TO SUCH SHAREHOLDERS.
The discussion is based on the Code, regulations proposed
or promulgated thereunder, and current administrative interpretations
and judicial precedents relating thereto, all of which are subject to
change. Any such change, which may or may not be retroactive, could
alter the tax consequences discussed herein. The discussion is also
based on certain customary assumptions regarding the factual
circumstances that will exist at the Effective Time of the Merger,
including without limitation, certain representations of Magna, River
Bend and certain shareholders of River Bend. If any of these factual
assumptions or representations is inaccurate, the tax consequences of
the Merger could differ from those described herein. The discussion
assumes that shares of River Bend Stock are held as capital assets
(within the meaning of Section 1221 of the Code) at the Effective
Time. For purposes of the following discussion, (i) Class I Common
Stock and Class II Common Stock are sometimes collectively referred to
as "River Bend Common Stock" and (ii) and the Common Cash
Distribution, the Preferred Cash Distribution and the Real Estate
Distribution are sometimes individually and collectively referred to
as "Other Property."
Assuming the Merger occurs in accordance with the Merger
Agreement, the Merger will constitute a "reorganization" for
federal income tax purposes under Section 368(a)(1)(A) of the Code,
by reason of the application of Section 368(a)(2)(D) of the Code,
with the following federal income tax consequences:
EXCHANGE OF RIVER BEND COMMON STOCK FOR MAGNA COMMON
STOCK AND OTHER PROPERTY. Each holder of River Bend Common Stock
who exchanges, in the Merger, shares of River Bend Common Stock
solely for shares of Magna Common Stock, the Real Estate
Distribution and the Common Cash Distribution, if any:
(i) will realize gain (determined separately as to
each class and each block of River Bend Common Stock
exchanged) if (i) the sum of the fair market value
of the shares of Magna Common Stock received and the
fair market value of the Other Property received
exceeds (ii) the aggregate adjusted tax basis of the
River Bend Common Stock surrendered in exchange
therefor, and will recognize such gain, if any, up
to but not in excess of the fair market value of
Other Property received;
(ii) will not recognize any loss realized
(determined separately as to each class and each
block of River Bend Common Stock exchanged);
(iii) will have a basis for the shares of Magna
Common Stock received equal to the aggregate
adjusted tax basis of the shares of River Bend
Common Stock surrendered, increased by the amount of
gain, if any, recognized by such holder and
decreased by the fair market value of Other Property
received; and
(iv) will have a holding period for the shares of
Magna Common Stock received which includes the
holding period of the River Bend Common Stock
surrendered,
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<PAGE> 44
provided that the shares of River Bend Common
Stock surrendered are held as capital assets at
the Effective Time.
Counsel has expressed no opinion as to whether the
recognized gain described in clause (i) above will be capital gain
or will be treated as the receipt of a taxable dividend, because
this determination generally will depend on the facts and
circumstances of each River Bend shareholder. Under Section 356 of
the Code, the determination of whether the receipt of Other
Property has the effect of the distribution of a dividend will be
made generally in accordance with the principles of Section 302 of
the Code, taking into account the stock ownership attribution rules
of Section 318 of the Code. Provided that the receipt of Other
Property by a River Bend shareholder does not have the effect of
the distribution of a dividend, such gain will be capital gain if
the shares of River Bend Common Stock exchanged are held as capital
assets at the Effective Time, and long-term or short-term depending
on the holder's holding period for each block of River Bend Common
Stock surrendered. However, if the receipt of Other Property does
have the effect of the distribution of a dividend, such gain
generally will be taxable as a dividend in accordance with the
provisions and limitations of Section 356(a) of the Code. See "-
Impact of Section 302 of the Code," below.
EXCHANGE OF RIVER BEND COMMON STOCK AND PREFERRED STOCK
FOR OTHER PROPERTY. Each shareholder of River Bend who receives solely
the Common Cash Distribution, the Real Estate Distribution and the
Preferred Cash Distribution in exchange for River Bend Common Stock
and Preferred Stock pursuant to the Merger:
(i) will recognize gain or loss with respect to the
River Bend Common Stock exchanged (determined
separately as to each class and each block of River
Bend Common Stock exchanged) in an amount equal to
the difference between (A) the sum of the amount of
the Common Cash Distribution and the fair market
value of the Real Estate Distribution received, and
(B) such shareholder's aggregate adjusted tax basis
for the shares of River Bend Common Stock
surrendered; and
(ii) will recognize gain or loss with respect to
the Preferred Stock exchanged (determined separately
as to each class and each block of Preferred Stock
exchanged) in an amount equal to the difference
between (A) the amount of the Preferred Cash
Distribution received and (B) such shareholder's
aggregate adjusted tax basis for the shares of
Preferred Stock surrendered;
provided that the receipt of Other Property does not have the
effect of the distribution of a dividend. Such gain or loss will
be capital gain or loss if the shares of River Bend Common Stock
and Preferred Stock surrendered are held as capital assets at the
Effective Time, and long-term or short-term depending on the
holder's holding period for each block of River Bend Common Stock
surrendered. However, if the receipt of Other Property does have
the effect of the distribution of a dividend, such shareholder will
recognize income in the amount of the Other Property received
(without regard to such shareholder's basis in the River Bend
Common Stock surrendered), which generally will be taxable as a
dividend.
The determination of whether the receipt of Other
Property has the effect of the distribution of a dividend will be
made pursuant to the provisions and limitations of Section 302 of
the Code, taking into account the stock ownership attribution rules
of Section 318 of the Code. Because such determination generally
will depend on the facts and circumstances of each River Bend
shareholder, Counsel has expressed no opinion as to whether the
payments of Other Property discussed in clauses (i) and (ii) above
will be treated as having the effect of the distribution of a
dividend. See "- Impact of Section 302 of the Code," below.
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<PAGE> 45
EXCHANGE OF PREFERRED STOCK FOR PREFERRED CASH
DISTRIBUTION. Each holder of Preferred Stock who receives solely
the Preferred Cash Distribution in the Merger will recognize gain
or loss (determined separately as to each block of Preferred Stock
exchanged) in an amount equal to the difference between (i) the
amount of cash received by such shareholder and (ii) such
shareholder's aggregate adjusted tax basis for the shares of
Preferred Stock surrendered, provided that the cash payment does
not have the effect of the distribution of a dividend. Such gain
or loss will be capital gain or loss if the shares of Preferred
Stock surrendered are held as capital assets at the Effective Time,
and long-term or short-term depending on the holder's holding
period for each block of Preferred Stock surrendered. However, if
the cash payment does have the effect of the distribution of a
dividend, such shareholder will recognize income in the amount of
the cash received (without regard to such shareholder's basis in
the Preferred Stock surrendered), which generally will be taxable
as a dividend.
The determination of whether the receipt of a cash
payment (i.e., Other Property) has the effect of the distribution
----
of a dividend will be made pursuant to the provisions and
limitations of Section 302 of the Code, taking into account the
stock ownership attribution rules of Section 318 of the Code.
Because such determination generally will depend on the facts and
circumstances of each River Bend shareholder, Counsel has expressed
no opinion as to whether the payments of Other Property discussed
in the preceding paragraph will be treated as having the effect of
the distribution of a dividend. See "- Impact of Section 302 of
the Code," below.
CASH RECEIVED IN LIEU OF FRACTIONAL SHARES OF MAGNA
COMMON STOCK. Each shareholder of River Bend who receives, in the
Merger, cash in lieu of a fractional share of Magna Common Stock
will be treated as if the fractional share had been received in the
Merger and then redeemed by Magna. Provided that the shares of
River Bend Common Stock surrendered were capital assets in the
hands of such holder at the time of the Merger, the receipt of such
cash will cause the recipient to recognize capital gain or loss,
equal to the difference between the amount of cash received and the
portion of such holder's basis in the shares of Magna Common Stock
allocable to the fractional share. See "- Impact of Section 302 of
the Code," below.
IMPACT OF SECTION 302 OF THE CODE. The determination of
whether the receipt of Other Property has the effect of the
distribution of a dividend generally will be made in accordance
with the provisions of Section 302 of the Code. The receipt of
Other Property by a River Bend shareholder will be considered not
to have the effect of the distribution of a dividend under Section
302 of the Code and such shareholder will recognize capital gain or
loss only if the Other Property (i) results in a "complete
redemption" of such shareholder's actual and constructive stock
interest, (ii) results in a "substantially disproportionate"
reduction in such shareholder's actual and constructive stock
interest or (iii) is "not essentially equivalent to a dividend."
The receipt of Other Property will result in a "complete
redemption" of a shareholder's stock interest and such shareholder
will recognize capital gain or loss if such shareholder does not
actually or constructively own any stock after the receipt of the
cash payment. Accordingly, gain recognized by holders of River
Bend Stock who receive only Other Property in exchange for the
River Bend Stock they actually own and who own no stock
constructively will receive capital gain treatment upon the receipt
of Other Property.
A reduction in a shareholder's common stock interest will
be "substantially disproportionate" and such shareholder generally
will recognize capital gain or loss if (i) the percentage of
outstanding shares of all classes of common stock actually and
constructively owned by such shareholder after the receipt of the
Other Property is less than four-fifths (i.e., 80%) of the
----
percentage of outstanding shares of all classes of common stock
actually and constructively owned by such shareholder
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<PAGE> 46
immediately prior to the receipt of the Other Property and (ii) the
percentage of outstanding shares of common stock actually and
constructively owned by such shareholder after the receipt of the
Other Property is also less than four-fifths (i.e., 80%) of the
----
percentage of outstanding shares of voting stock actually and
constructively owned by such shareholder immediately prior to the
receipt of the Other Property. If a shareholder's receipt of Other
Property with respect to common stock qualifies as substantially
disproportionate, gain recognized with respect to any Preferred
Cash Distribution should qualify as capital gain. However,
shareholders who do not own any Class I Common Stock cannot qualify
for capital gain treatment under the substantially disproportionate
test, because they own no voting stock.
A cash payment will qualify as "not essentially
equivalent to a dividend" and a shareholder will recognize capital
gain or loss if it results in a meaningful reduction in the
percentage of outstanding shares actually and constructively owned
by such shareholder. No specific tests apply to determine whether
a reduction in a shareholder's ownership interest is meaningful;
rather, such determination will be made based on all the facts and
circumstances applicable to such River Bend shareholder. No
general guidelines dictating the appropriate interpretation of
facts and circumstances have been announced by the courts or issued
by the Internal Revenue Service (the "Service"). However, the
Service has indicated in Revenue Ruling 76-385 that a minority
shareholder (i.e., a holder who exercises no control over corporate
----
affairs and whose proportionate stock interest is minimal in
relation to the number of shares outstanding) generally is treated
as having had a "meaningful reduction" in interest if a cash
payment reduces such holder's actual and constructive stock
ownership by even a small amount. The Service has also indicated
in Revenue Ruling 74-515 that shareholders who actually and
constructively own only a small amount of voting stock generally
will be treated as having undergone a meaningful reduction in
interest upon a redemption of all preferred stock they actually
own.
With regard to River Bend shareholders who receive Magna
Common Stock and Other Property in the Merger, the determination of
whether a cash payment has the effect of a distribution of a
dividend generally will be made as if the River Bend Stock
exchanged for Other Property in the Merger had instead been
exchanged in the Merger for shares of Magna Common Stock followed
immediately by a redemption of such shares by Magna for the Other
Property (a "deemed Magna redemption"). Under this analysis, the
determination of whether the receipt of Other Property qualifies as
a substantially disproportionate reduction of interest or is not
essentially equivalent to a dividend will be made by comparing (i)
the shareholder's actual and constructive stock interest in Magna
before the deemed Magna redemption (determined as if such
shareholder had received solely Magna Common Stock in the Merger),
with (ii) such shareholder's actual and constructive stock interest
in Magna after the deemed Magna redemption.
With regard to River Bend shareholders who receive only
Other Property in exchange for River Bend Stock in the Merger,
Counsel has advised Magna that many tax practitioners believe that
the determination of whether a cash payment has the effect of a
distribution of a dividend should be made in accordance with the
deemed Magna redemption analysis discussed above; i.e., as if the
----
River Bend Stock exchanged for Other Property in the Merger had
instead been exchanged in the Merger for shares of Magna stock
followed immediately by a redemption of such shares by Magna for
the cash payment. However, under the traditional analysis, which
apparently continues to be used by the Service, Section 302 of the
Code will apply as though the payment of Other Property were made
by River Bend in a hypothetical redemption of River Bend Stock
immediately prior to, and in a transaction separate from, the
Merger (a "deemed River Bend redemption"). Accordingly, under the
traditional analysis, the determination of whether a cash payment
results in a complete redemption of interest, qualifies as a
substantially disproportionate reduction of interest, or is not
essentially equivalent to a dividend will be made by comparing (x)
the shareholder's actual and constructive stock interest in River
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<PAGE> 47
Bend before the deemed River Bend redemption, with (y) such
shareholder's actual and constructive stock interest in River Bend
after the deemed River Bend redemption (but before the Merger).
The law is unclear regarding whether the approach of the Service is
correct, and Counsel has rendered no opinion on the correctness of
the Service's approach. Counsel has noted in its opinion that
because the traditional analysis may be more likely to result in
dividend treatment than the deemed Magna redemption analysis, River
Bend shareholders who receive solely cash in exchange for all of
the River Bend Stock they actually own should discuss the proper
treatment of such cash with their owne tax advisors.
The determination of ownership for purposes of the three
foregoing tests will be made by taking into account both shares
owned actually by such shareholder and shares owned constructively
by such shareholder pursuant to Section 318 of the Code. Under
Section 318 of the Code, a shareholder will be deemed to own stock
that is actually or constructively owned by certain members of his
or her family (spouse, children, grandchildren and parents) and
other related parties including, for example, certain entities in
which such shareholder has a direct or indirect interest (including
partnerships, estates, trusts and corporations), as well as shares
of stock that such shareholder (or a related person) has the right
to acquire upon exercise of an option or conversion right. Section
302(c)(2) of the Code provides certain exceptions to the family
attribution rules for the purpose of determining whether a complete
redemption of a shareholder's interest has occurred for purposes of
Section 302 of the Code. These exceptions apply only to River Bend
shareholders who receive, in the Merger, solely cash in return for
the River Bend Stock they actually own.
BECAUSE THE DETERMINATION OF WHETHER THE RECEIPT OF OTHER
PROPERTY WILL BE TREATED AS HAVING THE EFFECT OF THE DISTRIBUTION
OF A DIVIDEND WILL GENERALLY DEPEND UPON THE FACTS AND
CIRCUMSTANCES OF EACH RIVER BEND SHAREHOLDER, RIVER BEND
SHAREHOLDERS ARE STRONGLY ADVISED TO CONSULT THEIR OWN TAX ADVISORS
REGARDING THE TAX TREATMENT OF CASH RECEIVED IN THE MERGER.
Each River Bend shareholder's ability to elect the type
of consideration he or she receives pursuant to the Merger affords
each such shareholder the opportunity to select that type of
consideration which will best serve his or her personal tax and
financial planning needs. However, each River Bend shareholder
should be aware that his or her ability to satisfy (or,
alternatively, fail to satisfy) any of the foregoing tests and
thereby avoid (or, alternatively, obtain) dividend treatment may be
affected by the various adjustments and allocations of the Merger
Consideration. See "TERMS OF THE MERGER - General Description of
the Merger."
Counsel has rendered no opinion concerning the manner in
which the Real Estate Distribution should be valued. However, the
Exchange Agent will be required to report the value of each
interest in the Land Trust distributed in the Real Estate
Distribution to the Service on Form 1099-B with respect to each
holder of River Bend Common Stock. Magna expects that the Exchange
Agent will, for these reporting purposes, determine the value of
each interest in the Land Trust to be equal to a proportionate
interest in the property held by the Land Trust. Any holder of
River Bend Stock who disagrees with the valuation of the Exchange
Agent should consult his or her own tax advisor to determine the
feasibility and implications of reporting a contrary valuation to
any taxing authority on his or her own tax return.
Each River Bend shareholder should also consult his or
her own tax advisor as to the determination of basis and holding
period in any one share of Magna Common Stock, because several
methods of determination may be available. In this regard, the
transmittal letter to be received by each River Bend shareholder
from the Exchange Agent after the Closing Date permits each River
Bend shareholder to designate the number of Magna Common Stock
certificates he or she wishes to receive, in order to permit
tracing of basis and holding period. See "TERMS OF THE MERGER -
General Description of the Merger."
- 41 -
<PAGE> 48
River Bend's obligation to consummate the Merger is
subject to the condition that it shall have received from
Thompson & Mitchell, counsel for Magna, an opinion dated as of the
Closing Date to the effect that the Merger will constitute a
reorganization within the meaning Section 368(a) of the Code and
that gain will be recognized by the shareholders of River Bend who
receive Magna Common Stock in accordance with the provisions and
limitations of Section 356 of the Code. Such opinion is subject to
the conditions and assumptions stated therein and relies upon
various representations made by Magna, River Bend and certain
shareholders of River Bend. Copies of the opinion are available,
without charge, to River Bend shareholders upon written request to
Magna. An opinion of counsel, unlike a private letter ruling from
the Service, has no binding effect on the Service. The Service
could take a position contrary to Counsel's opinion and, if the
matter were litigated, a court may reach a decision contrary to the
opinion. The Service is not expected to issue a ruling on the tax
consequences of the Merger, and no such ruling has been requested.
THE FOREGOING IS A GENERAL DISCUSSION OF THE MATERIAL
FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER TO CERTAIN RIVER BEND
SHAREHOLDERS AND IS INCLUDED FOR GENERAL INFORMATION ONLY. THE
FOREGOING DISCUSSION DOES NOT TAKE INTO ACCOUNT THE PARTICULAR
FACTS AND CIRCUMSTANCES OF EACH RIVER BEND SHAREHOLDER'S TAX STATUS
AND ATTRIBUTES. AS A RESULT, THE FEDERAL INCOME TAX CONSEQUENCES
ADDRESSED IN THE FOREGOING DISCUSSION MAY NOT APPLY TO EACH RIVER
BEND SHAREHOLDER. ACCORDINGLY, RIVER BEND SHAREHOLDERS SHOULD
CONSULT THEIR OWN TAX ADVISORS REGARDING THE SPECIFIC TAX
CONSEQUENCES OF THE MERGER, INCLUDING THE APPLICATION AND EFFECT OF
FEDERAL, STATE, LOCAL AND OTHER TAX LAWS AND THE POSSIBLE EFFECTS
OF CHANGES IN FEDERAL AND OTHER TAX LAWS.
RIGHTS OF DISSENTING SHAREHOLDERS OF RIVER BEND
-----------------------------------------------
Each holder of River Bend Stock has the right to dissent
from the Merger and receive the fair value of such shares of River
Bend in cash if the shareholder follows the procedures set forth in
the Illinois Statute, included as Annex B hereto and the material
-------
provisions of which are summarized below. Pursuant to the Illinois
Statute, a holder of River Bend Stock may dissent and Landmark, as
the surviving corporation, will pay to such shareholder the fair
value of such shareholder's shares of River Bend Stock, exclusive
of any appreciation or depreciation in anticipation of the Merger,
as of immediately before the consummation of the Merger if such
shareholder (1) files with River Bend prior to the vote being taken
a written demand for payment for their shares if the Merger is
consummated; and (2) does not vote in favor thereof. The Exchange
---
Agent will include notice of the Effective Date in its letter to
all shareholders of River Bend notifying them of the procedures to
exchange their shares for those of Magna. Such letter will be sent
promptly following the Effective Date. Within 10 days after the
shareholders' vote is effective or 30 days after the shareholder
delivers to River Bend the written demand for payment, whichever is
later, River Bend (or Landmark as the surviving corporation of the
Merger) shall send each shareholder who has delivered a written
demand for payment a statement setting forth the opinion of River
Bend or Landmark, as the case may be, as to the estimated fair
value of the shares, River Bend's latest balance sheet as of the
end of a fiscal year ending not earlier than 16 months before the
delivery of the statement, together with the statement of income
for that year and the latest available interim financial statements,
and either a commitment to pay for the shares of the dissenting
shareholder at the estimated fair value thereof upon transmittal to
River Bend or Landmark, as the case may be, of the certificate or
- 42 -
<PAGE> 49
certificates, or other evidence of ownership, with respect to the
shares. A VOTE AGAINST THE MERGER, WHETHER BY PROXY OR IN PERSON,
WILL NOT, BY ITSELF, BE REGARDED AS A WRITTEN DEMAND FOR PAYMENT FOR
PURPOSES OF ASSERTING DISSENTERS' RIGHTS.
Upon consummation of the Merger, Landmark shall pay to
each dissenter who transmits to Landmark the certificate or other
evidence of ownership of the shares the amount Landmark estimates
to be the fair value of the shares, plus accrued interest,
accompanied by a written explanation of how the interest was
calculated. Upon payment of the agreed value, the dissenting
shareholder shall cease to have any interest in such shares or in
River Bend or Magna.
If the dissenting shareholder does not agree with the
opinion of Landmark as to the estimated fair value of the shares or
the amount of interest due, the dissenting shareholder must, within
30 days from the delivery of Landmark's statement of value, notify
Landmark in writing, of the shareholder's estimated fair value and
interest due and demand payment for the difference between the
shareholder's estimate of fair value and interest due and the
amount of the payment by Landmark. If, within 60 days from
delivery to River Bend of the shareholder notification of estimate
of fair value of shares and interest due, Landmark and the
dissenting shareholder have not agreed in writing upon the fair
value of the shares and interest due, Landmark shall either pay the
difference in value demanded by the shareholder, with interest, or
file a petition in the circuit court of the county in which either
the registered office or the principal office of Landmark is
located, requesting the court to determine the fair value of the
shares and interest due. The "fair value" determined by the court
may be more or less than the amount offered to River Bend
shareholders under the Merger Agreements. The judgment shall be
payable only upon, and simultaneously with, the surrender to Magna
of the certificate or certificates representing said shares of
River Bend Stock. Upon the payment of the judgment, the dissenting
shareholder shall cease to have any interest in such shares or in
River Bend or Magna.
THE FOREGOING SUMMARY OF THE PROVISIONS REGARDING
DISSENTERS' RIGHTS UNDER THE ILLINOIS STATUTE IS QUALIFIED IN ITS
ENTIRETY BY THE COMPLETE TEXT OF THE ILLINOIS STATUTE WHICH IS
ATTACHED HERETO AS ANNEX B.
-------
River Bend shareholders who are interested in perfecting
dissenters' rights pursuant to the Illinois Statute in connection
with the Merger should consult with their counsel for advice as to
the procedures required to be followed.
PRO FORMA FINANCIAL INFORMATION
-------------------------------
COMPARATIVE PER SHARE DATA
The following table sets forth for the periods indicated
selected historical per share data of Magna and River Bend and the
corresponding pro forma and pro forma equivalent per share amounts
giving effect to the proposed Merger. The data presented is based
upon the consolidated financial statements and related notes of
Magna and River Bend included in this Proxy Statement/Prospectus or
in documents incorporated herein by reference. The assumptions
used in the preparation of this table appear in the footnotes
following the table. This data is not necessarily indicative of
the results of the future operations of the combined organization
or the actual results that would have occurred if the Merger had
been consummated prior to the periods indicated.
- 43 -
<PAGE> 50
The pro forma combined consolidated amounts included in
the table below assume that the Merger is accounted for as a
purchase transaction. See "TERMS OF THE MERGER-Accounting
Treatment."
<TABLE>
<CAPTION>
Magna River Bend
Reported Reported<F1> Pro Forma Combined<F2> Pro Forma Equivalent<F3>
-------- ------------ ---------------------- ------------------------
<S> <C> <C> <C> <C>
Book Value per Common Share:
December 31, 1994 $13.49 $12.60 $13.71 $15.08
September 30, 1995 15.38 14.30 15.55 17.10
Cash Dividends Declared per Common Share:
Year ended December 31, 1994 .76 .33 .76 .84
Nine months ended September 30, 1995 .60 .27 .60 .66
Earnings per Common Share (fully diluted):
Year ended December 31, 1994 1.66 2.06 1.65 1.81
Nine months ended September 30, 1995 1.31 1.46 1.30 1.43
Closing Market Price per Common Share:
At October 10, 1995<F4> 24.25 15.27 -- --
At -----------, 1995<F4> 15.27 -- --
<FN>
- -----------------
<F1> Effective March 7, 1994, River Bend amended its Articles
of Incorporation and effected a recapitalization whereby
each share of $10 par value common stock was exchanged
for one share of Class I Common Stock and five shares of
Class II Common Stock. The number of shares issued and
outstanding and the per share amounts for all periods
prior to the recapitalization have been restated to
reflect this change.
<F2> Includes the effect of pro forma adjustments related to
River Bend.
<F3> Assumes that a share of River Bend common stock is
converted solely into shares of Magna Common Stock and
assumes a market value of Magna Common Stock of $24.00,
the last sale price reported on the Nasdaq National
Market as of November 20, 1995.
<F4> The market value of Magna Common Stock disclosed as of
October 10, 1995, the last trading day preceding the
public announcement of the proposed acquisition, and
-----------, 1995, the latest available date prior to the
mailing of the Proxy Statement/Prospectus, is based on
the last sale price as reported on the Nasdaq National
Market. There are no publicly available quotations of
River Bend Stock. The market price per share of River
Bend common stock disclosed is the price paid per share
of Class II Common Stock in a transaction occurring in
the fourth quarter of 1994, the last transaction in River
Bend common stock for which a price is known to
management of River Bend.
</TABLE>
- 44 -
<PAGE> 51
INFORMATION REGARDING RIVER BEND
--------------------------------
BUSINESS OF RIVER BEND
River Bend is a registered single bank holding company
that was incorporated under the laws of the State of Illinois in
March 1985. As of September 30, 1995, River Bend had consolidated
assets of $159,825,000, deposits of $140,687,000, loans, net of
unearned discount, of $50,531,000, and shareholders' equity of
$14,073,000, and employed 54 full-time employees and seven part-
time employees. River Bend owns 100% of the outstanding capital
stock of Illinois State Bank.
Illinois State Bank is a full-service commercial bank,
offering banking services to the commercial and residential areas
which it serves throughout Madison County, Illinois. Services
include commercial, real estate and personal loans; money market
accounts; checking, savings and time deposit accounts; and trust
services.
The lending portion of Illinois State Bank's business
relates primarily to the activities of small to medium-sized
businesses, local community residences and other consumer purposes.
River Bend is subject to vigorous competition from major
banking institutions, as well as other financial institutions in
its principal service area, such as savings and loan associations,
insurance companies, credit unions and finance companies.
River Bend and Illinois State Bank are subject to
supervision, regulation and examination by the Federal Reserve
Board, the Illinois Commissioner and the Federal Deposit Insurance
Corporation (the "FDIC"). The deposits of Illinois State Bank are
primarily insured by the Bank Insurance Fund (the "BIF") of the
FDIC, but approximately $36 million in deposits are insured by the
Savings Association Insurance Fund (the "SAIF") of the FDIC.
In the following pages, statistical information about
River Bend is presented. Such information should be read in
conjunction with "Management's Discussion and Analysis of Financial
Condition and Results of Operations of River Bend" and the
consolidated financial statements included elsewhere herein.
DISTRIBUTION OF AVERAGE ASSETS, LIABILITIES AND STOCKHOLDERS'
EQUITY AND INTEREST RATES
The following table shows the condensed average balance
sheets for the periods presented and the percentage of each
principal category of assets, liabilities and stockholders' equity
to total assets. Also shown is the average yield on each category
of interest-earning assets and the average rate paid on interest-
bearing liabilities for each of the periods presented.
- 45 -
<PAGE> 52
<TABLE>
<CAPTION>
Nine months ended September 30,
-----------------------------------------------------------------------
1995 1994
------------------------------------ ---------------------------------
PERCENT INTEREST AVERAGE PERCENT INTEREST AVERAGE
AVERAGE OF TOTAL INCOME/ YIELD/ AVERAGE OF TOTAL INCOME/ YIELD/
BALANCE ASSETS EXPENSE RATE<F1> BALANCE ASSETS EXPENSE RATE<F1>
------- ------ ------- -------- ------- ------ ------- --------
ASSETS (dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Interest-earning assets:
Loans <F2> $ 50,610 31.92% $3,577 9.42% $ 50,046 30.74% $3,148 8.39%
Taxable investment securities 82,711 52.16 3,880 6.25 86,567 53.18 3,897 6.00
Non-taxable investment securities <F3> 12,894 8.13 668 6.91 14,237 8.75 747 7.00
Interest-bearing deposits 194 .12 10 6.87 193 .12 10 6.91
Federal funds sold 2,486 1.57 107 5.74 1,830 1.12 44 3.21
-------- ------ ------ -------- ------ ------
Total interest-earning assets 148,895 93.90 8,242 7.38 152,873 93.91 7,846 6.84
------ ---- ------ ----
Non-interest-earning assets:
Cash and due from banks 3,821 2.41 3,911 2.40
Premises and equipment 2,927 1.85 2,996 1.84
Accrued interest receivable and other assets 3,780 2.38 4,007 2.46
Allowance for loan losses (849) (.54) (994) (.61)
-------- ------ -------- ------
Total assets $158,574 100.00% $162,793 100.00%
======== ====== ======== ======
LIABILITIES AND STOCKHOLDERS' EQUITY
Interest-bearing liabilities:
Interest-bearing demand deposits 46,922 29.59% 912 2.59% 52,541 32.27% 937 2.38%
Savings deposits 19,342 12.20 405 2.79 22,498 13.82 465 2.76
Time deposits 57,749 36.42 2,119 4.89 55,109 33.85 1,597 3.86
Securities sold under agreements to repurchase and other
short-term borrowings 887 .56 37 5.56 1,322 .81 43 4.34
Note payable 2,466 1.55 160 8.65 2,828 1.74 144 6.79
-------- ------ ------ -------- ------ ------
Total interest-bearing liabilities 127,366 80.32 3,633 3.80 134,298 82.49 3,186 3.16
------ ---- ------ ----
Non-interest-bearing liabilities:
Demand deposits 17,120 10.80 16,063 9.87
Other liabilities 816 .51 683 .42
-------- ------ -------- ------
Total liabilities 145,302 91.63 151,044 92.78
Stockholders' equity 13,272 8.37 11,749 7.22
-------- ------ -------- ------
Total liabilities and stockholders' equity $158,574 100.00% $162,793 100.00%
======== ====== ======== ======
Net interest income $4,609 $4,660
====== ======
Interest rate spread 3.58% 3.68%
==== ====
Net interest rate margin 4.13% 4.06%
==== ====
<FN>
- ------------------------------------------
<F1> Average yield/rate for the nine months ended September 30, 1995 and 1994
is annualized.
<F2> Average balances include nonaccrual loans. The income on such loans is
included in interest income but is recognized only upon receipt.
<F3> Nontaxable investment income presented on a fully tax-equivalent basis.
The tax effect resulted in an increase to interest income of $227,000 and
$254,000 for the nine months ended September 30, 1995 and 1994, respectively.
</TABLE>
- 46 -
<PAGE> 53
<TABLE>
<CAPTION>
Year Ended December 31,
----------------------------------------------------------------------------------------------------------
1994 1993 1992
---------------------------------- ---------------------------------- ----------------------------------
PERCENT INTEREST AVERAGE PERCENT INTEREST AVERAGE PERCENT INTEREST AVERAGE
AVERAGE OF TOTAL INCOME/ YIELD/ AVERAGE OF TOTAL INCOME/ YIELD/ AVERAGE OF TOTAL INCOME/ YIELD/
BALANCE ASSETS EXPENSE RATE BALANCE ASSETS EXPENSE RATE BALANCE ASSETS EXPENSE RATE
------- ------ ------- ---- ------- ------ ------- ---- ------- ------ ------- ----
ASSETS (dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Interest-earning assets:
Loans <F1> $ 50,151 30.97% $ 4,273 8.52% $ 55,490 34.55% $ 4,730 8.52% $ 58,363 37.50% $ 5,580 9.56%
Taxable investment
securities 86,084 53.16 5,204 6.05 78,700 49.00 5,067 6.44 72,378 46.51 5,992 8.28
Nontaxable investment
securities <F2> 14,010 8.65 982 7.01 11,356 7.07 1,015 8.94 11,061 7.11 1,055 9.53
Interest-bearing
deposits 193 .12 13 6.74 204 .13 17 8.33 499 .32 39 7.82
Federal funds sold 1,635 1.01 58 3.55 5,009 3.12 145 2.89 4,021 2.58 141 3.51
-------- ------ ------- -------- ------ ------- -------- ------ -------
Total interest-
earning assets 152,073 93.91 10,530 6.92 150,759 93.87 10,974 7.28 146,322 94.02 12,807 8.75
------- ---- ------- ---- ------- ----
Non-interest-earning
assets:
Cash and due from
banks 3,902 2.41 3,838 2.39 3,444 2.21
Premises and equipment 2,981 1.84 2,977 1.85 2,559 1.65
Accrued interest
receivable and other
assets 3,956 2.44 4,029 2.51 4,238 2.72
Allowance for loan
losses (970) (.60) (991) (.62) (933) (.60)
-------- ------ -------- ------ -------- ------
Total assets $161,942 100.00% $160,612 100.00% $155,630 100.00%
======== ====== ======== ====== ======== ======
LIABILITIES AND
STOCKHOLDERS' EQUITY
Interest-bearing
liabilities:
Interest-bearing
demand deposits 51,875 32.03% 1,240 2.39% 55,077 34.29% 1,449 2.63% 49,881 32.05% 1,832 3.67%
Savings deposits 22,074 13.63 756 3.42 19,665 12.25 744 3.78 15,696 10.09 580 3.70
Time deposits 55,164 34.06 2,045 3.71 56,231 35.01 2,102 3.74 63,741 40.95 3,338 5.24
Securities sold under
agreements to
repurchase and other
short-term borrowings 1,175 .73 52 4.43 726 .45 21 2.89 773 .50 25 3.23
Note payable 2,795 1.73 197 7.05 3,289 2.05 198 6.02 3,815 2.45 241 6.32
-------- ------ ------- -------- ------ ------- -------- ------ -------
Total interest-
bearing liabilities 133,083 82.18 4,290 3.22 134,988 84.05 4,514 3.34 133,906 86.04 6,016 4.49
------- ---- ------- ---- ------- ----
Non-interest-bearing
liabilities:
Demand deposits 16,348 10.10 14,635 9.11 12,480 8.02
Other liabilities 671 .41 743 .46 1,043 .67
-------- ------ -------- ------ -------- ------
Total liabilities 150,102 92.69 150,366 93.62 147,429 94.73
Stockholders' equity 11,840 7.31 10,246 6.38 8,201 5.27
-------- ------ -------- ------ -------- ------
Total liabilities
and stockholders'
equity $161,942 100.00% $160,612 100.00% $155,630 100.00%
======== ====== ======== ====== ======== ======
Net interest income $ 6,240 $ 6,460 $ 6,791
======= ======= =======
Interest rate spread 3.70% 3.94% 4.26%
==== ==== ====
Net interest rate margin 4.10% 4.29% 4.64%
==== ==== ====
<FN>
- --------------------------
<F1> Average balances include nonaccrual loans. The income on such loans is
included in interest but is recognized only upon receipt.
<F2> Nontaxable investment income presented on a fully tax-equivalent basis.
The tax effect resulted in an increase to interest income of $334,000,
$345,000 and $359,000 for the years ended December 31, 1994, 1993 and 1992,
respectively.
</TABLE>
- 47 -
<PAGE> 54
<TABLE>
INTEREST DIFFERENTIAL
The following table sets forth, on a tax-equivalent basis for
the periods indicated, a summary of the changes in interest income and
interest expense resulting from changes in yields/rates:
<CAPTION>
AMOUNT OF INCREASE (DECREASE)
-----------------------------------------------------------
1994 COMPARED TO 1993 1993 COMPARED TO 1992
INCREASE (DECREASE) DUE TO INCREASE (DECREASE) DUE TO
---------------------------- ------------------------------
VOLUME<F1> RATE<F2> NET VOLUME<F1> RATE<F2> NET
---------- -------- --- ---------- -------- ---
(dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Interest earned on:
Loans $(457) $ -- $(457) $(265) $ (585) $ (850)
Taxable investment securities 456 (319) 137 491 (1,416) (925)
Nontaxable investment securities <F3> 211 (244) (33) 27 (67) (40)
Interest-bearing deposits (1) (3) (4) (24) 2 (22)
Federal funds sold (114) 27 (87) 31 (27) 4
----- ----- ----- ----- ------- -------
Total interest-earning assets 95 (539) (444) 260 (2,093) (1,833)
----- ----- ----- ----- ------- -------
Interest paid on:
Interest-bearing demand deposits (81) (128) (209) 176 (559) (383)
Savings deposits 86 (74) 12 151 13 164
Time deposits (40) (17) (57) (360) (876) (1,236)
Securities sold under agreements to repur-
chase and other short-term borrowings 17 14 31 (1) (3) (4)
Note payable (32) 31 (1) (32) (11) (43)
----- ----- ----- ----- ------- -------
Total interest-bearing liabilities (50) (174) (224) (66) (1,436) (1,502)
----- ----- ----- ----- ------- -------
Net interest income $ 145 $(365) $(220) $ 326 $ (657) $ (331)
===== ===== ===== ===== ======= =======
<FN>
- --------------------------
<F1> Change in volume multiplied by yield/rate of prior period.
<F2> Change in yield/rate multiplied by volume of prior period.
<F3> Nontaxable investment securities are presented on a fully tax-equivalent
basis assuming a tax rate of 34%.
NOTE: The change in interest due to both rate and volume has been allocated
to rate and volume changes in proportion to the relationship of the absolute
dollar amounts of the change in each.
</TABLE>
<TABLE>
INVESTMENT PORTFOLIO
The book value of investment securities is summarized as follows:
<CAPTION>
DECEMBER 31,
---------------------------------------------------------------------
1994 1993 1992
--------------------- --------------------- ---------------------
PERCENT PERCENT PERCENT
OF TOTAL OF TOTAL OF TOTAL
AMOUNT SECURITIES AMOUNT SECURITIES AMOUNT SECURITIES
------ ---------- ------- ---------- ------ ----------
(dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
U.S. Treasury securities and
U.S. government agencies
and corporations $52,196 54.6% $41,236 43.9% $36,852 42.5%
State and municipal 12,235 12.8 13,096 13.9 10,192 11.7
Other 31,146 32.6 39,681 42.2 39,776 45.8
------- ----- ------- ----- ------- -----
Total $95,577 100.0% $94,013 100.0% $86,820 100.0%
======= ===== ======= ===== ======= =====
</TABLE>
- 48 -
<PAGE> 55
<TABLE>
The following table summarizes maturity and yield information on
the investment portfolio at December 31, 1994:
<CAPTION>
DECEMBER 31, 1994 MATURING
-----------------------------------------------------------------------------------------------------
AFTER ONE AFTER FIVE
IN ONE THROUGH THROUGH AFTER
YEAR OR LESS FIVE YEARS TEN YEARS TEN YEARS TOTAL
------------------ -------------------- -------------------- -------------------- ------
AMOUNT YIELD<F1> AMOUNT YIELD<F1> AMOUNT YIELD<F1> AMOUNT YIELD<F1> AMOUNT
------ --------- ------ --------- ------ --------- ------ --------- ------
(dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
U.S. Treasury securities and
U.S. government agencies
and corporations $3,002 5.7% $30,335 5.6% $17,858 7.0% $ 1,001 7.9% $52,196
State and municipal 1,264 7.9 4,792 7.2 4,558 8.2 1,621 7.6 12,235
Other . . . . . 643 10.0 7,227 6.3 2,971 6.2 20,305 6.5 31,146
------ ------- ------- ------- -------
Total $4,909 6.8 $42,354 5.9 $25,387 7.1 $22,927 6.6 $95,577
====== ======= ======= ======= =======
<FN>
- ---------------------------
<F1> Presented on a fully tax-equivalent basis assuming a tax rate of 34%.
</TABLE>
<TABLE>
LOAN PORTFOLIO
The composition of the loan portfolio is summarized as follows:
<CAPTION>
December 31,
------------------------------------------------------------------------------------------------------
1994 1993 1992 1991 1990
----------------- ------------------ ------------------ ------------------ ------------------
PERCENT PERCENT PERCENT PERCENT PERCENT
OF TOTAL OF TOTAL OF TOTAL OF TOTAL OF TOTAL
AMOUNT LOANS AMOUNT LOANS AMOUNT LOANS AMOUNT LOANS AMOUNT LOANS
------ ------- ------ -------- ------ -------- ------ -------- ------ --------
(dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Commercial, financial and
agricultural $20,783 40.2% $22,680 42.7% $25,947 43.2% $21,574 38.6% $16,890 31.8%
Real estate mortgage 23,377 45.2 22,890 43.1 25,548 42.6 23,256 41.6 22,684 42.7
Installment 1,734 3.4 2,203 4.2 2,995 5.0 4,723 8.5 7,023 13.2
Consumer 5,474 10.6 5,301 10.0 5,496 9.2 6,289 11.3 6,511 12.3
Loans held for sale 296 .6 -- -- -- -- -- -- -- --
------- ----- ------- ----- ------- ----- ------- ----- ------- -----
Total loans $51,664 100.0% $53,074 100.0% $59,986 100.0% $55,842 100.0% $53,108 100.0%
======= ===== ======= ===== ======= ===== ======= ===== ======= =====
</TABLE>
The following table sets forth the maturities and sensitivities
composition of total loans at December 31, 1994:
<TABLE>
FIXED-RATE LOANS
<CAPTION>
DECEMBER 31, 1994 MATURING
---------------------------------------------
AFTER ONE
IN ONE THROUGH AFTER
YEAR OR LESS FIVE YEARS FIVE YEARS TOTAL
------------ ---------- ---------- -----
(dollars in thousands)
<S> <C> <C> <C> <C>
Commercial, financial and agricultural $ 4,826 $1,912 $ -- $ 6,738
Real estate mortgage 3,268 3,712 451 7,431
Installment 782 767 185 1,734
Consumer 2,691 2,086 401 5,178
Loans held for sale 117 158 21 296
------- ------ ------ -------
$11,684 $8,635 $1,058 $21,377
======= ====== ====== =======
</TABLE>
- 49 -
<PAGE> 56
<TABLE>
VARIABLE-RATE LOANS
<CAPTION>
DECEMBER 31, 1994 MATURING
---------------------------------------------
AFTER ONE
IN ONE THROUGH AFTER
YEAR OR LESS FIVE YEARS FIVE YEARS TOTAL
------------ ---------- ---------- -----
(dollars in thousands)
<S> <C> <C> <C> <C>
Commercial, financial and agricultural $14,026 $ 19 $ -- $14,045
Real estate mortgage 13,409 2,537 -- 15,946
Installment -- -- -- --
Consumer 291 5 -- 296
Loans held for sale -- -- -- --
------- ------ ----- -------
$27,726 $2,561 $ -- $30,287
======= ====== ===== =======
</TABLE>
<TABLE>
The following table summarizes maturity information for the
loan portfolio as of December 31, 1994:
<CAPTION>
DECEMBER 31, 1994 MATURING
---------------------------------------------
AFTER ONE
IN ONE THROUGH AFTER
YEAR OR LESS FIVE YEARS FIVE YEARS TOTAL
------------ ---------- ---------- -----
(dollars in thousands)
<S> <C> <C> <C> <C>
Commercial, financial and agricultural $18,852 $ 1,931 $ -- $20,783
Real estate mortgage 16,677 6,249 451 23,377
Installment 782 767 185 1,734
Consumer 2,982 2,091 401 5,474
Loans held for sale 117 158 21 296
------- ------- ------ -------
$39,410 $11,196 $1,058 $51,664
======= ======= ====== =======
</TABLE>
<TABLE>
RISK ELEMENTS INVOLVED IN LENDING ACTIVITIES. The following
table details the nonperforming asset information for the periods presented:
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
------------- ----------------------------------------------------
1995 1994 1993 1992 1991 1990
---- ---- ---- ---- ---- ----
(dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Nonaccrual loans $ 75 $211 $260 $225 $384 $204
Loans past due 90 days or more 22 3 141 665 92 270
Restructured loans -- -- -- -- -- --
---- ---- ---- ---- ---- ----
Total nonperforming loans 97 214 401 890 476 474
Foreclosed property -- -- 190 100 40 128
---- ---- ---- ---- ---- ----
Total nonperforming assets $ 97 $214 $591 $990 $516 $602
==== ==== ==== ==== ==== ====
Nonperforming loans to loans .19% .41% .76% 1.48% .85% .89%
Nonperforming assets to loans plus
foreclosed property .19 .41 1.11 1.65 .92 1.13
Nonperforming assets to total assets .06 .14 .37 .62 .34 .42
</TABLE>
It is generally the policy of River Bend to discontinue the
accrual of interest on loans when principal or interest is due and has
remained unpaid for 90 days or more, unless the loan is well secured
and in the process of collection. If interest on nonaccrual loans had
been accrued, such income would have amounted to $16,000 for 1994.
The amount recognized as interest income on nonaccrual loans amounted
to $11,000 for 1994.
POTENTIAL PROBLEM LOANS. Certain loans may require frequent
management attention and are reviewed on a monthly or more frequent basis.
Although payments on these loans are less than 90 days past due, or in many
cases current, the borrowers presently have or have had a history of financial
- 50 -
<PAGE> 57
difficulties and management has concern as to the borrower's ability to comply
with present loan repayment terms. As such, these loans may result in
classification at some future point as nonperforming. At September 30, 1995 and
December 31, 1994, such loans (excluding all nonperforming loans described
above) amounted to $905,000 and $2,640,000, respectively.
FOREIGN OUTSTANDINGS. River Bend had no loans to any foreign
countries on any of the dates specified in the tables.
LOAN CONCENTRATIONS. River Bend does not have a particular
concentration of credit in any one economic sector; however, a substantial
portion of the portfolio is concentrated in and secured by real estate. The
ability of River Bend's borrowers to honor their contractual obligations is
dependent on the local economy and its effect on the real estate market.
OTHER INTEREST-BEARING ASSETS
Other interest-bearing assets, consisting of interest-bearing
deposits and federal funds sold, would not be considered nonperforming at
September 30, 1995 and December 31, 1994 and 1993 if such assets were loans.
<TABLE>
SUMMARY OF LOAN LOSS EXPERIENCE
The following table summarizes changes in the allowance for loan
losses arising from loans charged-off and recoveries on loans previously
charged-off, by loan category and additions to the allowance that have been
charged to expense:
<CAPTION>
NINE MONTHS ENDED
-----------------
SEPTEMBER 30, YEAR ENDED DECEMBER 31,
------------- ----------------------------------------------------
1995 1994 1993 1992 1991 1990
---- ---- ---- ---- ---- ----
(dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Balance, beginning of period $ 831 $ 936 $ 905 $ 824 $ 739 $ 698
------ ------ ------ ------ ------ ------
Loans charged-off:
Commercial, financial and agricultural -- 4 67 93 110 71
Real estate mortgage 61 224 106 24 45 --
Installment and consumer 1 3 8 29 84 127
------ ------ ------ ------ ------ ------
Total charge-offs 62 231 181 146 239 198
------ ------ ------ ------ ------ ------
Recoveries of loans previously charged off:
Commercial, financial and agricultural 8 32 63 48 14 18
Real estate mortgage 11 5 -- 36 88 --
Installment and consumer 2 9 29 35 31 30
------ ------ ------ ------ ------ ------
Total recoveries 21 46 92 119 133 48
------ ------ ------ ------ ------ ------
Net charge-offs 41 185 89 27 106 150
------ ------ ------ ------ ------ ------
Additions to allowance charged to expense 72 80 120 108 191 191
------ ------ ------ ------ ------ ------
Balance, end of period $ 862 $ 831 $ 936 $ 905 $ 824 $ 739
====== ====== ====== ====== ====== ======
Net charge-offs to average loans .11% .38% .16% .05% .21% .30%
Allowance for loan losses to loans 1.71 1.62 1.77 1.52 1.49 1.42
Allowance for loan losses to nonperforming
loans 888.66 388.32 233.42 101.69 173.11 155.91
</TABLE>
In determining an adequate balance in the allowance for loan
losses, River Bend's management places its emphasis as follows: evaluation
of the loan portfolio with regard to potential future exposure on loans to
specific customers and industries; evaluation of each nonperforming loan or
the loans classified by supervisory authorities; and an overall review of the
remaining portfolio in light of past loan loss experience.
- 51 -
<PAGE> 58
<TABLE>
Management views the allowance for loan losses as being available
for all potential or previously unidentified loan losses which may occur in
the future. The risk of future losses that is inherent in the loan portfolio
is not precisely attributable to a particular loan or category of loans.
Based on its review of adequacy, River Bend's management has estimated those
portions of the allowance that could be attributable to major categories of
loans as detailed in the following table:
<CAPTION>
DECEMBER 31,
-----------------------------------------------------------------------------------------
1994 1993 1992 1991 1990
----------------- ----------------- ----------------- ----------------- -----------------
PERCENT OF PERCENT OF PERCENT OF PERCENT OF PERCENT OF
LOANS LOANS LOANS LOANS LOANS
IN EACH IN EACH IN EACH IN EACH IN EACH
CATEGORY CATEGORY CATEGORY CATEGORY CATEGORY
TO TOTAL TO TOTAL TO TOTAL TO TOTAL TO TOTAL
ALLOWANCE LOANS ALLOWANCE LOANS ALLOWANCE LOANS ALLOWANCE LOANS ALLOWANCE LOANS
--------- ----- --------- ----- --------- ----- --------- ----- --------- -----
(dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Commercial, financial
and agricultural $152 40.2% $174 42.7% $202 43.2% $152 38.6% $118 31.8%
Real estate mortgage 178 45.2 193 43.1 140 42.6 142 41.6 137 42.7
Installment 26 3.4 32 4.2 46 5.0 67 8.5 98 13.2
Consumer 40 10.6 38 10.0 43 9.2 45 11.3 46 12.3
Loans held for sale -- .6 -- -- -- -- -- -- -- --
Not allocated 435 -- 499 -- 474 -- 418 -- 340 --
---- ----- ---- ----- ---- ----- ---- ----- ---- -----
$831 100.0% $936 100.0% $905 100.0% $824 100.0% $739 100.0%
==== ===== ==== ===== ==== ===== ==== ===== ==== =====
</TABLE>
Allocations estimated for the loan categories do not specifically
represent that loan charge-offs of that magnitude will necessarily be
incurred. The allocation does not restrict future loan losses attributable
to other categories. The risk factors considered when determining the
overall level of the allowance for loan losses are the same when estimating
the allocation by major category, as specified in the allowance category.
<TABLE>
DEPOSITS
The following table shows, for each type of deposit, the average
monthly amount and the average rate paid on each type of deposit for the
years ended December 31, 1994, 1993 and 1992:
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------------------------------------------------
1994 1993 1992
------------------ ------------------ ------------------
AVERAGE AVERAGE AVERAGE
BALANCE RATE BALANCE RATE BALANCE RATE
------- ---- ------- ---- ------- ----
(dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Non-interest bearing
demand deposits $ 16,348 --% $ 14,635 --% $ 12,480 --%
Interest bearing
checking 51,875 2.39 55,077 2.63 49,881 3.67
Savings deposits 22,074 3.42 19,665 3.78 15,696 3.70
Time deposits 55,164 3.71 56,231 3.74 63,741 5.24
-------- -------- --------
$145,461 2.78 $145,608 2.95 $141,798 4.06
======== ======== ========
</TABLE>
- 52 -
<PAGE> 59
<TABLE>
The following table shows the maturity of time deposits of
$100,000 or more at December 31, 1994:
<CAPTION>
(dollars in thousands)
<S> <C>
Three months or less $1,601
Over three through six months 803
Over six through twelve months 706
Over twelve months 681
------
$3,791
======
</TABLE>
<TABLE>
RETURN ON EQUITY AND ASSETS
The following ratios are among those commonly used in analyzing
performance of banks and bank holding companies:
<CAPTION>
December 31,
--------------------------------------------
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Return on average assets 1.25% 1.22% 1.48%
Return on average equity 17.04 19.05 28.18
Dividend payout ratio 15.42 -- --
Average equity to average assets ratio 7.31 6.38 5.27
</TABLE>
PROPERTIES
River Bend's and Illinois State Bank's principal banking
office is located at 347 West Main Street, East Alton, Illinois 62024.
Illinois State Bank also operates two branch facilities; one of which
is located at 251 East Airline, Rosewood Heights, Illinois 62024, and
the second of which is located at 821 Homer Adams Parkway, Godfrey,
Illinois 62035.
LEGAL PROCEEDINGS
During the normal course of business, various legal claims
have arisen which, in the opinion of management, will not result in
any material liability to River Bend.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS OF RIVER BEND
INTRODUCTION
The following discussion and analysis is intended
to review the significant factors affecting the financial condition
and results of operations of River Bend for the nine months ended
September 30, 1995 and 1994 and the three-year period ended December
31, 1994. It provides a more comprehensive review not otherwise
apparent from the consolidated financial statements alone. Reference
should be made to those statements and the selected financial data
presented elsewhere herein for an understanding of the following review.
NET INCOME ANALYSIS
River Bend's net income for 1994 was $2,018,000
as compared to $1,952,000 for 1993 and $2,311,000 for 1992. The
increase in net income for 1994 as compared to 1993 was due primarily
to a decrease in the effective tax rate from 29.7% in 1993 to 28.1% in
1994 primarily due to a decrease
- 53 -
<PAGE> 60
in state income tax expense. Additionally, the adoption of a new
accounting standard for income taxes in 1993 reduced that year's net
income by $11,000. The decrease in net income for 1993 as compared to
1992 was primarily due to a $317,000 decrease in net interest income,
a decrease of $58,000 in noninterest income and an increase of
$163,000 in other noninterest expense, partially offset by a decrease
in income tax expense of $202,000.
For the nine months ended September 30, 1995 and 1994,
net income was $1,450,000 and $1,510,000, respectively. The decrease
was primarily due to an increase in noninterest expense of $83,000,
partially offset by a decrease in income tax expense of $21,000.
NET INTEREST INCOME
Net interest income is the largest component of earnings
and is affected by the volume of the sources and uses of funds, the
respective rates earned and paid on those funds, the mix of those
funds and the volume of nonperforming assets. River Bend's net
interest income decreased 3.4% to $5,906,000 during 1994 after a
decrease of 4.9% in 1993. The net interest margin, which is
calculated by dividing tax-equivalent net interest income by average
interest-earning assets, was 4.10% in 1994 as compared to 4.29% and
4.64% in 1993 and 1992, respectively. The decrease in the net
interest margin during 1994 primarily resulted from the overall shift
in interest-earning assets from loans to investments as shown by
average loans representing 31.0% and 34.6% of average interest-earning
assets in 1994 and 1993, respectively, whereas average taxable and
nontaxable investment securities represented 61.8% and 56.1% of
average interest-earning assets in 1994 and 1993, respectively. While
River Bend maintained its yield on average loans at 8.52% in 1994 and
1993, the average yield on investment securities declined from 6.75%
in 1993 to 6.18% in 1994, resulting in an overall decreased net
interest margin. River Bend shifted funds into investments due to a
decrease in loan demand and due to its sales of mortgage loans to the
secondary market. The decrease in the net interest margin during 1993
primarily resulted from the decline in interest rates in 1992 which
remained low throughout 1993, resulting in interest paid on
liabilities decreasing by $1,502,000 during 1993. The average yield
earned on loans declined from 9.56% in 1992 to 8.52% in 1993.
Additionally, the average yield earned on taxable and nontaxable
investments declined from 8.45% in 1992 to 6.75% in 1993. Partially
offsetting the decrease in yields on loans and investments was the
rate paid on interest-bearing deposits which declined from 4.45% in
1992 to 3.28% in 1993.
During 1994, decreases in the average volume of loans
and federal funds sold resulted in a decrease in interest income of
$571,000. This decrease was offset by a $667,000 increase in interest
income associated with an increase in the average volume of taxable
and nontaxable investment securities. Changes in interest rates on
the average volume of all interest-earning assets decreased interest
income by $539,000. Changes in the interest rates on the average
volume of interest-bearing demand deposits and savings deposits
decreased interest expense by $202,000. This decrease was offset by a
$31,000 increase in interest expense associated with a change in
interest rate on the average volume of the note payable. Changes in
interest rates on the average volume of interest-bearing liabilities
resulted in a decrease in interest expense of $174,000. The net
effect of the volume and rate changes associated with all categories
of interest-earning assets during 1994 as compared to 1993 decreased
interest income by $444,000, while the net effect of the volume and
rate changes associated with all categories of interest-bearing
liabilities decreased interest expense by $224,000.
During 1993, increases in the average volume of all
interest-earning assets resulted in an increase in interest income of
$260,000. Changes in interest rates on the average volume of loans and
taxable investment securities resulted in a decrease in interest
income of $2,001,000. Decreases in the average balance of time
deposits resulted in a decrease in interest expense of $360,000.
Changes in
- 54 -
<PAGE> 61
interest rates on the average volume of interest-bearing liabilities resulted in
a decrease in interest expense of $1,436,000. The net effect of the volume and
rate changes associated with all categories of interest-earning assets during
1993 as compared to 1992 lowered interest income $1,833,000, while the net
effect of the volume and rate changes associated with all categories of
interest-bearing liabilities lowered interest expense by $1,502,000.
Net interest income was $4,382,000 for the first nine
months of 1995, a .5% decrease from the same period of 1994. Interest
income increased $423,000 for the first nine months of 1995 and
interest expense increased $447,000. The net decrease was primarily
attributable to the increasing interest rate environment resulting
from the Federal Reserve Board increasing the discount rate and the
overall shift from loans to investments, which are yielding lower
rates. Additionally, an overall higher rate is being paid on
interest-bearing deposits of 3.69% in 1995 compared to 3.07% in 1994.
PROVISION FOR LOAN LOSSES
The provision for loan losses charged to expense was
$80,000 in 1994 compared to $120,000 in 1993 and $108,000 in 1992.
The allowance for loan losses is maintained at a level considered
adequate to provide for potential losses. The provision for loan
losses is based on a periodic analysis, considering, among other
factors, current economic conditions, loan portfolio composition, past
loan loss experience, independent appraisals, loan collateral and
payment experience. In addition to the allowance for losses on
identified problem loans, an overall unallocated allowance is established
to provide for unidentified credit losses inherent in the portfolio. As
adjustments become necessary, they are reflected in the results of operations
in the periods in which they become known.
Management believes the allowance for loan losses is
adequate to absorb losses in the loan portfolio. While management
uses available information to recognize loan losses, future additions
to the allowance may be necessary based on changes in economic
conditions. In addition, various regulatory agencies, as an integral
part of the examination process, periodically review the allowance for
loan losses. Such agencies may require River Bend to increase the
allowance for loan losses based on their judgments and interpretations
about information available to them at the time of their examinations.
<TABLE>
The allowance for loan losses is a valuation account
available to absorb future loan losses. The following table includes
pertinent ratios which describe trends in the allowance for loan
losses during the three-year period ended December 31, 1994:
<CAPTION>
DECEMBER 31,
--------------------------------------------
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Nonperforming loans to loans .41% .76% 1.48%
Allowance for loan losses to loans 1.62 1.77 1.52
Allowance for loan losses to nonperforming loans 388.32 233.42 101.69
Net charge-offs to average loans .38 .16 .05
</TABLE>
The decrease in nonperforming loans to loans since 1992 is a
result of a more aggressive approach to account collections and the
effectiveness of management in working with the problem credits coupled with
acquisitions of foreclosed real estate.
The provision for loan losses was $72,000 in the first nine
months of 1995 compared to $80,000 in the same period for 1994.
- 55 -
<PAGE> 62
NONINTEREST INCOME
River Bend's 1994 noninterest income was $820,000, representing a
15.2% increase from 1993 results, while 1993 noninterest income represented a
decrease of 7.5% from 1992 results. The increase in 1994 primarily reflected
a $143,000 increase in net gain on sale of other real estate, which was
partially offset by a $92,000 decrease in other noninterest income. Other
noninterest income Decreased by 22.6% during 1994 compared to an increase of
127.4% during 1993. The decrease in 1994 is primarily the result of a 31.2%
decrease in fees recognized on loans sold in the secondary market.
Noninterest income for the first nine months of 1995 was
$584,000, an increase of $18,000 over the same period in 1994 which was
attributable to a $10,000 increase in service charges on deposits, a net gain
on sales of debt and marketable equity securities of $7,000 for the first
nine months of 1995 compared to a net loss on sale of debt and marketable
equity securities of $18,000 for the first nine months of 1994, a decrease of
$72,000 in net gain on sale of other real estate, and an increase of $55,000
in other noninterest income.
NONINTEREST EXPENSE
River Bend's noninterest expense decreased 1.9% in 1994 and
increased 4.3% in 1993. Salaries and employee benefits, the largest
component of noninterest expense, increased $31,000, or 1.6%, in 1994 and
decreased $26,000, or 1.3%, in 1993. The increase in 1994 was attributable
to normal compensation increases and hiring new personnel. As a percentage
of average assets, total noninterest expense was 2.4% in 1994, 1993, and
1992. Noninterest expense items other than salaries and employee benefits
showed a decline of 5.5% from 1994 to 1993 and an increase of 10.8% from 1993
to 1992. The 1994 decrease was primarily attributable to decreases in
occupancy and equipment expenses. The 1993 increase related to increases in
several miscellaneous other expenses such as supplies expense, advertising
and community relations expense, collection expense and employee training
expense.
Noninterest expense was $2,875,000 in the first nine months of
1995 compared to $2,792,000 in the first nine months of 1994. Salaries and
employee benefits increased by $78,000, or 5.5%, reflecting normal increases
in compensation and the addition of an officer by Illinois State Bank.
Increases in occupancy and equipment expense, partially offset by the
decrease in FDIC insurance assessment, contributed to the increase in
noninterest expense categories exclusive of salaries and employee benefits.
The $54,000 decrease in FDIC insurance assessment was primarily due to the
BIF, the fund under which approximately 76% of Illinois State Bank's deposits
are insured by the FDIC, reaching its required reserve level of 1.25% of
total insured deposits during 1995, resulting in the FDIC reducing the
deposit premium charged to commercial banks. Illinois State Bank received a
refund of $49,000 for insurance premiums for the period June 1 to September
30, 1995 during September 1995. The remaining deposits of Illinois State
Bank are insured by the SAIF, which deposits Illinois State Bank acquired
when it purchased certain assets and liabilities of a failed East Alton,
Illinois savings institution in 1990. The insurance premiums charged by the
SAIF have remained unchanged at $0.23 per $100 of deposits, and a one-time
fee assessment is being debated by Congress to bring the SAIF up to the 1.25%
recapitalization ratio.
INCOME TAXES
River Bend recorded income tax expense of $787,000 for 1994,
$828,000 for 1993 and $1,030,000 for 1992. Income tax expense of $569,000
and $590,000 was recorded for the nine months ended September 30, 1995
and 1994, respectively. The effective income tax rate was 28.1%, 29.7%
and 30.8% for the years ended December 31, 1994, 1993 and 1992, respectively.
The decrease in the effective
- 56 -
<PAGE> 63
income tax rate was primarily a result of tax planning strategies. The
effective income tax rate was 28.2% and 28.1% for the nine months ended
September 30, 1995 and 1994, respectively. See note 7 to the consolidated
financial statements with respect to the components of income taxes for the
years ended December 31, 1994, 1993 and 1992.
In February 1992, the Financial Accounting Standards Board
("FASB") issued Statement of Financial Accounting Standards No. 109,
Accounting for Income Taxes (SFAS 109). SFAS 109 was effective for fiscal
years beginning after December 15, 1992, and could have been applied through
retroactive restatement of previously issued financial statements, or through
reporting the cumulative effect of applying the changes in the period of its
initial application. River Bend implemented SFAS 109 during the first
quarter of 1993 and reported the cumulative effect of this change in the
method of accounting for income taxes resulting in a charge to earnings of
$11,000 in River Bend's 1993 consolidated statement of income.
LIQUIDITY AND INTEREST RATE SENSITIVITY
Liquidity is provided to River Bend through earning assets
including short-term investments in federal funds sold and through maturities
in the investment and loan portfolios.
<TABLE>
The asset/liability management process, which involves management
of the components of the balance sheet to allow assets and liabilities to
reprice at approximately the same time, is a dynamic process essential to
minimizing the effect of interest rate fluctuations on net interest income.
The following tables reflect River Bend's GAP analysis (rate-sensitive assets
minus rate-sensitive liabilities) as of September 30, 1995 and December 31,
1994, respectively:
<CAPTION>
SEPTEMBER 30, 1995
-----------------------------------------------------------------
OVER OVER
3 MONTHS 1 YEAR
3 MONTHS THROUGH 12 THROUGH AFTER
OR LESS MONTHS 5 YEARS FIVE YEARS TOTAL
------- ------ ------- ---------- -----
(dollars in thousands)
<S> <C> <C> <C> <C> <C>
Assets:
Investments in debt securities $ 12,912 $ 23,008 $ 43,369 $ 17,196 $ 96,485
Loans 21,421 15,627 9,975 3,763 50,786
Federal funds sold 2,300 -- -- -- 2,300
Interest-bearing deposits -- 100 94 -- 194
-------- -------- -------- -------- --------
Total interest-sensitive
assets 36,633 38,735 53,438 20,959 149,765
-------- -------- -------- -------- --------
Liabilities:
Money market deposits
(interest-bearing demand) 46,173 -- -- -- 46,173
Savings 18,130 -- -- -- 18,130
Time deposits 14,758 28,053 15,849 -- 58,660
Short-term borrowings 1,827 -- -- -- 1,827
Note payable 66 197 2,105 -- 2,368
-------- -------- -------- -------- --------
Total interest-sensitive
liabilities 80,954 28,250 17,954 -- 127,158
-------- -------- -------- -------- --------
Interest-sensitivity gap at
September 30, 1995:
Incremental $(44,321) $ 10,485 $ 35,484 $ 20,959 $ 22,607
======== ======== ======== ======== ========
Cumulative $(44,321) $(33,836) $ 1,648 $ 22,607
======== ======== ======== ========
</TABLE>
- 57 -
<PAGE> 64
<TABLE>
<CAPTION>
DECEMBER 31, 1994
-----------------------------------------------------------------
OVER OVER
3 MONTHS 1 YEAR
3 MONTHS THROUGH 12 THROUGH AFTER
OR LESS MONTHS 5 YEARS FIVE YEARS TOTAL
------- ------ ------- ---------- -----
(dollars in thousands)
<S> <C> <C> <C> <C> <C>
Assets:
Investments in debt securities $ 6,990 $ 16,445 $48,090 $24,052 $ 95,577
Loans 22,693 16,716 11,197 1,058 51,664
Federal funds sold 200 -- -- -- 200
Interest-bearing deposits -- -- 194 -- 194
-------- -------- ------- ------- --------
Total interest-sensitive
assets 29,883 33,161 59,481 25,110 147,635
-------- -------- ------- ------- --------
Liabilities:
Money market deposits
(interest-bearing demand) 48,283 -- -- -- 48,283
Savings 20,706 -- -- -- 20,706
Time deposits 12,961 12,924 12,149 17,157 55,191
Short-term borrowings 637 -- -- -- 637
Note payable 66 197 2,302 -- 2,565
-------- -------- ------- ------- --------
Total interest-sensitive
liabilities 82,653 13,121 14,451 17,157 127,382
-------- -------- ------- ------- --------
Interest-sensitivity gap at
December 31, 1994:
Incremental $(52,770) $ 20,040 $45,030 $ 7,953 $ 20,253
======== ======== ======= ======= ========
Cumulative $(52,770) $(32,730) $12,300 $20,253
======== ======== ======= =======
</TABLE>
As is indicated in the preceding tables, River Bend was
liability sensitive on a cumulative basis in the near term (3 months
or less) at September 30, 1995 and December 31, 1994 based on
contractual maturities and earliest repricing dates. In this regard,
an increase in the general level of interest rates would generally
have a negative effect on River Bend's net interest income as the
repricing of the larger volume of interest-sensitive liabilities would
create a larger amount of interest expense than the additional amount
of interest income created by the repricing of the smaller volume of
interest-sensitive assets.
<TABLE>
The following table summarizes certain trends in River
Bend's consolidated balance sheet during the three-year period ended:
<CAPTION>
DECEMBER 31,
--------------------------------------------------------
1994 1993 1992
---- ---- ----
(dollars in thousands)
<S> <C> <C> <C>
Total assets $157,562 $161,814 $160,246
Earning assets 147,413 151,937 149,367
Deposits 141,426 145,372 145,182
Loans to deposits 36.37% 36.31% 41.02%
Loans to total assets 32.65 32.62 37.16
Debt securities to total assets 60.66 58.10 54.18
</TABLE>
The composition of total assets and earning assets changed
during 1994 as funds were shifted into investments due to a decrease
in loan demand and a decrease in customer deposits. Investment
securities were $95,577,000 at December 31, 1994 as compared to
$94,013,000 and $86,820,000 at December 31, 1993 and 1992,
respectively, while loans, net of unearned discount, decreased to
$51,442,000 at December 31, 1994 from $52,781,000 and $59,553,000 at
December 31, 1993 and 1992, respectively.
- 58 -
<PAGE> 65
During 1993, investment securities increased $7,193,000
and loans, net of unearned discount, decreased $6,772,000. The net
increase in these earning assets resulted from increased customer
deposits being invested in investment securities as loan demand was
lower during 1993 than during 1992. During the lower interest rate
environment of 1992 and 1993, customers were refinancing home
mortgages to fixed rate loans at the lower interest rates. Illinois
State Bank sold $12,398,000 and $13,336,000 of home mortgage loans on the
secondary market in 1993 and 1992, respectively. Additionally, River Bend
experienced a change in the deposit mix during 1993 as average interest-bearing
demand and savings deposits increased approximately $9,165,000, while average
time deposits decreased approximately $7,510,000. This trend was primarily
attributable to the lower interest rate environment experienced during 1993 as
maturing, longer-term time deposits were reinvested in more liquid instruments.
River Bend's earning assets decreased $4,524,000 from
December 31, 1993 to December 31, 1994 while total assets decreased
$4,252,000 during the same period. Interest-bearing deposits
decreased $5,656,000 while total deposits decreased $3,946,000. The
decrease in deposits was largely due to the increasing interest rate
environment as customers moved their funds outside of River Bend to
take advantage of higher yielding investment opportunities.
River Bend's earning assets increased $2,097,000 from
December 31, 1994 to September 30, 1995 while total assets increased
$2,263,000 during the same period. Interest-bearing deposits
decreased $1,217,000 while total deposits decreased $739,000. This
decrease in interest-bearing deposits is due to the level of interest
rates being offered on other investment opportunities.
CAPITAL ADEQUACY
River Bend's equity capital was $14,073,000 at September
30, 1995. This represented an increase of 12.8% over equity capital
at December 31, 1994 and resulted from net income for the first nine
months of 1995 of $1,450,000, offset by dividends paid of $326,000 and
a $477,000 increase in the net unrealized gain on investment
securities available-for-sale.
River Bend's equity capital was $12,472,000, $11,207,000
and $9,283,000 at December 31, 1994, 1993 and 1992, respectively.
During 1994, equity capital increased $1,265,000, or 11.3%, as a
result of net income of $2,018,000, offset by dividends paid of
$386,000 and a net unrealized loss on securities available-for-sale of
$396,000. During 1993, equity capital increased $1,923,000, or 20.7%.
This increase was attributable to net income of $1,952,000, offset by
a $29,000 change in unrealized losses on marketable equity securities.
Risk-based capital guidelines for financial institutions
were adopted by regulatory authorities effective January 1, 1991.
These guidelines were designed to relate regulatory capital
requirements to the risk profile of the specific institutions and to
provide for uniform requirements among the various regulators.
Currently, the risk-based capital guidelines require River Bend to
meet a minimum total capital ratio of 8.0%, of which at least 4.0%
must consist of Tier 1 capital. Tier 1 capital generally consists of
(a) common stockholders' equity, (b) qualifying perpetual preferred stock and
related surplus subject to certain limitations specified by the FDIC and (c)
minority interests in the equity accounts of consolidated securities less
goodwill and any other intangible assets and investments in subsidiaries that
the FDIC determines should be deducted from Tier 1 capital. The FDIC also
requires a minimum leverage ratio of 3.0%, defined as the ratio of Tier 1
capital less purchased mortgage servicing rights to total assets, for banking
organizations deemed the strongest and most highly rated by banking
regulators. A higher minimum leverage ratio is required of less highly rated
banking organizations.
- 59 -
<PAGE> 66
<TABLE>
The following table summarizes on a consolidated basis
River Bend's risk-based capital and leverage ratios:
<CAPTION>
RISK-BASED CAPITAL RATIOS
--------------------------------------------------------------------------------------------
TOTAL TIER 1
-------------------------------------------- --------------------------------------------
SEPTEMBER 30, DECEMBER 31, SEPTEMBER 30, DECEMBER 31,
------------- ---------------------------- ------------- ----------------------------
<C> <C> <C> <C> <C> <C> <C> <C>
1995 1994 1993 1992 1995 1994 1993 1992
---- ---- ---- ---- ---- ---- ---- ----
19.71% 17.80% 14.51% 10.65% 18.46% 16.56% 13.26% 9.54%
===== ===== ===== ===== ===== ===== ===== ====
</TABLE>
<TABLE>
<CAPTION>
LEVERAGE RATIOS
------------------------------------------------------------------------------------
SEPTEMBER 30, DECEMBER 31, DECEMBER 31, DECEMBER 31,
------------- ------------ ------------ ------------
1995 1994 1993 1992
---- ---- ---- ----
<C> <C> <C> <C>
7.87% 7.25% 6.00% 4.83%
==== ==== ==== ====
</TABLE>
Additionally, financial analysts often track primary
capital levels as an indicator of capital adequacy. Primary
capital includes equity capital, allowance for loan losses and debt
considered equity for regulatory capital purposes. At September
30, 1995, on a consolidated basis River Bend's primary capital was
$14,854,000 compared to $13,729,000, $12,143,000 and $10,188,000 at
December 31, 1994, 1993 and 1992, respectively. River Bend's
primary capital to assets ratio on a consolidated basis was 9.29%
at September 30, 1995 compared to 8.71%, 7.50% and 6.36% at
December 31, 1994, 1993 and 1992, respectively.
RISK MANAGEMENT
River Bend's management objective in structuring the
balance sheet is to maximize the return on stockholders' equity
while minimizing the associated risks. The major risks involved in
the banking industry are market, credit and liquidity risks. The
following is a discussion of River Bend's management of these
risks.
MARKET RISK MANAGEMENT. River Bend's management believes
its loan and investment portfolios are sufficiently diversified to
minimize the effect of a downturn in any particular industry or
market.
River Bend does not have any particular concentration of
credit in any one economic sector. However, $23,377,000, or 45.2%,
of the loan portfolio was concentrated in and secured by real
estate at December 31, 1994. Of the $23,377,000 in loans secured
by real estate, $16,664,000, or 32.3%, of total loans were secured
by one- to four-family residential mortgages. Commercial loans as
of December 31,1994 totaled $20,783,000, or 40.2%, of the loan
portfolio. The commercial loan portfolio, which includes loans
made primarily to businesses located in Madison County and served
by River Bend, is generally secured by business assets such as
inventory, accounts receivable and equipment. At December 31,
1994, the total investment portfolio was $95,577,000, an increase
of 1.7% from the same period in 1993. Approximately 54.6% of the
portfolio is comprised of U.S. government issues.
CREDIT RISK MANAGEMENT. The risks River Bend's
management assumes in providing credit products to customers is
fundamental to its business operation. Credit risk management
includes defining an acceptable level of risk and return,
establishing policies and procedures to govern the credit
- 60 -
<PAGE> 67
process and maintaining a thorough portfolio review function. Credit
policies are ultimately the responsibility of River Bend's Board of
Directors and, as such, are reviewed and approved by the Board of
Directors. Of equal importance in this risk management process are
the ongoing, monitoring procedures performed by management.
Nonperforming loans represented .19% of total loans at
September 30, 1995 compared to .34%, .76% and 1.48% at December 31,
1994, 1993 and 1992, respectively. Other real estate owned by
River Bend as a result of foreclosure transactions was $-0- at
September 30, 1995 and December 31, 1994 compared to $190,000 and
$92,000 at December 31, 1993 and 1992, respectively.
LIQUIDITY RISK MANAGEMENT. Liquidity is a measurement of
River Bend's ability to meet the borrowing needs and the deposit
withdrawal requirements of its customers. River Bend actively
manages the composition of its assets and liabilities to maintain
the appropriate level of liquidity in the balance sheet.
Management is guided by regularly reviewed policies when
determining the appropriate portion of total assets which should be
comprised of readily marketable assets available to meet future
liquidity needs. Much of this liquidity risk management has been
discussed previously in connection with the liquidity and rate
sensitivity.
IMPACT OF NEW ACCOUNTING PRONOUNCEMENTS
During May 1993, the FASB issued Statement of Financial
Accounting Standards No. 114, Accounting by Creditors for
Impairment of a Loan (SFAS 114) and SFAS 115 Accounting for Certain
Investments in Debt and Equity Securities. During October 1994,
the FASB issued SFAS 118, Accounting by Creditors for Impairment of
a Loan - Income Recognition and Disclosures, which amends SFAS 114.
During October 1994, the FASB issued SFAS 119, Disclosure about
Derivative Financial Instruments and Fair Value of Financial
Instruments. In March 1995, the FASB issued SFAS 121, Accounting
for the Impairment of Long-Lived Assets and for Long-Lived Assets
to Be Disposed Of. In May 1995, the FASB issued SFAS 122,
Accounting for Mortgage Servicing Rights, an amendment of FASB
Statement No. 65. In December 1994, the American Institute of
Certified Public Accountants issued Statement of Position 94-6,
Disclosure of Certain Significant Risks and Uncertainties (SOP 94-
6).
SFAS 114 (as amended by SFAS 118) amends SFAS 5,
Accounting for Contingencies, and SFAS 15, Accounting by Debtors
and Creditors for Troubled Debt Restructurings, and became
effective for River Bend on January 1, 1995. SFAS 114 defines the
recognition criterion for loan impairment and the measurement
methods for certain impaired loans and loans whose terms have been
modified in troubled-debt restructurings (a restructured loan).
Specifically, a loan is considered impaired when it is probable a
creditor will be unable to collect all amounts due - both principal
and interest - according to the contractual terms of the loan
agreement. When measuring impairment, the expected future cash
flows of an impaired loan will be required to be discounted at the
loan's effective interest rate. Alternatively, impairment can be
measured by reference to an observable market price, if one exists,
or the fair value of the collateral for a collateral-dependent
loan. Regardless of the measurement method used historically, SFAS
114 will require a creditor to measure impairment based on the fair
value of the collateral when the creditor determines foreclosure is
probable. Additionally, impairment of a restructured loan will be
measured by discounting the total expected future cash flow at the
loan's effective rate of interest as stated in the original loan
agreement.
SFAS 118 amends SFAS 114 to allow a creditor to use
existing methods for recognizing interest income on an impaired
loan. River Bend elected to continue to use its existing
nonaccrual methods for recognizing interest on impaired loans.
- 61 -
<PAGE> 68
The impact of initially applying SFAS 114 and SFAS 118
was not reported as an accounting change; rather, it was reported
as a component of the provision for loan losses charged to
operations but had no effect on River Bend's consolidated financial
condition as a result of implementation. SFAS 114 and SFAS 118 are
effective for fiscal years beginning after December 15, 1994.
SFAS 115 supersedes SFAS 12, Accounting for Certain
Marketable Securities, and related interpretations, and
significantly amends SFAS 65, Accounting for Certain Mortgage
Banking Activities, and SFAS No. 60, Accounting and Reporting by
Insurance Enterprises. River Bend adopted the provisions of
SFAS 115 on January 1, 1994.
SFAS 115 addresses the accounting and reporting for
investments in equity securities that have readily determinable
fair values, and all investments in debt securities. Under SFAS
115, debt and equity securities are classified into one of three
categories: trading, available-for-sale and held-to-maturity.
Trading securities are bought and held principally for the purpose
of selling them in the near term. Held-to-maturity securities are
those securities which River Bend has the ability and intent to
hold until maturity. All other securities not classified as
trading or held-to-maturity are classified as available-for-sale.
Trading and available-for-sale securities are recorded at
fair value. Held-to-maturity securities are recorded at amortized
cost, adjusted for the amortization or accretion of premiums or
discounts. Unrealized gains and losses on trading securities are
included in earnings. Unrealized gains and losses, net of the
related tax effect, on available-for-sale securities are excluded
from earnings and reported as a separate component of stockholders'
equity until realized. Transfers of securities between categories
are recorded at fair value at the date of transfer. Unrealized
gains and losses are recognized in earnings for transfers into the
trading category. Unrealized gains and losses associated with
transfers of securities from the held-to-maturity category to the
available-for-sale category are recorded as a separate component of
stockholders' equity and amortized into earnings over the remaining
life of the security as an adjustment to yield using the interest
method.
A decline in the market value of any available-for-sale
or held-to-maturity security below cost that is deemed other than
temporary results in a charge to earnings and the establishment of
a new cost basis for the security.
For securities in the available-for-sale and held-to-
maturity categories, premiums and discounts are amortized and
accreted over the lives of the respective securities, with
consideration of historical and estimated prepayment rates, as an
adjustment to yield using the interest method. Dividend and
interest income are recognized when earned. Realized gains and
losses for securities classified as available-for-sale are included
in earnings and are derived using the specific identification
method for determining the cost of securities sold.
As previously mentioned, effective January 1, 1994, River
Bend adopted SFAS 115, for which the cumulative effect was recorded
on the consolidated balance sheet on that date. On January 1,
1994, debt and marketable equity securities with a fair value of
$996,000 were classified as trading securities; debt and marketable
equity securities with an amortized cost of $71,128,000 were
classified as held-to-maturity securities; debt and marketable
equity securities with an amortized cost of $21,888,000 were
classified as available-for-sale securities; a market valuation
account was established for the available-for-sale securities of
$565,000 to increase the recorded balance of such securities at
January 1, 1994 to their fair value on that date; a deferred tax
liability of $219,000 was recorded to reflect the tax effect of the
market valuation account; and the net increase resulting from the
market valuation adjustment
- 62 -
<PAGE> 69
at January 1, 1994 was recorded as a separate component of
stockholders' equity. Prior to the adoption of SFAS 115, marketable
equity securities were carried at the lower of cost or estimated
market value. A deferred tax benefit was established for the
unrealized loss on marketable equity securities at January 1, 1994.
As of December 31, 1994, debt and marketable equity
securities with a fair market value of $451,000 were classified as
trading securities; debt and marketable equity securities with an
amortized cost of $75,793,000 were classified as held-to-maturity
securities; debt and marketable equity securities with an amortized
cost of $19,979,000 were classified as available-for-sale
securities; the market valuation account for the available-for-sale
securities was adjusted to approximately $(646,000) to decrease the
recorded balance of such securities at December 31, 1994 to their
fair value on that date; the deferred tax liability was adjusted to
a deferred tax asset of approximately $250,000 to reflect the tax
effect of the market valuation account; and the separate component
of stockholders' equity was adjusted to a $(396,000) balance,
resulting from the market valuation adjustment at December 31,
1994. The significant change in the market valuation account and
related components resulted from an overall increase in the
interest rate environment during 1994, as a direct result of the
Federal Reserve Board increasing the discount interest rate.
As of September 30, 1995, debt and marketable equity
securities with an amortized cost of $70,727,000 were classified as
held-to-maturity securities; debt and marketable equity securities
with an amortized cost of $25,586,000 were classified as available-
for-sale securities; the market valuation account for the
available-for-sale securities was adjusted to $172,000 to increase
the recorded balance of such securities at September 30, 1995 to
their fair value on that date; the deferred tax asset was adjusted
to a deferred tax liability of $91,000 to reflect the tax effect of
the market valuation account; and the separate component of
stockholders' equity was adjusted to an $81,000 balance, resulting
from the market valuation adjustment at September 30, 1995. The
significant change in the market valuation account and related
components resulted from continued increases in the interest rate
environment and $10,100,000, or 69.8%, of total securities
purchased for the nine months ended September 30, 1995 being
classified as available-for-sale securities as compared to
$4,700,000, or 16.7%, of those securities purchased for the year
ended December 31, 1994. No debt or marketable equity securities
were classified as trading securities as of September 30, 1995.
SFAS 119 requires disclosures about the amounts, nature,
and terms of derivative financial instruments that are not subject
to SFAS 105, Disclosure of Information about Financial Instruments
with Off-Balance Sheet Risk and Financial Instruments with
Concentrations of Credit Risk, because they do not result in off-
balance-sheet risk of accounting loss. SFAS 119 requires that a
distinction be made between financial instruments held or issued
for trading purposes and financial instruments held or issued for
purposes other than trading.
SFAS 119 was effective for financial statements issued
for fiscal years ending after December 15, 1994, and resulted in no
effect on River Bend's consolidated financial statements other than
additional disclosure requirements with respect to fixed rate loan
commitments.
SFAS 121 is effective for fiscal years beginning after
December 15, 1995. Earlier application is permitted. SFAS 121
will require, among other things, that long-lived assets and
certain identifiable intangibles to be held and used by an entity
be reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not
be recoverable. River Bend plans to adopt the provisions of SFAS
121 effective January 1, 1996. Management believes the adoption of
SFAS 121 will not have a material impact on their consolidated
financial statements.
- 63 -
<PAGE> 70
SFAS 122 amends SFAS 65, Accounting for Certain Mortgage
Banking Activities, to require that a mortgage banking enterprise
recognize as separate assets rights to service mortgage loans for
others however those servicing rights are acquired. A mortgage
banking enterprise that acquires mortgage servicing rights through
either the purchase or origination of mortgage loans and sells or
securitizes those loans with servicing rights retained should
allocate the total cost of the mortgage loans to the mortgage
servicing rights and the loans (without mortgage servicing rights)
based on their relative fair values, if it is practicable to
estimate those fair values. If it is not practicable to estimate
the fair values of the mortgage servicing rights and the mortgage
loans (without the mortgage servicing rights), the entire cost of
purchasing or originating the loans should be allocated to the
mortgage loans, and no cost should be allocated to mortgage
servicing rights. SFAS 122 also requires that a mortgage banking
enterprise assess its capitalized mortgage servicing rights for
impairment based on the fair value of those rights. SFAS 122 must
be applied prospectively for fiscal years beginning after December
15, 1995, with earlier adoption encouraged, to transactions in
which a mortgage banking enterprise sells or securitizes mortgage
loans with servicing rights retained and to impairment evaluations
of all amounts capitalized as mortgage servicing rights, including
those purchased before the adoption of SFAS 122. Retroactive
capitalization of mortgage servicing rights retained in
transactions in which a mortgage banking enterprise originates
mortgage loans and sells or securitizes those loans before the
adoption of SFAS 122 is prohibited. River Bend plans to adopt the
provisions of SFAS 122 effective January 1, 1996. Management of
River Bend does not believe the adoption of SFAS 122 will have a
material effect on its consolidated financial position.
SOP 94-6 is effective for fiscal year ending after
December 15, 1995. Earlier application is permitted. SOP 94-6
will require, among other things, that entities include in their
financial statements disclosures about the nature of their
operations and the use of estimates in the preparation of financial
statements. In addition, SOP 94-6 requires disclosures about
current vulnerability due to certain concentrations. River Bend
adopted the provisions of SOP 94-6 effective January 1, 1995. The
adoption of SOP 94-6 had no impact on River Bend's consolidated
financial statements.
EFFECT OF INFLATION
Persistent high rates of inflation can have a significant
effect on the reported financial condition and results of
operations of all industries. However, the asset and liability
structure of commercial banks is substantially different from that
of an industrial company in that virtually all assets and
liabilities of commercial banks are monetary in nature.
Accordingly, changes in interest rates may have a significant
impact on a commercial bank's performance. Interest rates do not
necessarily move in the same direction or in the same magnitude as
the prices of goods and services.
Inflation does have an impact on the growth of total
assets in the banking industry, often resulting in a need to
increase equity capital at higher than normal rates to maintain an
appropriate equity-to-assets ratio. One of the most important
effects that inflation has had on the commercial banking industry
is to reduce the proportion of earnings paid out in the form of
dividends.
Although it is obvious that inflation affects the growth
of total assets, it is difficult to measure the impact precisely.
Only new assets acquired in each year are directly affected, so a
simple adjustment of asset totals by use of an inflation index is
not meaningful. The results of operations also have been affected
by inflation, but again, there is no simple way to measure the
effect on the various categories of income and expense.
- 64 -
<PAGE> 71
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of the Record Date,
certain information with respect to the ownership of River Bend
Stock by each person, group or entity known by the Board of
Directors of River Bend to own of record more than five percent of
the outstanding shares of River Bend Stock, each director of River
Bend and all directors and executive officers of River Bend as a
group.
<TABLE>
<CAPTION>
Amount and Nature of Percent of
Name of Beneficial Owner Beneficial Ownership<F1> Class
------------------------ ------------------------ -----
<S> <C> <C> <C>
Byron L. Farrell 11,300<F2> Class I Common Stock 7.2%
One Lockhaven Manor 57,253<F2> Class II Common Stock 7.3
Godfrey, Illinois 62035 -- Preferred Stock --
Janice C. Farrell 9,636<F3> Class I Common Stock 6.1
One Lockhaven Manor 56,971<F3> Class II Common Stock 7.3
Godfrey, Illinois 62035 1,176<F3> Preferred Stock 19.6
Harley T. Godard, Director, 15,176<F4> Class I Common Stock 9.7
Vice President and Secretary 75,880<F4> Class II Common Stock 9.7
270 Shady Lane 504<F4> Preferred Stock 8.4
East Alton, Illinois 62024
Donald W. Griffin, Director -- Class I Common Stock --
92 Old Boston Road 5,000<F5> Class II Common Stock 0.6
Wilton, Connecticut 06897 -- Preferred Stock --
Jane Hadley 11,717<F6> Class I Common Stock 7.5
11 Lochwynd Court 59,985<F6> Class II Common Stock 7.6
Phoenix, Maryland 21131 398<F6> Preferred Stock 6.6
Elizabeth Helmkamp 2,581<F7> Class I Common Stock 1.6
P.O. Box 486 51,358<F7> Class II Common Stock 6.5
East Alton, Illinois 62024 -- Preferred Stock --
John G. Helmkamp, Jr., Director 105,195<F8> Class I Common Stock 67.0
President and Treasurer 458,251<F9> Class II Common Stock 58.4
P.O. Box 486 5,192<F10> Preferred Stock 86.7
East Alton, Illinois 62024
All Directors and Executive 120,371 Class I Common Stock 76.6
Officers (3 persons) 539,131 Class II Common Stock 68.7
5,696 Preferred Stock 95.1
<FN>
- -----------------
<F1> Beneficial ownership of shares as of September 30, 1995 as
determined in accordance with applicable Commission rules,
includes all shares as to which the person directly or
indirectly has or shares voting and/or dispositive control and
all shares as to which the person has a right to acquire sole
or shared voting and/or dispositive control within 60 days of
the reporting date.
<F2> Mr. Farrell holds sole beneficial ownership to 6,862 shares of
Class I Common Stock and 35,063 shares of Class II Common
Stock, and as President of Helmkamp Construction Co. shares
voting and dispositive control of 4,438 shares of Class I
Common Stock and 22,190 shares of Class II Common Stock.
<F3> Ms. Farrell holds sole beneficial ownership to 2,141 shares of
Class I Common Stock, 12,105 shares of Class II Common Stock
and 14 shares of Preferred Stock, and shares voting and
dispositive control with John G. Helmkamp, Jr. with respect to
7,495 shares of Class I Common Stock, 44,866 shares of Class
II Common Stock and 1,162 shares of Preferred Stock held by
various trusts.
<F4> Mr. Godard holds sole beneficial ownership to all shares.
<F5> Mr. Griffin holds sole beneficial ownership to all shares.
- 65 -
<PAGE> 72
<F6> Ms. Hadley holds sole beneficial ownership to 11,717 shares of
Class I Common Stock, 59,985 shares of Class II Common Stock
and 13 shares of Preferred Stock, and shares voting and
dispositive control with John G. Helmkamp, Jr. with respect to
285 shares of Preferred Stock held by various trusts.
<F7> Ms. Helmkamp holds the sole beneficial ownership to 2,581
shares of Class I Common Stock and 23,358 shares of Class II
Common Stock, and shares voting and dispositive control with
Mark Kratschmer with respect to 28,000 shares of Class II
Common Stock held by a trust.
<F8> Mr. Helmkamp holds sole beneficial ownership to 97,700 shares,
and shares voting and dispositive control with Janice C.
Farrell with respect to 7,495 shares held by various trusts.
<F9> Mr. Helmkamp holds sole beneficial ownership to 347,749
shares, and shares voting and dispositive control with Janice
C. Farrell with respect to 54,772 shares held by various
trusts, and with Mark Kratschmer with respect to 56,000 shares
held by various trusts.
<F10> Mr. Helmkamp holds sole beneficial ownership to 3,449 shares,
and shares voting and dispositive control with Janice C.
Farrell with respect to 1,358 shares held by various trusts
and with Jane Hadley with respect to 385 shares held by
various trusts.
</TABLE>
INFORMATION REGARDING MAGNA STOCK
---------------------------------
GENERAL
The authorized capital stock of Magna consists of
40,000,000 shares of Magna Common Stock, 1,000,000 shares of
preferred stock, no par value (the "No Par Value Preferred Stock"),
49,500 shares of Class B voting preferred stock, $20.00 par value
(the "Voting Preferred Stock"), and 1,000,000 shares of Class C
non-voting preferred stock, $.10 par value (the "Non-Voting
Preferred Stock"). Magna is authorized to issue its preferred
stock in one or more series, with the number of shares, dividends,
and other rights, preferences, limitations and terms of each series
to be determined and fixed by Magna's Board of Directors without
any further action by the stockholders of Magna. In connection
with the establishment of Magna's stockholder rights plan in
November 1988 (see "Preferred Share Purchase Rights Plan") and the
acquisition of another bank holding company in December 1991, Magna
designated and reserved for issuance or designated and issued,
respectively, certain shares of its preferred stock under each
category of its authorized preferred stock. At September 30, 1995,
(i) no shares of Magna's No Par Value Preferred Stock had been
issued and (ii) 2,039 shares of the Voting Preferred Stock, no
shares of the Non-Voting Preferred Stock and 27,881,344 shares of
Magna Common Stock were issued and outstanding.
PREFERRED STOCK
NO PAR VALUE PREFERRED STOCK
Except for the designation and reservation of the Series
A Junior Participating Preferred Stock (see "Preferred Share
Purchase Rights Plan"), the Board of Directors has not acted to
designate or issue any shares of No Par Value Preferred Stock.
VOTING PREFERRED STOCK
The Voting Preferred Stock has a cumulative dividend rate
of 7.5% per annum of the par value thereof, as and when declared by
Magna's Board of Directors. Cash dividends are required to be
declared and paid or set aside for payment on the Voting Preferred
Stock before any dividends are declared or paid on the Magna Common
Stock. Dividend rights with respect to the Voting Preferred Stock
rank pari passu with any other shares of equally ranking preferred
stock then outstanding.
- 66 -
<PAGE> 73
In the event of any liquidation, dissolution or winding
up of Magna, then, before any distribution shall be made to the
holders of Magna Common Stock, the holders of outstanding Voting
Preferred Stock are entitled to be paid $20.00 per share, together
with all accrued and unpaid dividends thereon, and the holders of
Magna Common Stock thereafter are entitled, to the exclusion of the
holders of Voting Preferred Stock, to divide ratably the assets of
Magna then remaining. Upon liquidation, the Voting Preferred Stock
ranks pari passu with any other shares of equally ranking preferred
stock then outstanding.
The holders of Voting Preferred Stock are entitled to one
vote for each share and vote together with holders of Magna Common
Stock as a single class except as otherwise required by law.
NON-VOTING PREFERRED STOCK
Except for the designation and issuance of 19,680 shares,
which shares were subsequently redeemed (see "General"), Magna's
Board of Directors has not acted to designate or issue any shares
of Non-Voting Preferred Stock.
MAGNA COMMON STOCK
DIVIDENDS
The holders of the Magna Common Stock are entitled to
share ratably in dividends thereon when, as and if declared by
Magna's Board of Directors from funds legally available therefor,
after full cumulative dividends have been paid or declared and
funds sufficient for the payment thereof set apart, on all series
of preferred stock ranking superior as to dividends to the Magna
Common Stock.
VOTING RIGHTS
Each holder of Magna Common Stock has one vote for each
share held on matters presented for consideration by the holders
and vote together with the holders of Voting Preferred Stock as a
single class, except as otherwise required by law. The holders of
the Magna Common Stock do not have cumulative voting rights in the
election of directors.
PREEMPTIVE RIGHTS
The holders of Magna Common Stock have no preemptive
right to acquire any additional unissued shares or treasury shares
of Magna.
LIQUIDATION RIGHTS
In the event of liquidation, dissolution or winding up of
Magna, whether voluntary or involuntary, the holders of Magna
Common Stock will be entitled to share ratably in any of its assets
or funds that are available for distribution to its common
shareholders after the satisfaction of its liabilities (or after
adequate provision is made therefor) and after preferences on any
outstanding preferred stock.
ASSESSMENT AND REDEMPTION
Shares of Magna Common Stock currently outstanding are,
and the Magna Common Stock to be issued in this offering will be,
fully paid and non-assessable. Such shares do not have any
redemption or sinking fund provisions.
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TRANSFER AGENT
Magna Trust Company, Belleville, Illinois, is the
transfer agent of the Magna Common Stock.
PREFERRED SHARE PURCHASE RIGHTS PLAN
One preferred stock purchase right (a "Magna Right") is
attached to each share of Common Stock issued and outstanding or to
be issued prior to certain designated events. Each Magna Right
expires in 1998 unless first exercised, redeemed or converted. The
Magna Rights become exercisable and detach from the Common Stock on
the tenth day after the public announcement that a person or group
is the beneficial owner of securities representing 20 percent or
more of the voting power of Magna or upon the commencement, or the
announcement of the intent of a person or group to commence, a
tender offer which would result in any person or group becoming the
beneficial owner of securities representing 20 percent or more of
the voting power of Magna without the prior written consent of
Magna's Board of Directors. When exercisable, each Magna Right
will entitle the holder thereof to purchase one one-hundredth of a
share of Magna's Series A Junior Participating Preferred Stock at
a purchase price of $50.00 per one one-hundredth of a share. The
Series A Junior Participating Preferred Stock is a voting,
cumulative, participating series ranking junior to the Voting
Preferred Stock in terms of liquidation and dividend preferences.
In certain circumstances, the Magna Rights may be redeemed by
Magna's Board at a redemption price of $.01 per Magna Right or may
be exchanged for Common Stock at an exchange rate of one share of
Common Stock for each Magna Right. In the event that a person or
group actually acquires beneficial ownership of securities
representing 20 percent or more (but less than 85 percent in a
tender offer for all shares) of the voting power of Magna, holders
of the Magna Rights (other than the acquiring person or group) may
purchase the number of shares of Common Stock having a market value
of twice the purchase price applicable to the Magna Rights. If
Magna is acquired (or substantially all of the assets or earning
power are transferred) after the Magna Rights become exercisable,
the holders of the Magna Rights (other than the acquiring person or
group) may purchase the number of shares of the acquiring company
having a market value of twice the purchase price applicable to the
Magna Rights. Currently, 400,000 shares of Series A Junior
Participating Preferred Stock are authorized and reserved for
issuance upon exercise of Magna Rights. The Magna Rights may have
the effect of delaying, deferring or preventing a future takeover
or change of control of Magna unless such takeover or change of
control is approved by Magna's Board of Directors. Such provisions
may result in Magna being less attractive to a potential acquiror.
RESERVATION OF SHARES
At September 30, 1995, approximately 4,684,554 shares of
Magna Common Stock were reserved for issuance in connection with
conversion of the Convertible Subordinated Capital Notes,
Convertible Subordinated Debentures and Magna's stock-based
compensation plans.
OTHER MATTERS
Magna's Certificate of Incorporation and By-Laws contain
provisions which: (i) classify Magna's Board of Directors into
three classes and stagger the terms of such classes; (ii) prohibit
the removal of a director or directors without cause by the
stockholders; (iii) require the affirmative vote of holders of at
least 80% of the voting power of all shares of the outstanding
capital stock of Magna to approve certain "business combinations"
with "interested parties" unless such transactions are approved by
at least two-thirds of Magna's Board of Directors; and (iv) require
an affirmative vote of at least 80% of the voting power of all
shares of the outstanding capital stock of Magna for the amendment,
alteration,
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change or repeal of any of the above provisions unless at least
two-thirds of Magna's Board of Directors first approves such an
amendment, alteration, change or repeal. Such provisions are intended
to enhance the likelihood of continuity and stability in the
composition of Magna's Board of Directors and may have the effect of
delaying, deferring or preventing a future takeover or change of
control of Magna unless such takeover or change of control is approved
by Magna's Board of Directors. Such provisions may result in Magna
being less attractive to a potential acquiror.
RESTRICTIONS ON RESALE OF MAGNA COMMON STOCK BY AFFILIATES
Under Rule 145 of the Securities Act, certain persons who
receive Magna stock pursuant to the Merger and who are deemed to be
"affiliates" of River Bend will be limited in their right to resell
the stock so received. The term "affiliate" is defined to include
any person who, directly or indirectly, controls, or is controlled
by, or is under common control with River Bend at the time the
Merger is submitted to a vote of the shareholders of River Bend.
Each affiliate of River Bend (e.g., generally any director or
executive officer or shareholder of River Bend who beneficially
owns a substantial number of outstanding shares of River Bend
stock) who desires to resell Magna Common Stock received in the
Merger must sell such stock either pursuant to an effective
registration statement or in accordance with an applicable
exemption, such as the applicable provisions of Rule 145(d) under
the Securities Act.
Rule 145(d) requires that persons deemed to be affiliates
resell their stock pursuant to certain of the requirements of Rule
144 under the Securities Act if such stock is sold within the first
two years after the receipt thereof. After two years if such
person is not an affiliate of Magna and if Magna is current in the
filing of its periodic securities law reports, a former affiliate
of River Bend may freely resell the stock received in the Merger
without limitation. After three years from the issuance of the
stock, if such person is not an affiliate of Magna at the time of
sale and for at least three months prior to such sale, such person
may freely resell such stock, without limitation, regardless of the
status of Magna's periodic securities law filings. The shares of
Magna Common Stock to be received by affiliates of River Bend in
the Merger will be legended as to the restrictions imposed upon
resale of such stock.
COMPARISON OF THE RIGHTS OF STOCKHOLDERS OF MAGNA AND SHAREHOLDERS
OF RIVER BEND
Magna is incorporated under the laws of the State of
Delaware, while River Bend is incorporated under the laws of the
State of Illinois. The rights of Magna's stockholders are governed
by Magna's Certificate of Incorporation and By-Laws and The General
Corporation Law of the State of Delaware (the "Delaware Corporation
Law"). The rights of River Bend shareholders are governed by River
Bend's Articles of Incorporation and By-Laws and by the Illinois
Business Corporation Act of 1983, as amended (the "Illinois Act").
The rights of River Bend shareholders who receive shares of Magna
Common Stock in the Merger will thereafter be governed by Magna's
Certificate of Incorporation and By-Laws and by the Delaware
Corporation Law. In many respects the rights of Magna stockholders
and River Bend shareholders, as provided under the respective
organizational documents, are similar. The significant rights of
such shareholders, and, where applicable, the differences between
the rights of Magna stockholders and River Bend shareholders, are
summarized below.
PREFERRED SHARE PURCHASE RIGHTS PLAN. As described above
under "INFORMATION REGARDING MAGNA STOCK - Preferred Share Purchase
Rights Plan," Magna's Common Stock has Magna Rights attached, which
may deter certain takeover proposals. River Bend has no rights
plan.
SUPERMAJORITY PROVISIONS. Magna's Certificate of
Incorporation and By-Laws require a vote of 80% of the outstanding
shares to remove directors without cause, to approve certain
business combinations, and to amend these provisions of the
Certificate of Incorporation and By-Laws. Such
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supermajority provisions may have the effect of discouraging takeover
attempts that do not have Board approval as well as delay a majority
holder from taking control of the Board of Directors of Magna. River
Bend's organizational documents do not require supermajority approval
of any corporate action.
VOTING FOR DIRECTORS. The Illinois Act provides for
cumulative voting for the election of directors if the Articles of
Incorporation do not provide otherwise. Cumulative voting entitles
each shareholder to cast an aggregate number of votes equal to the
number of voting shares held, multiplied by the number of directors
to be elected. Each shareholder may cast all such votes for one
nominee or distribute them among two or more nominees, thus
permitting holders of less than a majority of the outstanding
shares of voting stock to achieve proportional board
representation. River Bend's Articles of Incorporation provide for
cumulative voting rights. Magna's Certificate of Incorporation and
By-Laws do not provide for cumulative voting in the election of
directors. In contrast to cumulative voting, under non-cumulative
voting, holders of a majority of outstanding shares of voting stock
may elect the entire Board of Directors, thereby precluding the
election of any directors by the holders of less than a majority of
the outstanding shares of voting stock.
CLASSIFIED BOARD. As described under "INFORMATION
REGARDING MAGNA STOCK - Other Matters," the Board of Directors of
Magna is divided into three classes of directors, with each class
being elected to a staggered three-year term. River Bend does not
have a classified Board of Directors. The effect of a staggered
Board of Directors may be to delay a majority holder of Magna
Common Stock from electing a majority of the Board of Directors.
PREEMPTIVE RIGHTS. Neither River Bend's Articles of
Incorporation nor Magna's Certificate of Incorporation provide for
preemptive rights. Preemptive rights provide shareholders of a
corporation issuing new shares of its capital stock with the right
to purchase a percentage of the newly issued capital stock that
equals their percentage of ownership of the already outstanding
capital stock of the corporation.
DISSENTERS' RIGHTS. Under the Illinois Act, a
shareholder of any corporation which is party to a merger or
consolidation, or which sells all or substantially all of its
assets, has the right to dissent from such corporate action and to
demand payment of the fair value of his/her shares. The Delaware
Corporation Law, provides, however, that, with certain limited
exceptions, no such dissenters' rights are available to holders of
shares that are listed on a national securities exchange or are
held of record by more than 2,000 stockholders. Holders of Magna
Common Stock would therefore have no general right to dissent from
any merger, consolidation or disposition of assets since there are
in excess of 2,000 holders of record of Magna Common Stock.
ANTITAKEOVER STATUTES. Each of Illinois and Delaware has
enacted a business combination moratorium statute which generally
prohibits a domestic corporation from engaging in mergers or other
business combinations with certain "interested persons" for a
statutory time period. The moratorium can be avoided if the
business combination is approved by the Board of Directors prior to
the date on which the interested stockholder acquires the requisite
percentage of stock. The Illinois Act and the Delaware Corporation
Law both impose a 3 year moratorium on such transactions, thereby
potentially increasing the period during which a hostile bid may be
frustrated. In addition, both the Illinois Act and the Delaware
Corporation Law do not apply if the interested stockholder obtains
at least 85% of the corporation's voting stock upon consummation of
the transaction which resulted in the stockholder becoming an
interested stockholder. Thus, a person acquiring at least 85%
could circumvent the defensive provisions of the Delaware law and
the Illinois Act.
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STOCK PURCHASE AGREEMENTS. Most of the shareholders of
River Bend have entered into one of two different versions of
agreements (the "Shareholder Agreements") with River Bend and John
G. Helmkamp, Jr., President of River Bend ("Helmkamp"), respecting
the transfer of shares of River Bend Stock owned by such holder.
For those holders who are employees and/or directors of River Bend
or Illinois State Bank, the agreements generally provide: (i) that
the holder may not voluntarily transfer the shares held without
first offering the shares to River Bend (with Helmkamp also granted
an option to purchase the shares), upon the same terms and
conditions as the holder was to have sold to the prospective
purchaser (a right of first refusal); (ii) that upon the death,
retirement or termination of employment, River Bend will purchase
and the holder will sell all subject shares at an agreed-upon
price, based upon adjustments to the appraised fair market value
(with Helmkamp having the option to purchase the shares in lieu of
River Bend); and (iii) that upon an involuntary transfer, River
Bend and Helmkamp will have the option to purchase the shares at an
agreed-upon price based upon adjustments to the appraised fair
market value. The Shareholder Agreements that were executed by
those who are neither employees nor directors of River Bend or
Illinois State Bank generally provide River Bend with a right of
first refusal with respect to voluntary transfers (with Helmkamp
also granted an option to purchase the shares).
In addition to the foregoing, each of the Shareholder
Agreements provides that in the event that there is a change in
control of River Bend (defined to be where Helmkamp and his
immediate family no longer hold, directly or indirectly, beneficial
ownership of a majority of River Bend's voting shares of capital
stock), the holder may, upon the occurrence of certain events,
require that the holder's shares be purchased by River Bend, at a
per share purchase price equal to the average per share purchase
price in the change in control transaction. Such provision will
not be triggered as a result of the Merger.
Similarly, River Bend can require the holder to sell all
shares held by the holder to River Bend in the event of a change of
control, at a per share purchase price equal to the average per share
purchase price in the change of control transaction. However, in the
Reorganization Agreement, River Bend and Helmkamp agreed to waive any
purchase options it or he held with respect to shares subject to the
Shareholder Agreements; thus the transactions contemplated in the
Reorganization Agreement will not result in River Bend or Helmkamp
exercising an option to acquire any shares subject to any of the
Shareholder Agreements.
The shares of Magna Common Stock to be issued as Stock
Distribution will not be subject to any agreements, other than
shares held by affiliates of River Bend. See " - Restrictions on
Resale of Magna Common Stock by Affiliates." Thus former
shareholders of River Bend who receive shares of Magna Common Stock
as Stock Distribution will receive neither the rights nor the
obligations they had with respect to shares of River Bend subject
to one of the Shareholder Agreements.
SUPERVISION AND REGULATION
--------------------------
REGULATORY APPROVALS OF THE MERGER
As bank holding companies, Magna and River Bend are
subject to regulation under the BHCA by the Federal Reserve Board.
Bank holding companies are required to file reports with the
Federal Reserve Board and to provide such additional information as
the Federal Reserve Board may require.
The Merger is subject to approval by the Federal Reserve
Board under Section 3 of the BHCA. Under Section 3(a)(3) of the
BHCA, Magna is required to obtain the prior approval of the Federal
Reserve Board before acquiring direct or indirect ownership or
control of any voting shares of any bank (which it will do through
the Merger since, after the Merger, Magna will own more than five
percent
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of the voting shares of Landmark, the surviving entity in the Merger,
and thereby indirectly control Illinois State Bank).
Under the BHCA, the Federal Reserve Board must withhold
approval of the Merger if it finds that the Merger would result in
a monopoly or be in furtherance of any combination or conspiracy to
monopolize or to attempt to monopolize the business of banking in
any part of the United States. The Federal Reserve Board may not
approve the Merger if it finds that the effect of the Merger may be
to substantially lessen competition or to tend to create a monopoly
or if the Merger would in any other manner be in restraint of
trade, unless it finds that the anticompetitive effects of the
Merger are clearly outweighed in the public interest by the
probable effect of the Merger in meeting the convenience and needs
of the communities to be served.
In reviewing the Merger, the Federal Reserve Board must
examine the financial and managerial resources and future prospects
of the combined organization and, under the terms of the Community
Reinvestment Act of 1977, will assess the companies' records of
meeting the credit needs of the local communities in which they are
chartered consistent with the safe and sound operation of such
institutions. Under the BHCA, the Merger may not be consummated
sooner than the 15th day following the date of Federal Reserve
Board approval, during which time the United States Department of
Justice may challenge the Merger on antitrust grounds. The
commencement of an antitrust action could stay the effectiveness of
the Federal Reserve Board's approval unless a court specifically
orders otherwise.
Pursuant to the Illinois Banking Act, Magna must obtain
the prior approval of the Illinois Commissioner to acquire River
Bend and, thus, indirectly acquire Illinois State Bank. As a state
bank, Illinois State Bank is regulated and supervised by the
Illinois Commissioner. The approval of the Illinois Commissioner
is a condition to consummation of the Merger. In processing
Magna's application to acquire River Bend, the Illinois
Commissioner must determine the following: (i) that the general
character of Magna's management is such as to assure reasonable
promise of successful, safe and sound operation of Illinois State
Bank; (ii) that the future earnings prospects, upon consummation of
the Merger are favorable; and (iii) that any prior involvement by
Magna, or by the proposed management personnel of any other
financial institution, whether as stockholder, director, officer or
customer, was conducted in a safe and sound manner.
GENERAL REGULATORY CONSIDERATIONS
As a bank holding company, Magna is subject to regulation
under the BHCA and its examination and reporting requirements.
Under the BHCA, a bank holding company may not directly or
indirectly acquire the ownership or control of more than 5% of the
voting shares or substantially all of the assets of any company,
including a bank or savings and loan association, without the prior
approval of the Federal Reserve Board. In addition, bank holding
companies are generally prohibited under the BHCA from engaging in
nonbanking activities, subject to certain exceptions.
Magna and its subsidiaries are subject to supervision and
examination by applicable federal and state banking agencies. The
earnings of Magna's subsidiaries, and therefore the earnings of
Magna, are affected by general economic conditions, management
policies and the legislative and governmental actions of various
regulatory authorities, including the Federal Reserve Board, the
FDIC and the Office of the Comptroller of the Currency (the
"Comptroller"). In addition, there are numerous governmental
requirements and regulations that affect the activities of Magna
and its subsidiaries.
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CERTAIN TRANSACTIONS WITH AFFILIATES
There are various legal restrictions on the extent to
which a bank holding company and certain of its nonbank
subsidiaries can borrow or otherwise obtain credit from its bank
subsidiaries. In general, these restrictions require that any such
extensions of credit must be on non-preferential terms and secured
by designated amounts of specified collateral and be limited, as to
any one of the holding company or such nonbank subsidiaries, to 10%
of the lending bank's capital stock and surplus, and as to the
holding company and all such nonbank subsidiaries in the aggregate,
to 20% of such capital stock and surplus.
PAYMENT OF DIVIDENDS
Magna is a legal entity separate and distinct from its
banking and other subsidiaries. The principal sources of Magna's
revenues are dividends and management fees from its banking
subsidiary. Various federal statutory provisions limit the amount
of dividends Magna Bank can pay to Magna without regulatory
approval. The approval of the OCC is required for any dividend by
a national bank if the total of all dividends declared by the bank
in any calendar year would exceed the total of its net profits, as
defined by the OCC, for such year combined with its retained net
profits for the preceding two years, less any required transfers to
surplus or a fund for the retirement of any preferred stock. In
addition, a national bank may not pay a dividend in an amount
greater than its net profits then on hand, after deducting losses
and bad debt. All debts due to any national bank on which interest
is due and unpaid for a period of six months, unless the same are
well secured and in the process of collection, are considered bad
debts. The payment of dividends and management fees by any
affiliate bank may also be affected by other factors, such as the
maintenance of adequate capital for such affiliate bank.
CAPITAL ADEQUACY
The Federal Reserve Board has issued standards for
measuring capital adequacy for bank holding companies. These
standards are designed to provide risk-responsive capital
guidelines and to incorporate a consistent framework for use by
financial institutions operating in major international financial
markets. The banking regulators have issued standards for banks
that are similar to, but not identical with, the standards for bank
holding companies.
In general, the risk-related standards require banks and
bank holding companies to maintain capital based on "risk adjusted"
assets so that categories of assets with potentially higher credit
risk will require more capital backing than categories with lower
credit risk. In addition, banks and bank holding companies are
required to maintain capital to support off-balance sheet
activities such as loan commitments.
The standards classify total capital for this risk-based
measure into two tiers referred to as Tier 1 and Tier 2. Tier 1
capital consists of common shareholders' equity, certain non-
cumulative and cumulative perpetual preferred stock, and minority
interests in equity accounts of consolidated subsidiaries; Tier 2
capital consists of the allowance for loan and lease losses (within
certain limits), perpetual preferred stock not included in Tier 1,
hybrid capital instruments, term subordinated debt, and
intermediate-term preferred stock. Bank holding companies are
required to meet a minimum ratio of 8% of qualifying total capital
to risk-adjusted assets, and a minimum ratio of 4% of qualifying
Tier 1 capital to risk-adjusted assets. Capital that qualifies as
Tier 2 capital is limited in amount to 100% of Tier 1 capital in
testing compliance with the total risk-based capital minimum
standards.
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In addition, the Federal Reserve Board has established
minimum leverage ratio guidelines for bank holding companies.
These guidelines provide for a minimum ratio of Tier 1 capital to
adjusted average total assets (the "leverage ratio") of 3% for bank
holding companies that meet certain specified criteria, including
having the highest regulatory rating. Other bank holding companies
generally are required to maintain a leverage ratio of at least 3%
plus 100 to 200 basis points. The guidelines also provide that
bank holding companies experiencing internal growth or making
acquisitions will be expected to maintain strong capital positions
substantially above minimum supervisory levels, without significant
reliance on intangible assets. Furthermore, the Federal Reserve
Board has indicated that it may consider other indicia of capital
strength in evaluating proposals for expansion or new activities.
The federal bank regulatory agencies have issued various
proposals to amend the risk-based capital guidelines for banks and
bank holding companies. Under one proposal, banks would be
required to give explicit consideration to interest rate risk as an
element of capital adequacy by maintaining capital to compensate
for such risk in an amount measured by the bank's exposure to
interest rate risk in excess of a regulatory threshold. Another
proposal would revise the treatment given to (i) low-level recourse
arrangements to reduce the amount of capital required and (ii)
certain direct credit substitutes provided by banking organizations
to require that capital be maintained against the value of the
assets enhanced or the loans protected. A proposal recently issued
by the Federal Reserve Board and expected to be joined in by the
other bank regulatory agencies increases the amount of capital
required to be carried against certain long-term derivative
contracts; in addition, the proposal recognizes the effect of
certain bilateral netting arrangements in reducing potential future
exposure under these contracts. Magna believes that these changes
will not, if adopted, have a material effect on its compliance with
capital adequacy requirements.
FDIC INSURANCE ASSESSMENTS
Magna Bank is subject to FDIC deposit insurance
assessments. The FDIC has adopted a risk-based premium schedule.
Under this schedule, the annual premiums initially ranged from $.23
to $.31 for every $100 of deposits. Each financial institution is
assigned to one of three capital groups--well capitalized,
adequately capitalized or undercapitalized--and further assigned to
one of three subgroups within a capital group, on the basis of
supervisory evaluations by the institution's primary federal and,
if applicable, state supervisors and on the basis of other
information relevant to the institution's financial condition and
the risk posed to the applicable insurance fund. The actual
assessment rate applicable to a particular institution will,
therefore, depend in part upon the risk assessment classification
so assigned to the institution by the FDIC. See "- FIRREA and
FDICIA."
The Financial Institutions Reform, Recovery, and
Enforcement Act of 1989 ("FIRREA"), which was adopted to provide
for the resolution of insolvent savings associations, required the
FDIC to establish separate deposit insurance funds -- the Bank
Insurance Fund ("BIF") for banks and the SAIF for savings
associations. The law also requires the FDIC to set deposit
insurance assessments at such levels as will cause the BIF and the
SAIF to reach their "designated reserve ratios" of 1.25 percent of
the deposits insured by them within a reasonable period of time.
Due to the low costs of resolving bank insolvencies in the last few
years, the BIF reached its designated reserve ratio in May 1995.
As a result, in November 1995, the FDIC lowered deposit insurance
assessment rates for all banks by revising the range to $.04 to $.31
for every $100 of deposits. In addition, effective January 1, 1996,
due to the fact that the BIF had reached its designated reserve ratio,
the FDIC eliminated deposit insurance assessments (except for the
minimum $2,000 payment required by law) for banks that are well
capitalized and well managed.
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The balance in the SAIF is not expected to reach the
designated reserve ratio until about the year 2002, as the law
provides that a significant portion of the costs of resolving past
insolvencies of savings associations must be paid from this source.
Accordingly, it is likely that the SAIF rates will be significantly
higher than the BIF rates in the future. Magna acquired an
insignificant amount of SAIF-insured deposits during the years from
1989 to the present and is required to pay deposit insurance premiums
on these SAIF-insured deposits. Magna does not expect that such
additional deposit insurance costs will have a significant adverse
effect on its earnings.
SUPPORT OF SUBSIDIARY BANK
Under Federal Reserve Board policy, Magna is expected to
act as a source of financial strength to Magna Bank and to commit
resources to support Magna Bank in circumstances where it might not
choose to do so absent such a policy. In addition, any capital
loans by Magna to any of its subsidiaries would also be subordinate
in right of payment to deposits and certain other indebtedness of
such subsidiary. This support may be required at times when Magna
may not find itself able to provide it.
Consistent with this policy regarding bank holding
companies serving as a source of financial strength for their
subsidiary banks, the Federal Reserve Board has stated that, as a
matter of prudent banking, a bank holding company generally should
not maintain a rate of cash dividends unless its net income
available to common shareholders has been sufficient to fully fund
the dividends, and the prospective rate of earnings retention
appears consistent with the bank holding company's capital needs,
asset quality and overall financial condition.
FIRREA AND FDICIA
Although FIRREA was enacted primarily to deal with
problems in the savings and loan industry, it also affected commercial
banking organizations. FIRREA mandates public disclosure by
commercial banks of their Community Reinvestment Act ratings and
mortgage lending records, established enhanced enforcement measures
which are available for bank regulators to use against commercial
banks and bankers and imposes cross liability on insured
institutions under common control with any insured institution to
which the FDIC gives financial assistance. FIRREA also permits
bank holding companies to acquire savings and loan associations,
subject to the approval of the Federal Reserve Board.
FIRREA also contains a "cross-guarantee" provision that
could result in insured depository institutions owned by Magna being
assessed for losses incurred by the FDIC in connection with the
failure of, or assistance provided by the FDIC to avert the failure
of, any other insured depository institution controlled by Magna.
Under FIRREA, failure to meet certain capital guidelines could
subject a banking institution to a variety of enforcement remedies
available to Federal regulatory authorities, including the
termination of deposit insurance by the FDIC.
The Federal Deposit Insurance Corporation Improvement Act
of 1991 ("FDICIA") increases funding for the FDIC's bank insurance
fund, and establishes standards for, and restrictions on, activities
of depository institutions based upon capital status and supervisory
evaluation by Federal banking regulators. Under FDICIA, banks are
placed in one of five capital categories, for which the Federal
banking agencies have established specific ratio levels. Pursuant
to the agencies' regulations, an institution is considered "well
capitalized" if it has a total risk-based capital ratio of at least
10%, a tier 1 risk-based capital ratio of at lease 6% and a
leverage capital ratio of at least 5%. In addition, regardless of
a bank's capital level, a bank is not considered "well capitalized"
if it is subject to a cease and desist order, formal
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agreement, capital directive or prompt corrective action directive
that requires it to achieve or maintain a higher level of capital. An
institution is considered "adequately capitalized" if it has a total
risk-based capital ratio of at least 8%, a tier 1 risk-based capital
ratio of at least 4% and a leverage capital ratio of at least 4%.
Institutions with capital levels below those necessary to qualify as
"adequately capitalized" are deemed to be either "undercapitalized,"
"significantly undercapitalized" or "critically undercapitalized,"
depending on their specific capital needs.
FDICIA, through its prompt corrective action system,
imposes significant operational and management restrictions on
banks that are not considered at least "adequately capitalized."
Under FDICIA's prompt corrective action system, a bank in the
"undercapitalized" category must submit a capital restoration plan
guaranteed by its parent company. The liability of the parent company
under any such guarantee is limited to the lesser of 5% of the bank's
assets at the time it became "undercapitalized," or the amount needed
to comply with the plan. A bank in the "undercapitalized" category
also is subject to limitations in numerous areas including, but not
limited to: asset growth; acquisitions; branching; new business
lines; acceptance of brokered deposits; and borrowings from the
Federal Reserve System. Progressively more burdensome restrictions are
applied to banks in the "undercapitalized" category that fail to
submit or implement a capital plan and to banks that are in the
"significantly undercapitalized" or "critically undercapitalized"
categories. A bank's primary Federal banking agency is authorized to
downgrade the bank's capital category to the next lower category upon
a determination that the bank is in an unsafe or unsound condition or
is engaged in an unsafe or unsound practice. An unsafe or unsound
practice can include receipt by an institution of a rating on its
most recent examination of three or worse (on a scale of 1 (best)
to 5 (worst)), with respect to its asset quality, management,
earnings or liquidity.
FDICIA and the regulations issued thereunder also have
(i) limited the use of brokered deposits to "well capitalized"
banks, and "adequately capitalized" banks that have received
waivers from the FDIC; (ii) established restrictions on the
permissible investments and activities of FDIC-insured banks and
their subsidiaries; (iii) implemented uniform real estate lending
rules; (iv) prescribed standards to limit risks posed by credit
exposure between banks; (v) revised risk-based capital rules to
include components for measuring the risk posed by interest rate
changes; (vi) amended various consumer banking laws; (vii)
increased restrictions on loans to a bank's insiders' (viii)
established standards in a number of areas to assure bank safety
and soundness; and (ix) implemented additional requirements for
institutions that have $500 million or more in total assets with
respect to annual independent audits, audit committees, and
management reports related to financial statements, internal
controls and compliance with designated laws and regulations.
Magna continues to analyze the effect of, and address its
ongoing compliance with, the various regulations issued under
FDICIA. It is anticipated that FDICIA, and the regulations enacted
thereunder, will continue to result in more limitations on banking
activities generally, and increased costs for Magna and the banking
industry because of higher costs of compliance, documentation and
record keeping.
DEPOSITOR PREFERENCE STATUTE
Legislation enacted in August 1993 provides a preference
for deposits and certain claims for administrative expenses and
employee compensation against an insured depository institution,
such as River Bend's and Magna's insured bank subsidiaries, in the
liquidation or other resolution of such an institution by any
receiver. Such obligations would be afforded priority over other
general unsecured claims against such an institution, including
federal funds and letters of credit, as well as any obligation to
shareholders of such an institution in their capacity as such.
- 76 -
<PAGE> 83
THE INTERSTATE BANKING AND COMMUNITY DEVELOPMENT LEGISLATION
In September 1994, legislation was enacted that is
expected to have a significant effect in restructuring the banking
industry in the United States. The Riegle-Neal Interstate Banking
and Branching Efficiency Act of 1994 facilitates the interstate
expansion and consolidation of banking organizations by permitting
(i) bank holding companies that are adequately capitalized and
managed to acquire banks located in states outside their home
states regardless of whether such acquisitions are authorized under
the law of the host state, (ii) the interstate merger of banks
after June 1, 1997, subject to the right of individual states to
"opt in" or to "opt out" of this authority before that date, (iii)
banks to establish new branches on an interstate basis provided
that such action is specifically authorized by the law of the host
state, (iv) foreign banks to establish, with approval of the
regulators in the United States, branches outside their home states
to the same extent that national or state banks located in the home
state would be authorized to do so, and (v) banks to receive
deposits, renew time deposits, close loans, service loans and
receive payments on loans and other obligations as agent for any
bank or thrift affiliate, whether the affiliate is located in the
same state or a different state. One effect of this legislation is
to permit Magna to acquire banks located in any state and to permit
bank holding companies located in any state to acquire banks and
bank holding companies in Illinois and Missouri. Overall, this
legislation is likely to have the effects of increasing competition
and promoting geographic diversification in the banking industry.
The Riegle Community Development and Regulatory
Improvement Act of 1994, also enacted in September 1994, was
intended to (i) increase the flow of loans to businesses in
distressed communities by providing incentives to lenders to
provide credit within those communities, (ii) remove impediments to
the securitization of small business loans, (iii) provide for a
reduction in paperwork and to streamline bank regulation through,
for example, the coordination of examinations in a bank holding
company context, a reduction in the number of currency transaction
reports required and improvements to the National Flood Insurance
Program that include enabling lenders to force place flood
insurance, and (iv) increase the level of consumer protection
provided to customers in banking transactions. Magna believes that
these provisions will not have a material effect on its operations.
RELATIONSHIP WITH INDEPENDENT ACCOUNTANTS
-----------------------------------------
Ernst & Young LLP served as Magna's independent
accountants for the year ended December 31, 1994 and continues to
serve in such capacity. Services provided in connection with the
audit function included examination of the annual consolidated
financial statements, audit of employee benefit plans, review and
consultation regarding filings with the Commission and other
regulatory authorities and consultation on financial accounting and
reporting matters.
KPMG Peat Marwick LLP served as River Bend's independent
accountants for the year ended December 31, 1994 and continues to
serve in such capacity. Services provided in connection with the
audit function included examination of the annual consolidated
financial statements and consultation on financial accounting and
reporting matters. KPMG Peat Marwick LLP intends to have a
representative present at the Special Meeting to answer relevant
questions regarding the Merger.
LEGAL MATTERS
-------------
Certain legal matters will be passed upon for Magna by
Thompson & Mitchell, St. Louis, Missouri. As of October 31, 1995,
certain lawyers of the firm beneficially owned an aggregate of
- 77 -
<PAGE> 84
approximately 42,750 shares of Magna Common Stock. Certain legal
matters will be passed upon for River Bend by Suelthaus & Walsh
P.C. As of September 30, 1995, no lawyer at Suelthaus & Walsh P.C.
owned any shares of River Bend Stock.
The tax consequences, in general, of the Merger to the
shareholders of River Bend will be passed upon by Thompson &
Mitchell, legal counsel to Magna.
EXPERTS
-------
The consolidated financial statements of Magna Group,
Inc. incorporated by reference in Magna Group, Inc.'s Annual Report
(Form 10-K) for the year ended December 31, 1994, have been audited
by Ernst & Young LLP, independent auditors, as set forth in their
report thereon incorporated by reference therein and incorporated
by reference herein. Such consolidated financial statements are
incorporated herein by reference in reliance upon such report given
upon the authority of such firm as experts in accounting and
auditing.
The consolidated financial statements of River Bend for
the years ended December 31, 1994 and 1993 and for the three-year
period ended December 31, 1994 have been included herein in
reliance upon the report of KPMG Peat Marwick LLP, independent
certified public accountants, whose report is included herein, and
upon the authority of such firm as experts in accounting and
auditing.
OTHER MATTERS
-------------
The Board of Directors of River Bend, as of the date
hereof, is not aware of any business to be presented at the Special
Meeting other than that referred to in the Notice of Special
Meeting and discussed herein. If any other matter should properly
come before the Special Meeting, the persons named as proxies will
have discretionary authority to vote the shares represented by
proxies in accordance with their discretion and judgment as to the
best interest of River Bend.
STOCKHOLDER PROPOSALS
---------------------
Under applicable regulations of the Commission, all
proposals of stockholders to be considered for inclusion in the
proxy statement for, and to be considered at, the 1996 Annual
Meeting of Stockholders of Magna must have been received at the
offices of Magna, c/o Secretary, One Magna Place, 1401 South
Brentwood Boulevard, St. Louis, Missouri 63144-1401 by December 1,
1995. Stockholders of Magna may submit to Magna proposals for
formal consideration at the 1997 Annual Meeting of Stockholders of
Magna and inclusion in Magna's proxy statement for such meeting.
All proposals must be received at the offices of Magna, c/o
Secretary, One Magna Place, 1401 South Brentwood Boulevard,
St. Louis, Missouri 63144-1401 by no later than December ---, 1996.
Magna's By-laws also prescribe certain time limitations and
procedures regarding prior written notice to Magna by stockholders,
which limitations and procedures must be complied with for
proposals of stockholders to be included in Magna's proxy statement
for, and to be considered at, such annual meeting. Any stockholder
who wishes to make such a proposal should request a copy of the
applicable provisions of Magna's By-laws from the Secretary of
Magna.
- 78 -
<PAGE> 85
<TABLE>
RIVER BEND BANCSHARES, INC.
---------------------------
CONSOLIDATED FINANCIAL STATEMENTS
---------------------------------
INDEX
-----
<CAPTION>
Page
----
<S> <C>
INDEPENDENT AUDITORS' REPORT. . . . . . . . . . . . . . . . . F-1
CONSOLIDATED BALANCE SHEETS, AS OF SEPTEMBER 30, 1995
(UNAUDITED) AND AS OF DECEMBER 31, 1994 AND 1993. . . . . . F-2
CONSOLIDATED STATEMENTS OF INCOME, NINE MONTHS
ENDED SEPTEMBER 30, 1995 AND 1994 (UNAUDITED) AND YEARS
ENDED DECEMBER 31, 1994, 1993 AND 1992. . . . . . . . . . . F-3
CONSOLIDATED STATEMENTS OF STOCKHOLDERS'
EQUITY, NINE MONTHS ENDED SEPTEMBER 30, 1995 (UNAUDITED)
AND YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992. . . . . . F-4
CONSOLIDATED STATEMENTS OF CASH FLOWS, NINE MONTHS
ENDED SEPTEMBER 30, 1995 AND 1994 (UNAUDITED) AND
YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992. . . . . . . . F-5
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF
DECEMBER 31, 1994, 1993 AND 1992. . . . . . . . . . . . . . F-6 - F-22
</TABLE>
- 79 -
<PAGE> 86
INDEPENDENT AUDITORS' REPORT
The Board of Directors
River Bend Bancshares, Inc.:
We have audited the accompanying consolidated balance sheets of River Bend
Bancshares, Inc. and subsidiary as of December 31, 1994 and 1993, and the
related consolidated statements of income, stockholders' equity, and cash
flows for each of the years in the three-year period ended December 31, 1994.
These consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of River
Bend Bancshares, Inc. and subsidiary as of December 31, 1994 and 1993, and
the results of their operations and their cash flows for each of the years in
the three-year period ended December 31, 1994, in conformity with generally
accepted accounting principles.
As discussed in notes 1 and 3, the Company changed its method of accounting
for investments to adopt the provisions of the Financial Accounting Standards
Board's Statement of Financial Accounting Standards (SFAS) No. 115,
Accounting for Certain Investments in Debt and Equity Securities, at January
1, 1994.
/s/ KPMG Peat Marwick LLP
St. Louis, Missouri
February 17, 1995
F-1
<PAGE> 87
<TABLE>
RIVER BEND BANCSHARES, INC. AND SUBSIDIARY
Consolidated Balance Sheets
September 30, 1995 and December 31, 1994 and 1993
(dollars expressed in thousands, except share data)
<CAPTION>
Assets September 30, 1995 December 31
------ ------------------ -----------
(unaudited) 1994 1993
---- ----
<S> <C> <C> <C>
Cash and due from banks (note 2) $ 4,645 4,361 3,856
Federal funds sold 2,300 200 4,950
------- ------- -------
Cash and cash equivalents 6,945 4,561 8,806
------- ------- -------
Interest-bearing deposits in other financial institutions 194 194 193
Investments in debt and marketable equity securities (note 3):
Trading account securities, at estimated market value - 451 996
Available-for-sale, at estimated market value 25,758 19,333 -
Held-to-maturity, at amortized cost (estimated market
value of $70,076, $71,312, and $94,300 at September 30,
1995 and December 31, 1994 and 1993, respectively) 70,727 75,793 93,017
Loans (note 4) 50,786 51,664 53,074
Less:
Unearned discount and fees 255 222 293
Allowance for loan losses 862 831 936
------- ------- -------
Net loans 49,669 50,611 51,845
------- ------- -------
Premises and equipment, net (note 5) 2,802 2,935 3,034
Accrued interest receivable 1,630 1,483 1,273
Other assets (note 7) 2,100 2,201 2,650
------- ------- -------
Total assets $ 159,825 157,562 161,814
======= ======= =======
Liabilities and Stockholders' Equity
------------------------------------
Deposits:
Non-interest-bearing 17,724 17,246 15,536
Interest-bearing (note 6) 122,963 124,180 129,836
------- ------- -------
Total deposits 140,687 141,426 145,372
Securities sold under agreements to repurchase 763 - -
Treasury tax and loan short-term borrowings 1,064 637 1,350
Note payable (note 8) 2,368 2,565 3,026
Other liabilities (notes 7 and 9) 870 462 859
------- ------- -------
Total liabilities 145,752 145,090 150,607
------- ------- -------
Commitments and contingencies (note 10)
Stockholders' equity (note 11):
Preferred stock, $100 par value; 10,000 shares authorized,
5,991 shares issued and outstanding 599 599 599
Common stock:
Class I voting, $1 par value; 200,000 shares authorized,
157,063 shares issued and outstanding 157 157 -
Class II nonvoting, $1 par value; 1,000,000 shares
authorized, 785,315 shares issued and outstanding 785 785 -
Common stock, $10 par value; 200,000 shares authorized,
157,063 shares issued and outstanding - - 1,570
Surplus 628 628 -
Retained earnings 11,823 10,699 9,038
Net unrealized holding gains (losses) on securities available-for-sale 81 (396) -
------- ------- -------
Total stockholders' equity 14,073 12,472 11,207
------- ------- -------
Total liabilities and stockholders' equity $ 159,825 157,562 161,814
======= ======= =======
See accompanying notes to consolidated financial statements.
</TABLE>
F-2
<PAGE> 88
<TABLE>
RIVER BEND BANCSHARES, INC. AND SUBSIDIARY
Consolidated Statements of Income
Nine months ended September 30, 1995 and 1994 and
years ended December 31, 1994, 1993, and 1992
(dollars expressed in thousands, except share data)
<CAPTION>
September 30 December 31
------------ ------------------------
1995 1994 1994 1993 1992
---- ---- ---- ---- ----
(unaudited)
<S> <C> <C> <C> <C> <C>
Interest income:
Interest and fees on loans (note 4) $ 3,577 3,148 4,273 4,730 5,580
Interest on federal funds sold 107 44 58 145 141
Interest and dividends on debt and marketable
equity securities:
Taxable 3,880 3,897 5,204 5,067 5,992
Exempt from federal income taxes 441 493 648 670 696
Interest on interest-bearing deposits in other
financial institutions 10 10 13 17 39
------- ------- ------- ------- -------
Total interest income 8,015 7,592 10,196 10,629 12,448
------- ------- ------- ------- -------
Interest expense:
Interest on deposits (note 6) 3,436 2,999 4,041 4,295 5,750
Other interest expense 197 187 249 219 266
------- ------- ------- ------- -------
Total interest expense 3,633 3,186 4,290 4,514 6,016
------- ------- ------- ------- -------
Net interest income 4,382 4,406 5,906 6,115 6,432
Provision for loan losses (note 4) 72 80 80 120 108
------- ------- ------- ------- -------
Net interest income after provision
for loan losses 4,310 4,326 5,826 5,995 6,324
------- ------- ------- ------- -------
Noninterest income:
Service charges on deposits 257 247 335 302 338
Net gain (loss) on sale of debt and marketable
equity securities (note 3) 7 (18) 19 (5) 248
Net gain on sale of other real estate 7 79 151 8 5
Other noninterest income 313 258 315 407 179
------- ------- ------- ------- -------
Total noninterest income 584 566 820 712 770
------- ------- ------- ------- -------
Noninterest expense:
Salaries and employee benefits (note 9) 1,508 1,430 2,015 1,984 2,010
Occupancy (note 5) 237 229 303 312 293
Equipment (note 5) 204 178 246 286 244
FDIC insurance assessment 191 245 326 323 310
Other noninterest expense 735 710 951 1,011 896
------- ------- ------- ------- -------
Total noninterest expense 2,875 2,792 3,841 3,916 3,753
------- ------- ------- ------- -------
Income before applicable income tax
expense and cumulative effect of
change in accounting for income taxes 2,019 2,100 2,805 2,791 3,341
Applicable income tax expense (note 7) 569 590 787 828 1,030
------- ------- ------- ------- -------
Income before cumulative effect of
change in accounting for income taxes 1,450 1,510 2,018 1,963 2,311
Cumulative effect of change in accounting for income
taxes (note 1) - - - (11) -
------- ------- ------- ------- -------
Net income $ 1,450 1,510 2,018 1,952 2,311
======= ======= ======= ======= =======
Share data:
Average common shares outstanding (note 11) 942,378 942,378 942,378 942,378 942,378
======= ======= ======= ======= =======
Earnings per common share $ 1.46 1.53 2.06 2.07 2.30
==== ==== ==== ==== ====
See accompanying notes to consolidated financial statements.
</TABLE>
F-3
<PAGE> 89
<TABLE>
RIVER BEND BANCSHARES, INC. AND SUBSIDIARY
Consolidated Statements of Stockholders' Equity
Nine months ended September 30, 1995 and
years ended December 31, 1994, 1993, and 1992
(dollars expressed in thousands, except share data)
<CAPTION>
Net unreal-
ized holding
gains (losses)
Common stock on securities
Preferred ------------ Common Retained available-
stock Class I Class II stock Surplus earnings for-sale Total
----- ------- -------- ----- ------- -------- -------- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1991 $ 599 - - 1,570 - 4,948 - 7,117
Net income - - - - - 2,311 - 2,311
Cash dividends paid on preferred
stock ($24.00 per share) - - - - - (144) - (144)
--- --- --- ----- --- ------ --- ------
Balance, December 31, 1992 599 - - 1,570 - 7,115 - 9,284
Net income - - - - - 1,952 - 1,952
Net change in unrealized losses on
marketable equity securities - - - - - (29) - (29)
--- --- --- ----- --- ------ --- ------
Balance, December 31, 1993 599 - - 1,570 - 9,038 - 11,207
Effect of change in accounting
for debt and marketable
equity securities, net of tax - - - - - 29 346 375
Exchange of each share of common stock,
$10 par value, for one share of Class I
voting common stock, $1 par value,
and five shares of Class II nonvoting
common stock, $1 par - 157 785 (1,570) 628 - - -
Net income - - - - - 2,018 - 2,018
Cash dividends paid:
Preferred stock ($12.00 per share) - - - - - (72) - (72)
Class I common stock ($.25 per share) - - - - - (39) - (39)
Class II common stock ($.25 per share) - - - - - (196) - (196)
Common stock, before exchange
($.50 per share) - - - - - (79) - (79)
Net change in unrealized holding
gains (losses) on securities
available-for-sale - - - - - - (742) (742)
--- --- --- ----- --- ------ --- ------
Balance, December 31, 1994 599 157 785 - 628 10,699 (396) 12,472
Net income (unaudited) - - - - - 1,450 - 1,450
Cash dividends paid (unaudited):
Preferred stock ($12.00 per share) - - - - - (72) - (72)
Class I common stock ($.27 per share) - - - - - (42) - (42)
Class II common stock ($.27 per share) - - - - - (212) - (212)
Net change in unrealized holding
gains (losses) on securities
available-for-sale (unaudited) - - - - - - 477 477
--- --- --- ----- --- ------ --- ------
Balance, September 30, 1995
(unaudited) $ 599 157 785 - 628 11,823 81 14,073
=== === === ===== === ====== === ======
See accompanying notes to consolidated financial statements.
</TABLE>
F-4
<PAGE> 90
<TABLE>
RIVER BEND BANCSHARES, INC. AND SUBSIDIARY
Consolidated Statements of Cash Flows
Nine months ended September 30, 1995 and 1994 and
years ended December 31, 1994, 1993, and 1992
(dollars expressed in thousands)
<CAPTION>
September 30 December 31
------------ ------------------------
1995 1994 1994 1993 1992
---- ---- ---- ---- ----
(unaudited)
<S> <C> <C> <C> <C> <C>
Cash flows from operating activities:
Net income $ 1,450 1,510 2,018 1,952 2,311
Adjustments to reconcile net income to net cash provided
by operating activities:
Cumulative effect of change in accounting for income taxes - - - 11 -
Provision for loan losses 72 80 80 120 108
Depreciation and amortization 255 393 549 717 342
Provision for deferred income tax expense - - 66 11 (107)
Net (gain) loss on sale of debt and marketable equity securities (7) (18) (18) 5 (248)
(Increase) decrease in accrued interest receivable (147) (303) (211) 148 91
Net (acquisitions) proceeds on sales of trading securities 458 11 11 (998) 5
Net unrealized holding losses on trading securities included
in earnings - 43 52 - -
Net gain on sale of other real estate (7) (79) (151) (8) (5)
Origination of secondary market mortgage loans (3,569) (3,810) (10,968) (12,398) (13,261)
Proceeds from the sale of secondary market mortgage loans 3,763 4,926 10,672 12,398 13,336
Other operating activities, net 273 (16) 35 (230) (110)
------- ------- ------- ------- -------
Net cash provided by operating activities 2,541 2,737 2,135 1,728 2,462
------- ------- ------- ------- -------
Cash flows from investing activities:
Net (increase) decrease in interest-bearing deposits in other
financial institutions - (1) (1) 1 646
Proceeds from maturities of and principal payments on debt
securities, available-for-sale 4,603 3,102 5,265 - -
Proceeds from maturities of and principal payments on debt
securities, held-to-maturity 9,239 12,397 18,391 41,874 28,999
Proceeds from sales of debt securities - 2,013 2,027 4,297 6,914
Purchase of debt securities, available-for-sale (10,107) (4,203) (4,698) - -
Purchase of debt securities, held-to-maturity (4,365) (21,231) (23,477) (52,806) (42,544)
Net (increase) decrease in loans 401 767 1,108 6,336 (1,649)
Recoveries on loans previously charged off 21 43 46 92 119
Proceeds from sales of other real estate 160 378 564 110 60
Purchase of premises and equipment (37) (42) (99) (611) (280)
------- ------- ------- ------- -------
Net cash used in investing activities (85) (6,777) (874) (707) (7,735)
------- ------- ------- ------- -------
Cash flows from financing activities:
Net increase (decrease) in deposits (739) 776 (3,946) 190 7,064
Net increase in securities sold under agreements to
repurchase and other short-term borrowings 763 1,325 - - -
Net increase (decrease) in treasury tax and loan short-term
borrowings 427 (471) (713) 217 259
Principal payments on note payable (197) (395) (461) (526) (526)
Dividends paid on preferred stock (72) (72) (72) - (144)
Dividends paid on common stock (254) (230) (314) - -
------- ------- ------- ------- -------
Net cash provided by (used in) financing activities (72) 933 (5,506) (119) 6,653
------- ------- ------- ------- -------
Net increase (decrease) in cash and cash equivalents 2,384 (3,107) (4,245) 902 1,380
Cash and cash equivalents at beginning of year 4,561 8,806 8,806 7,904 6,524
------- ------- ------- ------- -------
Cash and cash equivalents at end of year $ 6,945 5,699 4,561 8,806 7,904
======= ======= ======= ======= =======
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest on deposits and borrowed funds $ 3,578 3,178 4,276 4,578 6,145
Income taxes 485 496 931 1,169 1,184
Noncash transactions:
Write-down in value of trading securities - - - 29 -
Transfers to other real estate in settlement of loans 154 247 247 251 154
Loans originated to facilitate sales of other real estate 100 49 49 5 76
Transfer of securities to available-for-sale - - 21,888 - -
Transfer of securities from trading to available-for-sale - 487 487 - -
Unrealized holding gain (loss) on securities available-for-sale 778 (846) 1,212 - -
======= ======= ======= ======= =======
See accompanying notes to consolidated financial statements.
</TABLE>
F-5
<PAGE> 91
RIVER BEND BANCSHARES, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
December 31, 1994, 1993, and 1992
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
River Bend Bancshares, Inc. and subsidiary (the Company) provides a full
range of banking services to individual and corporate customers. The Company
is subject to competition from other financial and nonfinancial institutions
providing financial services in its customer service area, which is primarily
the Alton-Wood River area of Southwestern Illinois. Additionally, the
Company is subject to the regulations of certain federal and state agencies
and undergoes periodic examinations by those regulatory agencies.
The consolidated financial statements of the Company have been prepared in
conformity with generally accepted accounting principles and conform to
predominant practices within the banking industry. In preparing the
consolidated financial statements, management is required to make estimates
and assumptions which significantly affect the reported amounts in the
consolidated financial statements. The more significant estimates which are
particularly susceptible to change in a short period of time include the
determination of the allowance for loan losses and valuation of real estate
and other properties acquired in connection with foreclosures or in
satisfaction of amounts due from borrowers on loans.
Significant accounting policies used by the Company in the preparation and
presentation of the consolidated financial statements are summarized below:
CONSOLIDATION
The consolidated financial statements include the accounts of River Bend
Bancshares, Inc. and its wholly owned subsidiary bank, Illinois State Bank &
Trust. All significant intercompany balances and transactions have been
eliminated.
CONSOLIDATED STATEMENTS OF CASH FLOWS
For purposes of the consolidated statements of cash flows, cash and cash
equivalents include cash and due from banks and federal funds sold.
INVESTMENTS IN DEBT AND MARKETABLE EQUITY SECURITIES
Effective January 1, 1994, the Company adopted Statement of Financial
Accounting Standards No. 115, Accounting for Certain Investments in Debt and
Equity Securities (SFAS 115). SFAS 115 addresses the accounting and
reporting for equity securities that have readily determinable fair values,
and all debt securities. Under SFAS 115, the Company classifies its debt and
equity securities into one of three categories: trading, available-for-sale,
or held-to-maturity. Trading securities are bought and held principally for
the purpose of selling them in the near term. Securities classified as
held-to-maturity are those securities in which the Company has the ability
and intent to hold until maturity. All other securities not included in
trading or held-to-maturity are classified as available-for-sale.
Trading and available-for-sale securities are recorded at fair value.
Held-to-maturity securities are recorded at amortized cost, adjusted for the
amortization or accretion of premiums or discounts. Unrealized holding gains
and losses on trading securities are included in earnings. Unrealized
holding gains and losses, net of the related tax effect, on
available-for-sale securities are excluded from earnings and reported as a
separate component of stockholders' equity until realized. Transfers of
securities between categories are recorded at fair value at the date of
transfer. Unrealized holding gains or losses on securities transferred from
the trading category have already been recognized in earnings and are not
reversed. Unrealized holding gains and losses are recognized in earnings for
transfers into the trading category. Unrealized holding gains or losses
associated with transfers of securities from the held-to-maturity category to
the available-for-sale category are recorded as a separate component of
stockholders' equity. The unrealized holding gains or losses
(Continued)
F-6
<PAGE> 92
RIVER BEND BANCSHARES, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
included in the separate component of stockholders' equity for securities
transferred from the available-for-sale category to the held-to-maturity
category are maintained and amortized into earnings over the remaining life
of the security as an adjustment to yield using the interest method. A
decline in the market value of any available-for-sale or held-to-maturity
security below cost that is deemed other than temporary results in a charge
to earnings and the establishment of a new cost basis for the security.
For securities in the held-to-maturity and available-for-sale categories,
premiums and discounts are amortized or accreted over the lives of the
respective securities as an adjustment to yield using the interest method.
Amortization of premiums and accretion of discounts on mortgage-backed
securities are amortized in relation to the corresponding prepayment rates,
both historical and estimated, using a method which approximates the interest
method. Interest income is recognized when earned. Realized gains and
losses for securities classified as available-for-sale and held-to-maturity
are included in earnings using the specific identification method for
determining the cost of securities sold.
Prior to January 1, 1994, debt securities were stated at cost adjusted for
amortization of premium and accretion of discount using the interest method,
over the period to maturity of the respective security. Gains or losses
from the sale of debt securities were recognized upon realization, based on
the adjusted cost of the specific security sold. Marketable equity
securities, representing investments in preferred stock, were recorded at the
lower of the aggregate cost or fair value of the investments. A market
valuation reserve was established through a charge to retained earnings for
the unrealized losses on such securities.
LOANS
Interest on commercial, real estate mortgage, and consumer loans is
recognized using the simple interest method. Interest on installment loans
is recognized using the sum-of-the-digits method, which approximates the
interest method. The accrual of interest on loans is discontinued when
principal or interest is due and has remained unpaid for 90 days or more,
unless the loan is well secured and in the process of collection. Subsequent
interest payments received on such loans are applied to principal if doubt
exists as to the collectibility of such principal; otherwise, such receipts
are recorded as interest income. Loans are returned to accrual status when
management believes full collectibility of principal and interest is
expected.
Net loan origination fees are deferred and recognized over the lives of
the related loans as an adjustment of the loan's yield using a method
approximating the interest method.
The allowance for loan losses is available to absorb loan charge-offs.
The allowance is increased by provisions charged to operations and reduced by
loan charge-offs less recoveries. The provision charged to operations each
year is that amount which management believes is sufficient to bring the
balance of the allowance to a level adequate to absorb potential loan losses,
based on their knowledge and evaluation of the current loan portfolio and the
current economic environment in which Illinois State Bank & Trust operates.
Management believes the allowance for loan losses is adequate to absorb
losses in the loan portfolio. While management uses available information to
recognize loan losses, future additions to the allowance may be necessary
based on changes in economic conditions. Additionally, various regulatory
agencies, as an integral part of the examination process, periodically review
the subsidiary bank's allowance for loan losses. Such agencies may require
the subsidiary bank to increase its allowance for loan losses based on their
judgments and interpretations about information available to them at the time
of their examinations.
(Continued)
F-7
<PAGE> 93
RIVER BEND BANCSHARES, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
SECONDARY MORTGAGE MARKET OPERATIONS
The Company's banking subsidiary originates mortgage loans for sale in the
secondary market to the Federal Home Loan Mortgage Corporation (FHLMC). Any
such mortgage loans held for sale are maintained on the Company's
consolidated balance sheets at the lower of cost or market as determined by
outstanding commitments from the FHLMC to purchase such loans. Gains and
losses on the sale of these loans and loan origination fees are recognized
upon sale of the related loans and included in the consolidated statements of
income as noninterest income. Additionally, loan administration fees,
representing income earned from servicing these loans, are calculated on the
outstanding principal balances of the loans serviced and recorded as
noninterest income as earned.
PREMISES AND EQUIPMENT
Premises and equipment are stated at cost less accumulated depreciation
and amortization. Depreciation and amortization of premises and equipment is
provided using the straight-line method over the estimated useful lives of
the respective assets or the respective lease terms for leasehold
improvements. The estimated useful lives range from 40-50 years for
buildings and improvements and 5-20 years for furniture, fixtures and
equipment. Expenditures for major renewals and betterments of premises and
equipment are capitalized, and those for maintenance and repairs are expensed
as incurred.
INTANGIBLE ASSETS
The excess of cost over fair value of net assets acquired, included in
other assets in the Company's consolidated balance sheets, is being amortized
on a straight-line basis over 40 years.
The core deposit premium intangible asset, also included in other assets
in the Company's consolidated balance sheets, relating to the Company's
purchase of certain assets and assumption of certain liabilities from an
unaffiliated institution in May 1990, is being amortized on a straight-line
basis over 20 years.
INCOME TAXES
The Company and its banking subsidiary file a consolidated federal income
tax return.
Effective January 1, 1993, the Company adopted Statement of Financial
Accounting Standards No. 109, Accounting for Income Taxes (SFAS 109), and
reported the cumulative effect of this change in the method of accounting for
income taxes in the 1993 consolidated statement of income. SFAS 109 required
a change from the deferred method of accounting for income taxes to the asset
and liability method of accounting for income taxes. Deferred tax assets and
liabilities are recognized for the estimated future tax consequences
attributable to differences between the financial statement carrying amounts
of existing assets and liabilities and their respective tax bases. Deferred
tax assets and liabilities are measured using enacted tax rates in effect for
the year in which those temporary differences are expected to be recovered or
settled. The effect on deferred tax assets and liabilities of a change in
tax rates is recognized in income in the period which includes the enactment
date.
OTHER REAL ESTATE
Other real estate, included in other assets in the accompanying
consolidated balance sheets, represents property acquired through foreclosure
or deeded to the Company's banking subsidiary in lieu of foreclosure on real
estate loans on which the borrowers have defaulted as to payment of principal
and interest. Other real estate is recorded on an individual asset basis at
the lower of fair value less estimated selling costs or cost. If the fair
value minus estimated selling costs is less than cost, the deficiency is
recorded in a valuation reserve account through a provision charged to
income. Subsequent increases in the fair value less estimated selling costs
are recorded through a reversal of the valuation reserve, but not below zero.
(Continued)
F-8
<PAGE> 94
RIVER BEND BANCSHARES, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
FINANCIAL INSTRUMENTS
For purposes of information included in note 12 regarding disclosures
about financial instruments, financial instruments are defined as cash,
evidence of ownership interest in an entity, or a contract that both:
* Imposes on one entity a contractual obligation to deliver cash or
another financial instrument to a second entity or to exchange other
financial instruments on potentially unfavorable terms with the second
entity; and
* Conveys to that second entity a contractual right to receive cash or
another financial instrument from the first entity or to exchange other
financial instruments on potentially favorable terms with the first
entity.
During October 1994, the FASB issued Statement of Financial Accounting
Standards No. 119, Disclosure about Derivative Financial Instruments and Fair
Value of Financial Instruments (SFAS 119). SFAS 119 requires disclosures
about the amounts, nature, and terms of derivative financial instruments that
are not subject to SFAS 105, Disclosure of Information about Financial
Instruments with Off-Balance-Sheet Risk and Financial Instruments with
Concentrations of Credit Risk, because they do not result in
off-balance-sheet risk of accounting loss. SFAS 119 requires that a
distinction be made between financial instruments held or issued for trading
purposes and financial instruments held or issued for purposes other than
trading.
SFAS 119, which is effective for financial statements issued for fiscal
years ending after December 15, 1994, resulted in no effect on the
consolidated financial statements other than the additional disclosure
requirements with respect to fixed rate loan commitments presented in note
12.
RECLASSIFICATIONS
Certain 1993 and 1992 financial information has been reclassified to
conform with the current year presentation. Such reclassification had no
effect on previously reported net income.
NOTE 2 - REGULATORY RESTRICTIONS
Subsidiary bank dividends are the principal source of funds for payment of
dividends by the Company to its stockholders and for debt service. The
Company's banking subsidiary is subject to regulations by regulatory
authorities which require the maintenance of minimum capital levels. As of
December 31, 1994 and 1993, there are no regulatory restrictions, other than
maintenance of minimum capital standards, as to the amount of dividends the
subsidiary bank can pay.
The Company's banking subsidiary is required to maintain certain daily
reserve balances on hand in accordance with Federal Reserve Board
requirements. The reserve balance maintained in accordance with such
requirements as of December 31, 1994 and 1993 was approximately $1,131,000
and $1,100,000, respectively.
NOTE 3 - INVESTMENTS IN DEBT AND MARKETABLE EQUITY SECURITIES
As discussed in note 1, effective January 1, 1994, the Company adopted
SFAS 115, for which the cumulative effect was recorded on the consolidated
balance sheet on that date. On January 1, 1994, securities with an amortized
cost of approximately $71,128,000 were classified as held-to-maturity
securities; securities with an amortized cost of approximately $21,888,000
were classified as available-for-sale securities; a market valuation account
was established for the available-for-sale securities of approximately
$565,000 to increase the recorded balance of such securities at January 1,
1994 to the estimated market value on that date; a deferred tax liability of
approximately $219,000 was recorded for the tax effect of the
(Continued)
F-9
<PAGE> 95
RIVER BEND BANCSHARES, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
market valuation account; and the net increase resulting from the market
valuation adjustment at January 1, 1994 was recorded as a separate component
of stockholders' equity. Prior to the adoption of SFAS 115, marketable
equity securities were carried at the lower of cost or estimated market
value. A deferred tax benefit was established for the unrealized loss on
marketable equity securities at January 1, 1994.
<TABLE>
The amortized cost, gross unrealized gains, gross unrealized losses, and
approximate market value for trading, available-for-sale and held-to-maturity
securities by major security type at December 31, 1994 are as follows:
<CAPTION>
1994
-------------------------------------------------
Gross Gross Approximate
Amortized unrealized unrealized market
cost gains losses value
---- ----- ------ -----
(dollars expressed in thousands)
<S> <C> <C> <C> <C>
Trading:
U.S. Treasury securities $ 497 - 46 451
====== === ===== ======
Available-for-sale:
U.S. Treasury securities $ 1,999 - 57 1,942
Securities of U.S. government agencies
and corporations 9,951 7 407 9,551
Obligations of states and political
subdivisions 1,177 23 16 1,184
Mortgage-backed and other asset-backed
securities 6,005 35 185 5,855
Other securities 847 - 46 801
------ --- ----- ------
$ 19,979 65 711 19,333
====== === ===== ======
Held-to-maturity:
U.S. Treasury securities $ 7,841 - 588 7,253
Securities of U.S. government agencies
and corporations 32,411 4 1,760 30,655
Obligations of states and political
subdivisions 11,051 60 557 10,554
Mortgage-backed and other asset-backed
securities 22,282 33 1,609 20,706
Other securities 2,208 8 72 2,144
------ --- ----- ------
$ 75,793 105 4,586 71,312
====== === ===== ======
</TABLE>
(Continued)
F-10
<PAGE> 96
RIVER BEND BANCSHARES, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
<TABLE>
The amortized cost, gross unrealized gains, gross unrealized losses, and
approximate market value of debt and marketable equity securities at
December 31, 1993 are as follows:
<CAPTION>
1993
-------------------------------------------------
Gross Gross Approximate
Amortized unrealized unrealized market
cost gains losses value
---- ----- ------ -----
(dollars expressed in thousands)
<S> <C> <C> <C> <C>
Trading:
U.S. Treasury securities $ 1,000 - 4 996
====== ===== === ======
Held-to-maturity:
U.S. Treasury securities $ 7,920 71 59 7,932
Securities of U.S. government agencies and
corporations 32,320 509 72 32,757
Obligations of states and political
subdivisions 13,096 426 34 13,488
Mortgage-backed and other asset-backed
securities 35,317 400 96 35,621
Other securities 4,364 139 1 4,502
------ ----- --- ------
$ 93,017 1,545 262 94,300
====== ===== === ======
</TABLE>
The amortized cost and estimated market value of investments in debt and
marketable equity securities at December 31, 1994, by contractual maturity,
are shown below. Actual maturities may differ from contractual maturities
because borrowers have the right to call or prepay obligations with or
without call or prepayment penalties.
<TABLE>
<CAPTION>
Estimated
Amortized cost market value
-------------- ------------
(dollars expressed in thousands)
<S> <C> <C>
Available-for-sale:
Due in one year or less $ 377 381
Due after one year through five years 2,931 2,833
Due after five years through ten years 9,967 9,602
Due after ten years 500 502
Mortgage-backed securities 6,005 5,855
Equity securities 199 160
------ ------
$ 19,979 19,333
====== ======
Held-to-maturity:
Due in one year or less $ 4,457 4,446
Due after one year through five years 33,139 31,279
Due after five years through ten years 12,777 11,979
Due after ten years 3,138 2,902
Mortgage-backed securities 22,282 20,706
------ ------
$ 75,793 71,312
====== ======
</TABLE>
(Continued)
F-11
<PAGE> 97
RIVER BEND BANCSHARES, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
Proceeds from sales of debt and marketable equity securities classified as
trading and available-for-sale during 1994 were approximately $2,027,000 and
$1,002,000, respectively. No sales of debt or marketable equity securities
during 1994 were from the held-to-maturity category. Proceeds from sales of
debt securities during 1993 and 1992 were approximately $4,297,000 and
$6,914,000, respectively. Gross gains of approximately $18,000 were realized
on sales in 1994. Gross gains of approximately $23,000 and $250,000 and
gross losses of approximately $28,000 and $2,000 were realized on sales in
1993 and 1992, respectively.
Debt securities with a carrying value of approximately $11,780,000 and
$15,024,000 at December 31, 1994 and 1993, respectively, were pledged to
secure public deposits and for other purposes required or permitted by law.
NOTE 4 - LOANS
The composition of the loan portfolio at December 31, 1994 and 1993 is as
follows:
<TABLE>
<CAPTION>
1994 1993
---- ----
(dollars expressed in thousands)
<S> <C> <C>
Commercial $ 20,783 22,680
Real estate mortgage 23,377 22,890
Installment 1,734 2,203
Consumer 5,474 5,301
Loans held for sale 296 -
-------- ------
Total $ 51,664 53,074
======== ======
</TABLE>
The Company grants commercial, residential, installment, and consumer
loans to customers throughout its service area, which is primarily in the
Alton-Wood River area of Southwestern Illinois. The Company has a
diversified loan portfolio, with no particular concentration of credit in any
one economic sector in this service area; however, a substantial portion of
the portfolio is concentrated in and secured by real estate. The ability of
the Company's borrowers to honor their contractual obligations is dependent
upon the local economy and its effect on the real estate market.
Included in loans at December 31, 1994 and 1993 are approximately $211,000
and $260,000, respectively, of loans on which interest is not being accrued.
If interest on nonaccrual loans had been accrued, such income would have
amounted to approximately $16,000, $30,000, and $18,000 for 1994, 1993, and
1992, respectively. The amount recognized as interest income on these loans
amounted to approximately $11,000, $17,000, and $11,000 for December 31,
1994, 1993, and 1992, respectively.
The Company's banking subsidiary is an authorized seller of residential
real estate mortgage loans to the FHLMC. Loans sold in this capacity are
sold without recourse with the Company servicing all loans sold in exchange
for a servicing fee. Loans serviced for others totaled approximately
$25,300,000 and $24,400,000 at December 31, 1994 and 1993, respectively.
(Continued)
F-12
<PAGE> 98
RIVER BEND BANCSHARES, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
Transactions in the allowance for loan losses for the years ended
December 31, 1994, 1993, and 1992 are summarized as follows:
<TABLE>
<CAPTION>
1994 1993 1992
---- ---- ----
(dollars expressed in thousands)
<S> <C> <C> <C>
Balance, beginning of year $ 936 905 824
Provision charged to operations 80 120 108
Loans charged off (231) (181) (146)
Recoveries on loans previously charged off 46 92 119
--- --- ---
Net charge-offs (185) (89) (27)
--- --- ---
Balance, end of year $ 831 936 905
=== === ===
</TABLE>
Following is a summary of activity in 1994 of loans made by the Company to
certain officers and directors (including associates of officers and
directors) and certain corporations in which officers and directors had
substantial beneficial interest or corporations in which officers and
directors serve as trustees or in a similar capacity. These loans were made
on substantially the same terms, including interest rates and collateral, as
those prevailing at the time for comparable transactions with other customers
and did not involve more than the normal risk of collectibility (dollars
expressed in thousands).
<TABLE>
<CAPTION>
<S> <C>
Aggregate balance, December 31, 1993 $ 5,212
New loans and advances 13,126
Repayments (11,987)
------
Aggregate balance, December 31, 1994 $ 6,351
======
</TABLE>
NOTE 5 - PREMISES AND EQUIPMENT
A summary of premises and equipment at December 31, 1994 and 1993 is
as follows:
<TABLE>
<CAPTION>
1994 1993
---- ----
(dollars expressed in thousands)
<S> <C> <C>
Land $ 467 467
Buildings and leasehold improvements 2,602 2,590
Furniture, fixtures and equipment 1,964 1,877
----- -----
5,033 4,934
Less accumulated depreciation and amortization 2,098 1,900
----- -----
$ 2,935 3,034
===== =====
</TABLE>
Amounts charged to occupancy and equipment expense for depreciation and
amortization aggregated approximately $198,000, $227,000, and $201,000 for
the years ended December 31, 1994, 1993, and 1992, respectively.
The Company leases certain premises and equipment under various
noncancellable operating lease agreements which expire at various dates
through 1999. The Company also leases certain equipment under agreements
which are cancellable. Minimum rental commitments under noncancellable
leases are approximately $16,000 as of December 31, 1994.
(Continued)
F-13
<PAGE> 99
RIVER BEND BANCSHARES, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
Total rent expense incurred in 1994, 1993, and 1992 was approximately
$10,000, $9,000, and 7,000, respectively.
NOTE 6 - INTEREST-BEARING DEPOSITS
A summary of interest-bearing deposits at December 31, 1994 and 1993 is as
follows:
<TABLE>
<CAPTION>
1994 1993
---- ----
(dollars expressed in thousands)
<S> <C> <C>
NOW, super NOW, and money market demand accounts $ 48,283 52,878
Savings accounts 20,706 21,904
Time deposits:
Less than $100,000 51,400 51,295
$100,000 or more 3,791 3,759
------- -------
$ 124,180 129,836
======= =======
</TABLE>
A summary of interest on deposits for the years ended December 31, 1994,
1993, and 1992 is as follows:
<TABLE>
<CAPTION>
1994 1993 1992
---- ---- ----
(dollars expressed in thousands)
<S> <C> <C> <C>
NOW, super NOW, and money market demand accounts $ 1,240 1,449 1,832
Savings accounts 756 744 580
Time deposits:
Less than $100,000 1,874 1,922 3,007
$100,000 or more 171 180 331
----- ----- -----
$ 4,041 4,295 5,750
===== ===== =====
NOTE 7 - INCOME TAXES
The components of income tax expense for the years ended December 31, 1994,
1993, and 1992 are as follows:
</TABLE>
<TABLE>
<CAPTION>
1994 1993 1992
---- ---- ----
(dollars expressed in thousands)
<S> <C> <C> <C>
Current:
Federal $ 672 712 964
State 50 105 173
--- --- -----
722 817 1,137
Deferred 65 11 (107)
--- --- -----
$ 787 828 1,030
=== === =====
</TABLE>
(Continued)
F-14
<PAGE> 100
RIVER BEND BANCSHARES, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
A reconciliation of expected income tax expense, computed by applying the
federal statutory rate of 34% to income before applicable income tax expense
and cumulative effect of change in accounting for income taxes for the years
ended December 31, 1994, 1993, and 1992, to reported income tax expense is as
follows:
<TABLE>
<CAPTION>
1994 1993 1992
---- ---- ----
(dollars expressed in thousands)
<S> <C> <C> <C>
Expected statutory federal income tax $ 954 949 1,136
Tax-exempt interest income (197) (208) (206)
Amortization of intangible assets 16 16 21
State tax expense, net of federal tax benefit 33 70 114
Other, net (19) 1 (35)
--- --- -----
$ 787 828 1,030
=== === =====
</TABLE>
The tax effects of temporary differences which give rise to significant
portions of the deferred tax assets and deferred tax liabilities at
December 31, 1994 and 1993 are as follows:
<TABLE>
<CAPTION>
1994 1993
---- ----
(dollars expressed in thousands)
<S> <C> <C>
Deferred tax assets:
Allowance for loan losses $ 92 134
Unrealized holding loss on securities available-for-sale 249
Other 51 52
--- ---
Total deferred tax assets 392 186
--- ---
Deferred tax liabilities:
Purchase valuation adjustments 128 115
Premises and equipment 196 188
Other 33 31
--- ---
Total deferred tax liabilities 357 334
--- ---
Net deferred tax (assets) liabilities $ (35) 148
=== ===
</TABLE>
The significant components of the deferred income tax benefit for the year
ended December 31, 1992 are as follows (dollars expressed in thousands):
<TABLE>
<CAPTION>
<S> <C>
Provision for loan losses $ 32
Purchase valuation adjustments 63
Other, net 12
---
$ 107
===
</TABLE>
A valuation allowance would be provided on deferred tax assets when it is
more likely than not that some portion of the assets will not be realized.
The Company has not established a valuation allowance as of December 31, 1994
or 1993 due to management's belief that all criteria for recognition have
been met, including the existence of a history of taxes paid sufficient to
support the realization of the deferred tax assets.
NOTE 8 - NOTE PAYABLE
The note payable at December 31, 1994, represents a borrowing agreement
with an unaffiliated financial institution, secured by 3,976 of the 4,000
shares outstanding of the common stock of the Company's subsidiary
(Continued)
F-15
<PAGE> 101
RIVER BEND BANCSHARES, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
bank with a book value of approximately $13.5 million at December 31, 1994.
The note is payable in quarterly installments and is due October 31, 1997.
Payments due under the terms of the note are approximately $263,000, $263,000,
and $2,039,000 for 1995, 1996, and 1997, respectively. The note bears
interest at .25% less than the floating prime commercial rate which was 8.5%
at December 31, 1994. The interest rate on the note payable as of December
31, 1993 was the prime commercial rate of 6%. The weighted average interest
rate on the note payable in 1994, 1993, and 1992 was 7.17%, 6.00%, and 6.31%,
respectively.
The note payable agreement contains certain restrictive covenants which,
among other things, require maintenance of certain financial statement ratios
including equity capital ratios of the subsidiary bank, and limit capital
expenditures and the purchase of treasury stock other than the $100 par
preferred stock. Any of the covenants may be waived at the discretion of the
lending financial institution. The Company was in compliance with all debt
covenants as of December 31, 1994 and 1993.
NOTE 9 - EMPLOYEE BENEFIT PLANS
The Company has a defined benefit pension plan which covers substantially
all nonunion employees. Benefits are based on years of service and an
employee's average annual compensation. The Company's funding policy is to
contribute annually an amount between the minimum and maximum amounts which
can be deducted for federal income tax purposes. Contributions are intended
to provide not only for benefits attributed to service to date, but also for
those expected to be earned in the future.
The following sets forth the funded status of the Company's retirement
plan as of December 31, 1994 and 1993 and the amounts recognized in the
Company's consolidated financial statements as of and for the years ended
December 31, 1994 and 1993:
<TABLE>
<CAPTION>
1994 1993
---- ----
(dollars expressed in thousands)
<S> <C> <C>
Actuarial present value of accumulated benefit obligations,
including vested benefits of approximately $590,000 and
$486,000 at December 31, 1994 and 1993, respectively $ 598 501
=== ===
Projected benefit obligation, for service rendered to date $ (910) (705)
Plan assets at fair value 619 529
--- ---
Projected benefit obligation in excess of plan assets (291) (176)
Unrecognized transition amount 146 158
Unrecognized loss 148 18
--- ---
Prepaid pension expense included
in other assets $ 3 -
=== ===
</TABLE>
Net pension cost for 1994, 1993, and 1992 included the following
components:
<TABLE>
<CAPTION>
1994 1993 1992
---- ---- ----
(dollars expressed in thousands)
<S> <C> <C> <C>
Service cost-benefits earned during year $ 60 49 43
Interest cost on projected benefit obligation 59 43 37
Actual return on plan assets 8 (27) (38)
Net amortization and deferral (30) 12 29
-- -- --
$ 97 77 71
== == ==
</TABLE>
(Continued)
F-16
<PAGE> 102
RIVER BEND BANCSHARES, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
The weighted average discount rate, rate of increase in future
compensation levels, and expected long-term rate of return on assets used in
determining the actuarial present value of the projected benefit obligation
were 7.5%, 4.5%, and 6.0%, respectively, for 1994, 7.00%, 4.00%, and 5.66%,
respectively, for 1993, and 7.00%, 4.00%, and 10.74%, respectively, for 1992.
The Company also has an employee savings plan which covers union
employees. Employee benefit expense related to this plan was approximately
$8,000, $7,000, and $8,000 for the years ended December 31, 1994, 1993, and
1992, respectively.
NOTE 10 - COMMITMENTS AND CONTINGENT LIABILITIES
During the normal course of business, various legal claims have arisen
which, in the opinion of management, will not result in any material
liability to the Company.
NOTE 11 - STOCKHOLDERS' EQUITY
The Company has 5,991 shares issued and outstanding of $100 par value
preferred stock at December 31, 1994 and 1993. Holders of this preferred
stock have no voting rights. Dividends are preferential at the rate of 12%
of the par value per annum. These dividends are 6% cumulative and 6%
noncumulative.
Effective March 7, 1994, River Bend Bancshares, Inc. amended its Articles
of Incorporation and effected a stock dividend whereby each share of $10 par
value common stock was exchanged for one share of $1 par value Class I
voting common stock and five shares of $1 par value Class II nonvoting
common stock. The shares outstanding and per share amounts for all periods
prior to this stock dividend have been restated to reflect this change.
Most stockholders of Company stock, including Class I voting common stock,
Class II nonvoting common stock, and preferred stock, have signed one of two
versions of a stock purchase agreement with the Company and a director and
officer of the Company (Officer). For stockholders who are employees or
directors of the Company or its banking subsidiary, the agreement generally
provides that (1) the stockholder may not voluntarily transfer the shares
held without first offering the shares to the Company (with an option granted
to the Officer to purchase the shares) under the same terms and conditions as
the stockholder was to have sold to the prospective purchaser (a right of
first refusal), (2) upon the death, retirement, or termination of employment,
the Company will purchase and the stockholder will sell all shares at an
agreed-upon price, based upon adjustments to the appraised fair market value
(with the Officer having the option to purchase the shares in lieu of the
Company), and (3) upon an involuntary transfer, the Company and the Officer
have the option to purchase the shares at an agreed-upon price based on
adjustments to the appraised fair market value. For stockholders who are not
employees or directors, the Company has a right of first refusal with respect
to voluntary transfers with the Officer granted an option to purchase the
shares.
NOTE 12 - DISCLOSURES ABOUT FINANCIAL INSTRUMENTS
The Company is a party to financial instruments with off-balance-sheet
risk in the normal course of business to meet the financing needs of its
customers. These financial instruments include commitments to extend credit
and standby letters of credit. These instruments involve, to varying
degrees, elements of credit risk in excess of the amount recognized in the
consolidated balance sheets.
The Company's exposure to credit loss in the event of nonperformance by
the other party to the financial instrument for commitments to extend credit
and standby letters of credit written is represented by the
(Continued)
F-17
<PAGE> 103
RIVER BEND BANCSHARES, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
contractual amount of those instruments. The Company uses the same credit
policies in making commitments and conditional obligations as it does for
financial instruments included in the consolidated balance sheet.
Off-balance-sheet financial instruments whose contractual amount
represents credit risk as of December 31, 1994 and 1993 are as follows:
<TABLE>
<CAPTION>
1994 1993
---- ----
(dollars expressed in thousands)
<S> <C> <C>
Commitments to extend credit $ 10,631 8,360
Irrevocable letters of credit 429 628
====== =====
</TABLE>
Commitments to extend credit are agreements to lend to a customer as long
as there is no violation of any condition established in the contract.
Commitments generally have fixed expiration dates or other termination
clauses and may require payment of a fee. Since certain of the commitments
may expire without being drawn upon, the total commitment amounts do not
necessarily represent future cash requirements. The Company evaluates each
customer's creditworthiness on a case-by-case basis. The amount of
collateral obtained, if deemed necessary by the Company upon extension of
credit, is based on management's credit evaluation of the borrower.
Collateral held varies, but is generally residential or income-producing
property, inventory, accounts receivable, or equipment.
Fixed-rate loan commitments, as defined in SFAS 119, are considered
derivative financial instruments. Of the total commitments to extend credit
at December 31, 1994, approximately $1,171,000 represent fixed-rate loan
commitments.
Irrevocable letters of credit are conditional commitments issued by the
Company to guarantee the performance of a customer to a third party. Those
guarantees are primarily issued to support public and private borrowing
arrangements. The credit risk involved in issuing letters of credit is
essentially the same as that involved in extending loan facilities to
customers.
<TABLE>
Following is a summary of the carrying amounts and fair values of the
Company's financial instruments at December 31, 1994 and 1993:
<CAPTION>
1994 1993
----------------------- ----------------------
Carrying Fair Carrying Fair
amount value amount value
------ ----- ------ -----
(dollars expressed in thousands)
<S> <C> <C> <C> <C>
Balance sheet assets:
Cash and due from banks $ 4,361 4,361 3,856 3,856
Federal funds sold 200 200 4,950 4,950
Interest-bearing deposits in other financial
institutions 194 194 193 193
Investments in debt and marketable equity securities:
Trading 451 451 996 996
Available-for-sale 19,333 19,333 - -
Held-to-maturity 75,793 71,312 93,017 94,300
Loans, net 50,611 51,130 51,845 53,000
Accrued interest receivable 1,483 1,483 1,273 1,273
------- ------- ------- -------
$ 152,426 148,464 156,130 158,568
======= ======= ======= =======
</TABLE>
(Continued)
F-18
<PAGE> 104
RIVER BEND BANCSHARES, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
<TABLE>
<CAPTION>
1994 1993
----------------------- ----------------------
Carrying Fair Carrying Fair
amount value amount value
------ ----- ------ -----
(dollars expressed in thousands)
<S> <C> <C> <C> <C>
Balance sheet liabilities:
Deposits $ 141,426 141,083 145,372 145,614
Treasury tax and loan short-term borrowings 637 637 1,350 1,350
Note payable 2,565 2,565 3,026 3,026
Accrued interest payable 241 241 226 226
------- ------- ------- -------
$ 144,869 144,526 149,974 150,216
======= ======= ======= =======
</TABLE>
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 such value:
CASH AND OTHER SHORT-TERM INSTRUMENTS
For cash and due from banks, federal funds sold, interest-bearing deposits
in other financial institutions, accrued interest receivable, treasury tax
and loan short-term borrowings, and accrued interest payable, the carrying
amount is a reasonable estimate of fair value, as such instruments are
payable upon demand or reprice in a short time.
INVESTMENTS IN DEBT AND MARKETABLE EQUITY SECURITIES
For debt and marketable equity securities, fair values are based on
quoted market prices or dealer quotes.
LOANS
For certain homogeneous categories of loans, such as certain residential
mortgages and other consumer loans, fair value is estimated using the quoted
market prices for securities backed by similar loans, adjusted for
differences in loan characteristics. The fair value of other types of 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.
DEPOSITS
The fair value of demand accounts, 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 is estimated
using the rates currently offered for deposits of similar remaining
maturities.
NOTE PAYABLE
The estimate of the fair value of the note payable which the Company has
with an unaffiliated financial institution approximates the present carrying
value, based upon alternative rates and terms currently available to the
Company.
COMMITMENTS TO EXTEND CREDIT AND STANDBY LETTERS OF CREDIT
The fair value of commitments to extend credit and irrevocable letters of
credit are estimated using the fees currently charged to enter into similar
agreements, taking into account the remaining terms of the agreements, the
likelihood of the counter-parties drawing on such financial instruments, and
the present creditworthiness of such counterparties. The Company believes
such commitments have been made on terms which are competitive in the markets
in which it operates and, accordingly, the Company has not assigned a value
to such instruments for purposes of this disclosure.
(Continued)
F-19
<PAGE> 105
RIVER BEND BANCSHARES, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
NOTE 13 - PARENT COMPANY ONLY FINANCIAL INFORMATION
Following are condensed balance sheets of River Bend Bancshares, Inc.
(parent company only) as of December 31, 1994 and 1993, and condensed
schedules of income and cash flows for the years ended December 31, 1994,
1993, and 1992:
<TABLE>
CONDENSED BALANCE SHEETS
(dollars expressed in thousands)
<CAPTION>
Assets 1994 1993
------ ---- ----
<S> <C> <C>
Cash $ 33 14
Investment in Illinois State Bank, at equity 13,587 12,734
Excess of purchase price over equity in Illinois State Bank,
net of amortization 1,449 1,496
Other assets 4 21
------ ------
Total assets $ 15,073 14,265
====== ======
Liabilities and Stockholders' Equity
------------------------------------
Accrued expenses 36 32
Note payable 2,565 3,026
------ ------
Total liabilities 2,601 3,058
------ ------
Stockholders' equity:
Preferred stock 599 599
Common stock 942 1,570
Surplus 628 -
Retained earnings 10,699 9,038
Net unrealized holding losses on securities available-for-sale (396) -
------ ------
Total stockholders' equity 12,472 11,207
------ ------
Total liabilities and stockholders' equity $ 15,073 14,265
====== ======
</TABLE>
<TABLE>
CONDENSED SCHEDULES OF INCOME
(dollars expressed in thousands)
<CAPTION>
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Income:
Dividends from Illinois State Bank $ 983 667 836
Other 22 22 23
----- ----- -----
Total income 1,005 689 859
----- ----- -----
Expenses:
Interest 197 199 241
Salaries and employee benefits 35 35 37
Amortization of excess purchase price over equity of
Illinois State Bank 47 47 47
Other 29 17 12
----- ----- -----
Total expenses 308 298 337
----- ----- -----
Income before income tax benefit and equity in
undistributed earnings of Illinois State Bank 697 391 522
Income tax benefit 100 89 116
----- ----- -----
Income before equity in undistributed earnings of
Illinois State Bank 797 480 638
Equity in undistributed earnings of Illinois State Bank 1,221 1,472 1,673
----- ----- -----
Net income $ 2,018 1,952 2,311
===== ===== =====
</TABLE>
(Continued)
F-20
<PAGE> 106
RIVER BEND BANCSHARES, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
<TABLE>
CONDENSED SCHEDULES OF CASH FLOWS
(dollars expressed in thousands)
<CAPTION>
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 2,018 1,952 2,311
Adjustments to reconcile net income to net cash provided
by operating activities:
Equity in undistributed earnings of Illinois State Bank (1,221) (1,472) (1,673)
Amortization of excess of purchase price over
equity of Illinois State Bank 47 47 47
Other, net 22 (7) (36)
----- ----- -----
Net cash provided by operating activities 866 520 649
----- ----- -----
Cash flows from financing activities:
Payments on note payable (461) (526) (526)
Dividends paid on common stock (314) - -
Dividends paid on preferred stock (72) - (144)
----- ----- -----
Net cash used in financing activities (847) (526) (670)
----- ----- -----
Net increase (decrease) in cash and cash
equivalents 19 (6) (21)
Cash and cash equivalents, beginning of year 14 20 41
----- ----- -----
Cash and cash equivalents, end of year $ 33 14 20
===== ===== =====
</TABLE>
NOTE 14 - INTERIM CONSOLIDATED FINANCIAL INFORMATION (UNAUDITED)
BASIS OF PRESENTATION
The unaudited interim consolidated financial statements include the
accounts of River Bend Bancshares, Inc. and its subsidiary after elimination
of material intercompany transactions. This unaudited data, in the opinion
of the Company, includes all adjustments necessary for the fair presentation
thereof. All adjustments made were of a normal and recurring nature.
IMPLEMENTATION OF NEW ACCOUNTING PRINCIPLE
Effective January 1, 1995, the Company adopted SFAS 114, Accounting by
Creditors for Impairment of a Loan, and SFAS 118, Accounting by Creditors for
Impairment of a Loan - Income Recognition and Disclosures, which amends SFAS
114.
SFAS 114 (as amended by SFAS 118) defines the recognition criteria for
loan impairment and the measurement methods for certain impaired loans and
loans for which terms have been modified in troubled-debt restructurings (a
restructured loan). Specifically, a loan is considered impaired when it is
probable a creditor will be unable to collect all amounts due - both
principal and interest - according to the contractual terms of the loan
agreement. When measuring impairment, the expected future cash flows of an
impaired loan are required to be discounted at the loan's effective interest
rate. Alternatively, impairment can be measured by reference to an
observable market price, if one exists, or the fair value of the collateral
for a collateral-dependent loan. Regardless of the historical measurement
method used, SFAS 114 requires a creditor to measure impairment based on the
fair value of the collateral when the creditor determines foreclosure is
probable. Additionally, impairment of a restructured loan is measured by
discounting the total expected future cash flows at the loan's effective rate
of interest as stated in the original loan agreement.
(Continued)
F-21
<PAGE> 107
RIVER BEND BANCSHARES, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
SFAS 118 amends SFAS 114 to allow a creditor to use existing methods for
recognizing interest income on an impaired loan. The Company has elected to
continue to use its existing nonaccrual methods for recognizing interest on
impaired loans. The Company continues to apply all payments received on
impaired loans to the outstanding balance of the loan until such time as the
loan balance is reduced to zero, after which payments are applied to interest
income until such time as the foregone interest is recovered, or until such
time as an improvement in the condition of the loan has occurred which would
warrant resumption of interest accruals.
As of the adoption date, January 1, 1995, and at September 30, 1995, the
Company had impaired loans in the amount of approximately $1,145,000 and
$666,000, respectively. A specific reserve of $80,000 and $105,000 has been
allocated to approximately $1,137,000 and $626,000 of impaired loans at
January 1, 1995 and September 30, 1995, respectively. No reserve has been
allocated to the remaining balance of approximately $8,000 and $40,000 of
impaired loans at January 1, 1995 and September 30, 1995, respectively. The
average balance of impaired loans for the period January 1 through
September 30, 1995 was approximately $913,000. If interest on impaired loans
had been accrued, such income would have been approximately $92,000 for the
nine months ended September 30, 1995. Interest income recognized for the
nine months ended September 30, 1995 for the period the loans were impaired
was approximately $80,000, and the amount recognized as interest income,
representing cash payments received, for the nine months ended September 30,
1995 for the period the loans were impaired was approximately $22,000. The
adoption of SFAS 114 and SFAS 118 resulted in no prospective adjustment to
the provision for loan losses.
NOTE 15 - EVENT (UNAUDITED) SUBSEQUENT TO DATE OF INDEPENDENT
AUDITORS' REPORT
On October 11, 1995, the Company entered into an Agreement and Plan of
Reorganization with Magna Group, Inc. (Magna) to merge River Bend Bancshares,
Inc. (River Bend) into a wholly owned subsidiary of Magna (the Agreement).
At September 30, 1995, Magna, which is headquartered in Brentwood, Missouri,
had total assets of approximately $4.9 billion. The Agreement with Magna
will be effected by converting River Bend's preferred stock into the right to
receive cash in the amount of $599,100 and converting River Bend's Class I
voting common stock and Class II nonvoting common stock into the right to
receive 550,240 shares of Magna common stock, cash in the amount of
$11,668,175, and an undivided beneficial interest in a certain parcel of real
estate. The merger is contingent upon approval of various regulatory
agencies and the affirmative vote of the holders of at least two-thirds of
the outstanding shares of River Bend (Class I voting common stock, Class II
nonvoting common stock, and preferred stock, each voting as a separate
class). The Company and Officer have agreed to waive any purchase option it
or he may have with respect to shares of the Company under the provisions of
the stockholder agreements discussed in note 11 with respect to the proposed
merger with Magna. Certain stockholders of River Bend have entered into a
voting agreement with Magna executing irrevocable proxies representing 69%,
77%, and 72% of the shares outstanding of River Bend preferred stock, Class I
voting common stock, and Class II nonvoting common stock, respectively. If
approved, the merger is expected to close in the first quarter of 1996.
F-22
<PAGE> 108
TRUST AGREEMENT
---------------
THIS TRUST AGREEMENT, dated this 30th day of November, 1995,
is to certify that JOHN G. HELMKAMP, JR., as trustee hereunder, is
about to take title to the following described real estate in
Madison County, Illinois, to-wit:
PARCEL 1:
Tract A: A tract of land located in the Southeast
Quarter of Section 17, Township 5 North, Range 9 West of
the Third Principal Meridian, described as follows:
Beginning at a point on the South line of said quarter
section located 21.6 feet West from the Southeast Corner
of said quarter section; thence West along said South
line a distance of 308.93 feet; thence North 0 degrees 04
minutes 54 seconds West a distance of 267.15 feet; thence
North 61 degrees 28 minutes 00 seconds East a distance of
173.55 feet to the Westerly right of way line of Federal
Aid Route 4 (Alternate United States Route 67); thence
Southeasterly along said right of way on a curve to the
right having a radius of 3506.17 feet, a chord bearing of
South 24 degrees 08 minutes 05 seconds East, a chord
distance of 383.58 feet and an arc distance of 383.78
feet to the point of beginning.
Tract B: A tract of land located in the Southeast
Quarter of Section 17, Township 5 North, Range 9 West of
the Third Principal Meridian, described as follows:
From the Southeast corner of said quarter section measure
West along the South line of said quarter section a
distance of 330.53 feet; thence North 0 degrees 04
minutes 54 seconds West a distance of 267.15 feet to the
point of beginning; thence continue North 0 degrees 04
minutes 54 seconds West a distance of 110.00 feet; thence
North 61 degrees 28 minutes 00 seconds East a distance of
61.94 feet to the Westerly right of way line of Federal
Aid Route 4 (Alternate United States Route 67); thence
South 65 degrees 41 minutes 14 seconds East along said
right of way line a distance of 98.60 feet; thence
continuing Southeasterly along said right of way line
along a curve to the right having a radius of 3506.17
feet, a chord bearing of South 27 degrees 25 minutes 07
seconds East; a chord distance of 18.12 feet and an arc
distance of
Trust Agreement Page 1
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<PAGE> 109
18.12 feet; thence South 61 degrees 28 minutes 00 seconds
West a distance of 173.55 feet to the point of beginning.
PARCEL 2:
Easement: The permanent, non-exclusive right of ingress
and egress for the benefit of Parcel 1 (Tracts A and B),
created by Declaration of Easement recorded April 23,
1986 in Roll 1511, Frame 931, over a strip of land of
uniform 60 foot width lying adjacent to the
aforedescribed tracts described as follows:
From the Southeast corner of said quarter section measure
West along the South line of said quarter section a
distance of 330.53 feet; thence North 0 degrees 04
minutes 54 seconds West a distance of 75.00 feet to the
point of beginning; thence continue North 0 degrees 04
minutes 54 seconds West along the West lines of
aforedescribed Tracts A and B, a distance of 302.15 feet
to the Northwesterly line of aforedescribed Tract B;
thence North 61 degrees 28 minutes 00 seconds East along
said line a distance of 61.94 feet to the Westerly right
of way line of Federal Aid Route 4 (Alternate U.S. Route
67); thence on a curve to the left along said right of
way line having a radius of 3446.17 feet a chord bearing
North 29 degrees 16 minutes 20 seconds West a distance of
50.00 feet; thence North 10 degrees 29 minutes 48 seconds
East continuing along said right of way line a distance
of 12.88 feet; thence South 61 degrees 28 minutes 00
seconds West parallel to and 60 feet distant from the
Northwesterly line aforedescribed Tract B a distance of
105.14 feet; thence South 0 degrees 04 minutes 54 seconds
East parallel to and 60 feet distant from the West lines
of aforedescribed Tracts A and B a distance of 337.80
feet to the North line of below described Tract C; thence
East along said North line a distance of 60.00 feet to
the point of beginning.
For reference only, Tract C aforesaid is described as
follows: A tract of land located in the Southeast
Quarter of Section 17, Township 5 North, Range 9 West of
the Third Principal Meridian, described as follows:
Beginning at a point on the South line of said quarter
section a distance of 330.53 feet West from the Southeast
corner of said quarter section; thence West along said
South line a distance of 220.00 feet; thence North 0
degrees 04 minutes 54 seconds West a distance of 75.00
feet; thence East a distance of 220.00 feet; thence South
0 degrees 04 minutes 54 seconds East a distance of 75.00
feet to the point of beginning.
Trust Agreement Page 2
A-2
<PAGE> 110
Situated in the County of Madison, in the State of
Illinois.
Parcel ID No., 19-1-08-17-20-401-002.001
Subject to easements, restrictions and rights of way of
record.
and that when he has taken the title thereto, or to any other real
estate deeded to him as a trustee hereunder, he will hold it and
any proceeds of sale of any real estate sold by the trustee for the
uses and purposes and upon the trusts herein set forth. The
following named persons shall be entitled to the earnings, avails
and proceeds of said real estate according to the respective
interests herein set forth, to-wit:
River Bend Bancshares, Inc., or such corporation into
which it may hereafter merge ("River Bend"), the
surviving entity of which merger shall be recognized by
the trustee as having all of the powers and rights of the
original beneficial owner.
IT IS UNDERSTOOD AND AGREED between the parties hereto, and by
any person or persons who may become entitled to any interest under
this trust, that the interest of any beneficiary hereunder shall
consist solely of a power of direction to deal with the title to
said property and to manage and control said property as
hereinafter provided, and the right to receive the proceeds from
rentals and from mortgages, sales, or other disposition of said
premises, and that such right in the avails of said property shall
be deemed to be personal property, and may be assigned and
transferred as such; that in case of the death of any beneficiary
hereunder during the existence of this trust, his or her right and
interest hereunder shall, except as herein otherwise specifically
provided, pass to his or her executor or administrator, and not to
his or her heirs at law; and that no beneficiary now has, and that
no beneficiary hereunder at any time shall have any right, title or
interest in or to any portion of said real estate as such, either
legal or equitable, but only an interest in the earnings, avails
and proceeds as aforesaid. The death of any beneficiary hereunder
shall not terminate the
Trust Agreement Page 3
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<PAGE> 111
trust nor in any manner affect the powers of the trustee hereunder.
No assignment of any beneficial interest hereunder shall be binding on
the trustee until the original or a duplicate of the assignment in
form satisfactory to the trustee is lodged with the trustee, and every
assignment of any beneficial interest hereunder, the original or
duplicate of which shall not have been lodged with the trustee, shall
be void as to all subsequent assignees or purchasers without notice.
Additionally, no assignment of any beneficial interest hereunder shall
be binding on the trustee until the proposed assignee or transferee
executes a transfer, in form reasonably acceptable to River Bend, that
such assignee or transferee accepts the foregoing assignment subject
to all the provisions of this trust agreement, PROVIDED, HOWEVER, that
River Bends consent shall not be required after thirty six months
from the date River Bend first distributes beneficial interests in
the trust to the former shareholders of River Bend.
IT IS FURTHER UNDERSTOOD AND AGREED between the parties
hereto, and any person or persons who are now or may subsequently
become entitled to any interest under this trust that this Trust
Agreement may not be revoked or modified prior to that date thirty
six months after the date River Bend first distributes beneficial
interests of this trust to the former shareholders of River Bend
without the written consent of River Bend and the trustee, and
thereafter if the beneficial interest is owned by persons other
than River Bend, only with the written consent of the trustee and
persons holding 70 percent or more of the beneficial interest in
this trust.
IT IS FURTHER UNDERSTOOD AND AGREED that this Trust Agreement
is made in furtherance of and to facilitate the performance of an
agreement between Magna Group, Inc. ("Magna") and River Bend dated
as of October 11, 1995, and entitled "Agreement and Plan of
Reorganization." In the event that Magna, River Bend, or any of
their subsidiaries (collectively the "Entities") shall incur any
tax liability (including any interest, penalties, or additions
thereto) in excess of $90,000 by reason of the distribution of
beneficial interest in
Trust Agreement Page 4
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<PAGE> 112
this trust from River Bend to the former shareholders of River Bend or
by reason of payments of interests in this trust to the former
shareholders of River Bend, then the trustee shall indemnify and hold
harmless each Entity which is liable for the payment of the tax, but
only to the extent the aggregate liability of all of the Entities
exceeds $90,000.00. The trustee's indemnification obligation created
by this paragraph shall not be deemed or construed to be the personal
obligation of the trustee, but shall be enforceable only against the
trustee in the trustee's representative capacity and only against
monies or other property acquired upon the sale of the real estate
about to be conveyed to the trustee now or hereafter held in trust.
If the real estate which is about to be conveyed to the trustee is
sold within thirty six months of the date River Bend first distributes
beneficial interests in the trust to the former shareholders of
River Bend, the trustee shall cause the proceeds of such sale to be
paid to the trust.
If the real estate which is about to be conveyed to the
trustee is sold within thirty six months of the date River Bend
first distributes beneficial interests in the trust to the former
shareholders of River Bend , the trustee shall disburse no proceeds
in excess of an amount equal to two-thirds of the difference of (i)
the net proceeds of the sale of the real estate less (ii) $340,000,
during the period ending thirty six months from the date River Bend
first distributes beneficial interests of this trust to the former
shareholders of River Bend, after which period the trustee may
disburse the remaining balance of the sale proceeds in accordance
with the directions of the holders of the beneficial interest of
the trust (subject to such reductions as are provided for herein);
provided, however, that with the consent of Magna, the remaining
balance may be distributed at any earlier time.
If at any time the trustee is liable to any of the Entities in
an amount exceeding the value of the assets of the trust, and if
the trust has disbursed to persons holding beneficial interest in
the trust proceeds from the sale of the real estate about to be
conveyed to the
Trust Agreement Page 5
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<PAGE> 113
trustee, then, and only in such circumstances, the holders of the
beneficial interest in the trust shall, in proportion to their
beneficial interest in the trust, pay over to the trustee such amounts
that, in the aggregate, will equal the shortfall in assets of the
trust with respect to the amount as to which the trustee is liable to
the Entities; PROVIDED, HOWEVER, that in no circumstance shall any
person holding a beneficial interest by required to pay over an amount
in excess of the amounts disbursed to such person.
Nothing contained in this trust agreement shall be construed
as imposing any obligation on the trustee to file any income,
profit or other tax reports or schedules, it being expressly
understood that the beneficiaries from time to time will
individually make all such reports, and pay any and all taxes,
required with respect to the earnings, avails and proceeds of said
real estate or growing out of their interest under this trust
agreement. Further, nothing in this trust agreement shall obligate
the trustee to rent or sell the real estate held in this trust,
unless so directed by persons holding 70 percent or more of the
beneficial interest in this trust.
In case said trustee shall make any advances of money on
account of this trust for any purpose, including, but not limited
to, payment of taxes, insurance premiums, and fees and expenses
(including legal and accounting) incurred in the administration of
this trust, or shall be made a party to any litigation on account
of holding title to said real estate or in connection with this
trust, or in case said trustee shall be liable to pay any sum of
money on account of this trust, whether on account of breach of
contract, injury to person or property, fines or penalties under
any law or otherwise, the beneficiaries hereunder do hereby jointly
and severally agree that they will on demand pay to the said
trustee, with interest thereon at the rate of 8% per annum, all
such disbursements or advances on payments made by said trustee,
together with his expenses, including reasonable attorneys' fees,
and that the said trustee shall not be called upon to convey or
otherwise deal with said property at any time
Trust Agreement Page 6
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<PAGE> 114
held hereunder until all of said disbursements, payments, advances and
expenses made or incurred by said trustee shall have been fully paid,
together with interest thereon as aforesaid. However, nothing herein
contained shall be construed as requiring the trustee to advance or
pay out any money on account of this trust or to prosecute or defend
any legal proceeding involving this trust or any property or interest
thereunder unless it shall be furnished with funds sufficient
therefor or be satisfactorily indemnified in respect thereto.
Furthermore, in lieu of being repaid by the beneficiaries for funds
advanced, the trustee may, at his option, upon sale of the real
estate, be reimbursed for all advanced funds (including interest
earned thereon) from the proceeds of such sale, prior to any
distributions of funds to holders of beneficial interest in this
trust.
It shall not be the duty of the purchaser of said premises or
of any part thereof to see to the application of the purchase money
paid therefor, nor shall anyone who may deal with said trustee be
required or privileged to inquire into the necessity or expediency
of any act of said trustee, or of the provisions of this
instrument.
This Trust Agreement shall not be placed on record in the
Recorder's Office of the county in which the land is situated, or
elsewhere. The recording of the same, however, shall not be
considered as notice of the rights of any person hereunder,
derogatory to the title or powers of said trustee. Upon service of
process upon the trustee at any time hereafter, the trustee may, in
its discretion, disclose to the other parties to any such
proceeding, the names and addresses of the beneficiary or
beneficiaries hereof.
The trustee may at any time resign by sending by registered
mail a notice of its intention so to do to each of the then
beneficiaries hereunder at his or her address last known to the
trustee. Such resignation shall become effective ten days after
the mailing of such notice by the trustee. In the event of such
resignation, a successor or successors may be
Trust Agreement Page 7
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<PAGE> 115
appointed by the direction of holders of 70 percent or more of the
beneficial interests in the trust, and the trustee shall thereupon
convey the trust property to such successor or successors in trust.
In the event that no successor in trust is named as above provided
within ten days after the mailing of such notices by the trustee, then
the trustee shall file a bill for appropriate relief in a court of
competent jurisdiction. The trustee notwithstanding such resignation
shall continue to have a first lien on the trust property for its
costs, expenses and attorneys' fees, and funds advanced.
Every successor trustee or trustees appointed hereunder shall
become fully vested with all the estate, properties, rights,
powers, trusts, duties and obligations of its, his or their
predecessor.
It is understood and agreed by the parties hereto and by any
person who may hereafter become a party hereto, that the trustee
will deal with said real estate or proceeds of sale of same only
when authorized to do so in writing and that (notwithstanding any
change in the beneficiary or beneficiaries hereunder) he will on
the written direction of those persons holding 70 percent or more
of the beneficial interest of this trust, rent, make deeds for, or
otherwise deal with the title to said real estate, provided,
however, that the trustee shall not be required to enter into any
personal obligation or liability in dealing with said land or to
make himself liable for any damages, costs, expenses, fines or
penalties, or to deal with the title so long as any money is due to
him hereunder. The trustee shall not be required to inquire into
the propriety of any such direction.
The beneficiary or beneficiaries hereunder, in his, her or
their own right shall have the management of said property and
control of the selling, renting and handling thereof, and shall
collect and handle the rents, earnings, avails and proceeds
thereof, and said trustee shall have no duty in respect to such
management or control, or the collection, handling or
Trust Agreement Page 8
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<PAGE> 116
application of such rents, earnings, avails or proceeds, or in respect
to the payment of taxes or assessments or in respect to insurance,
litigation or otherwise, except on written direction as hereinabove
provided, and after the payment to it of all money necessary to
carry out said instructions. No beneficiary hereunder shall have
any authority to contract for or in the name of the trustee or to
bind the trustee personally. If any property remains in this trust
twenty years from this date, it shall be sold at public sale by the
trustee on reasonable notice, and the proceeds of the sale shall be
divided among those who are entitled thereto under this trust
agreement.
John G. Helmkamp, Jr. shall receive for his services in
accepting this trust and in taking title hereunder the sum of
$100.00.
IN TESTIMONY WHEREOF, JOHN G. HELMKAMP, JR., as trustee, has
executed this Trust Agreement and RIVER BEND BANCSHARES, INC., as
grantor and as beneficiary has caused this Agreement to be executed
by its duly authorized officers and its corporate seal to be hereto
affixed, as and for its act and deed as of the day and date above
written.
/s/ John G. Helmkamp, Jr.
TRUSTEE: ---------------------------------------
John G. Helmkamp, Jr.
GRANTOR AND BENEFICIARY: RIVER BEND BANCSHARES, INC.
By: /s/ John G. Helmkamp, Jr.
------------------------------------
John G. Helmkamp, Jr., President
ATTEST: /s/ Harley T. Godard
--------------------------------
Harley T. Godard, Secretary
Trust Agreement Page 9
A-9
<PAGE> 117
ANNEX B
-------
Following is the text of the dissenters' rights provisions set
forth at Sections 11.65 and 11.70, respectively, of the Illinois
Business Corporation Act of 1983, as amended:
Section 11.65. Right to Dissent. (a) A shareholder of a
corporation is entitled to dissent from, and obtain payment for his
or her shares in the event of any of the following corporate
actions: (1) consummation of a plan of merger or consolidation or
a plan of share exchange to which the corporation is a party if
(i) shareholder authorization is required for the merger or
consolidation or the share exchange by Section 11.20 or the
articles of incorporation or (ii) the corporation is a subsidiary
that is merged with its parent or another subsidiary under Section
11.30; (2) consummation of sale, lease or exchange of all, or
substantially all, of the property and assets of the corporation
other than in the usual and regular course of business; (3) an
amendment of the articles of incorporation that materially and
adversely affects rights in respect of a dissenter's shares because
it: (i) alters or abolishes a preferential right of such shares;
(ii) alters or abolishes a right in respect of redemption,
including a provision respecting a sinking fund for the redemption
or repurchase, of such shares; (iii) in the case of a corporation
incorporated prior to January 1, 1982, limits or eliminates
cumulative voting rights with respect to such shares; or (4) any
other corporate action taken pursuant to a shareholder vote if the
articles of incorporation, by-laws, or a resolution of the board of
directors provide that shareholders are entitled to dissent and
obtain payment for their shares in accordance with the procedures
set forth in Section 11.70 or as may be otherwise provided in the
articles, by-laws or resolution.
(b) A shareholder entitled to dissent and obtain payment for
his or her shares under this Section may not challenge the
corporate action creating his or her entitlement unless the action
is fraudulent with respect to the shareholder or the corporation or
constitutes a breach of a fiduciary duty owed to the shareholder.
(c) A record owner of shares may assert dissenters' rights as
to fewer than all the shares recorded in such person's name only if
such person dissents with respect to all shares beneficially owned
by any one person and notifies the corporation in writing of the
name and address of each person on whose behalf the record owner
asserts dissenters' rights. The rights of a partial dissenter are
determined as if the shares as to which dissent is made and the
other shares were recorded in the names of different shareholders.
A beneficial owner of shares who is not the record owner may assert
dissenters' rights as to shares held on such person's behalf only
if the beneficial owner submits to the corporation the record
owner's written consent to the dissent before or at the same time
the beneficial owner asserts dissenters' rights.
Section 11.70. Procedure to Dissent. (a) If the corporate
action giving rise to the right to dissent is to be approved at a
meeting of shareholders, the notice of meeting shall inform the
shareholders of their right to dissent and the procedure to
dissent. If, prior to the meeting, the corporation furnishes to
the shareholders material information with respect to the
transaction that will objectively enable a shareholder to vote on
the transaction and to determine whether or not to exercise
dissenters' rights, a shareholder may assert dissenter' rights only
if the shareholder delivers to the corporation before the vote is
taken a written demand for payment for his or her shares if the
proposed action is consummated, and the shareholder does not vote
in favor of the proposed action.
(b) If the corporate action giving rise to the right to
dissent is not to be approved at a meeting of shareholders, the
notice to shareholders describing the action taken under Section
11.30 or Section 7.10 shall inform the shareholders of their right
to dissent and the procedure to dissent. If, prior to or
concurrently with the notice, the corporation furnishes to the
shareholders material information with respect to the transaction
that will objectively enable a shareholder to determine whether or
not to exercise
B-1
<PAGE> 118
dissenters' rights, a shareholder may assert dissenter's rights only
if he or she delivers to the corporation within 30 days from the date
of mailing the notice a written demand for payment for his or her
shares.
(c) Within 10 days after the date on which the corporate
action giving rise to the right to dissent is effective or 30 days
after the shareholder delivers to the corporation the written
demand for payment, whichever is later, the corporation shall send
each shareholder who has delivered a written demand for payment a
statement setting forth the opinion of the corporation as to the
estimated fair value of the shares, the corporation's latest
balance sheet as of the end of a fiscal year ending not earlier
than 16 months before the delivery of the statement, together with
the statement of income for that year and the latest available
interim financial statements, and either a commitment to pay for
the shares of the dissenting shareholder at the estimated fair
value thereof upon transmittal to the corporation of the
certificate or certificates, or other evidence of ownership, with
respect to the shares, or instructions to the dissenting
shareholder to sell his or her shares within 10 days after delivery
of the corporation's statement to the shareholder. The corporation
may instruct the shareholder to sell only if there is a public
market for the shares at which the shares may be readily sold. If
the shareholder does not sell within that 10 day period after being
so instructed by the corporation, for purposes of this Section the
shareholder shall be deemed to have sold his or her shares at the
average closing price of the shares, if listed on a national
exchange, or the average of the bid and asked price with respect to
the shares quoted by a principal market maker, if not listed on a
national exchange, during that 10 day period.
(d) A shareholder who makes written demand for payment under
this Section retains all other rights of a shareholder until those
rights are cancelled or modified by the consummation of the
proposed corporate action. Upon consummation of that action, the
corporation shall pay to each dissenter who transmits to the
corporation the certificate or other evidence of ownership of the
shares the amount the corporation estimates to be the fair value of
the shares, plus accrued interest, accompanied by a written
explanation of how the interest was calculated.
(e) If the shareholder does not agree with the opinion of the
corporation as to the estimated fair value of the shares or the
amount of interest due, the shareholder, within 30 days from the
delivery of the corporation's statement of value, shall notify the
corporation in writing of the shareholder's estimated fair value
and amount of interest due and demand payment for the difference
between the shareholder's estimate of fair value and interest due
and the amount of the payment by the corporation or the proceeds of
sale by the shareholder, whichever is applicable because of the
procedure for which the corporation opted pursuant to subsection
(c).
(f) If, within 60 days from delivery to the corporation of
the shareholder notification of estimate of fair value of the
shares and interest due, the corporation and the dissenting
shareholder have not agreed in writing upon the fair value of the
shares and interest due, the corporation shall either pay the
difference in value demanded by the shareholder, with interest, or
file a petition in the circuit court of the county in which either
the registered office or the principal office of the corporation is
located, requesting the court to determine the fair value of the
shares and interest due. The corporation shall make all
dissenters, whether or not residents of this State, whose demands
remain unsettled parties to the proceeding as 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. Failure of the
corporation to commence an action pursuant to this Section shall
not limit or affect the right of the dissenting shareholders to
otherwise commence an action as permitted by law.
(g) The jurisdiction of the court in which the proceeding is
commenced under subsection (f) by a corporation is plenary and
exclusive. The court may appoint one or more persons as appraisers to
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<PAGE> 119
receive evidence and recommend decision on the question of fair
value. The appraisers have the power described in the order
appointing them, or in any amendment to it.
(h) Each dissenter made a party to the proceeding is entitled
to judgment for the amount, if any, by which the court finds that
the fair value of his or her shares, plus interest, exceeds the
amount paid by the corporation or the proceeds of sale by the
shareholder, whichever amount is applicable.
(i) The court, in a proceeding commenced under subsection
(f), shall determine all costs of the proceeding, including the
reasonable compensation and expenses of the appraisers, if any,
appointed by the court under subsection (g), but shall exclude the
fees and expenses of counsel and experts for the respective
parties. If the fair value of the shares as determined by the
court materially exceeds the amount which the corporation estimated
to be the fair value of the shares or if no estimate was made in
accordance with subsection (c), then all or any part of the costs
may be assessed against the corporation. If the amount which any
dissenter estimated to be the fair value of the shares materially
exceeds the fair value of the shares as determined by the court,
then all or any part of the costs may be assessed against that
dissenter. 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:
(1) Against the corporation and in favor of any or all
dissenters if the court finds that the corporation did not
substantially comply with the requirements of subsections (a),
(b), (c), (d), or (f).
(2) Against either the corporation or a dissenter and 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 Section.
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 that
counsel reasonable fees to be paid out of the amounts awarded to
the dissenters who are benefited. Except as otherwise provided in
this Section, the practice, procedure, judgment and costs shall be
governed by the Code of Civil Procedure.
(j) As used in this Section:
(1) "Fair value", with respect to a dissenter's shares,
means the value of the shares immediately before the
consummation 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.
(2) "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.
B-3
<PAGE> 120
PROXY RIVER BEND BANCSHARES, INC.
347 WEST MAIN STREET
EAST ALTON, ILLINOIS 62024
FOR THE SPECIAL MEETING OF SHAREHOLDERS TO BE HELD -------------, 1996
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned shareholder(s) of RIVER BEND BANCSHARES, INC. ("River
Bend"), does hereby nominate, constitute and appoint ---------------- and
- ----------------, or each of them (with full power to act alone), true and
lawful attorney(s), with full power of substitution, for the undersigned
and in the name, place and stead of the undersigned to vote all of the
shares of (i) Class I Voting Common Stock, $1.00 par value, of River Bend,
(ii) Class II Non-Voting Common Stock, $1.00 par value, of River Bend and
(iii) Class A Preferred Stock, $100.00 par value, of River Bend standing in
the name of the undersigned on its books at the close of business on
- ---------------, 199- at the Special Meeting of Shareholders to be held at
the main banking house of Illinois State Bank and Trust, 347 West Main
Street, East Alton, Illinois, on ------------, -----------, 1996, at --:--
- -.m. local time, and at any adjournments or postponements thereof, with all
the powers the undersigned would possess if personally present, as follows:
(1) A proposal to approve an Agreement and Plan of Reorganization, as
amended, and the related Plan of Merger (collectively, the "Merger
Agreements"), and each of the transactions contemplated thereby,
pursuant to which River Bend will be merged (the "Merger") with
and into Landmark Bancshares Corporation ("Landmark"), a wholly
owned subsidiary of Magna Group, Inc. ("Magna"), in a transaction
which will result in the business and operations of River Bend
being continued through Landmark, and whereby, upon consummation
of the Merger, (i) the aggregate of all issued and outstanding
shares of Class A Preferred Stock, $100.00 par value, of River
Bend will be converted into the right to receive an amount in cash
equal to $599,100.00 and (ii) the aggregate of all issued and
outstanding shares of Class I Voting Common Stock, $1.00 par
value, of River Bend and Class II Non-Voting Common Stock, $1.00
par value, of River Bend will be converted into the right to
receive (A) 550,240 shares of Common Stock, $2.00 par value, of
Magna, (B) an amount in cash equal to $11,668,175.00 and (C) an
undivided beneficial interest in a certain parcel of real estate,
consisting of two acres more or less (items (A) and (B) are
subject to certain limitations and adjustments, as more fully
described in the accompanying Proxy Statement/Prospectus).
/ / FOR / / AGAINST / / ABSTAIN
(2) To transact such other business as may properly come before the
Special Meeting or any adjournments or postponements thereof.
(Continued on Reverse Side)
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER
DIRECTED HEREIN BY THE UNDERSIGNED SHAREHOLDER(S). IF NO DIRECTION IS
GIVEN HEREIN, THIS PROXY WILL BE VOTED "FOR" PROPOSAL 1 LISTED ABOVE.
Dated: ---------------
----------------------------------
Signature of Shareholder
----------------------------------
Signature of Shareholder
(To be signed by the holder(s) of
record exactly as the name(s) of such
holder(s) appears on the stock
certificate. When signing as an
attorney, executor, administrator,
trustee or guardian, please give full
title. All joint owners must sign.)
PLEASE MARK, DATE, SIGN AND RETURN THIS PROXY PROMPTLY USING THE ENCLOSED
ENVELOPE.
<PAGE> 121
ELECTION FORM FOR USE BY HOLDERS OF
RIVER BEND BANCSHARES, INC. COMMON STOCK
River Bend Bancshares, Inc.
347 West Main Street
East Alton, Illinois 62024
Gentlemen:
Pursuant to the terms of the Agreement and Plan of
Reorganization, as amended (the "Agreement"), by and between River Bend
Bancshares, Inc. ("River Bend") and Magna Group, Inc. ("Magna") and the
related Plan of Merger (the "Plan of Merger") by and between River Bend and
Landmark Bancshares Corporation, a wholly owned subsidiary of Magna, the
undersigned shareholder(s) of River Bend, in conversion of their shares of
River Bend Class I Voting Common Stock ("Class I Common Stock") or River
Bend Class II Non-Voting Common Stock ("Class II Common Stock") upon
consummation of the merger, elect to receive their proportionate interest
in the total value of (A) the Stock Distribution (as defined in the Proxy
Statement/Prospectus) and (B) the Common Cash Distribution (as defined in
the Proxy Statement/Prospectus) in the following percentages:
PLEASE INDICATE A PERCENTAGE ON EACH LINE; THE TOTAL OF BOTH LINES MUST
EQUAL 100%
------% STOCK DISTRIBUTION - the Stock Distribution will be valued at a
price equal to the average per share closing price of Magna
Common Stock as reported on the Nasdaq National Market for the
five business days preceding three business days preceding the
date of consummation of the merger, and is subject to certain
adjustments that are more fully described in the accompanying
Proxy Statement/Prospectus.
------% COMMON CASH DISTRIBUTION
100%
======
The undersigned acknowledge that the deadline for filing this
Election Form with River Bend Bancshares, Inc. is by 5:00 p.m., local time,
on -----------, 1996, the day preceding the day of the Special Meeting of
Shareholders of River Bend called to consider and vote upon the Agreement
and the Plan of Merger. Shareholders who fail to deliver properly
completed Election Forms to River Bend by the deadline will be deemed to
have elected to receive 50% of their proportionate interests in the total
value of the consideration as Stock Distribution and 50% as Common Cash
Distribution. See the section of the accompanying Proxy
Statement/Prospectus entitled "TERMS OF THE MERGER -- General Description
of the Merger" for a description of the situations in which the Exchange
Agent may be required to pay to shareholders consideration other than in
the elected percentages of consideration and the circumstances governing
such adjustments.
Prior to 5:00 p.m., local time, on -----------, 1996, the
undersigned may, at any time or from time to time, change their election by
filing a new Election Form with River Bend.
Shareholders who have questions regarding the election process,
and/or the tax consequences associated with such election process, should
consult their own tax, legal and investment advisors.
<PAGE> 122
Each separate entity on River Bend's list of shareholders will be
deemed to represent a separate and distinct holder of Class I Common Stock
or Class II Common Stock. As a consequence, if any person or entity holds
shares of Class I Common Stock or Class II Common Stock titled in two or
more different names (e.g., individually, as trustee or jointly with a
spouse), A PROPERLY COMPLETED AND EXECUTED ELECTION FORM MUST BE FILED FOR
EACH NAME OR SET OF NAMES UNDER WHICH SHARES ARE TITLED.
Dated: ---------------, 1996 -----------------------------------
Signature of Shareholder
-----------------------------------
Signature of Shareholder
(To be signed by the holder(s) of
record exactly as the name(s) of
such holder(s) appears on the
stock certificate. When signing
as an attorney, executor,
administrator, trustee or
guardian, please give full title.
All joint owners must sign.)
PLEASE RETURN TO RIVER BEND BANCSHARES, INC. USING THE ENCLOSED, PRE-PAID,
PRE-ADDRESSED ENVELOPE. THIS FORM, PROPERLY COMPLETED, MUST BE RECEIVED BY
RIVER BEND NO LATER THAN 5:00 P.M. ON -------------, 1996 TO BE EFFECTIVE.
<PAGE> 123
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
------------------------------------------
Item 20. Indemnification of Officers and Directors
- ---------------------------------------------------
Section 145 of the General Corporation Law of the State of
Delaware provides generally and in pertinent part that a Delaware
corporation may indemnify its directors and officers against
expenses, judgments, fines and settlements actually and reasonably
incurred by them in connection with any civil suit or action,
except actions by or in the right of the corporation, or any
administrative or investigative proceeding if, in connection with
the matters in issue, they acted in good faith and in a manner they
reasonably believed to be in, or not opposed to, the best interest
of the corporation, and in connection with any criminal suit or
proceeding, if in connection with the matters in issue, they had no
reasonable cause to believe their conduct was unlawful. Section
145 further permits a Delaware corporation to grant its directors
and officers additional rights of indemnification through bylaw
provisions and otherwise and to purchase indemnity insurance on
behalf of its directors and officers.
Article 12 of Magna's Certificate of Incorporation provides
for the elimination of personal liability of directors of Magna to
Magna and its stockholders for monetary damages arising from
certain breaches of directors' duty of care. In addition,
Article 12 provides for the indemnification of persons who are or
were directors, officers, employees and agents of Magna or who are
or were serving at the request of Magna in a similar capacity with
another enterprise or entity to the fullest extent authorized by
the Delaware General Corporation Law. Article 12 also authorizes
Magna to purchase insurance for itself and indemnifiable persons
against any expense, liability or loss whether or not Magna would
have the power to indemnify such expense, liability or loss under
the Delaware General Corporation Law.
Magna maintains a liability insurance policy which indemnifies
directors, officers, employees and agents of Magna. As part of the
acquisition of Landmark, Magna assumed Landmark's obligations under
indemnification agreements with Landmark's directors (including
certain directors who are currently directors of Magna) and
obligations under an employment agreement between Landmark and
S. Lee Kling (also a current director of Magna).
Pursuant to the Reorganization Agreement, Magna has agreed to
indemnify and hold harmless John C. Helmkamp, Jr. from and against
any and all losses, claims, damages, expenses or liabilities, joint
or several, including legal fees and expenses, to which he may
become subject under Section 11(a)(3) of the Securities Act,
insofar as such losses, claims, damages, expenses or liabilities
arise out of or are based upon any untrue statement, or alleged
untrue statement, of a material fact in the written information
furnished by Magna, or are based upon the omission, or alleged
omission by Magna, to state a material fact required to be stated,
or necessary to make the statements contained in such information
not misleading, except as may be limited by the rules and
regulations of the Commission.
Item 21. Exhibits and Financial Statement Schedules
- ----------------------------------------------------
A. Exhibits. See Exhibit Index.
---------
B. Financial Statement Schedules. Not Applicable.
------------------------------
II-1
<PAGE> 124
Item 22. Undertakings
- ----------------------
(1) 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 of
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.
(2) The undersigned Registrant hereby undertakes 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 Section 15(d) of the Securities Exchange Act of
1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 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.
(3) The undersigned Registrant hereby undertakes as follows:
that prior to any public reoffering of the securities registered
hereunder through 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.
(4) The Registrant undertakes that every prospectus (i) that
is filed pursuant to paragraph (3) 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 (Section 230.415 of this chapter), 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) The undersigned Registrant hereby undertakes to respond
to requests for information that is incorporated by reference into
the prospectus pursuant to Item 4, 10(b), 11 or 13 of this Form,
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 the documents filed
subsequent to the effective date of the Registration Statement
through the date of responding to the request.
(6) The undersigned Registrant hereby undertakes 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.
II-2
<PAGE> 125
(7) The undersigned Registrant hereby undertakes:
(a) To file during any period in which offers and sales
are being made, a post-effective amendment to this
Registration Statement:
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or
events arising after the effective date of the
Registration Statement (or the most recent
post-effective amendment thereof), which
individually or in the aggregate, represent a
fundamental change in the information set forth in
the Registration Statement;
(iii) To include any material information with
respect to the plan of distribution not previously
disclosed in the Registration Statement or any
material change to such information in the
Registration Statement.
(b) That for the purpose 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.
(c) To remove from registration by means of a
post-effective amendment any of the securities being
registered which remain unsold at the termination of the
offering.
II-3
<PAGE> 126
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 Brentwood, County of St. Louis, State of Missouri,
on November 28, 1995.
MAGNA GROUP, INC.
By /s/ G. Thomas Andes
----------------------------------
G. Thomas Andes
Chairman of the Board and Chief
Executive Officer
POWER OF ATTORNEY
We, the undersigned officers and directors of Magna Group,
Inc., hereby severally and individually constitute and appoint G.
Thomas Andes and Carolyn B. Ryseff, and each of them, the true and
lawful attorneys and agents of each of us to execute in the name,
place and stead of each of us (individually and in any capacity
stated below) any and all amendments to this Registration Statement
on Form S-4 and all instruments necessary or advisable in
connection therewith and to file the same with the Securities and
Exchange Commission, each of said attorneys and agents to have the
power to act with or without the others and to have full power and
authority to do and perform in the name and on behalf of each of
the undersigned every act whatsoever necessary or advisable to be
done in the premises as fully and to all intents and purposes as
any of the undersigned might or could do in person, and we hereby
ratify and confirm our signatures as they may be signed by our said
attorneys and agents or each of them to any and all such amendments
and instruments.
Pursuant to the requirements of the Securities Act of 1933,
this Registration Statement has been signed by the following
persons in the capacities and on the date indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<C> <S> <C>
/s/ G. Thomas Andes Chairman of the Board, November 28, 1995
- ------------------------------ Chief Executive
G. Thomas Andes Officer and Director
Principal Executive Officer
/s/ Ronald A. Buerges Senior Vice President - November 28, 1995
- ------------------------------ Corporate Finance
Ronald A. Buerges
Principal Financial Officer--
Principal Accounting Officer
/s/ James A. Auffenberg, Jr. Director November 28, 1995
- ------------------------------
James A. Auffenberg, Jr.
II-4
<PAGE> 127
<CAPTION>
Signature Title Date
--------- ----- ----
<C> <S> <C>
/s/ William E. Cribbin Director November 28, 1995
- ------------------------------
William E. Cribbin
/s/ Wayne T. Ewing Director November 28, 1995
- ------------------------------
Wayne T. Ewing
/s/ Donald P. Gallop Director November 28, 1995
- ------------------------------
Donald P. Gallop
/s/ C.E. Heiligenstein Director November 28, 1995
- ------------------------------
C.E. Heiligenstein
/s/ Carl G. Hogan, Sr. Director November 28, 1995
- ------------------------------
Carl G. Hogan, Sr.
- ------------------------------ Director November --, 1995
Franklin A. Jacobs
/s/ Wendell J. Kelley Director November 28, 1995
- ------------------------------
Wendell J. Kelley
/s/ S. Lee Kling Director November 28, 1995
- ------------------------------
S. Lee Kling
- ------------------------------ Director November --, 1995
Ralph F. Korte
/s/ Robert E. McGlynn Director November 28, 1995
- ------------------------------
Robert E. McGlynn
/s/ Frank R. Trulaske, III Director November 28, 1995
- ------------------------------
Frank R. Trulaske, III
/s/ Dr. George T. Wilkins, Jr. Director November 28, 1995
- ------------------------------
Dr. George T. Wilkins, Jr.
</TABLE>
II-5
<PAGE> 128
<TABLE>
EXHIBIT INDEX
<CAPTION>
Exhibit
Number Description Page
------- ----------- ----
<C> <S> <C>
2.1 Agreement and Plan of Reorganization dated October 11, 1995
by and between Magna and River Bend.
2.2 First Amendment to Agreement and Plan of Reorganization
dated as of November 27, 1995 by and between Magna and
River Bend.
2.3 Form of Plan of Merger to be executed by Landmark and River
Bend.
3.1 Certificate of Incorporation, as amended and currently in
effect (filed as Exhibit 3.1 to Magna's Annual Report on
Form 10-K for the year ended December 31, 1991 (File No. 0-
8234) and incorporated herein by reference).
3.2 By-laws (filed as Exhibit 3.2 to Magna's Annual Report on
Form 10-K for the year ended December 31, 1991 (File No. 0-
8234) and incorporated herein by reference).
4.1 Form of Indenture, including form of Note, between Magna
and Mark Twain Bank, as trustee, dated August 1, 1987 for
the 7% Convertible Subordinated Capital Notes Due 1999
(filed as Exhibit 1 to Magna's Registration Statement on
Form 8-A dated June 15, 1988 (File No. 0-8234) and
incorporated herein by reference).
4.2 Indenture (File No. 0-8234) dated as of November 1, 1986
between Landmark and Centerre Trust Company of St. Louis,
regarding the issuance of $17,250,000 principal amount of
Landmark's 8-3/4% Convertible Subordinated Debentures due
November 1, 1998 (filed as Exhibit 4(c) to Landmark's
Annual Report on Form 10-K for the year ended December 31,
1986 (File No. 1-8810) and incorporated herein by
reference).
4.3 First Supplemental Indenture dated December 20, 1991 among
Magna, Magna Acquisition Corporation and Boatmen's National
Bank of St. Louis as successor to Centerre Trust Company of
St. Louis, Trustee, assuming the obligations of Landmark
under the Indenture dated November 1, 1986 (filed as
Exhibit 4.2 to Magna's Current Report on Form 8-K dated
December 20, 1991 (File No. 0-8234) and incorporated herein
by reference).
4.4 Rights Agreement, including form of Right Certificate,
dated as of November 11, 1988 between Magna and Magna Trust
Company, Trustee (filed as Exhibits 1 and 2 to Magna's
Registration Statement on Form 8-A dated November 11, 1988
(File No. 0-8234) and incorporated herein by reference).
II-6
<PAGE> 129
<CAPTION>
Exhibit
Number Description Page
------- ----------- ----
<C> <S> <C>
5.1 Opinion of Thompson & Mitchell as to the legality of the
securities being registered.
8.1 Opinion of Thompson & Mitchell regarding certain tax
matters in the Merger.
10.1 Form of Stock Option Agreement under Landmark's 1982
Capital Accumulation Plan, assumed by Magna as to
outstanding obligations pursuant to the acquisition of
Landmark (filed as Exhibit 10.1 to Magna's Annual Report on
Form 10-K for the year ended December 31, 1991 (File No. 0-
8234) and incorporated herein by reference).
10.2 Form of Stock Option Agreement under Landmark's 1986 Non-
Qualified Stock Option Plan, assumed by Magna as to
outstanding obligations pursuant to the acquisition of
Landmark (filed as Exhibit 10.2 to Magna's Annual Report on
Form 10-K for the year ended December 31, 1991 (File No. 0-
8234) and incorporated herein by reference).
10.3 1987 Stock Option Plan of Magna (filed as Exhibit 10.2 to
Magna's Registration Statement on Form S-4 (Reg. No. 33-
15463) and incorporated herein by reference).
10.4 Landmark's Amended and Restated Supplemental Retirement
Plan (filed as Exhibit 10(ff) to Landmark's Annual Report
on Form 10-K for the year ended December 31, 1989 (File No.
1-8810) and incorporated herein by reference).
10.5 Form of Restricted Stock Agreement dated March 10, 1992
between Magna and G. Thomas Andes (filed as Exhibit 10.5 to
Magna's Annual Report on Form 10-K for the year ended
December 31, 1991 (File No. 0-8234) and incorporated herein
by reference).
10.6 Employment Agreement dated January 1, 1995 between Magna
and G. Thomas Andes (filed as Exhibit 10.6 to Magna's
Annual Report on Form 10-K for the year ended December 31,
1994 (File No. 0-8234) and incorporated herein by
reference).
10.7 Agreement dated December 1, 1994 between Magna and Linda K.
Fabel (filed as Exhibit 10.7 to Magna's Annual Report on
Form 10-K for the year ended December 31, 1994 (File No. 0-
8234) and incorporated herein by reference).
II-7
<PAGE> 130
<CAPTION>
Exhibit
Number Description Page
------- ----------- ----
<C> <S> <C>
10.8 Agreement dated December 2, 1994 between Magna and David D.
Harris (filed as Exhibit 10.8 to Magna's Annual Report on
Form 10-K for the year ended December 31, 1994 (File No. 0-
8234) and incorporated herein by reference).
10.9 Agreement dated November 29, 1994 between Magna and Gary D.
Hemmer (filed as Exhibit 10.9 to Magna's Annual Report on
Form 10-K for the year ended December 31, 1994 (File No. 0-
8234) and incorporated herein by reference).
10.10 Agreement dated December 1, 1994 between Magna and Robert
M. Olson, Jr. (filed as Exhibit 10.11 to Magna's Annual
Report on Form 10-K for the year ended December 31, 1994
(File No. 0-8234) and incorporated herein by reference).
10.11 Second Amendment to Second Restated Employment Agreement
between Magna and S. Lee Kling (filed as Exhibit 10.24 to
Magna's Quarterly Report on Form 10-Q for the period ended
June 30, 1994 (File No. 0-8234) and incorporated herein by
reference).
10.12 Second Restated Employment Agreement dated as of October
20, 1990, as amended by Letter Agreement dated August 29,
1991, between Landmark and S. Lee Kling (filed on Exhibit
10.9 to Magna's Annual Report on Form 10-K for the year
ended December 31, 1991 (File No. 0-8234) and incorporated
herein by reference).
10.13 Directors' Survivor Benefit Plan (filed as Exhibit 10.11 to
Magna's Annual Report on Form 10-K for the year ended
December 31, 1991 (File No. 0-8234) and incorporated herein
by reference).
10.14 Directors' Deferred Compensation Plan (filed as Exhibit
10.12 to Magna's Annual Report on Form 10-K for the year
ended December 31, 1991 (File No. 0-8234) and incorporated
herein by reference).
10.15 Board of Directors Retirement Plan of Magna (filed as
Exhibit 10.16 to Magna's Annual Report on Form 10-K for the
year ended December 31, 1994 (File No. 0-8234) and
incorporated herein by reference).
10.16 Executive Supplemental Deferral Plan (filed as Exhibit
10.12 to Magna's Annual Report on Form 10-K for the year
ended December 31, 1987 (File No. 0-8234) and incorporated
herein by reference).
II-8
<PAGE> 131
<CAPTION>
Exhibit
Number Description Page
------- ----------- ----
<C> <S> <C>
10.17 Form of Director Indemnification Agreement dated as of
May 30, 1991 between Landmark and Donald P. Gallop, Carl G.
Hogan, Sr., Franklin A. Jacobs and Ralph Korte,
respectively, and Consent dated May 24, 1991 of Magna to
Director Indemnification Agreements dated May 30, 1991
assuming Landmark's obligations thereunder upon
effectiveness of the acquisition (filed as Exhibit 10.14 to
Magna's Annual Report on Form 10-K for the year ended
December 31, 1991 (File No. 0-8234) and incorporated herein
by reference).
10.18 1992 Long Term Performance Plan of Magna (filed as Appendix
A to Magna's Proxy Statement for the 1992 Annual Meeting of
Stockholders (File No. 0-8234) and incorporated herein by
reference).
10.19 Directors' Stock Option Plan of Magna (filed as Appendix B
to Magna's Proxy Statement for the 1992 Annual Meeting of
Stockholders (File No. 0-8234) and incorporated herein by
reference).
10.20 Amendment to Supplemental Executive Retirement Plan of
Magna (filed as Exhibit 10.25 to Magna's Quarterly Report
on Form 10-Q for the period ended June 30, 1994 (File No.
0-8234) and incorporated herein by reference).
10.21 Supplemental Executive Retirement Plan of Magna (filed as
Exhibit 10.15 to Magna's Annual Report on Form 10-K for the
year ended December 31, 1993 (File No. 0-8234) and
incorporated herein by reference).
10.22 Magna Executive Incentive Compensation Plan (MEICP) 1995
(filed as Exhibit 10.23 to Magna's Annual Report on Form
10-K for the year ended December 31, 1994 (File No. 0-8234)
and incorporated herein by reference).
10.23 Lease between Magna as successor in interest to Landmark,
and St. Louis Brentwood Associates, L.P., dated
December 19, 1986, relating to Magna Place, as amended by
the First Amendment dated November 17, 1987, the Addendum
dated February 1, 1990 and the Letter Agreement dated
January 9, 1992 (filed as Exhibit 10.17 to Magna's Annual
Report on Form 10-K for the year ended December 31, 1991
(File No. 0-8234) and incorporated herein by reference).
II-9
<PAGE> 132
<CAPTION>
Exhibit
Number Description Page
------- ----------- ----
<C> <S> <C>
10.24 Stock Purchase Agreement dated March 27, 1992, by and among
Capital Bancorporation, Inc., Magna and Landmark
Acquisition Corporation, and amendment thereto (filed as
Exhibit 2.1 to Magna's Registration Statement on Form S-3
(Reg. No. 33-48918) and incorporated herein by reference).
10.25 Form of Restricted Stock Agreement dated December 31, 1994
between Magna and each of Linda K. Fabel and Robert M.
Olson, Jr. (filed as Exhibit 10.29 to Magna's Annual Report
on Form 10-K for the year ended December 31, 1994 (File No.
0-8234) and incorporated herein by reference).
21.1 List of Subsidiaries (filed as Exhibit 21.1 to Magna's
Annual Report on Form 10-K for the year ended December 31,
1994 and incorporated herein by reference).
23.1 Consent of Ernst & Young LLP.
23.2 Consent of KPMG Peat Marwick LLP.
23.3 Consent of Thompson & Mitchell in Exhibit 5.1.
23.4 Consent of Fister & Associates, Inc.
24.1 Power of Attorney (included on signature page hereto).
99.1 Consent of John D. Helmkamp, Jr.
</TABLE>
II-10
<PAGE> 1
EXHIBIT 2.1
AGREEMENT AND PLAN OF REORGANIZATION
between
MAGNA GROUP, INC.
a Delaware corporation
and
RIVER BEND BANCSHARES, INC.
an Illinois corporation
Dated as of October 11, 1995
<PAGE> 2
<TABLE>
TABLE OF CONTENTS
-----------------
<CAPTION>
Page
----
<S> <C>
Recitals. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE I
THE MERGER
1.01 The Merger. . . . . . . . . . . . . . . . . . . . . . . . 1
1.02 Conversion of Shares; Election Procedures;
Dissenting Shares . . . . . . . . . . . . . . . . . . . . 2
1.03 Exchange Procedures . . . . . . . . . . . . . . . . . . . 5
1.04 Closing; Effective Time . . . . . . . . . . . . . . . . . 7
1.05 Further Assurances. . . . . . . . . . . . . . . . . . . . 7
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF MAGNA
2.01 Organization and Authority. . . . . . . . . . . . . . . . 7
2.02 Capitalization of Magna . . . . . . . . . . . . . . . . . 7
2.03 Authorization . . . . . . . . . . . . . . . . . . . . . . 8
2.04 Magna Financial and Other Reports . . . . . . . . . . . . 8
2.05 Registration and Proxy Statements . . . . . . . . . . . . 9
2.06 Events Subsequent to December 31, 1994. . . . . . . . . . 9
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF RIVER BEND
3.01 Organization and Authority. . . . . . . . . . . . . . . . 10
3.02 River Bend Subsidiaries . . . . . . . . . . . . . . . . . 10
3.03 Capitalization of River Bend. . . . . . . . . . . . . . . 10
3.04 Authorization . . . . . . . . . . . . . . . . . . . . . . 10
3.05 River Bend Financial and Other Reports. . . . . . . . . . 11
3.06 Events Subsequent to December 31, 1994. . . . . . . . . . 12
3.07 Investment and Loan Portfolios. . . . . . . . . . . . . . 12
3.08 Title to Properties; Insurance. . . . . . . . . . . . . . 12
3.09 Compliance with Laws. . . . . . . . . . . . . . . . . . . 13
3.10 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.11 Litigation. . . . . . . . . . . . . . . . . . . . . . . . 13
3.12 Registration and Proxy Statements . . . . . . . . . . . . 13
3.13 Brokers and Finders . . . . . . . . . . . . . . . . . . . 13
3.14 Commitments and Contracts . . . . . . . . . . . . . . . . 14
3.15 Material Interests of Certain Persons . . . . . . . . . . 14
3.16 River Bend Benefit Plans. . . . . . . . . . . . . . . . . 14
3.17 Registration Obligations. . . . . . . . . . . . . . . . . 15
3.18 Administration of Trust Accounts. . . . . . . . . . . . . 15
3.19 Vote Required . . . . . . . . . . . . . . . . . . . . . . 15
3.20 Interest Rate Risk Management Instruments . . . . . . . . 16
- i -
<PAGE> 3
<CAPTION>
Page
----
<S> <C>
3.21 Discrimination, Occupational Safety, Labor and
Other Statutes and Regulations. . . . . . . . . . . . . . 16
ARTICLE IV
ENVIRONMENTAL MATTERS
4.01 Environmental Inspection. . . . . . . . . . . . . . . . . 16
4.02 Environmental Claims. . . . . . . . . . . . . . . . . . . 16
4.03 Hazardous Material. . . . . . . . . . . . . . . . . . . . 17
ARTICLE V
GOVERNMENTAL APPROVALS AND OTHER REQUIREMENTS
5.01 Regulatory Approvals. . . . . . . . . . . . . . . . . . . 17
5.02 Registration and Proxy Statements . . . . . . . . . . . . 17
5.03 Other Governmental Filings. . . . . . . . . . . . . . . . 18
5.04 Indemnity . . . . . . . . . . . . . . . . . . . . . . . . 18
5.05 Tax Opinion . . . . . . . . . . . . . . . . . . . . . . . 18
5.06 Agreements of Affiliates. . . . . . . . . . . . . . . . . 18
ARTICLE VI
RIVER BEND'S COVENANTS AND AGREEMENTS
6.01 Operation of Business . . . . . . . . . . . . . . . . . . 19
6.02 Preservation of Business. . . . . . . . . . . . . . . . . 20
6.03 Expenses. . . . . . . . . . . . . . . . . . . . . . . . . 20
6.04 Tax Opinion Certification . . . . . . . . . . . . . . . . 20
6.05 Sale of Magna Common Stock by Shareholders of
River Bend. . . . . . . . . . . . . . . . . . . . . . . . 20
6.06 Purchase Options for River Bend Stock . . . . . . . . . . 20
ARTICLE VII
MUTUAL COVENANTS AND AGREEMENTS
7.01 Access and Information. . . . . . . . . . . . . . . . . . 21
7.02 Current Information . . . . . . . . . . . . . . . . . . . 22
7.03 Press Releases. . . . . . . . . . . . . . . . . . . . . . 22
7.04 Intracorporate Transactions . . . . . . . . . . . . . . . 22
7.05 Representations . . . . . . . . . . . . . . . . . . . . . 22
7.06 Anti-Dilution . . . . . . . . . . . . . . . . . . . . . . 22
7.07 Tax Treatment . . . . . . . . . . . . . . . . . . . . . . 22
7.08 System Conversion . . . . . . . . . . . . . . . . . . . . 23
7.09 Miscellaneous Agreements and Consents . . . . . . . . . . 23
7.10 Notice to Other Party . . . . . . . . . . . . . . . . . . 23
7.11 Best Efforts. . . . . . . . . . . . . . . . . . . . . . . 23
7.12 Payments to Dissenters. . . . . . . . . . . . . . . . . . 23
7.13 Schedules and Exhibits. . . . . . . . . . . . . . . . . . 23
- ii -
<PAGE> 4
<CAPTION>
Page
----
<S> <C>
ARTICLE VIII
CONDITIONS TO CLOSING
8.01 Conditions to Each Party's Obligations to
Effect the Merger . . . . . . . . . . . . . . . . . . . . 24
8.02 Conditions to Obligations of River Bend to
Effect the Merger . . . . . . . . . . . . . . . . . . . . 24
8.03 Conditions to Obligations of Magna to Effect
the Merger. . . . . . . . . . . . . . . . . . . . . . . . 26
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
9.01 Termination . . . . . . . . . . . . . . . . . . . . . . . 28
9.02 Effect of Termination . . . . . . . . . . . . . . . . . . 29
9.03 Amendment . . . . . . . . . . . . . . . . . . . . . . . . 29
9.04 Waiver. . . . . . . . . . . . . . . . . . . . . . . . . . 29
ARTICLE X
GENERAL PROVISIONS
10.01 Non-Survival of Representations, Warranties
and Agreements. . . . . . . . . . . . . . . . . . . . . . 29
10.02 Notices . . . . . . . . . . . . . . . . . . . . . . . . . 29
10.03 Entire Agreement; Enforcement . . . . . . . . . . . . . . 30
10.04 Counterparts. . . . . . . . . . . . . . . . . . . . . . . 30
10.05 Governing Law . . . . . . . . . . . . . . . . . . . . . . 30
10.06 Successors and Assigns. . . . . . . . . . . . . . . . . . 30
10.07 No Third Party Beneficiaries. . . . . . . . . . . . . . . 30
10.08 Table of Contents; Captions . . . . . . . . . . . . . . . 30
Exhibit A Plan of Merger
Exhibit B Affiliate Letter
Exhibit C Officer Certificate
Exhibit D Shareholder or Director Certificate
Exhibit E Supplemental Agreement of John G. Helmkamp, Jr.
</TABLE>
- iii -
<PAGE> 5
AGREEMENT AND PLAN OF REORGANIZATION
------------------------------------
THIS AGREEMENT AND PLAN OF REORGANIZATION (the
"Agreement") is made and entered into as of the 11th day of
October, 1995, by and between MAGNA GROUP, INC., a Delaware
corporation ("Magna"), and RIVER BEND BANCSHARES, INC., an Illinois
corporation ("River Bend").
WHEREAS, the respective Boards of Directors of Magna and
River Bend have approved the merger of River Bend with and into
River Bend Acquisition Corporation ("RBAC"), a to be formed
Illinois corporation which will be a wholly owned subsidiary of
Magna (the "Merger"); and
WHEREAS, each of Magna and River Bend believes that such
proposed Merger, and the conversion of shares of capital stock of
River Bend into the Merger Consideration (as defined in Section
1.01 hereof) in the manner provided in this Agreement and the Plan
of Merger, a copy of which is attached hereto as Exhibit A (the
"Plan of Merger"), is desirable and in the best interests of its
stockholders and shareholders, respectively; and
WHEREAS, Magna and River Bend intend that the Merger
constitute a reorganization within the meaning of Section 368 of
the Internal Revenue Code of 1986, as amended (the "Code") and that
gain will be recognized by the shareholders of River Bend with
regard to the Stock Distribution (as defined in Section 1.02), the
Common Cash Distribution (as defined in Section 1.02) and the
Preferred Cash Distribution (as defined in Section 1.02), but only
in accordance with the provisions and limitations of Section 356 of
the Code.
NOW, THEREFORE, it is agreed:
ARTICLE I
THE MERGER
----------
1.01 The Merger. Subject to the terms and conditions of
----------
this Agreement and the Plan of Merger, Magna and River Bend agree
to effect the Merger of River Bend with and into RBAC in accordance
with the Illinois Business Corporation Act of 1983, as amended (the
"Illinois Statute"), and the separate corporate existence of River
Bend shall cease.
The parties agree that River Bend and RBAC will execute
a Plan of Merger substantially in the form attached hereto as
Exhibit A which provides for the terms of the Merger and the mode
of carrying the same into effect. The Merger shall be consummated
at the Effective Time (as defined in Section 1.04 hereof). At the
Effective Time, the outstanding shares of River Bend Stock (as
defined in Section 1.02 hereof) shall be converted into the right
to receive the Merger Consideration (as defined in Section 1.02
hereof), in accordance with Section 1.02 hereof and Article III of
the Plan of Merger.
Following the Effective Time, RBAC shall be the surviving
corporation and shall possess all of the rights, privileges,
immunities and franchises and shall be liable for all of the
liabilities and obligations of each of the merging corporations,
all as provided in the Illinois Statute.
Prior to the Effective Time, Magna shall appoint a
qualified bank or trust company, as agent (the "Exchange Agent"),
for the purpose of exchanging, after the Effective Time,
certificates representing shares of River Bend Stock for the Merger
Consideration and, following the Effective Time, Magna shall issue
and deliver to the Exchange Agent certificates representing shares
of common stock, $2.00 par value, of Magna ("Magna Common Stock")
and shall pay to the Exchange Agent such amounts of cash as shall
be required to be delivered as the Merger Consideration.
<PAGE> 6
1.02 Conversion of Shares; Election Procedures;
------------------------------------------
Dissenting Shares.
- -----------------
(a) Merger Consideration. At the Effective Time, by
--------------------
virtue of the Merger and without any action on the part of River
Bend, Magna, RBAC or the holders of any of the capital stock of
River Bend, the aggregate of all issued and outstanding shares of:
(i) Class A Preferred Stock, $100 par value, of
River Bend ("Preferred Stock") shall cease to be
outstanding and shall be converted into the right to
receive, in the aggregate, an amount in cash equal to
$599,100 (the "Preferred Cash Distribution");
(ii) Class I Voting Common Stock, $1.00 par value,
of River Bend ("Class I Common Stock") and Class II Non-
Voting Common Stock, $1.00 par value, of River Bend
("Class II Common Stock") shall cease to be outstanding
and shall be converted into the right to receive, in the
aggregate, (1) 550,240 shares of Magna Common Stock (the
"Stock Distribution") and (2) an amount in cash equal to
$11,668,175 (the "Common Cash Distribution"); provided,
however, that if the number of shares of Magna Common
Stock issuable to all holders of Class I Common Stock and
Class II Common Stock is insufficient in the reasonable
judgment of Thompson & Mitchell to allow it to render the
opinion required by Section 5.05 of this Agreement, then,
Thompson & Mitchell will advise Magna on the Closing Date
(as defined in Section 1.03 hereof) as to the minimum
number of additional shares of Magna Common Stock that
will be required to be issued as Stock Distribution (in
place of the Common Cash Distribution) in the Merger in
order to allow Thompson & Mitchell to render such opinion
in its reasonable judgment. In the event that Magna is
required to issue additional shares of Magna Common
Stock, (1) the Stock Distribution shall equal A + B and
(2) the Common Cash Distribution shall equal C - (B x D).
For purposes of this Section 1.02(a)(ii):
A = 550,240 shares
B = The minimum number of additional shares
of Magna Common Stock, as determined by
Thompson & Mitchell in its reasonable
judgment, that must be issued in the
Merger to the holders of Class I Common
Stock and Class II Common Stock as Stock
Distribution in order for Thompson &
Mitchell to render the tax opinion
required by Section 5.05 of this
Agreement.
C = $11,668,175
D = $21.75; and
(iii) By the later of (1) ten (10) days after
the Effective Time or (2) the date on which a holder of
shares of Class I Common Stock and/or Class II Common
Stock surrenders their Certificate(s) (as defined in
Section 1.03 hereof) to the Exchange Agent, Magna shall
cause RBAC to distribute to the former holders of the
157,063 shares of Class I Common Stock and the 785,315
shares of Class II Common Stock (all such 942,378 shares
being treated equally but excluding any such shares as to
which dissenters' rights are then being pursued by the
former holder(s) thereof) beneficial interests in a trust
(the "Trust") that shall be the record owner of that
certain parcel of land identified by Parcel ID
No. 19-1-08-17-20-401-002.001 and consisting of two acres
more or less (the "Real Estate Consideration") (the Stock
Distribution, the Common Cash Distribution and the Real
Estate Consideration are collectively referred to herein
as the "Common Stock Consideration"). Any beneficial
interests that would
- 2 -
<PAGE> 7
otherwise be distributed to holders of shares as to which
dissenters' rights are then being pursued shall be
distributed to them if and when such dissenters' rights are
no longer being pursued and if such holders shall have
completed the dissent process such that they are not to
receive the Common Stock Consideration, then such interests
in the Trust shall be distributed to Magna. The Trust
shall have been formerly owned beneficially by River Bend.
The Trust shall contain terms acceptable to Magna providing
that Magna and the subsidiaries of Magna and River Bend
shall be indemnified and held harmless for any and all tax
liability (including any interest, penalties or additions
thereto) in excess of $90,000 that Magna, River Bend, any
subsidiary of Magna or any subsidiary of River Bend shall
incur by reason of the distribution of the Trust from
RBAC or payment of interests in the Trust to the former
holders of Class I Common Stock and/or Class II Common
Stock. Such indemnification shall not be subject to any
conditions precedent, other than a condition that Magna
permit the Trust to defend any proposed assessment of
tax. This indemnification obligation shall be guaranteed
by John G. Helmkamp, Jr. for a period of one year
following the Effective Time; provided, however, in the
event (i) Magna or any subsidiary thereof, has filed a
tax return(s) which reports the distribution of the Real
Estate Consideration and such return(s) report the fair
market value of the Real Estate Consideration at any
amount such that Magna's and any subsidiary thereof's, in
the aggregate, tax liability is greater than $90,000 and
(ii) Magna, during the period ending one year after the
Closing Date, has provided notice to the Trust of such
additional tax due, the indemnification obligation of
Mr. Helmkamp pursuant to this Section 1.02(a) (iii) shall
extend beyond such one year period, but solely with
respect to the tax liability that is the subject of the
notice provided by Magna to the Trust (e.g., the
distribution of the interests in the Trust to the former
shareholders of River Bend).
(iv) For purposes of this Agreement, the Common
Stock Consideration and the Preferred Cash Distribution
are collectively referred to herein as the "Merger
Consideration" and the Class I Common Stock, the Class II
Common Stock and the Preferred Stock are collectively
referred to herein as the "River Bend Stock."
(b) Share Conversion. At the Effective Time, each
----------------
individual share of (i) Preferred Stock shall be converted into the
right to receive an amount in cash equal to $100 and (ii) Class I
Common Stock and Class II Common Stock (each share of such stock
being treated equally on a share by share basis) shall be converted
into the right to receive that share's proportionate interest in
the Common Stock Consideration, subject to adjustment as provided
in Sections 1.02(c) and (d) hereof.
(c) Conversion Election Procedures.
------------------------------
(i) Concurrently with the mailing of the Proxy
Statement (as contemplated by Section 5.02 of this
Agreement, including the Prospectus contained in the
Registration Statement (also as contemplated by Section
5.02 of this Agreement)) to the shareholders of River
Bend, Magna shall cause the Exchange Agent to mail to
each holder of record of Class I Common Stock and/or
Class II Common Stock a form of election (the "Election
Form") on which such holder shall make the election as
provided for in this Section 1.02. Each Election Form
shall specify the composition of the proportionate
interest in the Stock Distribution and the Common Cash
Distribution received by that holder (subject to
adjustments as provided for herein), by specifying what
percentage of the value of the consideration to be
received by the holder shall be the Common Cash
Consideration and what percentage of the value of the
consideration shall be the Stock Consideration. For this
purpose, the Stock Consideration shall be valued at a
price equal to the average, per share closing price of
Magna Common Stock as reported on the Nasdaq Stock Market
for the five business
- 3 -
<PAGE> 8
days preceding three business days preceding the Closing
Date (the "Magna Share Value").
(ii) Any shares of Class I Common Stock or Class II
Common Stock with respect to which the holder thereof
shall not, as of the "Election Deadline" (as defined
below), have made an election, pursuant to Section
1.02(c)(i) of this Agreement, by submission to River Bend
of an effective, properly completed Election Form shall
be deemed to have elected to receive 50% of their
proportionate interest of the Common Stock Consideration
as Stock Distribution and 50% as Common Cash
Distribution. "Election Deadline" means 5:00 p.m., local
time, on the day preceding the day of the special meeting
of shareholders called to vote upon the Merger. Any
election for purposes of this Section 1.02 shall be
effective only if River Bend shall have received a
properly completed Election Form by the Election
Deadline. Any Election Form may be revoked or changed by
the person submitting such Election Form or any other
person to whom the subject shares are subsequently
transferred by written notice by such person to River
Bend at or prior to the Election Deadline.
(iii) All Election Forms shall be deemed to be
revoked if this Agreement shall have been terminated in
accordance with its terms. River Bend shall have
reasonable discretion to determine when any election,
modification or revocation is received and whether any
such election, modification or revocation is effective,
consistent with the duty of River Bend to give effect to
such elections, modifications or revocations to the
maximum extent possible. As soon as practicable after
the Election Deadline, River Bend shall deliver to the
Exchange Agent (i) a certified list that sets forth the
election made, if any, by each holder of Class I Common
Stock and/or Class II Common Stock and (ii) a copy of
each Election Form received by River Bend.
(iv) As soon as practicable after the Closing, Magna
shall cause the Exchange Agent to allocate among the
holders of Class I Common Stock and Class II Common Stock
the rights to receive the Stock Distribution and the
Common Cash Distribution as set forth in their respective
Election Forms; provided, however, to the extent that
holders of certificates representing shares of Class I
Common Stock and Class II Common Stock elect either (A)
more cash than equals the Common Cash Distribution or (B)
more Magna Common Stock than equals the Stock
Distribution, the type of merger consideration
oversubscribed shall be apportioned among the holders by
pro-rating that consideration, in proportion to the
amounts elected by the holders, so that the sum of the
amount of that form of consideration equals the amount
available to be received by the holders of the
certificates representing shares of Class I Common Stock
and Class II Common Stock, in the aggregate. The
remainder of each holder's merger consideration shall be
in the form of the undersubscribed merger consideration,
in an amount such that the fair market value of all
merger consideration (valuing the Stock Distribution
portion at a per share value equal to the Magna Share
Value) received by the holder equals the proportionate
amount of the Common Stock Consideration to which such
holder is entitled.
(v) The pro rata computations to be used by the
Exchange Agent shall be made by the Exchange Agent in the
reasonable exercise of its discretion. Each separate
entry on River Bend's list of shareholders shall be
presumed to represent a separate and distinct holder of
record of Class I Common Stock, Class II Common Stock or
Preferred Stock.
(vi) Only holders of shares of Class I Common Stock
and Class II Common Stock shall be entitled to complete
and submit an Election Form. Holders of shares of
- 4 -
<PAGE> 9
Preferred Stock shall be entitled to receive their
proportionate interest of the Preferred Cash Distribution
(as provided in Section 1.02(a)(i) of this Agreement).
(d) Adjustments for Post February 29, 1996 Closing Date.
---------------------------------------------------
In the event that the Closing Date occurs after February 29, 1996,
then the Common Cash Consideration and the Preferred Cash
Distribution shall be adjusted in the following manner. An amount
shall be added to the Common Cash Consideration (after such number
has been adjusted as provided in Section 1.02(a)(ii) of this
Agreement but before any adjustment pursuant to this Section
1.02(d)) equal to (A) the product of (i) the sum of all dividends
declared by Magna on a single share of Magna Common Stock for
stockholders of record for the period beginning March 1, 1996 and
ending the day prior to the Closing Date and (ii) the number of
shares of Magna Common Stock comprising the Stock Consideration
(after such number has been adjusted as provided in Section
1.02(a)(ii) of this Agreement) less (B) the aggregate amount of
----
dividends declared by River Bend on shares of Class I Common Stock
and Class II Common Stock during such period plus (C) the product
----
of (i) the Common Cash Consideration (after such number has been
adjusted as provided in Section 1.02(a)(ii) of this Agreement but
before any adjustment pursuant to this Section 1.02(d)) times (ii)
-----
(1) the Federal funds rate, as published in The Wall Street
Journal, Midwest Edition, as such rate varies from time to time,
divided by (2) 365 times (iii) the number of days, inclusive, from
- ---------- -----
February 29, 1996 to the day prior to the Closing Date. An amount
shall be added to the Preferred Cash Distribution equal to the
product of (A) the Preferred Cash Distribution times (B) (i) the
-----
Federal funds rate, as published in The Wall Street Journal,
Midwest Edition, as such rate varies from time to time, divided by
----------
(ii) 365 times (C) the number of days, inclusive, from February 29,
-----
1996 to the day prior to the Closing Date.
(e) Fractional Shares. No fractional shares of Magna
-----------------
Common Stock shall be issued. In lieu thereof, any shareholder of
River Bend who would be entitled to a fractional share of Magna
Common Stock shall receive an amount in cash, equal to the fraction
of a share to which such shareholder would have been entitled times
$21.75, rounded to the nearest whole cent. This value has been
agreed upon solely for the purpose of determining the conversion
rate for the Class I Voting Stock and the Class II Voting Stock
pursuant to this Agreement and the basis for the payment for
fractional shares under the Plan of Merger. No representation is
made that such value would be the value of shares for any other
purpose nor is any representation made that such value would be
relevant in determining the amount which any shareholder dissenting
from the merger would receive.
(f) Dissenting Shares. Shares of the outstanding River
-----------------
Bend Stock that are not voted for adoption of the Merger and with
respect to which the holder thereof has taken all necessary action
as of the Effective Time to perfect the shareholder's rights as a
dissenting shareholder in accordance with the applicable provisions
of the Illinois Business Corporation Act of 1983, as amended (the
"Illinois Statute") shall not be converted into the Merger
Consideration at or after the Effective Time unless and until the
holder of such shares withdraws the demand for payment of the fair
value of the shares or otherwise becomes ineligible to pursue the
rights of a dissenting shareholder under the Illinois Statute.
Holders of shares of River Bend Stock shall not be entitled to
receive any portion of the Merger Consideration that would have
been allocated to the holders of dissenting shares had such holders
not perfected their dissenters' rights pursuant to the Illinois
Statute.
(g) Unissued Shares. No payment shall be made in
---------------
respect of authorized but unissued shares of River Bend Stock.
1.03 Exchange Procedures.
-------------------
(a) At or prior to the Effective Time, Magna shall
deposit, or shall cause to be deposited, with the Exchange Agent,
for the benefit of holders of certificates representing shares of
River Bend Stock (the "Certificates"), for exchange in accordance
with this Section 1.03, certificates representing the Stock
Distribution and such amount of cash as shall represent (i) the
Preferred Cash
- 5 -
<PAGE> 10
Distribution, (ii) the Common Cash Distribution and (iii) cash in lieu
of fractional shares, to be issued and paid pursuant to the Merger in
exchange for outstanding shares of River Bend Stock.
(b) As soon as practicable following the Effective Time,
Magna shall mail to each holder of record of shares of River Bend
Stock as of the Closing Date, a notice of the consummation of the
Merger and a form of letter of transmittal pursuant to which each
such holder shall transmit the Certificates or, in lieu thereof,
such evidence of lost, stolen or mutilated Certificate or
Certificates and such surety bond or other security as the Exchange
Agent may reasonably require. Such letters of transmittal shall
specify that risk of loss and title to the Certificate or
Certificates shall pass only upon delivery of such Certificate or
Certificates to the Exchange Agent.
(c) After the Effective Time, each holder of a
Certificate that surrenders such Certificate or, in lieu thereof,
the required documentation for a lost, stolen or mutilated
Certificate (the "Required Documentation") to the Exchange Agent
will, upon acceptance thereof by the Exchange Agent, be entitled to
the Merger Consideration.
(d) The Exchange Agent shall accept Certificates or, in
lieu thereof, the Required Documentation upon compliance with such
reasonable terms and conditions as the Exchange Agent may impose to
effect an orderly exchange thereof in accordance with customary
exchange practices. Certificates shall be appropriately endorsed
or accompanied by such instruments of transfer as the Exchange
Agent may reasonably require. If the tender of a Certificate or
the Required Documentation is not in compliance with such
reasonable terms and conditions, the Exchange Agent shall promptly
return the Certificate or Required Documentation with instructions
as to how to comply with such terms and conditions.
(e) Each outstanding Certificate shall until duly
surrendered to the Exchange Agent be deemed to evidence ownership
of the Merger Consideration into which the shares of River Bend
Stock represented by such Certificate shall have been converted
pursuant to the Merger.
(f) After the Effective Time, holders of Certificates
shall cease to have rights with respect to the shares of River Bend
Stock previously represented by such Certificates, and such
holder's sole rights shall be to exchange such Certificates for the
Merger Consideration issuable in the Merger. After the Effective
Time, there shall be no further transfer on the records of River
Bend of Certificates, and if such Certificates are presented to
River Bend for transfer, they shall be cancelled against delivery
of the Merger Consideration issuable or payable in the Merger. The
Exchange Agent shall not be obligated to deliver the Merger
Consideration to which any holder of River Bend Stock is entitled
as a result of the Merger until such holder surrenders the
Certificates or furnishes the Required Documentation as provided
herein. No interest will be accrued or paid on the cash component
of the Merger Consideration other than as provided in Section
1.02(d) hereof. No dividends or distributions declared after the
Effective Time on the Magna Common Stock representing the stock
component of the Merger Consideration will be remitted to any
person entitled to receive the Merger Consideration under this
Agreement until such person surrenders the Certificate or
Certificates or furnishes the Required Documentation, at which time
such dividends or distributions shall be remitted to such person,
without interest and less any taxes that may have been imposed
thereon. Neither Magna nor River Bend nor any affiliate thereof
shall be liable to any holder of shares of River Bend Stock
represented by any Certificate for any Merger Consideration
issuable or payable in the Merger paid to a public official
pursuant to applicable abandoned property, escheat or similar laws.
The Exchange Agent shall be entitled to rely upon the stock
transfer books of River Bend to establish the identity of those
persons entitled to the Merger Consideration, which books shall be
conclusive with respect thereto. In the event of a dispute with
respect to ownership of the shares of River Bend Stock represented
by any Certificate, the Exchange Agent shall be entitled to deposit
any Merger Consideration represented thereby with an independent
third party and thereafter be relieved with respect to any claims
thereto.
- 6 -
<PAGE> 11
1.04 Closing; Effective Time. The closing (the
-----------------------
"Closing") of the Merger shall take place at the offices of
Thompson & Mitchell, St. Louis, Missouri promptly after the
satisfaction or waiver of all conditions to the Merger on a date to
be fixed by Magna (the "Closing Date") on the last Business Day (as
hereinafter defined ) of a calendar month in which the last of the
following events occurs: (i) the receipt of the requisite approval
of the Plan of Merger by the shareholders of River Bend as set
forth in Section 5.02 hereof and (ii) the receipt of the approvals
of the Board of Governors of the Federal Reserve System (the
"Federal Reserve Board") and the Illinois Commissioner of Banks and
Trust Companies (the "Illinois Commissioner"), and the expiration
of any waiting period after such approvals required by law or
regulation, or such later date as may be agreed to by the parties
in writing. At the Closing the parties shall each deliver to the
other such evidence of the satisfaction of the conditions to the
Merger as may reasonably be required (including materials required
to be delivered under Article VIII). Prior to the Closing Date,
the parties shall each execute Articles of Merger with respect to
the Plan of Merger and Magna shall cause such Articles of Merger to
be delivered, on the Closing Date, for filing with the Office of
the Secretary of State of the State of Illinois. The Merger shall
be effective on the date and at the time (the "Effective Time")
that the Secretary of State of the State of Illinois issues the
Certificate of Merger in accordance with the provisions of the
Illinois Statute. For purposes of this Agreement, "Business Day"
shall mean any day that the Office of the Secretary of State of the
State of Illinois is open for receipt of official corporate
filings.
1.05 Further Assurances. If at any time after the
------------------
Effective Time Magna shall consider it advisable that any further
conveyances, agreements, documents, instruments or assurances of
law or any other actions or things are necessary or desirable to
vest, perfect, confirm or record in RBAC the title to any property,
rights, privileges, powers or franchises of River Bend or RBAC, the
Board of Directors and officers of RBAC shall, and are hereby
authorized to, execute and deliver in the name and on behalf of
River Bend, RBAC or otherwise, any and all proper conveyances,
agreements, documents, instruments and assurances of law and do all
things necessary or proper to vest, perfect or confirm title to
such property, rights, privileges, powers and franchises in RBAC
and otherwise, to carry out the provisions of this Agreement.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF MAGNA
---------------------------------------
Magna represents and warrants to River Bend as follows.
For purposes of this Agreement, except in Section 2.01 and where
the context requires otherwise, any reference to Magna shall be
deemed to include Magna and each of Magna's subsidiaries (being any
entity of which Magna owns 100% of the outstanding voting stock),
and any reference to "material," "material adverse effect" or a
similar standard shall refer to the financial condition, operations
or other aspects of Magna and Magna's subsidiaries, taken as a
whole.
2.01 Organization and Authority. Magna (parent company
--------------------------
only) is a corporation duly incorporated, validly existing and in
good standing under the laws of the State of Delaware and has the
corporate power and authority to own its properties and assets and
to carry on its business as it is now being conducted. Magna is
qualified to do business in the States of Missouri and Illinois and
is not required to qualify to do business in any other state or
foreign jurisdiction. Magna is registered as a bank holding
company with the Federal Reserve Board under the Bank Holding
Company Act of 1956, as amended (the "BHC Act").
2.02 Capitalization of Magna. As of September 30, 1995,
-----------------------
the authorized capital stock of Magna consisted of (a) 40,000,000
shares of Magna Common Stock, of which at September 30, 1995,
27,881,344 of such shares were issued and outstanding;
(b) 1,000,000 shares of Preferred Stock, no par value per share, of
which at September 30, 1995 no shares were issued or outstanding
and of which at September 30, 1995, 400,000 shares have been
designated by Magna's Board of Directors as the Series A Junior
Participating Preferred Stock (the "Magna Series A
- 7 -
<PAGE> 12
Preferred Stock"); (c) 49,500 shares of preferred stock, $20.00 par
value per share, designated Class B Voting Stock, of which, at
September 30, 1995, 2,037 shares were issued and outstanding; and (d)
1,000,000 shares of preferred stock, $0.10 par value per share,
designated Class C Nonvoting Stock, of which, at September 30, 1995,
no shares were issued and outstanding.
2.03 Authorization. The execution, delivery and
-------------
performance of this Agreement by Magna and the consummation of the
transactions contemplated hereby have been duly authorized by the
Board of Directors of Magna. No other corporate proceedings on the
part of Magna are necessary to authorize the execution and delivery
of this Agreement and the performance by Magna of the terms hereof.
This Agreement is a valid and binding obligation of Magna
enforceable against Magna in accordance with its terms except as
may be limited by applicable bankruptcy, insolvency, reorganization
or moratorium or other similar laws affecting creditors' rights
generally and except that the availability of equitable remedies is
within the discretion of the appropriate court.
Neither the execution, delivery and performance of this
Agreement by Magna, nor the consummation of the transactions
contemplated hereby, nor compliance by Magna with any of the
provisions hereof, will (a) in any material respect violate,
conflict with, or result in a breach of any provision of, or
constitute a default (or an event which, with notice or lapse of
time or both, would constitute a default) under, or result in the
termination of, or accelerate the performance required by, or
result in a right of termination or acceleration, or the creation
of any lien, security interest, charge or encumbrance upon any of
the properties or assets of Magna under any terms, conditions or
provisions of, (i) Magna's Certificate of Incorporation or Bylaws
or other charter documents of Magna, or (ii) any material note,
bond, mortgage, indenture, deed of trust, license, lease, agreement
or other instrument or obligation to which Magna is a party or by
which Magna may be bound, or to which Magna or its properties or
assets may be subject, or (b) subject to compliance with the
statutes and regulations referred to in the next paragraph, violate
in any material respect any judgment, ruling, order, writ,
injunction, decree, statute, rule or regulation applicable to Magna
or any of its properties or assets. No notice to, filing with,
authorization of, exemption by, or consent or approval of, any
public body or authority is necessary for the execution or delivery
by Magna of this Agreement.
Other than in connection or in compliance with the
provisions of the Illinois Statute, the Securities Act of 1933, as
amended, and the rules and regulations thereunder (the "Securities
Act"), the Securities Exchange Act of 1934, as amended, and the
rules and regulations thereunder (the "Exchange Act"), the
securities or blue sky laws of the various states and consents,
authorizations, approvals, notices or exemptions required under the
BHC Act and the banking laws of the State of Illinois no notice to,
filing with, authorization of, exemption by, or consent or approval
of, any public body or authority is necessary for the consummation
by Magna of the transactions contemplated by this Agreement.
2.04 Magna Financial and Other Reports. Magna has made
---------------------------------
available to River Bend the following financial statements and
other reports and documents (the "Magna Financial Statements"):
(a) Magna's Annual Report to Stockholders for the years
ended December 31, 1994, 1993 and 1992;
(b) Copies of all of Magna's Forms 10-K, 8-K, 10-Q and
8-A and definitive proxy statements filed with the SEC since
December 31, 1992, as amended;
(c) The annual FRY-6 Reports of Magna filed with The
Federal Reserve Bank of St. Louis for the fiscal years ended
December 31, 1994, 1993 and 1992.
The Magna Financial Statements have been prepared and
where required, filed in accordance with all provisions of
applicable law, including without limitation the Securities Act and
the
- 8 -
<PAGE> 13
Exchange Act, and do not omit to state or reflect any material
fact concerning Magna required to be stated or reflected therein or
necessary to make the statements therein not misleading. The Magna
Financial Statements (i) have been prepared, where applicable, in
accordance with generally accepted accounting principles, except as
otherwise noted therein, (ii) present fairly the results of
operations and financial position of Magna for the periods and at
the times indicated, and (iii) are true and correct in all material
respects for the periods and at the times indicated.
Since January 1, 1992, Magna has filed, and subsequent to
the date hereof will file, all reports, registrations and
statements, together with any amendments required to be made with
respect thereto, that were and are required to be filed with
(i) the SEC, including, but not limited to, Forms 10-K, 10-Q and
8-K and proxy statements, and (ii) the Federal Reserve Board (all
such reports and statements are collectively referred to herein as
the "Magna Reports"). As of their respective dates, the Magna
Reports complied and will comply in all material respects with all
of the statutes, rules and regulations enforced or promulgated by
the regulatory authority with which they were or will be filed and
did not 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.
2.05 Registration and Proxy Statements. None of the
---------------------------------
information supplied or to be supplied by Magna for inclusion in
(a) the Registration Statement to be filed by Magna with the SEC
(the "Registration Statement") in connection with the Magna Common
Stock to be issued in the Merger, (b) the Proxy Statement to be
mailed to River Bend shareholders in connection with the meeting
(the "River Bend Shareholders' Meeting") to be called to consider
the Merger (the "Proxy Statement"), and (c) any other documents to
be filed with the SEC or any regulatory agency in connection with
the transactions contemplated hereby will, at the time the
Registration Statement is filed with the SEC or at the time it
becomes effective, at the time the Proxy Statement is mailed to
holders of River Bend Stock, at the time of the River Bend
Shareholders' Meeting and at the time of filing of such other
documents, respectively, contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein
in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. All
documents which Magna is responsible for filing with the SEC or any
regulatory agency in connection with the Merger will comply as to
form in all material respects with the provisions of applicable
law.
2.06 Events Subsequent to December 31, 1994. Since
--------------------------------------
December 31, 1994, except as disclosed in Schedule 2.06 hereto or
-------------
in the Magna Financial Statements filed prior to the date hereof,
there has been no (a) material adverse change in the financial
condition or operating results of Magna; or (b) damage, destruction
or loss materially adversely affecting the property or business of
Magna. Magna anticipates, on or before December 31, 1995,
converting Magna Bank of Missouri and Magna Bank of Illinois into
national banks and thereafter merging the two banks.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF RIVER BEND
--------------------------------------------
River Bend represents and warrants to Magna as follows.
For purposes of this Agreement, except in Sections 3.01 and 3.03
and where the context requires otherwise any reference to River
Bend shall be deemed to include River Bend and each of the "River
Bend Subsidiaries" (as defined in Section 3.02 below), and any
reference to "material," "material adverse effect" or a similar
standard shall refer to the financial condition, operations or
other aspects of River Bend and the River Bend Subsidiaries, taken
as a whole. A disclosure made in any schedule delivered by River
Bend pursuant to this Article III shall be deemed to have been made
in all such schedules.
- 9 -
<PAGE> 14
3.01 Organization and Authority. River Bend is a
--------------------------
corporation duly incorporated, validly existing and in good
standing under the laws of the State of Illinois and has the
corporate power and authority to own its property and assets and to
carry on its business as it is now being conducted. River Bend is
not required to qualify to do business in any other state or
foreign jurisdiction. River Bend is registered as a bank holding
company with the Federal Reserve Board under the BHC Act.
3.02 River Bend Subsidiaries. Except as otherwise set
-----------------------
forth in Schedule 3.02 hereto, River Bend beneficially owns,
-------------
directly or indirectly, all the shares of the outstanding capital
stock of each of the subsidiaries listed in Schedule 3.02 hereto,
-------------
(herein called collectively the "River Bend Subsidiaries" or
individually a "River Bend Subsidiary"), which subsidiaries
constitute all of the material, direct or indirect subsidiaries of
River Bend. River Bend does not own more than 5% of the voting
power of any other corporation or entity. No equity securities of
any of the River Bend Subsidiaries are or may become required to be
issued by reason of any options, warrants, scrip, rights to
subscribe, calls or commitments of any character whatsoever; there
are outstanding no securities or rights convertible into or
exchangeable for shares of any capital stock of any River Bend
Subsidiary; and there are no other contracts, commitments,
understandings or arrangements, whether oral or written, by which
any River Bend Subsidiary is bound to issue additional shares of
its capital stock or options, warrants or rights to purchase or
acquire any additional shares of its capital stock. Except as
provided for under any applicable banking statute, all of the
shares of capital stock of each of the River Bend Subsidiaries
owned by River Bend are fully paid and nonassessable and are owned,
directly or indirectly, by it free and clear of any material claim,
lien, encumbrance or agreement with respect thereto. Each River
Bend Subsidiary is a banking association or a corporation duly
organized, validly existing and in good standing under the laws of
its jurisdiction of incorporation, and has the corporate power and
authority and all necessary material federal, state and local
authorizations to own or lease its properties and assets and to
carry on its business as it is now being conducted. The deposits
of each River Bend Subsidiary which is a banking institution and
accepts deposits are insured by the FDIC to the extent provided by
law under either the Bank Insurance Fund or the Savings Association
Insurance Fund.
3.03 Capitalization of River Bend. The authorized
----------------------------
capital stock of River Bend consists of (i) 200,000 shares of Class
I Common Stock, of which, as of the date hereof, 157,063 shares
were issued and outstanding, (ii) 1,000,000 shares of Class II
Common Stock, of which, as of the date hereof, 785,315 shares were
issued and outstanding, and (iii) 10,000 shares of Preferred Stock,
of which, as of the date hereof, 5,991 shares were issued and
outstanding.
Other than as set forth in this Section 3.03, there are
no other shares of capital stock or other equity securities of
River Bend outstanding and no other outstanding options, warrants,
scrip, rights to subscribe, calls or commitments of any character
whatsoever relating to, or securities or rights convertible into or
exchangeable for, shares of any capital stock of River Bend, or
contracts, commitments, understandings or arrangements by which
River Bend was or may become bound to issue additional shares of
its capital stock or options, warrants or rights to purchase or
acquire any additional shares of its capital stock. Attached
hereto as Schedule 3.03 is a current and accurate list of River
-------------
Bend's shareholders, including addresses, dated as of the date
hereof.
3.04 Authorization. The execution, delivery and
-------------
performance of this Agreement and the Plan of Merger by River Bend
and the consummation of the transactions contemplated hereby and
thereby have been duly authorized by the Board of Directors of
River Bend. No other corporate proceedings on the part of River
Bend are necessary to authorize the execution and delivery of this
Agreement and the Plan of Merger and, except for the approval of
the Merger by River Bend's shareholders, the performance by River
Bend of the terms hereof and thereof. Each of this Agreement and
the Plan of Merger is a valid and binding obligation of River Bend
enforceable against River Bend in accordance with its terms except
as may be limited by applicable bankruptcy, insolvency,
reorganization or moratorium or other similar laws affecting
creditors' rights generally and except that the availability of
equitable remedies is within the discretion of the appropriate
court.
- 10 -
<PAGE> 15
Neither the execution, delivery and performance of this
Agreement and the Plan of Merger by River Bend, nor the
consummation of the transactions contemplated hereby or thereby,
nor compliance by River Bend with any of the provisions hereof or
thereof, will (a) in any material respect violate, conflict with,
or result in a breach of any provision of, or constitute a default
(or an event which, with notice or lapse of time or both, would
constitute a default) under or result in the termination of, or
accelerate the performance required by, or result in a right of
termination or acceleration, or the creation of any lien, security
interest, charge or encumbrance upon any of the properties or
assets of River Bend or any River Bend Subsidiary under any terms,
conditions or provisions of, (i) River Bend's Articles of
Incorporation or Bylaws or other charter documents of River Bend or
any River Bend Subsidiary or, (ii) subject to receipt of applicable
waivers or consents shown on Schedule 3.04, any material note,
-------------
bond, mortgage, indenture, deed of trust, license, lease, agreement
or other instrument or obligation to which River Bend or any River
Bend Subsidiary is a party or by which River Bend or any River Bend
Subsidiary may be bound, or to which River Bend or any River Bend
Subsidiary or the properties or assets of any of them may be
subject, or (b) subject to compliance with the statutes and
regulations referred to in the next paragraph, violate in any
material respect any judgment, ruling, order, writ, injunction,
decree, statute, rule or regulation applicable to River Bend or any
of the River Bend Subsidiaries or any of their respective
properties or assets. No notice to, filing with, authorization of,
exemption by, or consent or approval of, any public body or
authority is necessary for the execution or delivery by River Bend
of this Agreement and the Plan of Merger.
Other than in connection or in compliance with the
provisions of the Illinois Statute, the Securities Act, the
Exchange Act, the securities or blue sky laws of the various states
and consents, authorizations, approvals, notices or exemptions
required under the BHC Act and the banking laws of the State of
Illinois, no notice to, filing with, authorization of, exemption
by, or consent or approval of, any public body or authority is
necessary for the consummation by River Bend of the transactions
contemplated by this Agreement including the Plan of Merger.
3.05 River Bend Financial and Other Reports. River Bend
--------------------------------------
has made available to Magna the following financial statements and
other reports and documents (the "River Bend Financial
Statements"):
(a) River Bend's audited consolidated financial
statements and the notes thereto as prepared by River Bend's
independent accountants for the years ended December 31, 1994, 1993
and 1992 and all unaudited reports for any interim periods since
December 31, 1994;
(b) Consolidated Reports of Condition and Income of each
of the River Bend Subsidiaries, where applicable, for the fiscal
years ended December 31, 1994, 1993 and 1992; and
(c) The annual FRY-6 Reports filed with The Federal
Reserve Bank of St. Louis of River Bend for the fiscal years ended
December 31, 1994, 1993 and 1992.
The River Bend Financial Statements have been prepared
and, where required, filed in accordance with all provisions of
applicable law and do not omit to state or reflect any material
fact concerning River Bend required to be stated or reflected
therein or necessary to make the statements therein not misleading.
The River Bend Financial Statements (i) have been prepared, where
applicable, in accordance with generally accepted accounting
principles, except as otherwise noted therein, (ii) present fairly
the results of operations and financial position of River Bend for
the periods and at the times indicated, and (iii) are true and
correct in all material respects for the periods and at the times
indicated.
Since January 1, 1992, River Bend and the River Bend
Subsidiaries have filed, and subsequent to the date hereof will
file, all reports and statements, together with any amendments
required to be made with respect thereto, that were and are
required to be filed with (i) the Federal
- 11 -
<PAGE> 16
Reserve Board, (ii) the FDIC and (iii) any applicable state banking
authorities (all such reports and statements are collectively referred
to herein as the "River Bend Reports"). As of their respective dates,
the River Bend Reports complied and will comply in all material
respects with all of the statutes, rules and regulations enforced or
promulgated by the regulatory authority with which they were filed and
did not 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.
3.06 Events Subsequent to December 31, 1994. Since
--------------------------------------
December 31, 1994, except as disclosed in Schedule 3.06 hereto or
-------------
in the River Bend Financial Statements filed prior to the date
hereof, there has been no (a) material adverse change in the
financial condition or operating results of River Bend; (b) damage,
destruction or loss materially adversely affecting the property or
business of River Bend; or (c) declaration, setting aside or
payment of any dividend on, or any distribution in respect of, the
River Bend Stock, other than (i) a dividend of $12.00 per share
with respect to the Preferred Stock payable to the shareholders of
record on January 24, 1995 and paid on January 31, 1995, (ii) a
dividend of $0.09 per share with respect to the Class I Common
Stock and Class II Common Stock payable to shareholders of record
on February 17, 1995 and paid on February 24, 1995, (iii) a
dividend of $0.09 per share with respect to the Class I Common
Stock and Class II Common Stock payable to shareholders of record
on May 18, 1995 and paid on May 25, 1995 and (iv) a dividend of
$0.09 per share with respect to the Class I Common Stock and Class
II Common Stock payable to shareholders of record on August 31,
1995 and payable on August 31, 1995.
3.07 Investment and Loan Portfolios. All United States
------------------------------
Treasury securities, obligations of other United States Government
agencies and corporations, obligations of States and political
subdivisions of the United States and other investment securities
shown on the River Bend Financial Statements at December 31, 1994
or which are purchased after December 31, 1994 but before the
Effective Time were, and will be, carried in the aggregate at no
more than cost adjusted for amortization of premiums and accretion
of discounts, subject to any adjustment required for securities
classified as available for sale or held for trading under
Statement of Financial Accounting Standard No. 115, "Accounting for
Certain Investments in Debt and Equity Securities." Except as
disclosed on Schedule 3.07, all loans and discounts shown on the
-------------
River Bend Financial Statements at December 31, 1994 or which are
entered into after December 31, 1994 but before the Effective Time
were, and will be, made in all material respects for good, valuable
and adequate consideration in the ordinary course of the business
of River Bend, and the notes or other evidence of indebtedness
evidencing them are and will be, in all material respects,
enforceable, valid, true and genuine and what they purport to be.
River Bend has complied and will prior to the Effective Time comply
with all laws and regulations relating to such loans, or to the
extent there has not been such compliance, such failure to comply
will not materially interfere with collections. River Bend's
reserve for possible loan and lease losses shown on the River Bend
Financial Statements as of December 31, 1994 or which is allocated
after December 31, 1994 but before the Effective Time was, and will
be, adequate to absorb reasonably anticipated losses in the loan
and lease portfolios of River Bend, in view of the size and
character of such portfolios, current economic conditions, and
other pertinent factors, and no facts have subsequently come to the
attention of management of River Bend which would cause it to
restate any of the River Bend Financial Statements in any material
way the level of such reserve for possible losses on loans and
leases.
3.08 Title to Properties; Insurance. River Bend has
------------------------------
marketable title, insurable at standard rates, free and clear of
all material liens, charges and encumbrances (except taxes which
are a lien but not yet payable and liens, charges or encumbrances
reflected in the River Bend Financial Statements) to all material
real and personal properties shown on the latest applicable River
Bend Financial Statements as belonging to it (including leasehold
interests) or acquired since the date thereof (except any
properties subsequently disposed of in the ordinary course of
business). Except as set forth on Schedule 3.08, all leases
-------------
material to River Bend pursuant to which River Bend, as lessee,
leases real or personal property are valid and effective in
accordance with their respective terms in all
- 12 -
<PAGE> 17
material respects, and there is not, under any of such leases, any
material existing default by River Bend, or (to the best knowledge of
River Bend) any other party thereto, or any event which with notice or
lapse of time or both would constitute such a material default. All
such properties comply in all material respects with all applicable
private agreements, zoning requirements and other governmental laws
and regulations relating thereto and there are no material
condemnation proceedings pending or, to the knowledge of River
Bend, threatened with respect to such properties. All material
insurable properties owned or leased by River Bend are adequately
insured by financially sound and reputable insurers in such amounts
and against fire and other risks insured against by extended
coverage and public liability insurance, as is customary with
companies of the same size and in the same business.
3.09 Compliance with Laws. River Bend has all material
--------------------
licenses, franchises, permits and other governmental authorizations
that are legally required to enable it to conduct its business as
presently conducted in all material respects, is in compliance in
all material respects with all laws and regulations, and has filed
all material reports required by any governmental or other
regulatory body. River Bend is also in compliance in all material
respects with all material agreements to which it is a party.
3.10 Taxes. River Bend has heretofore made available to
-----
Magna copies of the federal and state tax returns for River Bend
and all notices related thereto for the five fiscal years
immediately preceding the date of this Agreement. River Bend has
filed all material federal, state and local tax returns due in
respect of any of its businesses or properties in a timely fashion
and has paid or made appropriate provisions for all amounts due as
shown on such returns. All such returns fairly reflect in all
material respects the information required to be presented therein.
Except as disclosed on Schedule 3.10, all provisions for accrued
-------------
but unpaid taxes contained in the River Bend Financial Statements
were made in accordance with generally accepted accounting
principles and in the aggregate do not materially fail to provide
for potential tax liabilities. No audit, examination or
investigation of the tax returns of River Bend is presently being
conducted or, to the knowledge of River Bend, threatened by any
taxing authority.
3.11 Litigation. Except as disclosed in Schedule 3.11,
---------- -------------
there is no litigation or other proceeding pending or, to the
knowledge of River Bend, threatened, before any judicial,
administrative or regulatory agency or tribunal, to which River
Bend is a party or to which the property of River Bend is subject,
which would have a material adverse effect upon River Bend's
business or condition.
3.12 Registration and Proxy Statements. None of the
---------------------------------
information supplied or to be supplied by River Bend for inclusion
in (a) the Registration Statement, (b) the Proxy Statement and
(c) any other documents to be filed with the SEC or any regulatory
agency in connection with the transactions contemplated hereby
will, at the time the Registration Statement is filed with the SEC
or at the time it becomes effective, at the time the Proxy
Statement is mailed to holders of River Bend Stock, at the time of
River Bend Shareholders' Meeting, and at the time of filing of such
other documents, respectively, contain any untrue statement of a
material fact or omit to state a material fact required to be
stated therein in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. All
documents which River Bend is responsible for filing with the SEC
or any regulatory agency in connection with the Merger will comply
as to form in all material respects with the provisions of
applicable law.
3.13 Brokers and Finders. Except for Fister &
-------------------
Associates, Inc., neither River Bend nor any of its officers,
directors or employees has employed any broker or finder or
incurred any liability for any financial advisory fees, brokerage
fees, commissions or finder's fees, and, except for Fister and
Associates, Inc., no broker or finder has acted directly or
indirectly for River Bend in connection with this Agreement, the
Plan of Merger, or the transactions contemplated hereby or thereby.
- 13 -
<PAGE> 18
3.14 Commitments and Contracts. Except as set forth on
-------------------------
Schedule 3.14 neither River Bend nor any River Bend Subsidiary is
- -------------
a party or subject to any of the following (whether written or
oral, express or implied):
(i) any employment contract or understanding
(including any understandings or obligations with respect
to severance or termination pay liabilities or fringe
benefits) with any present or former officer, director,
employee or consultant (other than those which are
terminable at will by River Bend or such subsidiary);
(ii) any plan, contract or understanding providing
for any bonus, pension, option, deferred compensation,
retirement payment, profit sharing or similar arrangement
with respect to any present or former officer, director,
employee or consultant other than as set forth in Section
3.16;
(iii) any contract not made in the ordinary course
of business containing covenants which limit the ability
of River Bend or any River Bend Subsidiary to compete in
any line of business or with any person or which involve
any restriction of the geographical area in which, or
method by which, River Bend or any River Bend Subsidiary
may carry on its business (other than as may be required
by law or applicable regulatory authorities);
(iv) any other contract or agreement which is a
"material contract" within the meaning of Item 601(b)(10)
of Regulation S-K issued under the Securities Act; or
(v) any lease with annual rental payments
aggregating $20,000 or more.
3.15 Material Interests of Certain Persons. Except as
-------------------------------------
set forth on Schedule 3.15, no officer or director of River Bend or
-------------
any River Bend Subsidiary, or any "associate" (as such term is
defined in Rule 14a-1 under the Exchange Act) of any such officer
or director, has any material interest in any material contract or
property (real or personal), tangible or intangible, used in or
pertaining to the business of River Bend or any River Bend
Subsidiary.
Schedule 3.15 sets forth a correct and complete list of
-------------
any loan from River Bend or any River Bend Subsidiary to any
present officer, director, employee or any associated or related
interest of any such person which was required under Regulation 0
of the Federal Reserve Board or applicable state law to be approved
by or reported to River Bend's or such River Bend Subsidiary's
Board of Directors.
3.16 River Bend Benefit Plans.
------------------------
(a) The only "employee benefit plans" within the meaning
of Section 3(3) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), for which River Bend or any River Bend
Subsidiary acts as the plan sponsor as defined in ERISA Section
3(16)(B), and with respect to which any liability under ERISA or
otherwise exists or may be incurred by River Bend or any River Bend
Subsidiary are those set forth on Schedule 3.16 (the "Plans"). No
-------------
Plan is a "multiemployer plan" within the meaning of Section 3(37)
of ERISA.
(b) Each Plan is and has been in all material respects
operated and administered in accordance with its provisions and
applicable law. Except as set forth on Schedule 3.16, River Bend
-------------
or the River Bend Subsidiaries have received favorable
determination letters from the Internal Revenue Service under the
provisions of the Tax Equity and Fiscal Responsibility Act
("TEFRA"), the Deficit Reduction Act ("DEFRA"), the Retirement
Equity Act ("REA") and the Tax Reform Act of 1986 for each of the
Plans to which the qualification requirements of Section 401(a) of
the Code, apply. River Bend knows of no reason that any Plan which
is subject to the qualification provisions of Section 401(a) of
- 14 -
<PAGE> 19
the Code is not "qualified" within the meaning of Section 401(a) of
the Code and that each related trust is not exempt from taxation under
Section 501(a) of the Code.
(c) Each Plan that is subject to ERISA did not, in each
case, as of the end of the last plan year, have any unfunded vested
benefits for purposes of payment of premiums to the Pension Benefit
Guaranty Corporation ("PBGC"), as reported on each such Plan's PBGC
Form 1.
(d) Except as disclosed in Schedule 3.16, no Plan or any
-------------
trust created thereunder, nor any trustee, fiduciary or
administrator thereof, has engaged in a "prohibited transaction",
as such term is defined in ERISA or Section 4975 of the Code, or
breached a fiduciary duty which could subject such plan or trust,
or any trustee, fiduciary or administrator thereof, or any party
dealing with any such Plan or trust, to civil or criminal liability
under ERISA or to the tax or penalty on prohibited transactions
imposed by said Section 4975.
(e) Except as set forth on Schedule 3.16, no Plan or any
-------------
trust created thereunder has been terminated, nor have there been
any "reportable events" with respect to any Plan, as that term is
defined in Section 4043 of ERISA.
(f) No Plan or any trust created thereunder has incurred
any "accumulated funding deficiency", as such term is defined in
Section 412 of the Code (whether or not waived) during the last
five (5) Plan years.
(g) All filings and reports as to such Plans required to
have been made on or prior to the date hereof to the Internal
Revenue Service, the United States Department of Labor or any other
governmental authority, or any individual, have been made on or
prior to the date hereof.
(h) There is no material litigation, disputed claim,
governmental proceeding or investigation pending or threatened with
respect to any of the Plans, the related trusts or any fiduciary,
trustee, administrator or sponsor of such Plans.
(i) River Bend and each of the River Bend Subsidiaries
have complied, in all material respects, with the provisions of
Section 4980B of the Code and Sections 601 through 608 of ERISA and
is not liable for any excise tax under Section 4980B of the Code.
3.17 Registration Obligations. Except as set forth on
------------------------
Schedule 3.17, neither River Bend nor any River Bend Subsidiary is
- -------------
under any obligation, contingent or otherwise, which will survive
the Merger by reason of any agreement to register any of its
securities under the Securities Act.
3.18 Administration of Trust Accounts. Except as set
--------------------------------
forth on Schedule 3.18, River Bend and each River Bend Subsidiary
-------------
has properly administered in all material respects and which could
reasonably be expected to be material to the financial condition of
River Bend all accounts for which it acts as a fiduciary, including
but not limited to accounts for which it serves as a trustee,
agent, custodian, personal representative, guardian or investment
advisor, in accordance with the terms of the governing documents
and applicable state and federal law and regulation and common law.
Neither River Bend, any River Bend Subsidiary, nor any director,
officer or employee of River Bend or any River Bend Subsidiary has
committed any breach of trust with respect to any such fiduciary
account which is material to or could reasonably be expected to be
material to the financial condition of River Bend, and the
accountings for each such fiduciary account are true and correct in
all material respects and accurately reflect the assets of such
fiduciary account.
3.19 Vote Required. The affirmative vote of the holders
-------------
of at least two-thirds of the outstanding shares of River Bend
Stock (Class I Common Stock, Class II Common Stock and Preferred
Stock each voting as a separate class) is the only vote of the
shareholders of River Bend necessary to approve the Merger and
other transactions contemplated hereby.
- 15 -
<PAGE> 20
3.20 Interest Rate Risk Management Instruments.
-----------------------------------------
(a) Set forth on Schedule 3.20(a) is a list as of the
----------------
date hereof of all interest rate swaps, caps, floors and option
agreements and other interest rate risk management arrangements to
which River Bend or any of the River Bend Subsidiaries is a party
or by which any of their properties or assets may be bound.
(b) All such interest rate swaps, caps, floors and
option agreements and other interest rate risk management
arrangements to which River Bend or any of the River Bend
Subsidiaries is a party or by which any of their properties or
assets may be bound were entered into in the ordinary course of
business and, to the best knowledge of River Bend, in accordance
with prudent banking practice and applicable rules, regulations and
policies of the appropriate regulatory authorities and with
counterparties believed to be financially responsible at the time
and are legal, valid and binding obligations and are in full force
and effect. River Bend and each of the River Bend Subsidiaries has
duly performed in all material respects all of its obligations
thereunder to the extent that such obligations to perform have
accrued, and to the best knowledge of River Bend, there are no
material breaches, violations or defaults or allegations or
assertions of such by any party thereunder.
3.21 Discrimination, Occupational Safety, Labor and Other
----------------------------------------------------
Statutes and Regulations. No person, party or labor organization
- ------------------------
(including, but not limited to, governmental agencies of any kind)
has any claim, action or proceeding pending or, to River Bend's
knowledge, threatened against River Bend arising out of any
statute, ordinance or regulation relating to the payment of wages
or benefits, plant closing laws, discrimination in employment,
employment practices, immigration, continuation of health insurance
benefits or occupational safety and health standards (including,
but without limiting the foregoing, any applicable state statutes,
the Fair Labor Standards Act, National Labor Relations Act, Title
VII of the Civil Rights Act of 1964, as amended, the Age
Discrimination in Employment Act of 1967, as amended, or the
Americans with Disabilities Act), nor, to River Bend's knowledge,
is there any basis for any such claim, action or proceeding.
Attached hereto as Schedule 3.21 is a copy of each collective
-------------
bargaining agreement to which River Bend or a River Bend Subsidiary
is a party.
ARTICLE IV
ENVIRONMENTAL MATTERS
---------------------
4.01 Environmental Inspection. After the execution of
------------------------
this Agreement, Magna may commence or cause to be commenced
environmental assessments, including but not limited to an
inspection, with respect to each of the Bank Premises (as
hereinafter defined) to the extent deemed appropriate by Magna in
its sole and absolute discretion. River Bend agrees to cooperate
with Magna and its environmental consultants with respect to such
inspections and audits, which cooperation shall include, but shall
not be limited to, River Bend providing reasonable access to the
Bank Premises for the purposes of inspection, sampling and analysis
by Magna and its consultants, and making River Bend's employees
reasonably available for interviews regarding environmental
matters. The cost of the audits shall be at Magna's sole cost and
expense and such assessments must be completed within 55 days after
the date hereof. Should the assessments indicate risks, conditions
or environmental concerns unacceptable to Magna in its sole and
absolute discretion, Magna shall have the right for a period of ten
days following the end of such 45 day period, to terminate this
Agreement, which shall be Magna's sole remedy in such event. Bank
Premises means the banking houses, drive-in banking facilities and
teller facilities (staffed or automated), together with appurtenant
parking, storage, and other areas owned or leased by River Bend.
4.02 Environmental Claims. River Bend represents and
--------------------
warrants that, except as set forth on Schedule 4.02, no person or
-------------
governmental unit or agency has asserted, and to the best knowledge
of management of River Bend, no person or governmental unit or
agency has, any claim or basis for any action or proceeding against
River Bend or any Bank Premises arising under the
- 16 -
<PAGE> 21
Comprehensive Environmental Response, Compensation and Liability Act
of 1980, Federal Water Pollution Control Act (Clean Water Act), the
Resource Conservation and Recovery Act, the Clean Air Act, the Toxic
Substance Control Act, the Coastal Zone Management Act, the Power
Plant and Industrial Fuel Use Act of 1978, the National
Environmental Policy Act (Environmental Impact Statement), Illinois
Environmental Protection Act, all as amended, or any
anti-pollution, waste control and disposal, or environmental
"clean-up" provision of any statute, ordinance, regulation, rule or
guideline of any federal, state or local governmental unit or
authority, and all regulations and standards enacted pursuant
thereto and all permits and authorizations issued in connection
therewith (an "Environmental Matter").
Except as otherwise disclosed in Schedule 4.02, River
-------------
Bend has not been subject to or received any oral or written notice
of, nor to the best of its knowledge does it have reason to believe
there is any potential existing or pending violation, citation or
complaint relating to an Environmental Matter. Other than as set
forth on Schedule 4.02, to the best knowledge of River Bend, no
-------------
underground tank is now or has been located at any facility owned
by or leased to River Bend and no Hazardous Material (hereinafter
defined) has been generated, treated, stored, disposed of or
otherwise deposited in or on or allowed to emanate from any such
facility which may support a material claim or material cause of
action under the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended, or any other federal, state
or local governmental statute, ordinance, regulation, rule or
guideline.
4.03 Hazardous Material. For the purposes of this
------------------
Agreement, the term Hazardous Material shall include petroleum,
petroleum products, those substances defined as hazardous
substances in the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 (as amended), those wastes
defined as hazardous wastes under the Resource Conservation and
Recovery Act (as amended), and any other substances, materials or
wastes identified as being hazardous, toxic or dangerous under any
local, state or federal environmental law or regulation.
ARTICLE V
GOVERNMENTAL APPROVALS AND OTHER REQUIREMENTS
---------------------------------------------
5.01 Regulatory Approvals. River Bend and Magna will
--------------------
cooperate fully, provide all necessary information and data, and
render all assistance necessary or appropriate to facilitate the
filing by Magna, as soon as practicable after the execution of this
Agreement, of applications with (i) the Federal Reserve Board for
approval under the BHC Act, (ii) the Illinois Commissioner for
approval under the Illinois Banking Act and (iii) any other
applicable statutes of the Merger, to the extent required, and will
use their best efforts to obtain such approval.
5.02 Registration and Proxy Statements. River Bend and
---------------------------------
Magna will cooperate fully, provide all necessary information and
data, and render all assistance necessary or appropriate to
facilitate filing by Magna, as soon as practicable after the
execution of this Agreement, of the Registration Statement, and
shall use their best efforts to have the Registration Statement
declared effective as promptly as practicable. River Bend and
Magna shall also take any action required to be taken under any
applicable state blue sky or securities laws in connection with the
issuance of the shares of Magna Common Stock pursuant to the
Merger. River Bend shall furnish such information as may
reasonably be required in connection with any such action. River
Bend shall call the River Bend Shareholders' Meeting to be held as
soon as practicable for the purpose of voting upon the Plan of
Merger. In connection with the River Bend Shareholders' Meeting,
Magna shall prepare, subject to the review and consent of River
Bend, the Proxy Statement (which shall be part of the Registration
Statement) and mail the same to the shareholders of River Bend.
The Board of Directors of River Bend shall, subject to advice of
counsel with respect to its fiduciary obligations, recommend
approval of the Plan of Merger. River Bend shall, subject to
advice of counsel with respect to the Board of Directors' fiduciary
obligations, use its best efforts to obtain the approval of its
shareholders. At its Shareholders'
- 17 -
<PAGE> 22
Meeting, River Bend shall not submit any matter unrelated to the
transactions contemplated by this Agreement for approval of its
shareholders (except with the prior consent of Magna, which consent
shall not be unreasonably withheld). Promptly after the River Bend
Shareholders' Meeting, River Bend will deliver to Magna a true and
correct list of the names and addresses of, and the number of shares
of the River Bend Stock owned by, each of its shareholders who has
filed a timely written objection to the Merger and who has not voted
in favor thereof as provided in the Illinois Statute to preserve
rights as a dissenting shareholder.
5.03 Other Governmental Filings. River Bend and Magna
--------------------------
will file all necessary applications or notices with appropriate
state securities commissioners or authorities, and state banking
supervisory agencies or authorities, as may be necessary or
appropriate to effect the Merger.
5.04 Indemnity. River Bend and Magna shall each
---------
indemnify and hold harmless the other, and each of the other's
directors and officers, and each person, if any, who controls the
other party within the meaning of Section 15 of the Securities Act,
from and against any and all losses, claims, damages, expenses or
liabilities, joint or several, including legal fees and expenses,
to which they or any of them may become subject under the
Securities Act or under any other statute or at common law, insofar
as such losses, claims, damages, expenses or liabilities arise out
of or are based upon any untrue statement, or alleged untrue
statement, of a material fact in the written information furnished
hereunder by the indemnifying party, or are based upon the
omission, or alleged omission by the indemnifying party, to state
a material fact required to be stated, or necessary to make the
statements contained in such information not misleading, except as
may be limited by the rules and regulations of the SEC. Magna
shall indemnify and hold harmless John G. Helmkamp, Jr. from and
against any and all losses, claims, damages, expenses or
liabilities, joint or several, including legal fees and expenses,
to which he may become subject under the Section 11(a)(3) of the
Securities Act, insofar as such losses, claims, damages, expenses
or liabilities arise out of or are based upon any untrue statement,
or alleged untrue statement, of a material fact in the written
information furnished hereunder by Magna, or are based upon the
omission, or alleged omission by Magna, to state a material fact
required to be stated, or necessary to make the statements
contained in such information not misleading, except as may be
limited by the rules and regulations of the SEC.
5.05 Tax Opinion. An opinion of Thompson & Mitchell
-----------
shall be delivered and dated as of the date of filing of the
Registration Statement and as of the Closing Date to the effect
that the Merger will constitute a reorganization within the meaning
of Section 368 of the Code and that gain will be recognized by the
shareholders of River Bend with regard to the Stock Distribution,
the Common Cash Distribution and the Preferred Cash Distribution,
but only in accordance with the provisions and limitations of
Section 356 of the Code; provided, however, that certain holders of
Preferred Stock will recognize gain or loss in accordance with the
provisions of Section 302 of the Code.
5.06 Agreements of Affiliates. As soon as practicable
------------------------
following the River Bend Shareholders' Meeting, River Bend agrees
to deliver a letter identifying all persons or entities whom it
believes to be, at the time of the River Bend Shareholders'
Meeting, its "affiliates" for purposes of Rule 145 under the
Securities Act. River Bend shall cause each person or entity who
is identified as an "affiliate" in the letter referred to above to
deliver to Magna a written agreement dated the date of the River
Bend Shareholders' Meeting, in the form attached hereto as Exhibit
B, providing such person or entity will not sell, pledge, transfer
or otherwise dispose of the shares of Magna Common Stock owned by
such person except in compliance with the applicable provisions of
the Securities Act. River Bend will use its best efforts to obtain
a like agreement from any person or entity who becomes an affiliate
after the River Bend Shareholders' Meeting but prior to the
Effective Time.
- 18 -
<PAGE> 23
ARTICLE VI
RIVER BEND'S COVENANTS AND AGREEMENTS
-------------------------------------
Except as specifically contemplated or permitted by this
Agreement, River Bend hereby agrees, between the date hereof and
the Effective Time, as follows:
6.01 Operation of Business. Between the date hereof and
---------------------
the Effective Time, subject to all applicable laws, it will operate
its business (and will cause the River Bend Subsidiaries to operate
their businesses) solely in the ordinary course consistent with
past practices, and without the prior written consent of Magna, it
(and the River Bend Subsidiaries) will not:
(a) Incur any material liabilities or material
obligations, whether directly or by way of guaranty, including any
obligation for borrowed money whether or not evidenced by a note,
bond, debenture or similar instrument, except in the ordinary
course of business consistent with past practice, except for a
payment of $260,500 to Fister & Associates, Inc. Notwithstanding
the foregoing, River Bend may, with the prior written consent of
Magna, terminate the Illinois State Bank of East Alton Defined
Benefit Plan and Trust, Plan No. 001.
(b) Grant any increase in the rate of pay of any of its
employees, nor grant any increase in the salaries of any officer,
employee or agent, nor enter into any bonus, profit-sharing,
incentive compensation payment, pension, retirement, medical,
hospitalization, life insurance or other insurance plan or plans,
or other contracts or commitments, which increase(s) in any amount
the benefits or compensation of any such officer, employee or
agent; except, however, in each such case ordinary increases not
unusual in character or amount made in the ordinary course of
business. Notwithstanding the foregoing, River Bend may pay
bonuses to its employees that are consistent with past practice
and, in the aggregate, do not exceed $150,000.
(c) Enter into any employment contract or collective
bargaining agreement, or employ, directly or indirectly, any broker
or finder or incur any liability for any financial advisor, broker
or finder fees or commissions in connection with this Agreement or
the transactions contemplated hereby, or with respect to any
merger, business combination, sale of assets or securities or
similar transactions.
(d) Declare or pay any dividend or make any sale of, or
distribution in respect of, or grant any options or rights with
respect to, its capital stock or other securities or directly or
indirectly redeem, purchase or otherwise acquire any of its capital
stock or other securities, except for the payment of dividends by
the River Bend Subsidiaries to River Bend; provided, however, River
Bend may pay a dividend, to the extent not previously paid, of
$0.09 per share for each of the fourth quarter of 1995 and the
first and second quarters of 1996 with respect to each share of
Class I Common Stock and Class II Common Stock; further provided,
the record date for any dividend to be paid pursuant to this
Section 6.01(d) shall be the record date for dividends payable with
respect to shares of Magna Common Stock for the quarter in which
the River Bend dividend is to be paid and no dividend shall be
declared or paid by River Bend for any quarter in which the
shareholders of River Bend would be stockholders of record of Magna
for the purpose of receiving the Magna dividend payment for such
quarter. Notwithstanding the foregoing, River Bend may declare and
pay a dividend of $12.00 per share during the first quarter of 1996
with respect to each share of Preferred Stock.
(e) Make any amendments to or changes in its Articles of
Incorporation or By-laws.
(f) Perform any act, or attempt to do any act, or permit
any act or omission to act, which will cause a breach of any
material contract, commitment or obligation to which it is a party.
- 19 -
<PAGE> 24
(g) Subject to advice of counsel with respect to its
fiduciary obligations, encourage, solicit or initiate offers from
or negotiate with, or provide information or assistance to, any
party other than Magna with respect to a merger, sale of assets,
offer to purchase outstanding stock or similar transaction
involving it, the River Bend Stock or its assets; provided,
however, that if it or any of its advisors receives, from time to
time, an inquiry, proposal, plan, offer, bid or contract from any
third party with respect to any of the foregoing, it will promptly
notify Magna, and will promptly furnish Magna with a copy of any
document received or a summary of any other communication with
respect thereto.
(h) Authorize, recommend, propose or announce an
intention to authorize, recommend or propose, or enter into an
agreement with respect to, any merger, consolidation or business
combination, any acquisition of a material amount of assets or
securities or any release or relinquishment of any material
contract rights not in the ordinary course of business other than
as contemplated in this Agreement.
(i) Except in a fiduciary capacity, purchase or sell any
shares of Magna Common Stock.
(j) Agree in writing or otherwise to do any of the
foregoing.
6.02 Preservation of Business. Between the date hereof
------------------------
and the Effective Time, River Bend will carry on its business (and
will cause its Subsidiaries to carry on their businesses)
diligently and substantially in the same manner as heretofore
conducted and shall use its best efforts to keep its business
organization intact, including its present relationships with its
employees and customers and others having business relations with
it.
6.03 Expenses. River Bend shall pay its own expenses
--------
incident to preparing for, entering into and carrying out this
Agreement and to the consummation of the Merger, including the fee
of Fister & Associates, Inc. as provided in Section 6.01(a).
6.04 Tax Opinion Certification. River Bend shall cause
-------------------------
such of its executive officers, directors and/or holders of shares
of River Bend Stock (including shares beneficially held) as may be
requested by Thompson & Mitchell to timely execute and deliver to
Thompson & Mitchell certificates substantially in the form of
Exhibits C or D hereto, as the case may be.
6.05 Sale of Magna Common Stock by Shareholders of River
---------------------------------------------------
Bend. River Bend will notify its shareholders that after the date
- ----
hereof and prior to the Effective Time that they shall not sell any
shares of Magna Common Stock. The opinion of Thompson & Mitchell
contemplated under Section 5.05 hereof is dependent upon no such
sale having been made and if any such sale has been made such
opinion may not be relied upon for any purpose, unless it has been
amended and reissued to reflect any such sale.
6.06 Purchase Options for River Bend Stock. Each of
-------------------------------------
River Bend and John G. Helmkamp, Jr. hereby agree to waive any
purchase option it or he may have with respect to shares of River
Bend Stock by way of:
(i) that certain Stock Purchase Agreement dated
August 12, 1985 by and between River Bend and Helmkamp;
(ii) those certain Shareholder Agreements dated
April 20, 1994 by and among River Bend, Helmkamp and each
of Dale W. Langefeld and Gary E. Lynn;
(iii) those certain Shareholder Agreements dated
April 29, 1994 by and among River Bend, Helmkamp and each
of Leslie G. Bramley, Donna E. or Emma Ellen
- 20 -
<PAGE> 25
Brandt, Virginia L. Chamberlain, Charles A. Halverson,
Edward A. Hamlin, James M. Hoefert, and Paul R. Lauschke,
Jr.;
(iv) that certain Shareholder Agreement dated May 2,
1995 by and among River Bend, Helmkamp and Donald W.
Griffin.
(v) that certain Shareholder Agreement dated May 6,
1994 by and among River Bend, Helmkamp and Edward G.
Ryrie;
(vi) that certain Shareholder Agreement dated May 9,
1994 by and among River Bend, Helmkamp and John J.
Keller;
(vii) that certain Shareholder Agreement dated
June 17, 1994 by and among River Bend, Helmkamp and
Harley T. Godard;
(viii) that certain Shareholder Agreement dated
November 2, 1994 by and among River Bend, Helmkamp and
Thomas O. Coles;
(ix) those certain Revised Stock Purchase Agreements
dated April 25, 1994 by and between River Bend and each
of Byron L. Farrell, Helmkamp Construction Company,
Flossie E. Helmkamp Retained Annuity Trust Number One,
John E. Helmkamp III Trust Number Two, Ryan Helmkamp
Trust Number Two, Gilbert Helmkamp Non-Qtip Trust B, U/A
dated October 2, 1980 and Darren Helmkamp Trust Number
Two;
(x) that certain Revised Stock Purchase Agreement
dated April 26, 1994 by and between River Bend and John
G. Helmkamp III Trust;
(xi) that certain Revised Stock Purchase Agreement
dated April 30, 1994 by and between River Bend and each
of Jane E. Hadley and Gregory Hadley;
(xii) those certain Revised Stock Purchase
Agreements dated May 2, 1994 by and between River Bend
and each of Beth Farrell Elmore Trust, Gregory Farrell
Trust, Bradford Farrell Trust, Michael Farrell Trust and
Edward W. Ruhe;
(xiii) that certain Revised Stock Purchase
Agreement dated May 23, 1994 by and between River Bend
and James H. Laux; and
(xiv) those certain Revised Stock Purchase
Agreements dated May 26, 1994 by and between River Bend
and each of Ryan Helmkamp Trust and Frank K. Webb
Revocable Trust dated February 3, 1992.
ARTICLE VII
MUTUAL COVENANTS AND AGREEMENTS
-------------------------------
Except as specifically contemplated or permitted by this
Agreement, Magna and River Bend each hereby agree as follows:
7.01 Access and Information. Magna and River Bend shall
----------------------
afford to each other, and their respective accountants, counsel and
other representatives, reasonable access during normal business
hours, during the period prior to the Effective Time, to their
properties, books, contracts, commitments and records and, during
such period, they shall furnish promptly, or make available to the
other (a) a copy of each material report, schedule and other
document filed or received by them
- 21 -
<PAGE> 26
during such period pursuant to the requirements of federal and state
securities laws, and (b) all other information concerning their
business, properties and personnel as the other party may reasonably
request. Each party shall cause all information obtained by it or its
representatives pursuant to this Agreement or in connection with the
negotiation hereof to be treated as confidential and shall not use,
nor knowingly permit others to use, any such information for their own
benefit unless such information becomes generally available to the
public and, in the event of the termination of this Agreement, each
party shall return or destroy all such confidential documents
(including copies thereof) obtained hereunder from the other.
7.02 Current Information. During the period from the
-------------------
date of this Agreement to the Effective Time, each party will cause
one or more of its representatives to confer on a regular and
frequent basis with representatives of the other party, to report
the general status of its ongoing operations, and to consult as to
the making of any decisions or the taking of actions in matters
other than in the ordinary course of business. Each of Magna and
River Bend shall promptly notify the other of (a) any material
change in the normal course of its business or in the operation of
its properties, (b) any material governmental complaints,
investigations or hearings (or communications indicating that the
same may be contemplated), or the institution or the threat of
material litigation, and (c) any impending or threatened occurrence
of any event of which it has knowledge and which would cause or
constitute a breach of any of its representations or warranties
contained or referred to in this Agreement, and each will use their
best efforts to keep the other fully informed with respect to such
events.
7.03 Press Releases. Magna and River Bend will consult
--------------
with each other as to the form and substance of any press release
or other public disclosure of matters relating to this Agreement or
any of the transactions contemplated hereby and will not issue any
such release or disclosure unless approved by the other, which
approval shall not be unreasonably withheld, except as otherwise
required by law or regulation in the opinion of its counsel.
7.04 Intracorporate Transactions. Notwithstanding any
---------------------------
other provision of this Agreement, no merger or other business
combination, transfer of assets, liabilities or stock ownership
(a) between or among Magna and any of its Subsidiaries or between
or among any Magna Subsidiaries shall be deemed to violate any of
Magna's representations or agreements set out in Article II or VII
hereof, and (b) between or among River Bend and any River Bend
Subsidiaries or between or among any River Bend Subsidiaries shall
be deemed to violate (i) any of River Bend's representations set
out in Article III hereof, or (ii) any of River Bend's agreements
set out in Article VI or VII hereof.
7.05 Representations. Neither Magna nor River Bend will
---------------
take any action which would result in the representations in this
Agreement being incorrect as of the Effective Time.
7.06 Anti-Dilution.
-------------
(a) The shares of River Bend Stock presently
outstanding, and only such shares, shall be converted into the
right to receive the Merger Consideration, as provided in this
Agreement. River Bend shall not, without the prior written consent
of Magna, effect any stock dividends, split-ups, recapitalizations
or the like. River Bend shall not, without the prior written
consent of Magna, issue, exchange or otherwise effect any change in
its capitalization prior to the Effective Time.
(b) In the event of changes in the Magna Common Stock by
virtue of stock dividends, split-ups, recapitalizations or the
like, the type and number of Magna Shares to be exchanged shall be
adjusted appropriately.
7.07 Tax Treatment. Magna and River Bend agree to use
-------------
their best efforts to cause the Merger to qualify as a
reorganization under Section 368 of the Code.
- 22 -
<PAGE> 27
7.08 System Conversion. From and after the date hereof,
-----------------
representatives of Magna, River Bend and the River Bend
Subsidiaries shall meet on a regular basis to discuss and plan for
the conversion of River Bend's data processing and related
electronic informational systems to those used by Magna, which
planning shall include, but not be limited to, discussion of the
possible termination by River Bend and the River Bend Subsidiaries
of third-party service provider arrangements effective at the
Closing Date or at a date thereafter, non-renewal of personal
property leases and software licenses used by River Bend and the
River Bend Subsidiaries in connection with it systems operations
and outsourcing, as appropriate, of proprietary or self-provided
system services, it being understood that River Bend and the River
Bend Subsidiaries shall not be obligated to take any such action
and, unless River Bend otherwise agrees, no conversion shall in
fact take place prior to the Closing Date.
7.09 Miscellaneous Agreements and Consents. Subject to
-------------------------------------
the terms and conditions herein provided, the parties hereto agree
to use all reasonable efforts to take, or cause to be taken, all
action, and to do or cause to be done, all things necessary, proper
or advisable under applicable laws and regulations to consummate
and make effective the transactions contemplated by this Agreement
including, without limitation, using reasonable efforts to lift or
rescind any injunction or restraining order or other order
adversely affecting the ability of the parties to consummate the
transactions contemplated hereby, and using their best efforts to
prevent the breach of any representation, warranty or agreement
contained or referred to in this Agreement and to remedy the same
promptly. The parties hereto will, and will cause their
subsidiaries to, use their best efforts to obtain the consents of
all third parties and governmental bodies necessary or desirable
for the consummation of the transactions contemplated by this
Agreement.
7.10 Notice to Other Party. Each of Magna and River Bend
---------------------
shall notify the other party hereto of (i) any fact or
circumstances of which the executive officers of either Magna or
River Bend, as the case may be, have knowledge which would, absent
disclosure by Magna or River Bend to River Bend or Magna, as the
case may be, and Magna's or River Bend's, as the case may be,
subsequent consent to such facts or circumstances, not permit River
Bend to satisfy the condition set forth in Section 8.03(b) of this
Agreement or Magna to satisfy the condition set forth in Section
8.02(a) of this Agreement, (ii) any material breach of any of its
covenants contained herein, and (iii) any material adverse change
in its financial condition, business, prospects or operating
results.
7.11 Best Efforts. Each of the parties hereto shall use
------------
its best efforts to assure, to the extent reasonably within its
control, as soon as it is reasonably practicable, the satisfaction
of the conditions to the effectiveness of the transactions
contemplated under Section 1.01 hereof and the transactions
contemplated by this Agreement.
7.12 Payments to Dissenters. Upon consummation of the
----------------------
Merger, RBAC shall pay or provide for any payment (with funds
provided by Magna) for any shareholder dissenting from the Merger.
7.13 Schedules and Exhibits. The parties hereto
----------------------
acknowledge that the schedules of River Bend and Exhibits C and D,
----------------
all of which are referenced herein, are not incorporated in this
Agreement as of the date hereof. River Bend, within ten days after
the date hereof, shall provide to Magna all schedules that River
Bend was required to deliver pursuant to this Agreement. The
obligations on the part of Magna under this Agreement are expressly
conditioned on, and subject to, acceptance by Magna, within five
days after the receipt thereof, of the form and/or substance of the
schedules of River Bend, in each case, in the sole discretion of
Magna. During the period commencing on the date hereof and ending
10 days hereafter, Magna and River Bend shall use their reasonable
best efforts to agree to the form and the substance of the
documents to be incorporated herein as Exhibits C and D. In the
event Magna and River Bend are unable to agree as to such exhibits,
this Agreement shall terminate without any further obligation or
liability on the part of either Magna or River Bend, subject to the
provisions of Section 10.01 hereof.
- 23 -
<PAGE> 28
ARTICLE VIII
CONDITIONS TO CLOSING
---------------------
The obligations of River Bend and Magna under this
Agreement, except as otherwise provided herein, shall be subject to
the satisfaction or waiver of the following conditions on or prior
to the Closing:
8.01 Conditions to Each Party's Obligations to Effect the
----------------------------------------------------
Merger. The respective obligations of each party to effect the
- ------
Merger shall be subject to the following conditions:
(a) Shareholder Approval. The Plan of Merger shall have
--------------------
been approved by the requisite vote of the holders of the
outstanding shares of River Bend Stock at the River Bend
Shareholders' Meeting called pursuant to Section 5.02.
(b) Regulatory Approvals. The transactions contemplated
--------------------
by this Agreement shall have been approved by the Federal Reserve
Board, the Illinois Commissioner and any other required banking
authorities, without any condition or requirement which would have
a material adverse effect on the business, operations, properties,
assets or financial condition of Magna or River Bend, all
conditions required to be satisfied shall have been satisfied, and
all waiting periods relating to such approvals shall have expired.
(c) Absence of Injunction. Neither River Bend nor Magna
---------------------
shall be subject to any order, decree or injunction of a court or
agency of competent jurisdiction which enjoins or prohibits the
consummation of the Merger.
(d) Registration Statement. The Registration Statement
----------------------
shall have been declared effective and shall not be subject to a
stop order or any threatened stop order, and all state securities
and blue sky permits or approvals required to consummate the
transactions contemplated by this Agreement shall have been
received.
(e) Tax Opinion. River Bend and Magna shall have
-----------
received the opinion of Thompson & Mitchell as specified in Section
5.05 hereof.
8.02 Conditions to Obligations of River Bend to Effect
-------------------------------------------------
the Merger. The obligations of River Bend to effect the Merger
- ----------
shall be subject to the following additional conditions:
(a) Representations and Warranties. The representations
------------------------------
and warranties of Magna set forth in this Agreement shall be true
and correct in all material respects as of the date of this
Agreement and as of the Closing as though made at and as of the
Closing, except as otherwise contemplated by this Agreement or
consented to in writing by River Bend, and River Bend shall have
received a signed certificate of an officer of Magna, acting solely
in their capacity as an officer of Magna, to that effect.
(b) Performance of Obligations. Magna shall have
--------------------------
performed in all material respects all obligations required to be
performed by it under this Agreement prior to the Closing, and
River Bend shall have received a signed certificate of an officer
of Magna, acting solely in their capacity as an officer of Magna,
to that effect.
(c) Permits, Authorizations, Etc. Magna and the Magna
-----------------------------
Subsidiaries shall have obtained any and all material permits,
authorizations, consents, waivers, clearances or approvals required
on their part for the lawful consummation of the Merger (in
addition to those referred to in Section 8.01(b) hereof), without
any condition which would have a material adverse effect on the
business, operations, properties, assets or financial condition of
Magna after the Effective Time, all
- 24 -
<PAGE> 29
conditions imposed by the terms of such approvals shall have been
satisfied and all waiting periods relating to such permits,
authorizations, consents, waivers, clearances or approvals shall have
expired.
(d) Legal Opinion. An opinion of Thompson & Mitchell
-------------
shall be delivered to River Bend dated the Closing Date, and in
form and substance reasonably satisfactory to River Bend and its
counsel to the effect that:
(i) Magna is a corporation duly incorporated,
validly existing and in good standing under the laws of
the State of Delaware, and has full power to own and
operate its businesses and properties and to carry on its
business as presently conducted by it;
(ii) RBAC is a corporation duly incorporated,
validly existing and in good standing under the laws of
the State of Illinois, and has full power to own and
operate its businesses and properties and to carry on its
business as presently conducted by it;
(iii) the authorized capital stock of Magna
consists of (a) 40,000,000 shares of Magna Common Stock,
of which at September 30, 1995, 27,881,344 of such shares
were issued and outstanding; (b) 1,000,000 shares of
Preferred Stock, no par value per share, of which at such
date no shares were issued or outstanding and of which at
September 30, 1995, 400,000 shares have been designated
by Magna's Board of Directors as the Series A Junior
Participating Preferred Stock (the "Magna Series A
Preferred Stock"); (c) 49,500 shares of preferred stock,
$20.00 par value per share, designated Class B Voting
Stock, of which, as of September 30, 1995, 2,037 shares
were issued and outstanding; and (d) 1,000,000 shares of
preferred stock, $0.10 par value per share, designated
Class C Nonvoting Stock, of which, as of September 30,
1995, no shares were issued and outstanding. To such
counsel's knowledge, all of the outstanding stock is
validly issued, fully paid and nonassessable;
(iv) Magna has full power and authority to make,
execute and deliver this Agreement, it has been duly
authorized and approved by all necessary corporate action
of Magna and has been duly executed and delivered and is
its valid and binding obligations subject, however, to
bankruptcy, insolvency and similar laws affecting the
enforcement of creditors' rights generally and to the
availability of equitable remedies in general;
(v) RBAC has full power and authority to make,
execute and deliver the Plan of Merger, which has been
duly authorized and approved by all necessary corporate
action of RBAC and has been duly executed and delivered
and is its valid and binding obligation subject, however,
to bankruptcy, insolvency and similar laws affecting the
enforcement of creditor's rights generally and to the
availability of equitable remedies in general;
(vi) The transactions contemplated by this Agreement
or the Plan of Merger will not violate the Certificate of
Incorporation or Bylaws of Magna or the Articles of
Incorporation or Bylaws of RBAC;
(vii) The meeting of the Board of Directors of
Magna authorizing this Agreement was duly called and
validly held and the resolutions there adopted are in
full force and effect and have not been amended or
repealed; and
(viii) To such counsel's knowledge, there is no
litigation or proceeding pending or threatened against
Magna or any of the Magna Subsidiaries relating to the
- 25 -
<PAGE> 30
participation in or consummation of this Agreement by
Magna or any of the Magna Subsidiaries.
In rendering the foregoing opinion such counsel may rely
on certificates of corporate officers or governmental officials as
to factual matters.
(e) Supplemental Document. Magna shall have executed
---------------------
and delivered the Supplemental Agreement by and between Magna and
John G. Helmkamp, which is attached hereto as Exhibit E.
8.03 Conditions to Obligations of Magna to Effect the
------------------------------------------------
Merger. The obligations of Magna to effect the Merger shall be
- ------
subject to the following additional conditions:
(a) Due Diligence. Magna shall be satisfied, in its
-------------
sole discretion, with its due diligence examination of the
financial condition, results of operations and review of the
assets, books and records of River Bend and the River Bend
Subsidiaries and shall not have notified River Bend of its
dissatisfaction on or before a period ending 45 days after the date
hereof (the "Due Diligence Period"). River Bend shall have thirty
days after the date of receipt of Magna's notification of
dissatisfaction to remedy, in Magna's sole judgment, the cause of
such dissatisfaction. In the event Magna concludes its due
diligence examination sooner than 45 days after the date hereof,
Magna shall notify River Bend of the results of its due diligence
examination and, if Magna, in its sole discretion, is satisfied
with the results of its due diligence examination, the Due
Diligence Period shall end on such earlier date.
(b) Representations and Warranties. The representations
------------------------------
and warranties of River Bend set forth in this Agreement shall be
true and correct in all material respects as of the date of this
Agreement and as of the Closing as though made at and as of the
Closing, except as otherwise contemplated by this Agreement or
consented to in writing by Magna, and Magna shall have received a
signed certificate of the Chairman or President of River Bend,
acting solely in their capacity as an officer of River Bend, to
that effect. Magna may perform from time to time a review of the
assets and liabilities of River Bend prior to the Effective Time.
(c) Performance of Obligations. River Bend shall have
--------------------------
performed in all material respects all obligations required to be
performed by it under this Agreement prior to the Closing, and
Magna shall have received a signed certificate of the Chairman or
President of River Bend, acting solely in their capacity as an
officer of River Bend, to that effect.
(d) Permits, Authorizations, Etc. River Bend and the
-----------------------------
River Bend Subsidiaries shall have obtained any and all material
permits, authorizations, consents, waivers, clearances or approvals
required on their part for the lawful consummation of the Merger
(in addition to those referred to in Section 8.01(b) hereof),
without any condition which would have a material adverse effect on
the business, operations, properties, assets or financial condition
of Magna after the Effective Time, all conditions imposed by the
terms of such approvals shall have been satisfied and all waiting
periods relating to such permits, authorizations, consents,
waivers, clearances or approvals shall have expired.
(e) Legal Opinion. An opinion of Suelthaus & Walsh
-------------
shall be delivered to Magna dated the Closing Date, and in form and
substance reasonably satisfactory to Magna and its counsel to the
effect that:
(i) River Bend is a corporation duly incorporated,
validly existing and in good standing under the laws of
the State of Illinois, and has full power to own and
operate its businesses and properties and to carry on its
business as presently conducted by it;
- 26 -
<PAGE> 31
(ii) The authorized capital stock of River Bend
consists of (i) 200,000 shares of Class I Common Stock,
of which, as of the date hereof, 157,063 shares were
issued and outstanding, (ii) 1,000,000 shares of Class II
Common Stock, of which, as of the date hereof, 785,315
shares were issued and outstanding, and (iii) 10,000
shares of Preferred Stock, of which, as of the date
hereof, 5,991 shares were issued and outstanding. To
such counsel's knowledge, all of such outstanding stock
is validly issued, fully paid and nonassessable;
(iii) Each of the River Bend Subsidiaries is
duly incorporated, validly existing and in good standing
under the laws of its state or jurisdiction of
incorporation;
(iv) To such counsel's knowledge, River Bend is the
lawful owner of 100% of the outstanding stock of each of
the River Bend Subsidiaries, subject to the lien set
forth on Schedule 3.02 of the Agreement;
-------------
(v) River Bend has full power and authority to
make, execute and deliver this Agreement and the Plan of
Merger and they have been duly authorized and approved by
all necessary corporate action of River Bend and have
been duly executed and delivered and are its valid and
binding obligations subject, however, to bankruptcy,
insolvency and similar laws affecting the enforcement of
creditors' rights generally and to the availability of
equitable remedies in general;
(vi) The transactions contemplated by this Agreement
will not violate the Articles of Incorporation or Bylaws
of River Bend or any agreement to which River Bend and
any of its shareholders are a party;
(vii) The meetings of the Board of Directors of
River Bend authorizing this Agreement and the Plan of
Merger and calling the River Bend Shareholders' Meeting,
and the River Bend Shareholders' Meeting where this
Agreement and the Plan of Merger were submitted, were
duly called and validly held and the resolutions there
adopted are in full force and effect and have not been
amended or repealed; and
(viii) To such counsel's knowledge, there is no
litigation or proceeding pending or threatened against
River Bend or any of the River Bend Subsidiaries relating
to the participation in or consummation of this Agreement
by River Bend or any of the River Bend Subsidiaries.
(ix) To such counsel's knowledge, there are no
persons or entities who may be deemed to be affiliates of
River Bend for purposes of Rule 145 under the Securities
Act, who may receive shares of Magna Common Stock in the
Merger and who are not named in the letter delivered by
River Bend to Magna pursuant to Section 5.06 of the
Agreement.
In rendering the foregoing opinion such counsel may rely
on certificates of corporate officers or governmental officials as
to factual matters.
(f) Dissenters. Holders of less than nine percent (9%)
----------
of the River Bend Stock shall have taken such steps as are then
possible to dissent from the Merger.
(g) Affiliate Documents. River Bend shall have
-------------------
delivered to Magna those documents required pursuant to Section
5.06.
(h) List of Shareholders. River Bend shall have
--------------------
delivered to Magna a certified list of the shareholders of River
Bend, dated as of the Closing Date, that, with respect to each
outstanding
- 27 -
<PAGE> 32
Certificate, includes (i) the name of the holder(s) as it appears on
the Certificate, (ii) the number of shares of capital stock
represented by the Certificate and (iii) the address of the holder(s)
of the Certificate.
(i) Supplemental Document. Mr. John G. Helmkamp shall
---------------------
have executed and delivered to Magna the Supplemental Agreement
attached hereto as Exhibits E and Mr. Helmkamp shall have executed
an Indemnity Agreement, in form reasonably satisfactory to Magna,
as contemplated by Section 1.02(a)(iii) hereof.
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
---------------------------------
9.01 Termination. This Agreement may be terminated at
-----------
any time prior to the Effective Time either before or after it has
been approved by the shareholders of River Bend:
(a) By mutual consent of the Boards of Directors of
River Bend and Magna;
(b) By the Board of Directors of either River Bend or
Magna at any time on or after June 30, 1996, if the Merger shall
not theretofore have been consummated, for a reason other than the
failure of the terminating party to comply with its obligations
under this Agreement;
(c) By the Board of Directors of either River Bend or
Magna if the Federal Reserve Board or the Illinois Commissioner has
denied approval of the Merger and such denial has become final and
nonappealable;
(d) By the Board of Directors of either River Bend or
Magna in the event of a material breach by the other party of any
representation, warranty or agreement contained herein, which
breach is not cured within 60 days after written notice to the
party committing such breach;
(e) By the Board of Directors of Magna, if at the River
Bend Shareholders' Meeting (including any adjournment thereof) the
shareholders of River Bend fail to approve the Plan of Merger; or
(f) By the Board of Directors of Magna, if the Board of
Directors of River Bend shall have (i) approved the execution of a
definitive agreement with respect to a merger, consolidation,
tender or exchange offer or other business combination with a third
party, (ii) withdrawn or modified in a manner adverse to Magna its
approval or recommendation of this Agreement or the Plan of Merger
as set forth in Section 5.02 of this Agreement, (iii) breached its
obligation to mail the Proxy Statement to its shareholders or
failed to include in such Proxy Statement the recommendation that
the shareholders of River Bend vote to approve the Plan of Merger,
(iv) taken any public position inconsistent with such
recommendation; or (v) resolved to do any of the foregoing.
(g) By the Board of Directors of River Bend, if the
Board of Directors of Magna shall have approved the execution of a
definitive agreement with respect to a merger, consolidation,
tender or exchange offer or other business combination with a third
party whereby the third party is acquiring control of Magna and in
connection with which Magna refuses, in violation of the terms of
this Agreement, to consummate the Merger.
(h) By the Board of Directors of Magna at any time on or
after the last day of the period ending 30 days after the end of
the Due Diligence Period if (1) Magna shall have notified River
Bend during the Due Diligence Period of its dissatisfaction with
the results of its due diligence examination and (2) by the end of
the period ending 30 days after the end of the Due Diligence
Period, River Bend shall have failed, in Magna's sole judgment, to
remedy or correct the cause of Magna's dissatisfaction.
- 28 -
<PAGE> 33
(i) By the Board of Directors of Magna, in its sole
discretion, at any time during the period ending five days after
the delivery by River Bend of the disclosure schedules referred to
in Section 7.13 hereof.
9.02 Effect of Termination. In the event of termination
---------------------
of this Agreement by either River Bend or Magna as provided in
Section 9.01 hereof, such party shall promptly give written notice
of such action to the other party. Upon receipt of such notice,
this Agreement shall become void and there shall be no liability on
the part of either River Bend or Magna or their respective officers
or directors and there shall be no obligations except as set forth
in Section 10.01 hereof. In the event of a termination as provided
in Section 9.01(f), Magna shall promptly be paid the sum of
$1,000,000 by River Bend. In the event of a termination as
provided in Section 9.01(g), River Bend shall promptly be paid the
sum of $1,000,000 by Magna.
9.03 Amendment. This Agreement and the Exhibits and
---------
Schedules hereto may be amended by the parties hereto, by action
taken by or on behalf of their respective Boards of Directors, at
any time before or after approval of the Merger by the shareholders
of River Bend; provided, however, that after any such approval no
such amendment shall reduce the amount or change the form of the
Merger Consideration to be delivered to River Bend's shareholders
as contemplated by this Agreement. This Agreement may not be
amended except by an instrument in writing signed on behalf of each
of the parties hereto.
9.04 Waiver. Any terms, condition or provision of this
------
Agreement may be waived in writing at any time by the party which
is, or whose shareholders are, entitled to the benefits thereof.
ARTICLE X
GENERAL PROVISIONS
------------------
10.01 Non-Survival of Representations, Warranties and
-----------------------------------------------
Agreements. No investigation by the parties hereto made heretofore
- ----------
or hereafter shall affect the representations and warranties of the
parties which are contained herein and each such representation and
warranty shall survive such investigation. Except as set forth
below in this Section 10.01, all representations, warranties and
agreements in this Agreement of River Bend and Magna or in any
instrument delivered by River Bend or Magna pursuant to this
Agreement shall expire at the Effective Time or upon termination of
this Agreement in accordance with its terms. Notwithstanding the
foregoing, in the event of termination of this Agreement in
accordance with its terms, the agreements contained in or referred
to in the second sentence of Section 7.01, in Sections 6.03 and
9.02 and in this Section 10.01 shall survive such termination and,
if the Merger is consummated, the agreements contained in Sections
1.02, 1.03, 1.04, 1.05, 1.06 and 5.04 hereof shall survive the
Effective Time.
10.02 Notices. Any notice or other communication
-------
hereunder shall be in writing and shall be deemed to have been
given and duly received (i) on the date given if delivered
personally or by cable, telegram, telex or telecopy, or (ii) on the
date received if mailed by registered or certified mail, postage
prepaid and return receipt requested, addressed to the parties as
follows:
- 29 -
<PAGE> 34
(a) if to River Bend: John G. Helmkamp, President
River Bend Bancshares, Inc.
Main and West St. Louis Avenue
P.O. Drawer 100
East Alton, Illinois 62024
with a copy to: Kenneth H. Suelthaus
Suelthaus & Walsh, P.C.
7733 Forsyth, 12th Floor
St. Louis, Missouri 63105
(b) if to Magna: G. Thomas Andes, Chairman
Magna Group, Inc.
One Magna Place
1401 South Brentwood Blvd.
St. Louis, Missouri 63144
with a copy to: Gerard K. Sandweg, Jr.
Thompson & Mitchell
One Mercantile Center, Suite 3400
St. Louis, Missouri 63101
or to such other address as any party may from time to time
designate by notice to the others. Notice to a party's counsel
shall not be deemed to constitute notice to such party pursuant to
this Section 10.02.
10.03 Entire Agreement; Enforcement. This Agreement
-----------------------------
(including the Exhibits, Schedules and documents and instruments
referred to herein) constitutes the entire agreement between the
parties and supersedes and cancels any prior discussions or
agreements, oral or written. The failure of any party at any time
to require performance of any provision hereof shall not affect the
right of such party to enforce the same at any later time.
10.04 Counterparts. This Agreement may be executed
------------
in two or more counterparts, each of which shall be deemed an
original, and all of which shall be deemed one and the same
instrument.
10.05 Governing Law. This Agreement shall be
-------------
governed by the internal laws of the State of Illinois (excluding
its conflict of law rules) and any applicable federal laws or
regulations.
10.06 Successors and Assigns. This Agreement shall
----------------------
be binding upon and shall inure to the benefit of the parties and
their respective successors and permitted assigns. Neither this
Agreement nor any rights hereunder may be assigned by either party
without the prior written consent of the other, whether by
operation of law or otherwise.
10.07 No Third Party Beneficiaries. Except to the
----------------------------
extent of Sections 1.02, 1.03, 1.04, 1.05 and 5.04, no provision of
this Agreement shall create any third party beneficiary rights in
any person.
10.08 Table of Contents; Captions. The Table of
---------------------------
Contents and captions contained herein are included for convenience
of reference only and shall be ignored in the construction or
interpretation of this Agreement.
- 30 -
<PAGE> 35
IN WITNESS WHEREOF, the parties hereto have duly executed
this Agreement as of the day and year first above written.
RIVER BEND BANCSHARES, INC.
By /s/ John G. Helmkamp, Jr.
-----------------------------------------
John G. Helmkamp, Jr., President
MAGNA GROUP, INC.
By /s/ G. Thomas Andes
-----------------------------------------
G. Thomas Andes, Chairman of the Board
The undersigned, by execution of this signature page,
agrees to the terms and conditions contained in Sections 1.02(a)(iii)
and 6.06 of this Agreement.
/s/ John G. Helmkamp, Jr.
------------------------------------------
John G. Helmkamp, Jr.
- 31 -
<PAGE> 1
Exhibit 2.2
-----------
FIRST AMENDMENT TO
AGREEMENT AND PLAN OF REORGANIZATION
------------------------------------
This Amendment to Agreement and Plan of Reorganization
(the "First Amendment") is made and entered into as of the 27th day
of November, 1995 by and between Magna Group, Inc., a Delaware
corporation ("Magna"), and River Bend Bancshares, Inc., an Illinois
corporation ("River Bend").
WITNESSETH:
WHEREAS, Magna and River Bend entered into that certain
Agreement and Plan of Reorganization dated as of October 11, 1995
(the "Agreement"); and
WHEREAS, the Board of Directors of each of Magna and
River Bend have heretofore approved the merger of River Bend with
and into a wholly owned subsidiary of Magna; and
WHEREAS, each of Magna and River Bend believes that based
upon events subsequent to October 11, 1995, the Agreement should be
amended to change the following: (i) to amend the preamble to the
Agreement; (ii) to substitute "LBC" for "RBAC" throughout the
Agreement; (iii) to amend Section 1.01 to the Agreement; (iv) to
add a new Section 1.02(c)(i) to the Agreement; (v) to add a new
Section 1.02(d) to the Agreement; (vi) to add a new Section 1.04 to
the Agreement; (vii) to add a new Section 2.01 to the Agreement;
(viii) to amend Section 2.03 to the Agreement; (ix) to add a new
Section 8.02(d)(ii) to the Agreement; and (x) to add a new Exhibit
A to the Agreement.
NOW THEREFORE, in consideration of the premises and the
agreements herein contained, and other good and valuable
consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereto agree that the Agreement is hereby
amended in each of the following respects:
(1) The second paragraph of the preamble is hereby
amended to read as follows:
WHEREAS, the respective Boards of
Directors of Magna and River Bend have
approved the merger of River Bend with and
into Landmark Bancshares Corporation ('LBC'),
a Missouri corporation and wholly owned
subsidiary of Magna (the 'Merger'); and
<PAGE> 2
(2) The Agreement is amended in its entirety
to substitute "LBC" for "RBAC."
(3) The first and third paragraphs of Section
1.01 are hereby amended to read as follows:
Subject to the terms and conditions of
this Agreement and the Plan of Merger, Magna
and River Bend agree to effect the Merger of
River Bend with and into LBC in accordance
with the Illinois Business Corporation Act of
1983, as amended (the 'Illinois Statute'), and
the General and Business Corporation Law of
Missouri (the 'Missouri Statute'), and the
separate corporate existence of River Bend
shall cease.
Following the Effective Time, LBC shall
be the surviving corporation and shall possess
all of the rights, privileges, immunities and
franchises and shall be liable for all of the
liabilities and obligations of each of the
merging corporations, all as provided in the
Illinois Statute and the Missouri Statute.
(4) Section 1.02(c)(i) is hereby restated in
its entirety to read as follows:
(i) Concurrently with the mailing of the
Proxy Statement (as contemplated by Section
5.02 of this Agreement, including the
Prospectus contained in the Registration
Statement (also as contemplated by Section
5.02 of this Agreement)) to the shareholders
of River Bend, Magna shall cause the Exchange
Agent to mail to each holder of record of
Class I Common Stock and/or Class II Common
Stock a form of election (the "Election Form")
on which such holder shall make the election
as provided for in this Section 1.02. Each
Election Form shall specify the composition of
the proportionate interest in the Stock
Distribution and the Common Cash Distribution
received by that holder (subject to
adjustments as provided for herein), by
specifying what percentage of the value of the
consideration to be received by the holder
shall be the Common Cash Distribution and what
percentage of the value of the consideration
shall be the Stock Distribution. For this
purpose, the Stock Distribution shall be
valued at a price equal to the average, per
share closing price of Magna Common Stock as
reported on the Nasdaq Stock Market for the
five business days preceding the three
business days preceding the Closing Date (the
"Magna Share Value").
- 2 -
<PAGE> 3
(5) Section 1.02(d) is hereby restated in its
entirety to read as follows:
(d) Adjustments for Post February 29,
---------------------------------
1996 Closing Date. In the event that the
------------------
Closing Date occurs after February 29, 1996,
then the Common Cash Distribution and the
Preferred Cash Distribution shall be adjusted
in the following manner. An amount shall be
added to the Common Cash Distribution (after
such number has been adjusted as provided in
Section 1.02(a)(ii) of this Agreement but
before any adjustment pursuant to this Section
1.02(d)) equal to (A) the product of (i) the
sum of all dividends declared by Magna on a
single share of Magna Common Stock for
stockholders of record for the period
beginning March 1, 1996 and ending the day
prior to the Closing Date times (ii) the number
-----
of shares of Magna Common Stock comprising the
Stock Distribution (after such number has been
adjusted as provided in Section 1.02(a)(ii) of
this Agreement) less (B) the aggregate amount
----
of dividends declared by River Bend on shares
of Class I Common Stock and Class II Common
Stock during such period plus (C) the product
----
of (i) the Common Cash Distribution (after
such number has been adjusted as provided in
Section 1.02(a)(ii) of this Agreement but
before any adjustment pursuant to this Section
1.02(d)) times (ii) (1) the Federal funds
-----
rate, as published in The Wall Street Journal,
Midwest Edition, as such rate varies from time
to time, divided by (2) 365 times (iii) the
---------- -----
number of days, inclusive, from February 29,
1996 to the day prior to the Closing Date. An
amount shall be added to the Preferred Cash
Distribution equal to the product of (A) the
Preferred Cash Distribution times (B) (i) the
-----
Federal funds rate, as published in The Wall
Street Journal, Midwest Edition, as such rate
varies from time to time, divided by (ii) 365
----------
times (C) the number of days, inclusive, from
-----
February 29, 1996 to the day prior to the
Closing Date.
(6) Section 1.04 is hereby restated in its
entirety to read as follows:
1.04 Closing; Effective Time. The
------------------------
closing (the "Closing") of the Merger shall
take place at the offices of Thompson &
Mitchell, St. Louis, Missouri promptly after
the satisfaction or waiver of all conditions
to the Merger on a date to be fixed by Magna
(the "Closing Date") on the last Business Day
(as hereinafter defined ) of a calendar month
in which the last of the following events
occurs: (i) the receipt of the requisite
approval of the Plan of Merger by the
shareholders of River Bend as set forth in
Section 5.02 hereof and (ii) the receipt of
the approvals of the Board of Governors of the
Federal Reserve System (the "Federal Reserve
Board") and the Illinois Commissioner of Banks
and Trust Companies (the "Illinois
Commissioner"), and the expiration of any
waiting period after such approvals required
by law or regulation, or such later date as
may be agreed to by the parties in writing.
At the Closing the parties shall each deliver
to the other such evidence of the satisfaction
of the conditions to the Merger as may
reasonably be
- 3 -
<PAGE> 4
required (including materials required to be
delivered under Article VIII). Prior to the
Closing Date, LBC and River Bend shall each
execute Articles of Merger with respect to the
Plan of Merger and Magna shall cause such
Articles of Merger to be delivered, on the
Closing Date, for filing with the Office of the
Secretary of State of the State of Missouri and
the Office of the Secretary of State of the
State of Illinois. The Merger shall be
effective on the date and at the time (the
'Effective Time') that each of the Secretary of
State of the State of Illinois and the
Secretary of State of the State of Missouri
issue a Certificate of Merger in accordance
with the provisions of the Illinois Statute and
the Missouri Statute, respectively. For
purposes of this Agreement, 'Business Day'
shall mean any day that both the Office of the
Secretary of State of the State of Illinois and
the Office of the Secretary of State of the
State of Missouri are open for receipt of
official corporate filings.
(7) Section 2.01 is hereby restated in its
entirety to read as follows:
2.01 Organization and Authority. Magna
--------------------------
(parent company only) is a corporation duly
incorporated, validly existing and in good
standing under the laws of the State of
Delaware and has the corporate power and
authority to own its properties and assets and
to carry on its business as it is now being
conducted. LBC is a corporation duly
incorporated, validly existing and in good
standing under the laws of the State of
Missouri and has the corporate power and
authority to own its properties and assets and
to carry on its business as it is now being
conducted. Magna is qualified to do business
in the States of Missouri and Illinois and is
not required to qualify to do business in any
other state or foreign jurisdiction. LBC is
qualified to do business in the State of
Missouri and is not required to qualify to do
business in any other state or foreign
jurisdiction. Both Magna and LBC are
registered as bank holding companies with the
Federal Reserve Board under the Bank Holding
Company Act of 1956, as amended (the "BHC
Act").
(8) The third paragraph of Section 2.03 is
hereby amended to read as follows:
Other than in connection or in compliance
with the provisions of the Illinois Statute,
the Missouri Statute, the Securities Act of
1933, as amended, and the rules and
regulations thereunder (the "Securities Act"),
the Securities Exchange Act of 1934, as
amended, and the rules and regulations
thereunder (the "Exchange Act"), the
securities or blue sky laws of the various
states and consents, authorizations,
approvals, notices or exemptions required
under the BHC Act and the banking laws of the
State of Illinois, no notice to, filing with,
authorization of, exemption by, or consent or
approval of, any public body or authority is
necessary for the consummation by Magna of the
transactions contemplated by this Agreement.
- 4 -
<PAGE> 5
(9) Section 8.02(d)(ii) is hereby restated in
its entirety to read as follows:
(ii) LBC is a corporation duly
incorporated, validly existing and in good
standing under the laws of the State of
Missouri, and has full power to own and
operate its businesses and properties and to
carry on its business as presently conducted
by it;
(10) Exhibit A to the Agreement is hereby
replaced by Exhibit A to this First Amendment.
Other than as hereby amended, the Agreement remains in
full force and effect. This First Amendment may be executed in
several counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same
instrument.
[the remainder of this page is left intentionally blank]
- 5 -
<PAGE> 6
IN WITNESS WHEREOF, the parties hereto have executed this
First Amendment as of the day and year first above written.
MAGNA GROUP, INC.
By /s/ G. Thomas Andes
------------------------------------------
G. Thomas Andes, Chairman of the Board
RIVER BEND BANCSHARES, INC.
By /s/ John G. Helmkamp, Jr.
-----------------------------------------
John G. Helmkamp, Jr., President
- 6 -
<PAGE> 1
Exhibit 2.3
-----------
PLAN OF MERGER
This Plan of Merger (the "Plan") dated as of
- ---------------- by and between RIVER BEND BANCSHARES, INC., an
Illinois corporation ("River Bend"), and LANDMARK BANCSHARES
CORPORATION, a Missouri corporation ("LBC"), such corporations
being hereinafter collectively referred to as the "Constituent
Corporations."
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, LBC is a corporation duly organized and existing
under the laws of the State of Missouri having an authorized
capital of 30,000 shares of common stock, $1.00 par value (the "LBC
Common Stock"), of which 1,000 shares are issued and outstanding as
of the date hereof; and
WHEREAS, River Bend is a corporation duly organized and
existing under the laws of the State of Illinois, having an
authorized capital of (i) 200,000 shares of Class I Voting Common
Stock, $1.00 par value ("Class I Common Stock"), of which, as of
the date hereof, 157,063 shares are issued and outstanding, (ii)
1,000,000 shares of Class II Non-Voting Common Stock, $1.00 par
value ("Class II Common Stock"), of which, as of the date hereof,
785,315 shares are issued and outstanding, and (iii) 10,000 shares
of Class A Preferred Stock, $100 par value ("Preferred Stock"), of
which, as of the date hereof, 5,991 shares are issued and
outstanding (the Class I Common Stock, Class II Common Stock and
Preferred Stock are collectively referred to herein as the "River
Bend Stock"); and
WHEREAS, the respective Boards of Directors of LBC and
River Bend each have duly approved this Plan of Merger providing
for the merger (the "Merger") of River Bend with and into LBC as
the surviving corporation as authorized by the statutes of the
States of Missouri and Illinois, respectively; and
WHEREAS, River Bend and Magna Group, Inc., a Delaware
corporation ("Magna"), have entered into an Agreement and Plan of
Reorganization dated as of October 11, 1995, as amended as of
November 27, 1995 (the "Agreement), setting forth certain
representations, warranties, covenants, agreements and conditions
in connection with the Merger; and
WHEREAS, Magna owns all the outstanding shares of LBC;
NOW THEREFORE, in consideration of the premises and the
mutual covenants and agreements herein contained, and for the
purpose of setting forth the terms and conditions of the Merger,
the manner and the basis of causing the shares of River Bend Stock
to be converted into the right to receive the Common Stock of
Magna, $2.00 par value ("Magna Common Stock"), and/or a cash
payment and/or an interest in a land trust holding a certain parcel
of real estate, as herein provided, the matters with respect to
which the Articles of Incorporation of the Surviving Corporation
are to be amended and such other details and provisions as are
deemed necessary or proper, the parties hereto have agreed, subject
to the approval and adoption of this Plan by the requisite vote of
the shareholders of each Constituent Corporation, and subject to
the conditions hereinafter set forth, as follows:
<PAGE> 2
ARTICLE I
Merger and Name of Surviving Corporation
At the Effective Time, River Bend shall be merged with
and into LBC, which is hereby designated as the "Surviving
Corporation", the name of which upon and after the Effective Time
shall be Landmark Bancshares Corporation.
ARTICLE II
Terms and Conditions of Merger
The terms and conditions of the Merger are (in addition
to those set forth elsewhere in this Plan) as follows:
Section 1. At the Effective Time:
(a) River Bend shall be merged with and into LBC, and
LBC shall be, and is designated herein as, the Surviving
Corporation.
(b) The separate existence of River Bend shall cease.
(c) The Surviving Corporation shall thereupon and
thereafter possess all the rights, privileges, immunities and
franchises, of a public as well as of a private nature, of each of
the Constituent Corporations; and all property, real, personal and
mixed, and all debts due on whatever account, including
subscriptions to shares, and all other choices in action, and all
and every other interest, of or belonging to or due to each of the
Constituent Corporations, shall be taken and deemed to be
transferred to and vested in the Surviving Corporation without
further act or deed; and the title to any real estate, or any
interest therein, vested in either Constituent Corporation shall
not revert or be in any way impaired by reason of the Merger; the
Surviving Corporation shall thenceforth be responsible and liable
for all the liabilities and obligations of each of the Constituent
Corporations; and any claim existing or action or proceeding
pending by or against either of such Constituent Corporations may
be prosecuted to judgment as if the Merger had not taken place, or
such Surviving Corporation may be substituted in its place.
Neither the rights of creditors nor any liens upon the property of
either of the Constituent Corporations shall be impaired by the
Merger.
Section 2. At the Effective Time the Articles of
Incorporation of the Surviving Corporation shall be amended to the
extent and only to the extent that changes in such Articles of
Incorporation are stated in this Plan in Article I.
Section 3. At the Effective Time the by-laws of LBC
shall become the by-laws of the Surviving Corporation.
Section 4. At the Effective Time the members of the
Board of Directors and officers of LBC shall continue in office as
the members of the Board of Directors and officers of the Surviving
Corporation until their respective successors are duly elected and
qualified in accordance with the provisions of the by-laws of the
Surviving Corporation.
- 2 -
<PAGE> 3
ARTICLE III
Manner and Basis of Converting Shares
The manner and basis of converting the shares of River
Bend Stock into the right to receive Magna Common Stock, a cash
payment and/or an interest in a land trust holding a certain parcel
of real estate and the mode of carrying the Merger into effect are
as follows:
Section 1. Conversion of LBC Common Stock
------------------------------
Each share of LBC Common Stock outstanding at the
Effective Time shall without any action on the part of the holder
thereof, be converted into one fully paid and nonassessable share
of voting common stock, $1.00 par value, of the Surviving
Corporation, which shall upon such conversion be validly issued and
outstanding, fully paid and nonassessable, and shall not be liable
to any further call, nor shall the holder thereof be liable for any
further payments with respect thereto.
Section 2. Cancellation of River Bend Stock; Election
------------------------------------------
Procedures
----------
(a) At the Effective Time, by virtue of the Merger and
without any action on the part of River Bend, LBC or the holders of
any of the capital stock of River Bend, the aggregate of all issued
and outstanding shares of:
(i) Preferred Stock shall cease to be outstanding
and shall be converted into the right to receive, in the
aggregate, an amount in cash equal to $599,100 (the
"Preferred Cash Distribution");
(ii) Class I Common Stock and Class II Common
Stock shall cease to be outstanding and shall be
converted into the right to receive, in the aggregate,
(1) 550,240 shares of Magna Common Stock (the "Stock
Distribution") and (2) an amount in cash equal to
$11,668,175 (the "Common Cash Distribution"); provided,
however, that if the number of shares of Magna Common
Stock issuable to all holders of Class I Common Stock and
Class II Common Stock is insufficient in the reasonable
judgment of Thompson & Mitchell to allow it to render the
opinion required by Section 5.05 of the Agreement, then,
Thompson & Mitchell will advise Magna on the day that the
Effective Time occurs (the "Closing Date") as to the
minimum number of additional shares of Magna Common Stock
that will be required to be issued as Stock Distribution
(in place of the Common Cash Distribution) in the Merger
in order to allow Thompson & Mitchell to render such
opinion in its reasonable judgment. In the event that
Magna is required to issue additional shares of Magna
Common Stock, (1) the Stock Distribution shall equal A +
B and (2) the Common Cash Distribution shall equal C - (B
x D). For purposes of this Article III,
Section 2(a)(ii):
A = 550,240 shares
B = The minimum number of additional shares
of Magna Common Stock, as determined by
Thompson & Mitchell
- 3 -
<PAGE> 4
in its reasonable judgment, that must be
issued in the Merger to the holders of
Class I Common Stock and Class II Common
Stock as Stock Distribution in order for
Thompson & Mitchell to render the tax
opinion required by Section 5.05 of the
Agreement.
C = $11,668,175
D = $21.75; and
(iii) By the later of (1) ten (10) days after the
Effective Time or (2) the date on which a holder of
shares of Class I Common Stock and/or Class II Common
Stock surrenders their Certificate(s) (as defined in
Section 1.03 of the Agreement) to the Exchange Agent,
Magna shall cause LBC to distribute to the former holders
of the 157,063 shares of Class I Common Stock and the
785,315 shares of Class II Common Stock (all such 942,378
shares being treated equally but excluding any such
shares as to which dissenters' rights are then being
pursued by the former holder(s) thereof) beneficial
interests in a trust (the "Trust") that shall be the
record owner of that certain parcel of land identified by
Parcel ID No. 19-1-08-17-20-401-002.001 and consisting of
two acres more or less (the "Real Estate Consideration")
(the Stock Distribution, the Common Cash Distribution and
the Real Estate Consideration are collectively referred
to herein as the "Common Stock Consideration"). Any
beneficial interests that would otherwise be distributed
to holders of shares as to which dissenters' rights are
then being pursued shall be distributed to them if and
when such dissenters' rights are no longer being pursued
and if such holders shall have completed the dissent
process such that they are not to receive the Common
Stock Consideration, then such interests in the Trust
shall be distributed to Magna. The Trust shall have been
formerly owned beneficially by River Bend. The Trust
shall contain terms acceptable to Magna providing that
Magna and the subsidiaries of Magna and River Bend shall
be indemnified and held harmless for any and all tax
liability (including any interest, penalties or additions
thereto) in excess of $90,000 that Magna, River Bend, any
subsidiary of Magna or any subsidiary of River Bend shall
incur by reason of the distribution of the Trust from LBC
or payment of interests in the Trust to the former
holders of Class I Common Stock and/or Class II Common
Stock. Such indemnification shall not be subject to any
conditions precedent, other than a condition that Magna
permit the Trust to defend any proposed assessment of
tax. This indemnification obligation shall be guaranteed
by John G. Helmkamp, Jr. for a period of one year
following the Effective Time; provided, however, in the
event (i) Magna or any subsidiary thereof, has filed a
tax return(s) which reports the distribution of the Real
Estate Consideration and such return(s) report the fair
market value of the Real Estate Consideration at any
amount such that Magna's and any subsidiary thereof's, in
the aggregate, tax liability is greater than $90,000 and
(ii) Magna, during the period ending one year after the
Closing Date, has provided notice to the Trust of such
additional tax due, the indemnification obligation of
Mr. Helmkamp pursuant to this Article III, Section
2(a)(iii) shall extend beyond such one year period, but
solely with respect to the tax liability that is the
subject of the notice provided by Magna to the Trust
(e.g., the distribution of the interests in the Trust to
the former
- 4 -
<PAGE> 5
shareholders of River Bend) (the Common Stock Consideration
and the Preferred Cash Distribution are collectively referred
to herein as the "Merger Consideration").
(b) At the Effective Time, each individual share of (i)
Preferred Stock shall be converted into the right to receive an
amount in cash equal to $100 and (ii) Class I Common Stock and
Class II Common Stock (each share of such stock being treated
equally on a share by share basis) shall be converted into the
right to receive that share's proportionate interest in the Common
Stock Consideration, subject to adjustment as provided in Article
III, Sections 2(c) and (d) hereof.
(c) (i) Concurrently with the mailing of the Proxy
Statement (as contemplated by Section 5.02 of the
Agreement, including the Prospectus contained in the
Registration Statement (also as contemplated by Section
5.02 of the Agreement)) to the shareholders of River
Bend, Magna shall cause the Exchange Agent (as defined
below) to mail to each holder of record of Class I Common
Stock and/or Class II Common Stock a form of election
(the "Election Form") on which such holder shall make the
election as provided for in this Article III, Section 2.
Each Election Form shall specify the composition of the
proportionate interest in the Stock Distribution and the
Common Cash Distribution received by that holder (subject
to adjustments as provided for herein), by specifying
what percentage of the value of the consideration to be
received by the holder shall be the Common Cash
Distribution and what percentage of the value of the
consideration shall be the Stock Distribution. For this
purpose, the Stock Distribution shall be valued at a
price equal to the average, per share closing price of
Magna Common Stock as reported on the Nasdaq Stock Market
for the five business days preceding the three business
days preceding the Closing Date (the "Magna Share
Value").
(ii) Any shares of Class I Common Stock or Class
II Common Stock with respect to which the holder thereof
shall not, as of the "Election Deadline" (as defined
below), have made an election, pursuant to Article III,
Section 2(c)(i) hereof, by submission to River Bend of an
effective, properly completed Election Form shall be
deemed to have elected to receive 50% of their
proportionate interest of the Common Stock Consideration
as Stock Distribution and 50% as Common Cash
Distribution. "Election Deadline" means 5:00 p.m., local
time, on the day preceding the day of the special meeting
of shareholders called to vote upon the Merger. Any
election for purposes of this Article III, Section 2
shall be effective only if River Bend shall have received
a properly completed Election Form by the Election
Deadline. Any Election Form may be revoked or changed by
the person submitting such Election Form or any other
person to whom the subject shares are subsequently
transferred by written notice by such person to River
Bend at or prior to the Election Deadline.
(iii) All Election Forms shall be deemed to be
revoked if this Agreement shall have been terminated in
accordance with its terms. River Bend shall have
reasonable discretion to determine when any election,
modification or revocation is received and whether any
such election, modification or revocation is effective,
consistent with the duty of River Bend to give effect to
such elections, modifications or revocations to the
maximum
- 5 -
<PAGE> 6
extent possible. As soon as practicable after the Election
Deadline, River Bend shall deliver to the Exchange Agent (i) a
certified list that sets forth the election made, if any, by
each holder of Class I Common Stock and/or Class II Common
Stock and (ii) a copy of each Election Form received by River
Bend.
(iv) As soon as practicable after the Closing,
Magna shall cause the Exchange Agent to allocate among
the holders of Class I Common Stock and Class II Common
Stock the rights to receive the Stock Distribution and
the Common Cash Distribution as set forth in their
respective Election Forms; provided, however, to the
extent that holders of certificates representing shares
of Class I Common Stock and Class II Common Stock elect
either (A) more cash than equals the Common Cash
Distribution or (B) more Magna Common Stock than equals
the Stock Distribution, the type of merger consideration
oversubscribed shall be apportioned among the holders by
pro-rating that consideration, in proportion to the
amounts elected by the holders, so that the sum of the
amount of that form of consideration equals the amount
available to be received by the holders of the
certificates representing shares of Class I Common Stock
and Class II Common Stock, in the aggregate. The
remainder of each holder's merger consideration shall be
in the form of the undersubscribed merger consideration,
in an amount such that the fair market value of all
merger consideration (valuing the Stock Distribution
portion at a per share value equal to the Magna Share
Value) received by the holder equals the proportionate
amount of the Common Stock Consideration to which such
holder is entitled.
(v) The pro rata computations to be used by the
Exchange Agent shall be made by the Exchange Agent in the
reasonable exercise of its discretion. Each separate
entry on River Bend's list of shareholders shall be
presumed to represent a separate and distinct holder of
record of Class I Common Stock, Class II Common Stock or
Preferred Stock.
(vi) Only holders of shares of Class I Common
Stock and Class II Common Stock shall be entitled to
complete and submit an Election Form. Holders of shares
of Preferred Stock shall be entitled to receive their
proportionate interest of the Preferred Cash Distribution
(as provided in Article III, Section 2(a)(i) hereof).
(d) In the event that the Closing Date occurs after
February 29, 1996, then the Common Cash Distribution and the
Preferred Cash Distribution shall be adjusted in the following
manner. An amount shall be added to the Common Cash Distribution
(after such number has been adjusted as provided in Article III,
Section 2(a)(ii) hereof but before any adjustment pursuant to this
Article III, Section 2(d)) equal to (A) the product of (i) the sum
of all dividends declared by Magna on a single share of Magna
Common Stock for stockholders of record for the period beginning
March 1, 1996 and ending the day prior to the Closing Date and (ii)
the number of shares of Magna Common Stock comprising the Stock
Distribution (after such number has been adjusted as provided in
Article III, Section 2(a)(ii) hereof) less (B) the aggregate amount
----
of dividends declared by River Bend on shares of Class I Common
Stock and Class II Common Stock during such period plus (C) the
----
product of (i) the Common Cash Distribution (after such number has
been adjusted as provided in Article III, Section 2(a)(ii) hereof
but before any adjustment pursuant to this Article III, Section
2(d)) times (ii) (1) the
-----
- 7 -
<PAGE> 7
Federal funds rate, as published in The Wall Street Journal, Midwest
Edition, as such rate varies from time to time, divided by (2) 365 times
---------- -----
(iii) the number of days, inclusive, from February 29, 1996 to the day
prior to the Closing Date. An amount shall be added to the Preferred Cash
Distribution equal to the product of (A) the Preferred Cash Distribution
times (B) (i) the Federal funds rate, as published in The Wall Street
- -----
Journal, Midwest Edition, as such rate varies from time to time,
divided by (ii) 365 times (C) the number of days, inclusive, from
- ---------- -----
February 29, 1996 to the day prior to the Closing Date.
(e) No fractional shares of Magna Common Stock shall be
issued. In lieu thereof, any shareholder of River Bend who would
be entitled to a fractional share of Magna Common Stock shall
receive an amount in cash, equal to the fraction of a share to
which such shareholder would have been entitled times $21.75,
rounded to the nearest whole cent. This value has been agreed upon
solely for the purpose of determining the conversion rate for the
Class I Voting Stock and the Class II Voting Stock and the basis
for the payment for fractional shares under this Plan of Merger.
No representation is made that such value would be the value of
shares for any other purpose nor is any representation made that
such value would be relevant in determining the amount which any
shareholder dissenting from the merger would receive.
(f) No payment shall be made in respect of authorized
but unissued shares of River Bend Stock.
Section 3. Dissenting River Bend Shareholders
----------------------------------
Shareholders of River Bend who, at or prior to the
meeting of River Bend shareholders called to approve the Merger,
file a written demand for payment of their shares if the proposed
Merger is consummated and do not vote in favor thereof and shall
otherwise perfect their rights under the Illinois Business
Corporation Act of 1983, as amended (the "Illinois Statute"), shall
be paid by the Surviving Corporation, with funds provided by Magna,
such amount as they are entitled to under law.
Section 4. River Bend Stock Certificates
-----------------------------
After the Effective Time, each holder of an outstanding
certificate which prior thereto represented shares of River Bend
Stock shall be entitled, upon surrender thereof to a qualified bank
or trust company, as appointed by Magna (the "Exchange Agent"), to
receive in exchange therefor the number of shares of Magna Common
Stock, the cash payment and/or an interest in the Trust into which
it has been converted. Until so surrendered, each such outstanding
certificate which, prior to the Effective Time, represented shares
of River Bend Stock shall for all purposes evidence the right to
receive the Merger Consideration; provided that dividends or other
distributions which are payable in respect of shares of Magna
Common Stock into which shares of River Bend Stock shall have been
so converted shall be set aside by Magna and shall not be paid to
holders of certificates representing such shares of River Bend
Stock until such certificates shall have been so surrendered in
exchange for certificates representing such Magna Common Stock.
Upon such surrender the holders of such shares shall be entitled to
receive such dividends without interest. No interest will be
accrued or paid on the cash component of the Merger Consideration
except as provided in Article III, Section 2(d) hereof.
- 7 -
<PAGE> 8
The Merger Consideration shall be issued in full
satisfaction of all rights pertaining to such converted shares.
ARTICLE IV
Other Provisions with Respect to Merger
Section 1. This Plan of Merger shall be submitted to the
shareholders of each of LBC and River Bend as provided by the laws
of the States of Missouri and Illinois, respectively. After the
approval or adoption thereof by the shareholders of each
Constituent Corporation in accordance with the requirements of the
laws of the States of Missouri and Illinois, all required
documents, including the Articles of Merger, shall be executed,
filed and recorded and all required acts shall be done in order to
accomplish the Merger pursuant to the Illinois Statute and the
General and Business Corporation Law of Missouri (the "Missouri
Statute"), subject to the terms and conditions of the Agreement.
Section 2. If the Agreement is terminated, then this
Plan of Merger shall simultaneously terminate without further
action by the Constituent Corporations. In the event of such
termination, the Board of Directors of each of the Constituent
Corporations shall direct its officers not to file this Plan of
Merger as provided above notwithstanding favorable action on this
Plan of Merger by the shareholders of River Bend or LBC.
ARTICLE V
Approval and Effective Time of Merger; Miscellaneous Matters
Section 1. The Merger shall become effective when all
the following actions have been taken: (i) this Plan of Merger
shall be authorized, adopted and approved on behalf of each of LBC
and River Bend in accordance with the laws of the States of
Missouri and Illinois, respectively, and (ii) Articles of Merger
(with this Plan of Merger attached as part thereof) shall be filed
in the Office of the Secretary of State of the State of Illinois
and the Office of the Secretary of State of the State of Missouri
and each such Secretary shall have issued a certificate of merger
reflecting such filing. The time at which such actions are
completed and such merger becomes effective is herein referred to
as the "Effective Time".
Section 2. If at any time the Surviving Corporation
shall deem or be advised that any further grants, assignments,
confirmations or assurances are necessary or desirable to vest,
perfect or confirm, of record or otherwise, in the Surviving
Corporation the title to any property of River Bend acquired or to
be acquired by or as a result of the Merger, the officers or any of
them and directors of the Surviving Corporation shall be and they
hereby are severally and fully authorized to execute and deliver
any and all such deeds, assignments, confirmations and assurances
and to do all things necessary or proper so as to best prove,
confirm and ratify title to such property in the Surviving
Corporation and otherwise carry out the purposes of the Merger and
the terms of this Plan of Merger.
Section 3. For the convenience of the parties and to
facilitate the filing and recording of this Plan of Merger, any
number of counterparts hereof may be executed, and each such
counterpart shall be deemed to be an original instrument and all
such counterparts together shall be considered one instrument.
- 8 -
<PAGE> 9
Section 4. This Plan of Merger cannot be altered or
amended except pursuant to an instrument in writing signed on
behalf of the parties hereto.
IN WITNESS WHEREOF, each Constituent Corporation has
caused this Plan of Merger to be executed, all as of the date first
above written.
LANDMARK BANCSHARES CORPORATION
[SEAL]
By
------------------------------------
ATTEST: G. Thomas Andes, President
- ----------------------------------
Carolyn B. Ryseff, Secretary
RIVER BEND BANCSHARES, INC
[SEAL]
By
-------------------------------------
John G. Helmkamp, Jr., President
ATTEST:
- ----------------------------------
Harley T. Godard, Secretary
- 9 -
<PAGE> 1
[Letterhead of Thompson & Mitchell] EXHIBIT 5.1
November 30, 1995
Magna Group, Inc.
One Magna Place
1401 South Brentwood Boulevard
St. Louis, Missouri 63144-1401
Re: Registration Statement on Form S-4
Gentlemen:
We refer you to the Registration Statement on Form S-4 to
be filed by Magna Group, Inc. (the "Company"), on November 30, 1995
(the "Registration Statement") with the Securities and Exchange
Commission (the "SEC") under the Securities Act of 1933, as
amended, pertaining to the proposed issuance by the Company of up
to 650,240 shares of the Company's common stock, $2.00 par value
(the "Shares"), in connection with acquisition by merger of River
Bend Bancshares, Inc. ("River Bend") pursuant to the Agreement and
Plan of Reorganization dated as of October 11, 1995, as amended as of
November 27, 1995 (the "Agreement"), by and between the Company and
River Bend and the related Plan of Merger (the "Plan") by and between
River Bend and Landmark Bancshares Corporation, a wholly owned
subsidiary of Magna (the Agreement and the Plan are collectively
referred to herein as the "Merger Agreements"), all as provided in the
Registration Statement. In rendering the opinions set forth herein,
we have examined such corporate records of the Company,
such laws and such other information as we have deemed relevant,
including the Company's Certificate of Incorporation, as amended
and currently in effect, and Bylaws, as amended and currently in
effect, the resolutions adopted by the Company's Board of Directors
relating to the merger transaction, certificates received from
state officials and statements we have received from officers and
representatives of the Company. In delivering this opinion, the
undersigned assumes the genuineness of all signatures; the
authenticity of all documents submitted to us as originals; the
conformity to the originals of all documents submitted to us as
certified, photostatic or conformed copies; the authenticity of the
originals of all such latter documents; and the correctness of
statements submitted to us by officers and representatives of the
Company.
Based solely on the foregoing, the undersigned is of the
opinion that:
1. The Company has been duly incorporated and is
validly existing under the laws of the State of Delaware; and
2. The Shares to be sold by the Company, when issued in
conversion of the shares of River Bend common stock as provided in
the Merger Agreements, will be duly authorized, validly issued and
fully paid and nonassessable.
We consent to the filing of this opinion as an exhibit to
the Registration Statement and to the reference to this firm in the
section of the Proxy Statement/Prospectus entitled "Legal Matters."
Very truly yours,
/s/ Thompson & Mitchell
<PAGE> 1
Exhibit 8.1
-----------
[letterhead of Thompson & Mitchell]
November 30, 1995
Board of Directors
River Bend Bancshares, Inc.
Main and West St. Louis Avenue
East Alton, Illinois 62024
Ladies and Gentlemen:
You have requested our opinion with regard to certain federal
income tax consequences of the proposed merger (the "Merger") of
River Bend Bancshares, Inc. ("River Bend") with and into Landmark
Bancshares Corporation ("LBC"), a wholly owned subsidiary of Magna
Group, Inc. ("Magna").
In connection with the preparation of our opinion, we have
examined and have relied upon the following:
(i) The Agreement and Plan of Reorganization by and between
Magna and River Bend dated as of October 11, 1995, including
the amendment thereto dated as of November 27, 1995 and the
schedules and exhibits thereto (the "Agreement");
(ii) Magna's Registration Statement on Form S-4, including
the Joint Proxy Statement/Prospectus contained therein, filed
with the Securities and Exchange Commission on November 30,
1995 (the "Registration Statement");
(iii) The representations and undertaking of Magna
substantially in the form of Exhibit A hereto;
(iv) The representations and undertakings of River Bend and
certain holders of River Bend Class I Common Stock, par value
$1.00 per share ("River Bend Common Stock"), and River Bend
Class II Non-Voting Common Stock, par value $1.00 per share
(also "River Bend Common Stock"), substantially in the forms
of Exhibit B and Exhibit C hereto; and
(v) The Rights Plan between Magna and Magna Trust Company,
dated November 11, 1988.
Our opinion is based solely upon applicable law and the
factual information and undertakings contained in the above-
mentioned documents. In rendering our opinion, we have assumed the
accuracy of all information and the performance of all undertakings
contained in each of such documents. We also have assumed the
authenticity of all original documents, the conformity of all
copies to the original documents, and the genuineness of all
signatures. We have not attempted to verify independently the
accuracy of any information in any such document, and we have
assumed that such documents accurately and completely set forth all
material facts relevant to this opinion. All of our assumptions
were made with your consent. If any fact or assumption described
herein or below is incorrect, any or all of the federal income tax
consequences described herein may be inapplicable. Capitalized
terms not otherwise defined herein have the meaning ascribed to
them in the Agreement.
<PAGE> 2
River Bend Bancshares, Inc.
November 30, 1995
Page 2
OPINIONS
Subject to the foregoing, to the conditions and limitations
expressed elsewhere herein, and assuming that the Merger is
consummated in accordance with the Agreement, we are of the opinion
that for federal income tax purposes:
1. The Merger will constitute a reorganization within the
meaning of sections 368(a)(1)(A) and 368(a)(2)(D) of the Internal
Revenue Code of 1986, as amended to the date hereof (the "Code").
2. Exchange of River Bend Common Stock for Magna Common Stock and
Other Property. Each holder of River Bend Common Stock who
exchanges, in the Merger, shares of River Bend Common Stock solely
for shares of Magna common stock, par value $2.00 per share ("Magna
Common Stock"), the Real Estate Consideration and the Common Cash
Distribution, if any (collectively, the Real Estate Consideration
and the Common Cash Distribution are sometimes hereinafter referred
to as "Other Property"for purposes of this paragraph 2):
a) will realize gain (determined separately as to each
class and each block of River Bend Common Stock
exchanged) if (i) the sum of the fair market value of the
shares of Magna Common Stock received (including any
fractional share of Magna Common Stock deemed to be
received, as described in paragraph 6, below), and the
fair market value of the Other Property exceeds (ii) the
aggregate adjusted tax basis of the River Bend Common
Stock surrendered in exchange therefor, and will
recognize such gain, if any, up to but not in excess of
the fair market value of Other Property received (Code
sections 1001 and 356(a); Rev. Rul. 74-515, 1974-2 C.B.
118; Rev. Rul. 71-364, 1971-2 C.B. 182);
b) will not recognize any loss realized (determined
separately as to each class and each block of River Bend
Common Stock exchanged), except with regard to cash
received in lieu of a fractional share, as discussed
below (Code section 356(c));
c) will have basis for the shares of Magna Common Stock
received (including any fractional share of Magna Common
Stock deemed to be received, as described in paragraph 6,
below) equal to the aggregate adjusted tax basis of the
shares of River Bend Common Stock surrendered, increased
by the amount of gain, if any, recognized by such holder
and decreased by the fair market value of Other Property
received (Code section 358(a)); and
d) will have a holding period for the shares of Magna
Common Stock received (including any fractional share of
Magna Common Stock deemed to be received, as described in
paragraph 6, below) which includes the holding period of
the River Bend Common Stock surrendered, provided that
the shares of River Bend Common Stock surrendered are
held as capital assets at the Effective Time (Code
section 1223(1)).
No opinion is expressed as to whether the recognized gain
described in subparagraph a of this paragraph 2 will be capital
gain or will be treated as the receipt of a taxable dividend,
because this determination generally will depend on the facts and
circumstances of each River Bend shareholder. Under section 356 of
the Code, the determination of whether the receipt of Other
Property has the effect of the distribution of a dividend will be
made generally in accordance with the
<PAGE> 3
River Bend Bancshares, Inc.
November 30, 1995
Page 3
principles of section 302 of the Code, taking into account the stock
ownership attribution rules of section 318 of the Code. Provided that the
receipt of Other Property by a River Bend shareholder does not have the
effect of the distribution of a dividend, such gain will be capital gain if
the shares of River Bend Common Stock exchanged are held as capital assets
at the Effective Time, and long-term or short-term depending on the
holder's holding period for each block of River Bend Common Stock
surrendered (Code section 1222). However, if the receipt of Other Property
does have the effect of the distribution of a dividend, such gain generally
will be taxable as a dividend in accordance with the provisions and
limitations of Code Section 356(a).
3. Exchange of River Bend Common Stock and Preferred Stock for Magna
Common Stock and Other Property. Each holder of River Bend Common Stock
who also holds Preferred Stock and who exchanges, in the Merger,
shares of River Bend Common Stock and shares of Preferred Stock
solely for shares of Magna Common Stock, the Real Estate
Consideration, the Common Cash Distribution, if any, and the
Preferred Cash Distribution (collectively, the Real Estate
Consideration, the Common Cash Distribution and the Preferred Cash
Distribution are referred to as "Other Property" for purposes of
this paragraph 3):
a) will realize gain with respect to the River Bend
Common Stock exchanged (determined separately as to each
class and each block of River Bend Common Stock
exchanged) if (i) the sum of the fair market value of the
shares of Magna Common Stock received (including any
fractional share of Magna Common Stock deemed to be
received, as described in paragraph 6, below), the fair
market value of the Real Estate Consideration, the amount
of the Common Cash Distribution, if any, exceeds (ii) the
aggregate adjusted tax basis of the River Bend Common
Stock surrendered in exchange therefor, and will
recognize such gain, if any, up to but not in excess of
the sum of the fair market value of the Real Estate
Consideration and the amount of the Common Cash
Distribution, if any, received (Code sections 1001 and
356(a); Rev. Rul. 74-515, supra; Rev. Rul. 71-364,
-----
supra);
-----
b) will not recognize any loss realized with respect to
the River Bend Common Stock exchanged (determined
separately as to each class and each block of River Bend
Common Stock exchanged), except with regard to cash
received in lieu of a fractional share, as discussed
below (Code section 356(c));
c) will have basis for the shares of Magna Common Stock
received (including any fractional share of Magna Common
Stock deemed to be received, as described in paragraph 6,
below) equal to the aggregate adjusted tax basis of the
shares of River Bend Common Stock surrendered, increased
by the amount of gain, if any, recognized by such holder
(as described in subparagraph b of this paragraph 3) and
decreased by the sum of the fair market value of the Real
Estate Consideration and the amount of the Common Cash
Distribution, if any, received (Code section 358(a);
Treas. Reg. Section 1.358-2(a)(4));
d) will have a holding period for the shares of Magna
Common Stock received (including any fractional share of
Magna Common Stock deemed to be received, as described in
paragraph 6, below) which includes the holding period of
the River Bend Common Stock surrendered, provided that
the shares of River Bend Common Stock surrendered are
held as capital assets at the Effective Time (Code
section 1223(1));
<PAGE> 4
River Bend Bancshares, Inc.
November 30, 1995
Page 4
e) will realize gain with respect to the Preferred
Stock exchanged (determined separately as to each block
of Preferred Stock exchanged) if (i) the amount of the
Preferred Cash Distribution exceeds (ii) the aggregate
adjusted tax basis of the Preferred Stock surrendered in
exchange therefor, and will recognize such gain, if any,
up to but not in excess of the amount of cash received
(Code sections 1001 and 356(a); Rev. Rul. 74-515, supra);
-----
and
f) will not recognize any loss realized with respect to
the Preferred Stock exchanged (determined separately as
to each block of Preferred Stock exchanged) (Code section
356(c)).
No opinion is expressed as to whether the recognized gain
described in subparagraphs a and d of this paragraph 3 will be
capital gain or will be treated as the receipt of a taxable
dividend, because this determination generally will depend on the
facts and circumstances of each River Bend shareholder. Under
section 356 of the Code, the determination of whether the receipt
of Other Property has the effect of the distribution of a dividend
will be made generally in accordance with the principles of section
302 of the Code, taking into account the stock ownership
attribution rules of section 318 of the Code. Provided that the
receipt of Other Property by a River Bend shareholder does not have
the effect of the distribution of a dividend, such gain will be
capital gain if the shares of River Bend Common Stock exchanged are
held as capital assets at the Effective Time, and long-term or
short-term depending on the holding period for each block of River
Bend Common Stock surrendered (Code section 1222). However, if the
receipt of Other Property does have the effect of the distribution
of a dividend, such gain generally will be taxable as a dividend in
accordance with the provisions and limitations of Code Section
356(a).
4. Exchange of River Bend Common Stock and Preferred Stock for Other
Property. Each shareholder of River Bend who receives solely the
Common Cash Distribution, the Real Estate Consideration and the
Preferred Cash Distribution (collectively referred to as "Other
Property" for purposes of this paragraph 4) in exchange for River
Bend Common Stock and Preferred Stock pursuant to the Merger:
a) will recognize gain or loss with respect to the
River Bend Common Stock exchanged (determined separately
as to each class and each block of River Bend Common
Stock exchanged) in an amount equal to the difference
between (i) the sum of the amount of the Common Cash
Distribution and the fair market value of the Real Estate
Consideration, and (ii) such shareholder's aggregate
adjusted tax basis for the shares of River Bend Common
Stock surrendered; and
b) will recognize gain or loss with respect to the
Preferred Stock exchanged (determined separately as to
each class and each block of Preferred Stock exchanged)
in an amount equal to the difference between (i) the sum
of the amount of the Preferred Cash Distribution and (ii)
such shareholder's aggregate adjusted tax basis for the
shares of Preferred Stock surrendered;
provided that the receipt of Other Property does not have the
effect of the distribution of a dividend (Code sections 1001 and
302(a)). Such gain or loss will be capital gain or loss if the
shares of River Bend Common Stock and Preferred Stock surrendered
are held as capital assets at the Effective Time, and long-term or
short-term depending on the holder's holding period for each block
of River Bend Common Stock surrendered (Code section 1222).
However, if the cash payment does have the effect
<PAGE> 5
River Bend Bancshares, Inc.
November 30, 1995
Page 5
of the distribution of a dividend, such shareholder will recognize income
in the amount of the cash received (without regard to such shareholder's
basis in the River Bend Common Stock surrendered), which generally will be
taxable as a dividend (Code sections 302(d) and 301).
The determination of whether a cash payment has the effect of
the distribution of a dividend will be made pursuant to the
provisions and limitations of section 302 of the Code, taking into
account the stock ownership attribution rules of section 318 of the
Code. Because such determination generally will depend on the
facts and circumstances of each River Bend shareholder, we express
no opinion as to whether the cash payments discussed in this
paragraph 4 will be treated as having the effect of the
distribution of a dividend.
5. Exchange of Preferred Stock for Other Property. Each holder of
Preferred Stock who receives solely the Preferred Cash Distribution
in the Merger will recognize gain or loss (determined separately as
to each block of Preferred Stock exchanged) in an amount equal to
the difference between (i) the amount of cash received by such
shareholder and (ii) such shareholder's aggregate adjusted tax
basis for the shares of Preferred Stock surrendered, provided that
the cash payment does not have the effect of the distribution of a
dividend (Code sections 1001 and 302(a); Rev. Rul. 74-515, supra).
-----
Such gain or loss will be capital gain or loss if the shares of
Preferred Stock surrendered are held as capital assets at the
Effective Time, and long-term or short-term depending on the
holder's holding period for each block of Preferred Stock
surrendered (Code section 1222). However, if the cash payment does
have the effect of the distribution of a dividend, such shareholder
will recognize income in the amount of the cash received (without
regard to such shareholder's basis in the Preferred Stock
surrendered), which generally will be taxable as a dividend (Code
sections 302(d) and 301).
The determination of whether a cash payment has the effect of
the distribution of a dividend will be made pursuant to the
provisions and limitations of section 302 of the Code, taking into
account the stock ownership attribution rules of section 318 of the
Code. Because such determination generally will depend on the
facts and circumstances of each River Bend shareholder, we express
no opinion as to whether the cash payments discussed in this
paragraph 5 will be treated as having the effect of the
distribution of a dividend.
6. Cash Received in lieu of Fractional Shares of Magna Common Stock.
Each shareholder of River Bend who receives, in the Merger, cash in
lieu of a fractional share of Magna Common Stock will be treated as
if the fractional share had been received in the Merger and then
redeemed by Magna. Provided that the shares of River Bend Common
Stock surrendered were capital assets in the hands of such holder
at the time of the Merger, the receipt of such cash will cause the
recipient to recognize capital gain or loss, equal to the
difference between the amount of cash received and the portion of
such holder's basis in the shares of Magna Common Stock allocable
to the fractional share (Code sections 1001 and 1222; Rev. Rul. 66-
365, 1966-2 C.B. 116; Rev. Proc. 77-41, 1977-2 C.B. 574).
* * * * * * * * * * * *
We express no opinion with regard to (1) the federal income
tax consequences of the Merger not addressed expressly by this
opinion, including without limitation, (i) the tax consequences, if
any, to those shareholders of River Bend who acquired shares of
River Bend Common Stock pursuant to the exercise of employee stock
options or otherwise as compensation, and (ii) the tax consequences
to special classes of shareholders, if any, including without
limitation, foreign persons, insurance
<PAGE> 6
River Bend Bancshares, Inc.
November 30, 1995
Page 6
companies, tax-exempt entities, retirement plans, and dealers in
securities; and (2) federal, state, local, or foreign taxes (or any other
federal, state, local, or foreign laws) not specifically referred to and
discussed herein. Further, our opinion is based upon the Code, Treasury
Regulations proposed or promulgated thereunder, and administrative
interpretations and judicial precedents relating thereto, all of which are
subject to change at any time, possibly with retroactive effect, and we
assume no obligation to advise you of any subsequent change thereto. If
there is any change in the applicable law or regulations, or if there is
any new administrative or judicial interpretation of the applicable law or
regulations, any or all of the federal income tax consequences described
herein may become inapplicable.
The foregoing opinion reflects our legal judgment solely on
the issues presented and discussed herein. This opinion has no
official status or binding effect of any kind. Accordingly, we
cannot assure you that the Service or any court of competent
jurisdiction will agree with this opinion.
We hereby consent to the filing of this letter as an exhibit
to the Registration Statement and to all references made to this
letter and to this firm in the Registration Statement.
Very truly yours,
/s/ Thompson & Mitchell
<PAGE> 7
Exhibit A
CERTIFICATE
-----------
The undersigned, * , [Undersigned's Title] of Magna
------------
Group, Inc., a Delaware corporation ("Magna"), HEREBY CERTIFIES
that (a) I am familiar with the terms and conditions of the
Agreement and Plan of Reorganization by and between Magna and River
Bend Bancshares, Inc., an Illinois corporation ("River Bend"),
dated as of October 11, 1995, including the amendment thereto dated
as of November 27, 1995 and the schedules and exhibits thereto (the
"Agreement"), and (b) I am aware that (i) this Certificate will be
relied on by Thompson & Mitchell, counsel for Magna, in rendering
its opinion to River Bend that the merger (the "Merger") of River
Bend with and into Landmark Bancshares Corporation, a Missouri
corporation ("LBC"), will constitute a reorganization within the
meaning of section 368(a)(1) of the Internal Revenue Code of 1986,
as amended (the "Code"), and (ii) the representations and
undertaking recited herein will survive the Merger.
The undersigned HEREBY FURTHER CERTIFIES, ON BEHALF OF Magna,
that:
(1) The fair market value of the River Bend Class I
Common Stock, par value $1.00 per share ("River Bend Common
Stock"), the River Bend Class II Non-Voting Common Stock, par value
$1.00 per share (also "River Bend Common Stock"), and the River
Bend Class A Preferred Stock, par value $100.00 per share ("River
Bend Preferred Stock"), surrendered in the Merger by each River
Bend shareholder will, in each case, be approximately equal to the
fair market value of the Magna common stock, par value $2.00 per
share ("Magna Common Stock"), and/or the cash (including cash to be
received in lieu of fractional shares of Magna Common Stock, if
any), and/or the "Real Estate Consideration" (as the quoted term is
defined in the Agreement) to be received by each such shareholder
in the Merger.
(2) Except as otherwise set forth by the undersigned on
an attachment hereto or in the certificate of John G. Helmkamp, Jr.,
Magna is aware of no plan, intention or arrangement (including any
option or pledge) on the part of any holder of River Bend Common Stock
to sell, exchange or otherwise dispose of any of the Magna Common
Stock to be received in the Merger, with the exception of fractional
shares of Magna Common Stock to be exchanged for cash pursuant to the
Merger.
(3) Before the Merger, Magna will be in control of LBC
within the meaning of section 368(c) of the Code.
<PAGE> 8
(4) Before the Merger, LBC will have no assets or
liabilities other than assets received from Magna to satisfy LBC's
capitalization requirements.
(5) After the Merger, (a) LBC will not issue additional
shares of its stock that would result in Magna losing control of
LBC within the meaning of section 368(c) of the Code, and (b)
neither LBC nor any other member of Magna's "affiliated group" (as
the quoted term is defined in Code section 1504, the ("Magna
Affiliated Group") will have outstanding any warrants, options,
convertible securities, or any other type of right (including any
preemptive right) pursuant to which any person could acquire stock
in LBC that, if exercised or converted, would affect Magna's
retention of control of LBC (as defined above). No stock of LBC
will be issued in connection with the Merger.
(6) In connection with the Merger, Magna and LBC will
tender no consideration for River Bend Common Stock and River Bend
Preferred Stock other than Magna Common Stock, the "Common Cash
Distribution" (as the quoted term is defined in the Agreement), the
"Preferred Cash Distribution" (as the quoted term is defined in the
Agreement), the Real Estate Consideration, and cash in lieu of
fractional shares of Magna Common Stock.
(7) Neither Magna nor any other member of the Magna
"Affiliated Group" has any plan or intention to redeem or otherwise
reacquire any of the Magna Common Stock issued to the shareholders
of River Bend in the Merger.
(8) Neither Magna nor any other member of the Magna
Affiliated Group has any plan or intention (a) to liquidate LBC,
(b) to merge LBC with and into another corporation, (c) to sell or
otherwise dispose of (whether by dividend distribution or
otherwise) the stock of LBC, or (d) except for transfers described
in section 368(a)(2)(C) of the Code, dispositions made in the
ordinary course of business, the disposition of the Real Estate
Consideration, or dispositions approved by Thompson & Mitchell, to
cause, suffer, or permit LBC to sell or otherwise dispose of
(whether by dividend distribution or otherwise) (i) any assets of
River Bend acquired in the Merger, or (ii) any assets of any other
member of River Bend's "affiliated group" (as the quoted term is
defined in Code section 1504, the "River Bend Affiliated Group").
(9) After the Merger, LBC will continue the historic
businesses of River Bend and the other members of the River Bend
Affiliated Group, or will use a significant portion of the historic
business assets of the members of the River Bend Affiliated Group
in a business (no stock of any member of the River Bend Affiliated
Group shall be treated as a business asset for purposes of this
representation).
<PAGE> 9
(10) Magna, LBC, River Bend, and the shareholders of
River Bend will each pay their respective expenses, if any,
incurred in connection with the Merger; provided, however, that
Magna or LBC may pay and assume those expenses of River Bend that
are solely and directly related to the Merger in accordance with
the guidelines established in Rev. Rul. 73-54, 1973-1 C.B. 187.
(11) Except with regard to Transaction Costs (as defined
below), neither Magna nor any other member of the Magna Affiliated
Group will pay any amount or incur any liability to or for the
benefit of, or assume or cancel any liability of, any shareholder
of River Bend in connection with the Merger, and no liability to
which River Bend Common Stock is subject will be extinguished as a
result of the Merger. For purposes of this representation, (a) the
term "liability" shall include any undertaking to pay or to cause
the reduction, release, or extinguishment of any obligation,
without regard to whether any such undertaking or obligation is
contingent or legally enforceable (for example and without
limitation, the term "liability" includes an unenforceable
agreement to cause the repayment of an obligation guaranteed by a
River Bend shareholder or to cause by other means the release of
such guaranty), and (b) the term "Transaction Costs" shall mean
amounts paid or liabilities incurred in connection with the Merger
(i) to River Bend shareholders with respect to the Magna Common
Stock, the "Common Cash Distribution," the "Preferred Cash
Distribution," the Real Estate Consideration, and cash in lieu of
fractional shares of Magna Common Stock to be delivered in the
Merger, (ii) to dissenters, if any, (iii) for legal, accounting,
and investment banking and/or advisor services rendered to Magna or
LBC, if any, (iv) for those expenses payable or assumable by Magna
in accordance with representation (10) above, (v) as compensation
to any employee of Magna or River Bend or of any other member of
the Magna Affiliated Group or the River Bend Affiliated Group for
services rendered in the ordinary course of his or her employment,
and (vi) the indemnification obligation described in the final
sentence of Section 5.04 of the Agreement.
(12) No indebtedness between River Bend or any other
member of the River Bend Affiliated Group, on the one hand, and LBC
or Magna or any other member of the Magna Affiliated Group, on the
other hand, exists or will exist prior to the Merger that (a) was
issued or acquired at a discount, (b) will be settled, as a result
of the Merger, at a discount, or (c) will result in the recognition
of gain under Treasury Regulation Section 1.1502-13. No
"installment obligation" (as the quoted term is defined for
purposes of Code section 453B), between River Bend, on the one
hand, and LBC, on the other hand, exists or will exist prior to the
Merger that will be extinguished as a result of the Merger.
(13) The payment of cash in lieu of fractional shares of
Magna Common Stock in the Merger will be solely for the purpose of
avoiding the expense and inconvenience to Magna of issuing
fractional shares and will not represent separately bargained-for
consideration. The total cash
<PAGE> 10
consideration that will be paid in the Merger to the River Bend
shareholders in lieu of fractional shares of Magna Common Stock will not
exceed one percent of the total consideration that will be issued in the
transaction to the River Bend shareholders in exchange for their shares of
River Bend Common Stock. The fractional share interests of each River Bend
shareholder will be aggregated, and no River Bend shareholder will receive
cash in lieu of fractional share interests in an amount equal to or greater
than the value of one full share of Magna Common Stock.
(14) None of the compensation to be paid or accrued after
the Merger to or for the benefit of any shareholder-employee of
River Bend will be separate consideration for, or allocable to, any
of his or her shares of River Bend Common Stock; none of the shares
of Magna Common Stock received in the Merger by any River Bend
shareholder-employee will be separate consideration for, or
allocable to, any employment agreement; and all compensation to be
paid or accrued after the Merger to or for the benefit of any River
Bend shareholder-employee will be for services actually rendered in
the ordinary course of his or her employment and will be
commensurate with amounts paid to third parties bargaining at arm's
length for similar services.
(15) All payments made to dissenters and all cash
payments made in lieu of fractional shares of Magna Common Stock
will be funded with assets of Magna. No such payments will be
funded with assets of LBC or River Bend.
(16) With regard to the Rights Agreement by and between
Magna and Magna Trust Company, dated November 11, 1988 (the "Rights
Agreement"), no "Distribution Date" (as the quoted term is defined
in the Rights Agreement) has occurred, and the Merger will not
cause the occurrence of a Distribution Date.
(17) Neither Magna nor any other member of the Magna
Affiliated Group has owned, directly or indirectly, any stock of
River Bend within the last five years.
(18) No terms of the Agreement have been waived or
modified.
The undersigned HEREBY AGREES to immediately communicate in
writing to Thompson & Mitchell at One Mercantile Center, St. Louis,
Missouri 63101, to the attention of Charles H. Binger, any
information that could indicate (i) any of the foregoing
representations was inaccurate when made, or (ii) any of the
foregoing representations would be inaccurate if it were made
immediately before the Merger.
<PAGE> 11
IN WITNESS WHEREOF, I have hereunto signed my name and
affixed the seal of Magna this ----- day of ------------, 1995.
----------------------------------
<PAGE> 12
Exhibit B
CERTIFICATE
-----------
The undersigned, * , [Undersigned's Title] of
-------------
River Bend Bancshares, Inc., an Illinois corporation ("River
Bend"), HEREBY CERTIFIES that (a) I am familiar with the terms and
conditions of the Agreement and Plan of Reorganization by and
between Magna Group, Inc., a Delaware corporation ("Magna"), and
River Bend dated as of October 11, 1995, including the amendment
thereto dated as of November 27, 1995 and the schedules and
exhibits thereto (the "Agreement"), and (b) I am aware that (i)
this Certificate will be relied on by Thompson & Mitchell, counsel
for Magna, in rendering its opinion to River Bend that the merger
(the "Merger") of River Bend with and into Landmark Bancshares
Corporation, a Missouri corporation ("LBC"), will constitute a
reorganization within the meaning of section 368(a)(1) of the
Internal Revenue Code of 1986, as amended (the "Code"), and (ii)
the representations and undertaking recited herein will survive the
Merger.
The undersigned HEREBY FURTHER CERTIFIES, ON BEHALF OF River
Bend, that:
(1) The fair market value of the River Bend Class I
Common Stock, par value $1.00 per share ("River Bend Common
Stock"), the River Bend Class II Non-Voting Common Stock, par value
$1.00 per share (also "River Bend Common Stock"), and the River
Bend Class A Preferred Stock, par value $100.00 per share,
surrendered in the Merger by each River Bend shareholder will, in
each case, be approximately equal to the fair market value of the
Magna common stock, par value $2.00 per share ("Magna Common
Stock"), and/or the cash (including cash to be received in lieu of
fractional shares of Magna Common Stock, if any), and/or the "Real
Estate Consideration" (as the quoted term is defined in the
Agreement) to be received by each such shareholder in the Merger.
(2) There is no plan, intention or other arrangement
(including any option or pledge) on the part of the holders of 1%
or more of the River Bend Common Stock and, to the best knowledge
of the undersigned, there is no plan, intention or other
arrangement (including any option or pledge) on the part of the
other holders of River Bend Common Stock to sell, exchange or
otherwise dispose of any shares of Magna Common Stock received by
such holders in the Merger, except as otherwise set forth in the
certificate of John G. Helmkamp, Jr. For purposes of this representation,
all shares of Magna Common Stock held by River Bend shareholders
and otherwise sold, redeemed, or disposed of before or after the
Merger will be taken into account in making this representation.
(3) River Bend will transfer to LBC in the Merger assets
representing at least 90 percent of the fair market value of the
net assets and at least 70 percent of the fair market value of the
gross assets, in each case, that were held by River Bend
immediately prior to the Merger. For
<PAGE> 13
purposes of this representation, River Bend assets used to pay expenses of
the Merger or to fund any redemption or distribution within 24 months
before the Merger (except for regular, normal dividends) shall be
included as assets of River Bend held immediately prior to the
Merger. For purposes of this representation, any asset of River
Bend or any other member of River Bend's "affiliated group" (as the
quoted term is defined in Code section 1504, the "River Bend
Affiliated Group") that is disposed of within 24 months before the
Merger other than in the ordinary course of business also shall be
included as an asset of River Bend held immediately prior to the
Merger. For purposes of this representation, the Real Estate
Consideration shall be treated as an asset held by River Bend
immediately prior to the Merger which is not transferred to LBC in
the Merger.
(4) At the time of the Merger and except with regard to
Transaction Costs (as defined below), each liability of River Bend
and each liability to which an asset of River Bend is subject will
have been incurred by River Bend in the ordinary course of business
and no such liability will have been incurred in anticipation of
the Merger. In addition, at the time of the Merger and except with
regard to Transaction Costs, River Bend will not, directly or
indirectly, have paid (or loaned) any amount or incurred any
liability to or for the benefit of, or assumed or cancelled any
liability of, any River Bend shareholder in connection with the
Merger. For purposes of this representation, (a) the term "River
Bend" shall be deemed also to refer to each other member of the
River Bend Affiliated Group, (b) the term "liability" shall include
any undertaking to pay or to cause the reduction, release, or
extinguishment of, any obligation, without regard to whether any
such undertaking or obligation is contingent or legally enforceable
(for example and without limitation, the term "liability" includes
an unenforceable agreement to cause the repayment of an obligation
guaranteed by a River Bend shareholder or to cause by other means
the release of such guaranty), and (c) the term "Transaction Costs"
shall mean amounts paid or liabilities incurred in connection with
the Merger (i) to dissenters, if any, (ii) for legal, accounting,
and investment banking and/or advisor services rendered to River
Bend or to any other member of the River Bend Affiliated Group, if
any, and (iii) as compensation to any employee of River Bend or of
any other member of the River Bend Affiliated Group for services
rendered in the ordinary course of his or her employment.
(5) Expenses, if any, that are incurred in connection
with the Merger and are properly attributable to River Bend's
shareholders will be paid by those shareholders and not by River
Bend. River Bend will pay its own expenses that are incurred in
connection with the Merger.
(6) No indebtedness between River Bend or any other
member of the River Bend Affiliated Group, on the one hand, and LBC
or Magna or any other member of Magna's "affiliated group" (defined
as above), on the other hand, exists or will exist prior to the
Merger that (a) was issued or acquired at a discount, (b) will be
settled, as a result of the Merger, at a discount, or (c)
<PAGE> 14
will result in the recognition of gain under Treasury Regulation Section
1.1502-13. No "installment obligation" (as the quoted term is
defined for purposes of Code section 453B), between River Bend, on
the one hand, and LBC, on the other hand, exists or will exist
prior to the Merger that will be extinguished as a result of the
Merger.
(7) Before the Merger, River Bend will not have
outstanding any warrants, options, convertible securities, or any
other type of right (including any preemptive right) pursuant to
which any person could acquire stock in River Bend that, if
exercised or converted after the Merger, would affect Magna's
retention of control of LBC (within the meaning of section 368(c)
of the Code).
(8) The fair market value of the assets of River Bend to
be transferred to LBC will exceed the sum of the amount of
liabilities to be assumed by LBC, plus the amount of liabilities,
if any, to which the assets to be transferred are subject.
(9) The payment of cash in lieu of fractional shares of
Magna Common Stock will be solely for the purpose of avoiding the
expense and inconvenience to Magna of issuing fractional shares and
will not represent separately bargained-for consideration. The
total cash consideration that will be paid in the Merger to the
River Bend shareholders in lieu of fractional shares of Magna
Common Stock will not exceed one percent of the total consideration
that will be issued in the transaction to the River Bend
shareholders in exchange for their shares of River Bend Common
Stock. The fractional share interests of each River Bend
shareholder will be aggregated, and no River Bend shareholder will
receive cash in lieu of fractional share interests in an amount
equal to or greater than the value of one full share of Magna
Common Stock.
(10) None of the compensation paid or accrued before the
Merger to or for the benefit of any River Bend shareholder-employee
will be separate consideration for, or allocable to, any of his or
her shares of River Bend Common Stock; none of the shares of Magna
Common Stock received in the Merger by any River Bend shareholder-
employee will be separate consideration for, or allocable to, any
employment agreement; and all compensation paid or accrued before
the Merger to or for the benefit of any River Bend shareholder-
employee will be for services actually rendered in the ordinary
course of his or her employment and will be commensurate with
amounts paid to third parties bargaining at arm's length for
similar services.
(11) Except for dispositions to be made in the ordinary
course of business and the disposition of the Real Estate
Consideration, River Bend is aware of no plan or intention to sell
or otherwise dispose of (whether by dividend distribution or
otherwise) (a) any assets of River Bend acquired in the Merger, or
(b) any assets of any other member of the River Bend Affiliated
Group.
<PAGE> 15
(12) All payments made to dissenters and all cash
payments made in lieu of fractional shares of Magna Common Stock
will be funded with assets of Magna. No such payments will be
funded with River Bend assets.
(13) To the best knowledge of the undersigned, the fair
market value of the Real Estate Consideration does not exceed
$400,000.
(14) Except for the $12.00 dividend that will be paid in
January 1996 prior to the consummation of the Merger, there are no
dividend arrearages on any shares of River Bend Preferred Stock;
the River Bend Preferred Stock has no redemption premium associated
with it; and, no share of River Bend Preferred Stock constitutes
"section 306 stock" (within the meaning of section 306(c) of the
Code).
(15) No terms of the Agreement have been waived or
modified.
The undersigned HEREBY AGREES to immediately communicate
in writing to Thompson & Mitchell at One Mercantile Center, St.
Louis, Missouri 63101, to the attention of Charles H. Binger, any
information that could indicate (i) any of the foregoing
representations was inaccurate when made, or (ii) any of the
foregoing representations would be inaccurate if it were made
immediately before the Merger.
IN WITNESS WHEREOF, I have hereunto signed my name and
affixed the seal of River Bend this ----- day of ---------------,
1995.
----------------------------------
<PAGE> 16
Exhibit C
SHAREHOLDER CERTIFICATE
-----------------------
The undersigned shareholder of River Bend Bancshares,
Inc., an Illinois corporation ("River Bend"), [SHAREHOLDER'S NAME],
--------------------
a holder of * shares of [CLASS OF STOCK] , par value $ *
------ -------------------- ------
per share, HEREBY CERTIFIES that (a) I am familiar with the terms
and conditions of the Agreement and Plan of Reorganization by and
between Magna Group, Inc., a Delaware corporation ("Magna") and
River Bend dated as of October 11, 1995, including the amendment
thereto dated as of November 27, 1995, and (b) I am aware that (i)
this Certificate will be relied on by Thompson & Mitchell, counsel
for Magna, in rendering its opinion to River Bend that the merger
(the "Merger") of River Bend with and into Landmark Bancshares
Corporation, a Missouri corporation ("LBC"), will constitute a
reorganization within the meaning of section 368(a)(1) of the
Internal Revenue Code of 1986, as amended, and (ii) the
representations and undertaking recited herein will survive the
Merger.
The undersigned HEREBY FURTHER CERTIFIES that the
undersigned has no plan, intention or arrangement (including any
option or pledge) to sell, exchange or otherwise dispose of any of
the Magna common stock, par value $2.00 per share ("Magna Common
Stock"), to be received in the Merger, with the exception of any
fractional share of Magna Common Stock to be exchanged for cash
pursuant to the Merger.
The undersigned HEREBY AGREES to immediately communicate
in writing to Thompson & Mitchell at One Mercantile Center, St.
Louis, Missouri 63101, to the attention of Charles H. Binger, any
information that could indicate (i) any of the foregoing
representations was inaccurate when made, or (ii) any of the
foregoing representations would be inaccurate if it were made
immediately before the Merger.
IN WITNESS WHEREOF, the undersigned has executed this
certificate, or caused this certificate to be executed by its duly
authorized representative, this ----- day of ---------------, 1995.
------------------------------
<PAGE> 1
EXHIBIT 23.1
Consent of Independent Auditors
-------------------------------
We consent to the reference of our firm under the caption "Experts"
in the Registration Statement (Form S-4) and related Prospectus of
Magna Group, Inc. for the registration of its common stock relating
to the acquisition of River Bend Bancshares, Inc. and to the
incorporation by reference therein of our report dated January 18,
1995, with respect to the consolidated financial statements of Magna
Group, Inc. incorporated by reference in its Annual Report (Form 10-K)
for the year ended December 31, 1994, filed with the Securities and
Exchange Commission.
/s/ Ernst & Young LLP
St. Louis, Missouri
November 27, 1995
<PAGE> 1
EXHIBIT 23.2
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
River Bend Bancshares, Inc.:
We consent to the use of our report included herein and to the
reference to our firm under the heading "Experts" in the prospec-
tus. Our report refers to a change in the method of accounting for
investments in debt and marketable equity securities.
/s/ KPMG Peat Marwick LLP
St. Louis, Missouri
November 30, 1995
<PAGE> 1
Exhibit 23.4
------------
Consent of Fister & Associates, Inc.
------------------------------------
Fister & Associates, Inc. hereby consents to the use of its name
and the reference to its oral opinion in the Proxy
Statement/Prospectus forming a part of this Registration Statement
on Form S-4 of Magna Group, Inc.
FISTER & ASSOCIATES, INC.
By: /s/ Richard E. Fister
------------------------------
Richard E. Fister, President
St. Louis, Missouri
November 28, 1995
<PAGE> 1
Exhibit 99.1
CONSENT
-------
I, John G. Helmkamp, Jr., hereby consent to be named as
a person about to become a director of Magna Group, Inc. in the
prospectus forming a part of the registration statement to which
this consent is attached as an exhibit.
/s/ John G. Helmkamp, Jr.
---------------------------------
John G. Helmkamp, Jr.
November 30, 1995.
