<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended MARCH 31, 1996
------------------------------------------
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from------------------ to---------------------
Commission file number 0-8234
--------------------------------------------------
MAGNA GROUP, INC.
- ------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 37-0996453
- -------------------------------- -------------------------------------
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or
organization)
One Magna Place
1401 South Brentwood Boulevard
St. Louis, Missouri 63144-1401
- ------------------------------------------------------------------------
(Address of principal executive offices)
(Zip Code)
(314) 963-2500
- ------------------------------------------------------------------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.
Yes x No
-------- --------
Title of class of Number of shares
common stock outstanding as of May 6, 1996
- ------------------------------ ---------------------------------
Common stock, $2.00 par value 28,677,594
<PAGE> 2
TABLE OF CONTENTS
Page
----
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS (UNAUDITED)
Condensed Consolidated Balance Sheets 3
Condensed Consolidated Statements of Income 4
Condensed Consolidated Statements of Cash Flows 5
Notes to Condensed Consolidated Financial Statements 6
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF
OPERATIONS 7
PART II - OTHER INFORMATION
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF
SECURITY HOLDERS 16
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K 17
SIGNATURE PAGE 18
EXHIBIT INDEX 19
2
<PAGE> 3
PART I - FINANCIAL INFORMATION
- ------------------------------
ITEM 1. FINANCIAL STATEMENTS
- ----------------------------
MAGNA GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
MARCH 31 DECEMBER 31
1996 1995
---------- -----------
<S> <C> <C>
ASSETS
Cash and due from banks $ 141,955 $ 175,167
Federal funds sold 6,815 47,046
Securities:
Held-to-maturity 137,025 126,248
Available-for-sale 1,511,587 1,238,616
Loans 3,277,606 3,205,374
Unearned income (2,092) (2,608)
Reserve for loan losses (43,905) (42,623)
---------- ----------
Net Loans 3,231,609 3,160,143
Premises and equipment 84,525 81,691
Other assets 139,111 118,588
---------- ----------
TOTAL ASSETS $5,252,627 $4,947,499
========== ==========
LIABILITIES
Deposits:
Noninterest bearing $ 517,613 $ 570,262
Interest bearing 3,533,463 3,318,004
---------- ----------
Total Deposits 4,051,076 3,888,266
Federal funds purchased 91,580 41,790
Repurchase agreements 405,617 368,861
Other short-term borrowings 82,974 50,000
Long-term debt 94,380 93,071
Other liabilities 65,390 59,467
---------- ----------
TOTAL LIABILITIES 4,791,017 4,501,455
Commitments and contingent liabilities
STOCKHOLDERS' EQUITY
Preferred stock:
Class B, voting, $20 par value -
2,039 shares issued and outstanding 41 41
Common stock, $2 par value - 28,661,992
and 27,997,889 shares issued and
outstanding, respectively 57,324 55,996
Capital surplus 224,427 211,588
Retained earnings 185,604 177,438
Net unrealized gains (losses)
on securities (5,786) 981
---------- ----------
TOTAL STOCKHOLDERS' EQUITY 461,610 446,044
---------- ----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $5,252,627 $4,947,499
========== ==========
See accompanying notes.
</TABLE>
3
<PAGE> 4
MAGNA GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31
-------------------------
1996 1995
---- ----
<S> <C> <C>
Interest Income:
Interest and fees on loans $69,267 $63,100
Securities:
Taxable 21,073 17,140
Tax-exempt 1,721 1,810
------- -------
22,794 18,950
Other interest income 707 213
------- -------
TOTAL INTEREST INCOME 92,768 82,263
Interest Expense:
Deposits 37,853 30,058
Federal funds purchased 689 1,022
Repurchase agreements 4,564 3,804
Other short-term borrowings 840 173
Long-term debt 1,697 1,520
------- -------
TOTAL INTEREST EXPENSE 45,643 36,577
------- -------
NET INTEREST INCOME 47,125 45,686
Provision for Loan Losses 2,483 1,667
------- -------
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 44,642 44,019
Noninterest Income:
Service charges on deposits 5,546 5,461
Trust 2,364 2,319
Securities gains, net 673 66
Other 3,639 3,235
------- -------
12,222 11,081
Noninterest Expense:
Employee compensation and
other benefits 17,620 18,583
Net occupancy 4,473 3,972
Equipment 2,250 2,202
FDIC insurance premiums 32 2,058
Other 10,499 10,474
------- -------
34,874 37,289
------- -------
INCOME BEFORE INCOME TAXES 21,990 17,811
Income Tax Expense 7,647 6,176
------- -------
NET INCOME $14,343 $11,635
======= =======
Average Shares Outstanding:
Primary 28,371 27,694
Fully diluted 29,193 28,644
Per Share Data:
Net income:
Primary $ .51 $ .42
===== =====
Fully diluted $ .50 $ .41
===== =====
Dividends declared $ .22 $ .20
===== =====
See accompanying notes.
</TABLE>
4
<PAGE> 5
MAGNA GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31
--------------------------
1996 1995
---- ----
<S> <C> <C>
NET CASH PROVIDED BY OPERATING ACTIVITIES $ 21,697 $ 20,454
INVESTING ACTIVITIES
Proceeds from maturities of held-to-maturity
securities 1,664 6,999
Proceeds from sales of held-to-maturity securities - 199
Purchases of held-to-maturity securities (3,220) (825)
Proceeds from maturities of available-
for-sale securities 93,773 40,774
Proceeds from sales of available-for-
sale securities 32,856 15,641
Purchases of available-for-sale securities (330,291) (5,665)
Net increase in loans (28,185) (48,890)
Proceeds from sales of foreclosed property 1,820 1,475
Purchases of premises and equipment (2,772) (5,347)
Proceeds from sales of premises and equipment 4 11
Purchase of financial organization,
net of cash received (2,382) -
-------- --------
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES (236,733) 4,372
FINANCING ACTIVITIES
Net increase in deposits 26,917 88,649
Cash dividends (6,177) (5,525)
Increase (decrease) in federal funds purchased 49,790 (107,505)
Increase (decrease) in repurchase agreements 35,941 (65,903)
Net increase in other short-term borrowings 8,551 -
Proceeds from long-term debt 25,000 -
Payments of long-term debt (2) -
Other 1,573 1,643
-------- --------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 141,593 (88,641)
-------- --------
DECREASE IN CASH AND CASH EQUIVALENTS (73,443) (63,815)
Cash and cash equivalents at beginning of period 222,213 281,930
-------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $148,770 $218,115
======== ========
See accompanying notes.
</TABLE>
5
<PAGE> 6
MAGNA GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOTE A--BASIS OF PRESENTATION
The unaudited interim condensed consolidated financial statements of
Magna Group, Inc. and its affiliates ("Magna") have been prepared in
accordance with generally accepted accounting principles for the banking
industry and with the instructions to Form 10-Q and Article 10 of Regulation
S-X. Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete financial
statements. Reference is hereby made to the notes to consolidated financial
statements contained in Magna's Annual Report on Form 10-K for the year
ended December 31, 1995. In the opinion of management, all adjustments
considered necessary for a fair presentation of the unaudited interim
condensed consolidated financial statements have been included therein and
are of a normal recurring nature. The results of operations for the interim
periods presented herein are not necessarily indicative of the results to be
expected for the full year.
NOTE B--ACQUISITIONS
On February 29, 1996, Magna acquired River Bend Bancshares, Inc. for
approximately 550,000 shares of common stock and approximately $12.3 million
in cash. The acquisition contributed approximately $160 million to total
assets and approximately $12 million to stockholders' equity at the date of
acquisition. The acquisition was accounted for under the purchase method
and was immaterial to the financial condition and results of operations of
Magna.
NOTE C--CHANGE IN ACCOUNTING METHODS
On January 1, 1996, Magna adopted Financial Accounting Standards No. 122
(FAS No. 122), "Accounting for Mortgage Servicing Rights." FAS No. 122
requires capitalization of purchased mortgage servicing rights, as well as
internally originated mortgage servicing rights. These mortgage servicing
rights are amortized over the estimated servicing period of the related
loans. The adoption of the standard had no material impact on Magna's
financial position or results of operations.
NOTE D--RECLASSIFICATIONS
Certain amounts in the 1995 financial statements have been reclassified
to conform with the 1996 presentation. Such reclassifications had no effect
on net income.
6
<PAGE> 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
- ------------------------------------------------------------------------
RESULTS OF OPERATIONS
- ---------------------
OVERVIEW
Net income for the first quarter of 1996 was $14.3 million, or 51
cents per common share on a primary basis, compared with $11.6 million, or
42 cents, for the first quarter of 1995. On a fully diluted basis, net
income per common share was 50 cents for the first quarter of 1996 compared
to 41 cents for the first quarter of 1995.
Operating results of the acquisition consummated on February 29, 1996,
are included since the acquisition date and are not material to Magna's
financial condition and results of operations for the first quarter of 1996.
Table 1 summarizes Magna's statement of income and the change in each
category for the periods presented.
<TABLE>
TABLE 1 -- Comparative Statements of Income
(In thousands)
<CAPTION>
Three Months Ended
March 31 Change
--------------------------- --------------------------
1996 1995 Amount Percent
--------- --------- --------- -------
<S> <C> <C> <C> <C>
Total interest income
(fully tax-equivalent) . . . . . . . . . $93,992 $83,492 $10,500 12.6%
Total interest expense. . . . . . . . . . 45,643 36,577 9,066 24.8
------- ------- -------
Net interest income. . . . . . . . . . 48,349 46,915 1,434 3.1
Provision for loan losses . . . . . . . . 2,483 1,667 816 49.0
Noninterest income:
Service charges on deposits. . . . . . 5,546 5,461 85 1.6
Trust. . . . . . . . . . . . . . . . . 2,364 2,319 45 1.9
Other. . . . . . . . . . . . . . . . . 3,639 3,235 404 12.5
------- ------- -------
11,549 11,015 534 4.8
Securities gains, net. . . . . . . . . 673 66 607 <FNM>
------- ------- -------
Total . . . . . . . . . . . . . . . 12,222 11,081 1,141 10.3
------- ------- -------
Noninterest expense:
Employee compensation and
other benefits. . . . . . . . . . . 17,620 18,583 (963) (5.2)
Net occupancy. . . . . . . . . . . . . 4,473 3,972 501 12.6
Equipment. . . . . . . . . . . . . . . 2,250 2,202 48 2.2
FDIC insurance premiums. . . . . . . . 32 2,058 (2,026) (98.4)
Other. . . . . . . . . . . . . . . . . 10,499 10,474 25 .2
------- ------- -------
Total. . . . . . . . . . . . . . . 34,874 37,289 (2,415) (6.5)
------- ------- -------
Income before income taxes . . . . . . 23,214 19,040 4,174 21.9
Less: tax-equivalent adjustment . . . . . 1,224 1,229 (5) (.4)
Income tax expense. . . . . . . . . . . . 7,647 6,176 1,471 23.8
------- ------- -------
Net income. . . . . . . . . . . . . . . . $14,343 $11,635 $ 2,708 23.3
======= ======= =======
<FN>
- ------------------------------
<FNM> - not meaningful
</TABLE>
7
<PAGE> 8
The following paragraphs discuss more fully significant changes and
trends as they relate to Magna's results of operations during the three
month period ended March 31, 1996 and its financial condition, asset
quality, capital resources and liquidity as of March 31, 1996. This
discussion should be read in conjunction with Magna's condensed consolidated
financial statements and notes thereto. The results of operations for the
interim periods presented herein are not necessarily indicative of the
results to be expected for the full year.
RESULTS OF OPERATIONS
NET INTEREST INCOME
Tax-equivalent net interest income increased 3.1% for the first
quarter of 1996 compared with 1995. This increase resulted from an increase
in the volume of earning assets offset by a reduced net interest margin.
The net interest margin for the first quarter of 1996 was 4.09%
compared with 4.54% for the first quarter of 1995 and 4.15% for the fourth
quarter of 1995. The decline in the first quarter of 1996 compared with the
fourth quarter of 1995 occurred as Magna's average yield on earning assets
declined at a faster pace than its cost of funds. The decline in the first
quarter of 1996 compared with the first quarter of 1995 occurred as the
average yield on earning assets declined while the cost of funds increased.
The decline in the yield on earning assets was primarily associated with an
overall decline in rates earned on Magna's investment portfolio. The yield
on earning assets is also impacted by the competitive rate environment
associated with the loan portfolio. The increased cost of funds primarily
resulted from Magna's decision, during the middle part of 1995, to price
certain deposit categories, primarily time deposits, more competitively.
PROVISION FOR LOAN LOSSES
Factors which influence management's determination of the provision
for loan losses include, among other things, evaluation of the anticipated
impact on the loan portfolio of current economic conditions, changes in the
character and size of the portfolio and past loan loss experience. The
increase in the provision for loan losses in the first quarter of 1996
compared with the first quarter of 1995, was primarily due to increased
internal loan growth. Activity in the reserve for loan losses and
nonperforming loan data are presented and discussed under "ASSET QUALITY."
8
<PAGE> 9
NONINTEREST INCOME
Total noninterest income was $12.2 million for the first quarter of
1996 compared with $11.1 million for the first quarter of 1995.
Net securities gains of $.7 million were recognized during the first
quarter of 1996 compared to $.1 million for the first quarter of 1995. In
addition, higher levels of fee income from brokerage and insurance
activities, credit card and secondary market operations contributed to the
increase in noninterest income.
For the first quarter of 1996, noninterest income as a percentage of
average assets, on an annualized basis, was .97% compared with .99% for the
first quarter of 1995.
NONINTEREST EXPENSE
Total noninterest expense was $34.9 million for the first quarter of
1996 compared with $37.3 million for the first quarter of 1995. For the
first quarter of 1996, noninterest expense as a percentage of average
assets, on an annualized basis, was 2.78% compared with 3.34% for the first
quarter of 1995.
The decrease in employee compensation and other benefits for the first
quarter of 1996 compared with 1995 was attributable to staff reductions that
occurred in January 1996. These reductions occurred as Magna continues to
achieve efficiencies in back-office operations and as a result of the merger
of Magna's banking subsidiaries in the fourth quarter of 1995. The
reduction in employee compensation and other benefits resulting from these
staff reductions was partially offset by normal merit increases and
severance costs. The increase in net occupancy expense during the first
quarter of 1996 was primarily due to direct expenses associated with Magna's
new operations center which was placed in service during the second quarter
of 1995. Federal Deposit Insurance Corporation premiums include assessments
levied in connection with the Bank Insurance Fund (BIF) and the Savings
Association Insurance Fund. Reductions in the BIF deposit assessment rate
resulted in a $2.0 million decrease in expense for the first quarter of 1996
compared to the first quarter of 1995.
The increase in the effective tax rate during the first quarter of
1996 was primarily the result of higher levels of earnings and a lower level
of tax-exempt interest as a percentage of total interest income.
9
<PAGE> 10
FINANCIAL CONDITION
GENERAL
Certain components of Magna's consolidated balance sheet at March 31,
1996 compared with December 31, 1995 are presented in summary form in Table
2 below. The increase in total assets is reflective of an increase in
investment securities and the acquisition consummated in the first quarter
of 1996.
<TABLE>
TABLE 2 -- Selected Comparative Balance Sheet Items
(In thousands)
<CAPTION>
Change
March 31 December 31 --------------------------
1996 1995 Amount Percent
----------- ----------- -------- -------
<S> <C> <C> <C> <C>
Total assets . . . . . . . . $5,252,627 $4,947,499 $305,128 6.2%
Loans, net of
unearned income . . . . . . 3,275,514 3,202,766 72,748 2.3
Investments . . . . . . . . . 1,648,612 1,364,864 283,748 20.8
Deposits . . . . . . . . . . 4,051,076 3,888,266 162,810 4.2
Federal funds purchased . . . 91,580 41,790 49,790 119.1
Repurchase agreements:
Cash management . . . . . . 317,221 294,328 22,893 7.8
Other . . . . . . . . . . . 88,396 74,533 13,863 18.6
Other short-term borrowings . 82,974 50,000 32,974 65.9
Long-term debt . . . . . . . 94,380 93,071 1,309 1.4
</TABLE>
LOANS
Loans, net of unearned income, increased 2.3%, or $72.7 million, from
year-end 1995 to March 31, 1996. The majority of this increase was derived
from the consummated acquisition. In addition to acquired loans, Magna also
experienced growth in consumer loans which resulted from continuing
expansion of its indirect auto loan program which provides financing for
customers of auto dealerships.
Table 3 presents the composition of the loan portfolio by type of
borrower and major loan category and the percentage of each to the total
portfolio for the periods presented.
10
<PAGE> 11
<TABLE>
TABLE 3 -- Loan Portfolio Composition
(In thousands)
<CAPTION>
March 31 December 31 March 31
1996 1995 1995
---------------- ---------------- -----------------
Amount Percent Amount Percent Amount Percent
------ ------- ------ ------- ------ -------
<S> <C> <C> <C> <C> <C> <C>
Commercial borrowers:
- ---------------------
Commercial, financial
and agricultural. . . . . . . . . $ 605,371 18.5% $ 593,664 18.5% $ 522,360 17.4%
Commercial real estate . . . . . . 1,026,401 31.3 996,464 31.1 922,086 30.6
Real estate
construction. . . . . . . . . . . 167,654 5.1 156,978 4.9 148,469 4.9
---------- ---- ---------- ---- ---------- ----
Total commercial. . . . . . . . 1,799,426 54.9 1,747,106 54.5 1,592,915 52.9
---------- ---- ---------- ---- ---------- ----
Consumer borrowers:
- -------------------
1-4 family residential
real estate . . . . . . . . . . . 940,849 28.7 934,826 29.2 906,338 30.1
Other consumer loans,
net of unearned income. . . . . . 535,239 16.4 520,834 16.3 514,104 17.0
---------- ---- ---------- ---- ---------- ----
Total consumer. . . . . . . . . 1,476,088 45.1 1,455,660 45.5 1,420,442 47.1
---------- ---- ---------- ---- ---------- ----
Total loans, net of
unearned income . . . . . . . . $3,275,514 100.0% $3,202,766 100.0% $3,013,357 100.0%
========== ===== ========== ===== ========== =====
</TABLE>
INVESTMENTS
Total investments increased 20.8%, or $283.7 million, at March 31, 1996
compared with year-end 1995. Magna's investment portfolio serves three
important functions. First, it is a vehicle for managing balance sheet rate
sensitivity. Second, it is a means for investment of excess funds.
Third, the available-for-sale portion of the portfolio provides a resource
from which immediate liquidity needs may be satisfied. The increase in
investment securities from year-end 1995 resulted from the consummated
acquisition coupled with the investment of excess funds which were not needed
to fund loan demand.
Table 4 presents the composition of investments and the change in each
category for the periods presented.
<TABLE>
TABLE 4 -- Investment Securities Portfolio Composition
(In thousands)
<CAPTION>
Change
March 31 December 31 ----------------
1996 1995 Amount Percent
---------- ---------- ------ -------
<S> <C> <C> <C> <C>
Held-to-maturity securities . . $ 137,025 $ 126,248 $ 10,777 8.5%
Available-for-sale securities. . 1,511,587 1,238,616 272,971 22.0
---------- ---------- --------
Total investments . . . . . . $1,648,612 $1,364,864 $283,748 20.8
========== ========== ========
</TABLE>
DEPOSITS
Total deposits increased $162.8 million to $4.1 billion at March 31,
1996 from year-end 1995. The acquisition consummated during the first
quarter of 1996 contributed approximately $138 million to total deposits at
March 31, 1996. Excluding the effects of the acquisition, interest bearing
deposits increased from year-end 1995 primarily due to more aggressive sales
efforts to secure such deposits. This increase was partially offset by a
decrease in noninterest bearing deposits due to seasonal factors which
increase demand deposits at the end of a calendar year.
11
<PAGE> 12
Table 5 sets forth the composition of deposits and the changes in each
category for the periods presented.
<TABLE>
TABLE 5 -- Deposit Liability Composition
(In thousands)
<CAPTION>
March 31 December 31
1996 1995 Change
----------------- ---------------- ---------------
Amount Percent Amount Percent Amount Percent
------ ------- ------ ------- ------ -------
<S> <C> <C> <C> <C> <C> <C>
Noninterest bearing . . . . . . . . $ 517,613 12.8% $ 570,262 14.7% $(52,649) (9.2)%
Interest bearing
demand deposits. . . . . . . . . 525,825 13.0 496,590 12.8 29,235 5.9
Savings and market
rate deposits. . . . . . . . . . 858,567 21.2 794,423 20.4 64,144 8.1
Time deposits less than
$100,000 . . . . . . . . . . . . 1,746,781 43.1 1,674,305 43.0 72,476 4.3
Time deposits $100,000
or more. . . . . . . . . . . . . 402,290 9.9 352,686 9.1 49,604 14.1
---------- ----- ---------- ----- --------
Total deposits . . . . . . . . $4,051,076 100.0% $3,888,266 100.0% $162,810 4.2
========== ===== ========== ===== ========
</TABLE>
FEDERAL FUNDS PURCHASED AND REPURCHASE AGREEMENTS
Federal funds purchased and repurchase agreements increased $86.5
million from year-end 1995. Federal funds purchased are short-term sources of
funds utilized by Magna's banking subsidiary and are primarily obtained from
its network of correspondent banks. As such, levels of federal funds
purchased can fluctuate significantly. The increase in repurchase agreements
was primarily in the form of cash management repurchase agreements. Such
accounts involve the daily transfer of excess funds from a noninterest
bearing deposit account into the interest bearing cash management repurchase
agreement account. The cash management repurchase agreement accounts are
viewed by management as a stable source of funds from commercial depositors.
OTHER SHORT-TERM BORROWINGS AND LONG-TERM DEBT
Other short-term borrowings reflected an increase of $33.0 million at
March 31, 1996 compared with year-end 1995. The increase consisted of two
advances from the Federal Home Loan Bank totaling $23.5 million which were
reclassified from long-term debt as a result of their February 1997 maturity
and an additional $9.5 million borrowing in the form of a treasury tax and
loan note option account, which was opened in January 1996. Amounts
reclassified from long-term debt to other short-term borrowings were
replaced, in the long-term debt category, with two additional advances
totaling $25.0 million from the Federal Home Loan Bank. One issue in the
amount of $10.0 million bears an interest rate of 5.91% and matures on March
7, 2001, while the remaining $15.0 million issue bears an interest rate of
6.20% and matures on March 7, 2003.
12
<PAGE> 13
ASSET QUALITY
The credit quality of Magna's loan portfolio remained relatively
stable during the first quarter of 1996 as indicated in Table 6. Magna does
not anticipate any significant losses on the disposition of other real
estate owned at March 31, 1996.
Table 6 sets forth a summary of Magna's loan portfolio mix and
nonperforming assets.
<TABLE>
TABLE 6 -- Loan Portfolio Mix and Nonperforming Assets
(In thousands)
<CAPTION>
March 31, 1996 December 31, 1995
----------------------- -----------------------
Loans and Non- Loans and Non-
Foreclosed performing Foreclosed performing
Property Assets Property Assets
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Commercial borrowers:
- ---------------------
Commercial, financial and
agricultural. . . . . . . . . . . . . $ 605,371 $ 8,016 $ 593,664 $ 7,197
Commercial real estate . . . . . . . . 1,026,401 7,954 996,464 8,294
Real estate construction . . . . . . . 167,654 2,332 156,978 1,979
---------- ------- ---------- -------
Total commercial . . . . . . . . . . 1,799,426 18,302 1,747,106 17,470
Consumer borrowers:
- -------------------
1-4 family residential
real estate . . . . . . . . . . . . . 940,849 11,863 934,826 10,914
Other consumer loans, net
of unearned income. . . . . . . . . . 535,239 2,379 520,834 2,436
---------- ------- ---------- -------
Total consumer. . . . . . . . . . . 1,476,088 14,242 1,455,660 13,350
---------- ------- ---------- -------
Total loans, net of
unearned income. . . . . . . . . . . 3,275,514 32,544 3,202,766 30,820
Foreclosed property. . . . . . . . . . . 4,285 4,285 5,009 5,009
---------- ------- ---------- -------
Total . . . . . . . . . . . . . . . . $3,279,799 $36,829 $3,207,775 $35,829
========== ======= ========== =======
Nonaccrual loans . . . . . . . . . . . . $21,624 $24,564
Loans past due 90 days or more . . . . . 10,867 6,198
Restructured loans . . . . . . . . . . . 53 58
------- -------
Total nonperforming loans. . . . . . . 32,544 30,820
Foreclosed property. . . . . . . . . . . 4,285 5,009
------- -------
Total nonperforming assets . . . . . . $36,829 $35,829
======= =======
Nonperforming loans to
total loans. . . . . . . . . . . . . . .99% .96%
Nonperforming assets to total
loans and foreclosed property. . . . . 1.12 1.12
</TABLE>
13
<PAGE> 14
Table 7 presents information pertaining to the activity in and an
analysis of Magna's reserve for loan losses for the periods presented.
<TABLE>
TABLE 7 -- Reserve For Loan Losses
(In thousands)
<CAPTION>
Three Months Ended
March 31
------------------
1996 1995
------- -------
<S> <C> <C>
Balance at beginning of period . . . . . . $42,623 $43,991
Reserves of acquired institution. . . . . . 890 -
Loans charged off:
Commercial borrowers:
Commercial, financial and agricultural . (1,373) (903)
Commercial real estate . . . . . . . . . (531) (1,330)
Real estate construction . . . . . . . . (62) -
------- -------
Total commercial . . . . . . . . . . . (1,966) (2,233)
Consumer borrowers:
1-4 family residential real estate . . . (279) (211)
Other consumer loans . . . . . . . . . . (1,177) (827)
------- -------
Total consumer . . . . . . . . . . . (1,456) (1,038)
------- -------
Total charge-offs . . . . . . . . . . (3,422) (3,271)
------- -------
Recoveries of loans previously charged off:
Commercial borrowers:
Commercial, financial and agricultural . 771 463
Commercial real estate . . . . . . . . . 99 453
Real estate construction . . . . . . . . 14 48
------- -------
Total commercial . . . . . . . . . . . 884 964
Consumer borrowers:
1-4 family residential real estate . . . 126 133
Other consumer loans . . . . . . . . . . 321 264
------- -------
Total consumer . . . . . . . . . . . . 447 397
------- -------
Total recoveries . . . . . . . . . . . 1,331 1,361
------- -------
Net loans charged off . . . . . . . . . . . (2,091) (1,910)
------- -------
Provision for loan losses charged
to operations . . . . . . . . . . . . . . 2,483 1,667
------- -------
Balance at end of period . . . . . . . . . $43,905 $43,748
======= =======
Net loan charge-offs (annualized) to
average loans . . . . . . . . . . . . . . .26% .26%
Reserve for loan losses to total loans . . 1.34 1.45
Reserve for loan losses to
nonperforming loans . . . . . . . . . . . 134.91 118.88
</TABLE>
14
<PAGE> 15
Management believes that the consolidated reserve for loan losses is
adequate to provide for possible losses inherent in the loan portfolio.
However, no assurance can be given that subsequent changes in economic
conditions, risk elements and other factors will not require significant
changes in the level of the loan loss reserve.
CAPITAL RESOURCES AND LIQUIDITY
CAPITAL
Financial institutions are required to maintain ratios of capital to
assets in accordance with guidelines adopted in 1989 by the Board of
Governors of the Federal Reserve System (the "Federal Reserve Board"). The
guidelines are commonly known as "Risk-Based Guidelines" as they define the
capital level requirements of a financial institution based upon the level
of credit risk associated with holding various categories of assets. The
Risk-Based Guidelines require minimum ratios of Tier 1 and Total Capital to
risk-weighted assets of 4% and 8%, respectively. At March 31, 1996, Magna's
Tier 1 and Total Capital ratios were 12.88% and 14.09%, respectively. In
addition, the Federal Reserve Board has established a minimum leverage
capital ratio of 3% which represents the minimum standard of Tier 1 Capital
to tangible assets for bank holding companies. This minimum leverage
capital ratio is considered satisfactory only with respect to top-rated
banking organizations that do not contemplate expansion. Magna's leverage
ratio at March 31, 1996 was 8.34%.
DIVIDENDS AND RESOURCE COMMITMENTS
The primary source of funds to Magna on a parent company only basis
consists of dividends and management fees paid by its banking subsidiary.
In general, the ability of Magna's banking subsidiary to pay dividends and
management fees is subject to limitations under various laws and
regulations, and to prudent and sound banking principles. Dividends
available to Magna from its banking subsidiary without prior regulatory
approval amounted to approximately $174 million at March 31, 1996.
Magna believes that its banking subsidiary's earnings will be
sufficient to provide capital to fund asset growth and to permit the
distribution of cash dividends to Magna sufficient to meet Magna's operating
and debt service requirements for the foreseeable future.
15
<PAGE> 16
PART II - OTHER INFORMATION
- ---------------------------
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
- ------------------------------------------------------------
(a) The annual meeting of the stockholders of Magna was held on May
1, 1996.
(b) The following individuals were elected as Class II directors of
Magna to serve a three-year term or until their successors shall have been
duly elected and qualified: G. Thomas Andes, Donald P. Gallop, Wendell J.
Kelley and Robert E. McGlynn.
The following sets forth the name of each director of Magna whose term of
office continued beyond the meeting:
Class I Directors Class III Directors
----------------- -------------------
James A. Auffenberg, Jr. Wayne T. Ewing
C. E. Heiligenstein John G. Helmkamp, Jr.
Carl G. Hogan, Sr. Franklin A. Jacobs
Ralph F. Korte S. Lee Kling
Frank R. Trulaske, III George T. Wilkins, Jr.
(c)(i) The election of four individuals as Class II directors of
Magna was voted upon at the annual meeting. The number of votes cast for or
withheld, and the number of broker non-votes, with respect to each of the
nominees were as follows:
<TABLE>
<CAPTION>
Votes Cast Votes Broker
Nominee For Withheld Non-votes
------- ---------- -------- ---------
<S> <C> <C> <C>
G. Thomas Andes 24,042,155 617,560 3,382,503
Donald P. Gallop 23,711,159 948,556 3,382,503
Wendell J. Kelley 23,498,317 1,161,398 3,382,503
Robert E. McGlynn 23,565,895 1,093,820 3,382,503
</TABLE>
(ii) The adoption of the Magna Group, Inc. 1996 Long Term Performance
Plan was also voted upon at the annual meeting. The number of votes cast
for, against or abstaining, and the number of broker non-votes, with respect
to adoption of such plan were as follows:
<TABLE>
<CAPTION>
Votes Cast Votes Votes Broker
For Against Abstaining Non-votes
---------- ------- ---------- ---------
<S> <C> <C> <C>
19,940,489 3,646,383 1,072,842 3,382,503
</TABLE>
16
<PAGE> 17
(iii) The adoption of the Magna Group, Inc. 1996 Directors' Stock
Option Plan was also voted upon at the annual meeting. The number of votes
cast for, against or abstaining, and the number of broker non-votes, with
respect to adoption of such plan were as follows:
<TABLE>
<CAPTION>
Votes Cast Votes Votes Broker
For Against Abstaining Non-votes
---------- ------- ---------- ---------
<S> <C> <C> <C>
20,541,050 2,940,593 1,178,071 3,382,503
</TABLE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
- -----------------------------------------
(a) Exhibits: See Exhibit Index on page 19 hereof.
(b) Reports on Form 8-K: On January 24, 1996, Magna filed a Current
Report on Form 8-K dated January 24, 1996, in which it disclosed its
business relationships with a St. Louis based computer leasing company (and its
affiliate) and the filing by such company of a Chapter 11 bankruptcy
proceeding.
17
<PAGE> 18
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
MAGNA GROUP, INC.
--------------------------------------
(Registrant)
DATE: May 9, 1996 By: /s/ G. Thomas Andes
- -------------------------------------- -----------------------------------
G. Thomas Andes
Chairman of the Board and
Chief Executive Officer
DATE: May 9, 1996 By: /s/ Ronald A. Buerges
- -------------------------------------- -----------------------------------
Ronald A. Buerges
Executive Vice President
and Chief Financial Officer
(Principal Financial and
Accounting Officer)
18
<PAGE> 19
EXHIBIT INDEX
-------------
EXHIBIT NO. DESCRIPTION
- ----------- -----------
10.1 Agreement dated April 8, 1996, between
Magna Group, Inc. and Ronald A. Buerges.
11.1 Computation of Net Income Per Common
Share.
27.1 Financial Data Schedule.
19
<PAGE> 1
MAGNA GROUP, INC.
AGREEMENT
---------
This agreement ("Agreement") has been entered into this 8th day
---
of April, 1996, by and between Magna Group, Inc., a Delaware corporation
----- --
("Company"), and Ronald A. Buerges, an individual ("Executive").
RECITALS
The Board of Directors of the Company (the "Board"), has
determined that it is in the best interests of the Company and its
stockholders to reinforce and encourage the continued attention and
dedication of the Executive to the Company as a member of the Company's
management (including, if applicable, management of a wholly owned
subsidiary) and to assure that the Company will have the continued
dedication of the Executive, notwithstanding the possibility, threat or
occurrence of a Change in Control (as defined below) of the Company. The
Board desires to provide for the continued employment of the Executive on
the terms hereof, and the Executive is willing to commit to continue to
serve the Company. Additionally, the Board believes it is imperative to
diminish the inevitable distraction of the Executive by virtue of the
personal uncertainties and risks created by a pending or threatened Change
in Control, to encourage the Executive's full attention and dedication to
the Company currently and in the event of any threatened or pending Change
in Control, and to provide the Executive with compensation and benefits
arrangements upon the breach of this Agreement by the Employer or upon a
termination of employment after a Change in Control which ensure that the
compensation and benefits expectations of the Executive will be satisfied
and which are competitive with those of other corporations. Therefore, in
order to accomplish these objectives, the Board has caused the Company to
enter into this Agreement.
IT IS AGREED AS FOLLOWS:
SECTION 1: DEFINITIONS AND CONSTRUCTION.
1.1 DEFINITIONS. For purposes of this Agreement, the following
words and phrases, whether or not capitalized, shall have the meanings
specified below, unless the context plainly requires a different meaning.
1.1(a) "ANNUAL BASE SALARY" means the dollar amount that
would be reported to the Internal Revenue Service
as compensation on Form W-2 or any successor form.
1.1(b) "BOARD" means the Board of Directors of the Company.
1.1(c) "CHANGE IN CONTROL" means a change in control of
the Company of a nature that would be required to
be reported in response to Item 6(e) of Schedule
14A of Regulation 14A promulgated under the
Exchange Act; provided that, for purposes of this
Agreement, a Change in Control shall be deemed to
have occurred if (i) any Person (other than the
Company) is or becomes the
<PAGE> 2
"beneficial owner" (as defined in Rule 13d-3 under
the Exchange Act), directly or indirectly, of
securities of the Company which represent 20% or
more of the combined voting power of the Company's
then outstanding securities; (ii) during any
period of two (2) consecutive years, individuals
who at the beginning of such period constitute the
Board cease for any reason to constitute at least a
majority thereof, unless the election, or the
nomination for election, by the Company's
stockholders, of each new director is approved by
a vote of at least two-thirds (2/3) of the
directors then still in office who were directors
at the beginning of the period but excluding any
individual whose initial assumption of office
occurs as a result of either an actual or
threatened election contest (as such term is used
in Rule 14a-11 of Regulation 14A promulgated under
the Exchange Act) or other actual or threatened
solicitation of proxies or consents by or on
behalf of a person other than the Board; (iii)
there is consummated any consolidation or merger
of the Company in which the Company is not the
continuing or surviving corporation or pursuant to
which shares of the Company's Common Stock is
converted into cash, securities, or other
property, other than a merger of the Company in
which the holders of the Company's Common Stock
immediately prior to the merger have the same
proportionate ownership of common stock of the
surviving corporation immediately after the
merger; (iv) there is consummated any
consolidation or merger of the Company in which
the Company is the continuing or surviving
corporation in which the holders of the Company's
Common Stock immediately prior to the merger do
not own fifty percent (50%) or more of the stock
of the surviving corporation immediately after the
merger; (v) there is consummated any sale, lease,
exchange, or other transfer (in one transaction or
a series of related transactions) of all, or
substantially all, of the assets of the Company,
or (vi) the stockholders of the Company approve
any plan or proposal for the liquidation or
dissolution of the Company.
1.1(d) "CHANGE IN CONTROL DATE" shall mean the date of
the Change in Control.
1.1(e) "CODE" shall mean the Internal Revenue Code of 1986,
as amended.
1.1(f) "COMPANY" means Magna Group, Inc., a Delaware
corporation.
1.1(g) "EFFECTIVE DATE" shall mean April 8, 1996.
1.1(h) "EXCHANGE ACT" means the Securities Exchange Act of
1934, as amended.
1.1(i) "INCENTIVE BONUS" shall mean the incentive bonus
provided through any incentive compensation plan,
which is generally available to other peer
executives of the Company, awarded to the
Executive for the year preceeding termination. To
the extent such incentive bonus is paid in shares
of restricted stock, Incentive Bonus shall include
the value of such shares on their award date
without any discount; provided, however, such
restricted shares shall include only those awarded
in lieu of compensation payable as determined by
the Compensation Committee of the Board.
-2-
<PAGE> 3
1.1(j) "PERSON" means any "person" within the meaning of
Sections 13(d) and 14(d) of the Exchange Act.
1.1(k) "TERM" means the period that begins on the Effective
Date and ends on the earlier of: (i) the Date of
Termination as defined in Section 3.7, or (ii) the
close of business on December 31 of any calendar
year during which notice is given, by December 1
of such year, by either party (as provided in
Section 7) of such party's intent not to renew
this Agreement.
1.2 GENDER AND NUMBER. When appropriate, pronouns in this
Agreement used in the masculine gender include the feminine gender, words
in the singular include the plural, and words in the plural include the
singular.
1.3 HEADINGS. All headings in this Agreement are included
solely for ease of reference and do not bear on the interpretation of the
text. Accordingly, as used in this Agreement, the terms "Article" and
"Section" mean the text that accompanies the specified Article or Section
of the Agreement.
1.4 APPLICABLE LAW. This Agreement shall be governed by and
construed in accordance with the laws of the state of Missouri, without
reference to its conflict of law principles.
SECTION 2: TERMS AND CONDITIONS OF EMPLOYMENT.
2.1 EMPLOYMENT. If the Executive is in the employ of the
Company (or in the employ of a wholly owned subsidiary) on a Change in
Control Date, then the Executive shall thereafter remain in the employ of
the Company (or in the employ of a wholly owned subsidiary) in accordance
with the terms and provisions of this Agreement.
2.2 POSITIONS AND DUTIES.
2.2(a) Following a Change in Control Date, the Executive
shall continue to serve in the Executive's then current
capacity, subject to the reasonable directions of the Board.
The Executive shall thereafter devote the Executive's full
working time and attention to such business and affairs of
the Company and/or any subsidiary of the Company as directed
by the Board, as may be compatible with the Executive's titles
and positions. In addition, the Executive's position
(including status, offices, titles and reporting requirements),
authority, duties and responsibilities shall be at least
commensurate in all material respects with those assigned to,
or held and exercised by, the Executive immediately preceding
a Change in Control Date.
2.2(b) Following a Change in Control Date and thereafter
throughout the Term of this Agreement (but excluding any
periods of vacation and sick leave to which the Executive is
entitled), the Executive shall devote reasonable attention and
time during normal business hours to the business and affairs
of the Company and shall use the Executive's reasonable best
efforts to perform faithfully and efficiently such
responsibilities as are assigned to the Executive under or in
accordance with this Agreement; provided that, it shall not be
a violation of this paragraph for the Executive to (i) serve
on corporate, civic or charitable boards or committees, (ii)
deliver lectures or fulfill speaking engagements, or (iii)
manage
-3-
<PAGE> 4
personal investments, so long as such activities do not
significantly interfere with the performance of the
Executive's responsibilities as an employee of the Company in
accordance with this Agreement or violate the Company's
conflict of interest policy as in effect immediately prior to
the Effective Date.
2.3 SITUS OF EMPLOYMENT. Following a Change in Control Date
and thereafter throughout the Term of this Agreement, the Executive's
services shall be performed at the location where the Executive was
employed immediately preceding the Change in Control Date.
2.4 COMPENSATION. For any calendar year including and
following a Change in Control Date, the Executive shall receive an Annual
Base Salary equal to the Annual Base Salary being received immediately
prior to a Change in Control Date, which shall be paid in equal or
substantially equal monthly installments. The Annual Base Salary payable
to the Executive shall be reviewed thereafter at least annually but need
not be adjusted upward as a result of such review and shall not be reduced
after any increase thereof.
SECTION 3: TERMINATION OF AGREEMENT.
3.1 DEATH. This Agreement shall terminate automatically upon
the Executive's death during the Term of this Agreement.
3.2 DISABILITY. If, following a Change in Control Date, the
Company determines in good faith that the Disability of the Executive has
occurred during the Term of this Agreement (pursuant to the definition of
Disability set forth below), it may give to the Executive written notice
in accordance with Section 8.1 of its intention to terminate the
Executive's employment. In such event, the Executive's employment with
the Company shall terminate effective on the thirtieth (30th) day after
receipt of such notice by the Executive (the "Disability Effective Date"),
provided that, within the thirty (30) days after such receipt, the
Executive shall not have returned to full-time performance of the
Executive's duties. For purposes of this Agreement, "Disability" shall
mean that the Executive has been unable to perform the services required
of the Executive hereunder on a full-time basis for a period of one
hundred eighty (180) consecutive business days by reason of a physical
and/or mental condition. "Disability" shall be deemed to exist when
certified by a physician selected by the Company or its insurers and
acceptable to the Executive or the Executive's legal representative (such
agreement as to acceptability not to be withheld unreasonably). The
Executive will submit to such medical or psychiatric examinations and
tests as such physician deems necessary to make any such Disability
determination.
3.3 PRIOR TO CHANGE IN CONTROL. Executive is employed at
will. Any notice of termination by Executive or Company shall be given in
accordance with Section 3.6 of the Agreement.
3.4 FOLLOWING A CHANGE IN CONTROL - TERMINATION BY
COMPANY FOR CAUSE. Following a Change in Control Date, the Company may
terminate the Executive's employment during the Term of this Agreement for
"Cause," which shall mean termination based upon: (i) the Executive's
willful and continued failure to substantially perform the Executive's
duties with the Company (other than as a result of incapacity due to
physical or mental condition), after a demand for substantial performance
is delivered to the Executive by the Chief Executive Officer of the
Company or the Chairman of the Compensation Committee of the Board, which
specifically identifies the manner in which the Executive has not
substantially performed the Executive's duties, (ii) the Executive's
willful commission of misconduct which is materially injurious to the
Company, monetarily or otherwise, or (iii) the Executive's material
-4-
<PAGE> 5
breach of any provision of this Agreement. For purposes of this paragraph,
no act, or failure to act on the Executive's part shall be considered
"willful" unless done, or omitted to be done, without good faith and
without reasonable belief that the act or omission was in the best
interest of the Company. Notwithstanding the foregoing, the Executive
shall not be deemed to have been terminated for Cause unless and until (i)
the Executive receives a Notice of Termination (as defined in Section 3.6)
from the Chief Executive Officer of the Company or the Chairman of the
Compensation Committee of the Board, (ii) the Executive is given the
opportunity, with counsel to be heard before the Board, and (iii) the
Board finds, in its good faith opinion, the Executive was guilty of the
conduct set forth in the Notice of Termination.
3.5 FOLLOWING A CHANGE IN CONTROL - TERMINATION BY
EXECUTIVE FOR GOOD REASON. Following a Change in Control Date, the
Executive may terminate the Executive's employment with the Company for
"Good Reason," which shall mean termination based upon:
(i) the assignment to the Executive of any duties
inconsistent in any respect with the Executive's position
(including status, offices, titles and reporting
requirements), authority, duties or responsibilities as
contemplated by Section 2.2(a) or any other action by the
Company which results in a material diminution in such
position, authority, duties or responsibilities, excluding
for this purpose any action not taken in bad faith and which
is remedied by the Company promptly after receipt of notice
thereof given by the Executive;
(ii) the failure by the Company to continue in effect any
benefit or compensation plan, stock ownership plan, life
insurance plan, health and accident plan or disability plan
to which the Executive is entitled, the taking of any action
by the Company which would adversely affect the Executive's
participation in, or materially reduce the Executive's
benefits such plans, or deprive the Executive of any
material fringe benefit enjoyed by the Executive or the
failure by the Company to provide the Executive with the
number of paid vacation days to which the Executive is
entitled.
(iii) the Company's requiring the Executive to be based at
any office or location other than that described in Section
2.3;
(iv) a material breach by the Company of any provision of
this Agreement;
(v) any purported termination by the Company of the
Executive's employment otherwise than as expressly permitted
by this Agreement;
(vi) within a period ending at the close of business on the
date two (2) years after the Change in Control Date, any
failure by the Company to comply with and satisfy
Section 6.2 on or after the Change in Control Date; or
(vii) within a period ending at the close of business on
the date one (1) year after the Change in Control Date, the
Executive, in the Executive's sole and absolute discretion,
determines and notifies the Company in writing, that the
Executive does not wish to continue employment with the
Company.
For purposes of this Section any good faith determination of "Good Reason"
made by the Executive shall be conclusive.
-5-
<PAGE> 6
3.6 NOTICE OF TERMINATION. Any termination by the Company,
or by the Executive, shall be communicated by Notice of Termination to the
other party, given in accordance with Section 8.1. For purposes of this
Agreement, a "Notice of Termination" means a written notice which
(i) indicates the specific termination provision in this Agreement relied
upon, (ii) to the extent applicable, sets forth in reasonable detail the
facts and circumstances claimed to provide a basis for termination of the
Executive's employment under the provision so indicated, and (iii) if the
Date of Termination (as defined below) is other than the date of receipt
of such notice, specifies the termination date (which date shall be not
more than fifteen (15) days after the giving of such notice). The failure
by the Executive or the Company to set forth in the Notice of Termination
any fact or circumstance which contributes to a showing of Good Reason or
Cause shall not waive any right of the Executive or the Company hereunder
or preclude the Executive or the Company from asserting such fact or
circumstance in enforcing the Executive's or the Company's rights
hereunder.
3.7 DATE OF TERMINATION. "Date of Termination" means (i) if
the Executive's employment is terminated by the Company with or without
Cause, or by the Executive for Good Reason or otherwise, the Date of
Termination shall be the date of receipt of the Notice of Termination or
any later date specified therein, as the case may be, or (ii) if the
Executive's employment is terminated by reason of death or Disability, the
Date of Termination shall be the date of death of the Executive or the
Disability Effective Date, as the case may be.
SECTION 4: CERTAIN BENEFITS UPON TERMINATION OF EMPLOYMENT.
4.1 TERMINATION WITHOUT CAUSE PRIOR TO A CHANGE IN
CONTROL. If, prior to a Change in Control, during the Term of this
Agreement the Company shall terminate the Executive's employment without
Cause, then on the tenth (10th) business day following the Date of
Termination, the Company shall pay to the Executive the sum of (1) the
Executive's Annual Base Salary prorated through the Date of Termination to
the extent not previously paid, and (2) any accrued vacation pay to the
extent not previously paid.
4.2 TERMINATION AFTER A CHANGE IN CONTROL. If a Change in
Control occurs during the Term of this Agreement and within two (2) years
after such Change in Control: (i) the Company shall terminate the
Executive's employment without Cause, or (ii) the Executive shall
terminate employment with the Company for Good Reason, then the Executive
shall be entitled to the benefits provided below:
4.2(a) "Accrued Obligations": On the tenth (10th) business
day following the Date of Termination, the Company shall pay
to the Executive the sum of (1) the Executive's Annual Base
Salary prorated through the Date of Termination to the
extent not previously paid, and (2) any accrued vacation pay
to the extent not previously paid.
4.2(b) "Severance Amount": On the tenth (10th) business day
following the Date of Termination, the Company shall pay to
the Executive as severance pay a lump sum cash payment in an
amount equal to 2 (two) times the sum of the Executive's
Annual Base Salary in effect on the Date of Termination and
the Executive's Incentive Bonus.
4.2(c) "Stock Options": To the extent not otherwise
provided for under the terms of any of the Company's stock
option agreements, all such stock options shall become fully
exercisable as of the Date of Termination and, except for
"incentive stock options" within
-6-
<PAGE> 7
the meaning of Code Section 422 granted prior to the date hereof,
shall remain fully exercisable in accordance with their terms.
4.2(d) "Other Benefits": To the extent not previously paid
or provided, the Company shall timely pay or provide to the
Executive and/or the Executive's family any other amounts or
benefits required to be paid or provided for which the
Executive and/or the Executive's family is eligible to
receive pursuant to this Agreement and under any plan,
program, policy or practice or contract or agreement of the
Company as those provided generally to other peer executives
and their families during the ninety (90) day period
immediately preceding the Effective Date or, if more
favorable to the Executive, as those provided generally
after the Effective Date to other peer executives of the
Company and their families.
4.2(e) "Excess Parachute Payment": Anything in this
Agreement to the contrary notwithstanding, in the event that
an independent accountant shall determine that any payment
or distribution by the Company to or for the benefit of
Executive (whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or
otherwise) (a "Payment") would be nondeductible by the
Company for Federal income tax purposes because of Code
Section 280G or would constitute an "excess parachute
payment" (as defined in Code Section 280G), then the
aggregate present value of amounts payable or distributable
to or for the benefit of Executive pursuant to this
Agreement (such payments or distributions pursuant to this
Agreement are hereinafter referred to as "Agreement
Payments") shall be reduced (but not below zero) to the
Reduced Amount. For purposes of this paragraph, the
"Reduced Amount" shall be an amount expressed in present
value which maximizes the aggregate present value of
Agreement Payments without causing any Payment to be
nondeductible by the Company because of Code Section 280G or
without causing any portion of the Payment to be subject to
the excise tax imposed by Code Section 4999.
If the independent accountant determines that any Payment would
be nondeductible by the Company because of Code Section 280G
or that any portion of the Payment will be subject to the
excise tax imposed by Code Section 4999, the Company shall
promptly give Executive notice to that effect and a copy of
the detailed calculation thereof and of the Reduced Amount.
The Executive may then elect, in the Executive's sole
discretion, which and how much of the Agreement Payments
shall be eliminated or reduced (as long as after such
election the aggregate present value of the Agreement
Payments equals the Reduced Amount), and shall advise the
Company in writing of the Executive's election within ten
(10) days of the Executive's receipt of such notice. If no
such election is made by Executive within such ten-day
period, the Company may elect which and how much of the
Agreement Payments shall be eliminated or reduced (as long
as after such election the aggregate present value of the
Agreement Payments equals the Reduced Amount) and shall
notify the Executive promptly of such election. For
purposes of this paragraph, present value shall be
determined in accordance with Code Section 280G(d)(4). All
determinations made by the independent accountant under this
paragraph shall be binding upon the Company and the
Executive and shall be made within sixty (60) days of a
termination of employment of the Executive. As promptly as
practicable following such determination and the elections
hereunder, the Company shall pay to or distribute to or for
the benefit of the Executive such amounts as are then due to
the Executive under this Agreement and shall
-7-
<PAGE> 8
promptly pay to or distribute for the benefit of the Executive in the
future such amounts as become due to the Executive under this
Agreement.
As a result of the uncertainty in the application of Code
Sections 280G and 4999 at the time of the initial
determination by the independent accountant hereunder, it is
possible that Agreements Payments will be made by the
Company which should not have been made ("Overpayment") or
that additional Agreement Payments which have not been made
by the Company should have been made ("Underpayment"), in
each case, consistent with the calculation of the Reduced
Amount hereunder. In the event that the independent
accountant, based upon the assertion of a deficiency by the
Internal Revenue Service against the Company or the
Executive which the independent accountant believes has a
high probability of success, determines that an Overpayment
has been made, any such Overpayment shall be treated for all
purposes as a loan to the Executive which the Executive
shall repay to the Company together with interest at the
applicable Federal rate provided for in Code Section 7872(f)(2);
provided, however, that no amount shall be payable by the
Executive to the Company if and to the extent such payment
would not reduce the amount which is subject to taxation under
Code Section 4999 or if the period of limitations for
assessment of tax under Code Section 4999 against the
Executive shall have expired. If the Executive is required to
repay an amount under this Section, the Executive shall repay
such amount over a period of time not to exceed one (1) year
for each twenty-five thousand dollars ($25,000) which the
Executive must repay to the Company. In the event that the
independent accountant, based upon controlling precedent,
determines that an Underpayment has occurred, any such
Underpayment shall be promptly paid by the Company to or for
the benefit of the Executive together with interest at the
applicable Federal rate provided for in Code Section
7872(f)(2)(A).
4.3 DEATH. If the Executive's employment is terminated by
reason of the Executive's death during the Term of this Agreement (either
prior or subsequent to a Change in Control), this Agreement shall
terminate without further obligations to the Executive's legal
representatives under this Agreement, other than for payment of Accrued
Obligations (as defined in Section 4.1) (which shall be paid to the
Executive's estate or beneficiary, as applicable, in a lump sum in cash
within ten (10) days of the Date of Termination).
4.4 DISABILITY. If the Executive's employment is terminated by
reason of the Executive's Disability during the Term of this Agreement
(either prior or subsequent to a Change in Control), this Agreement shall
terminate without further obligations to the Executive, other than for
payment of Accrued Obligations (as defined in Section 4.1) (which shall be
paid to the Executive in a lump sum in cash within ten (10) days of the
Date of Termination).
4.5 TERMINATION FOR CAUSE; EXECUTIVE'S TERMINATION OTHER
THAN FOR GOOD REASON AFTER A CHANGE IN CONTROL. If the Executive's
employment shall be terminated for Cause during the Term of this Agreement
(either prior to or subsequent to a Change in Control), this Agreement
shall terminate without further obligations to the Executive other than
the obligation to pay to the Executive Accrued Obligations (as defined in
Section 4.1). If the Executive terminates employment with the Company
during the Term of this Agreement, (other than for Good Reason after a
Change in Control) this Agreement shall terminate without further
obligations to the Executive, other than for Accrued Obligations (as
defined in Section 4.1). In such case, all Accrued Obligations shall be
paid to the Executive in a lump sum cash payment within thirty (30) days
of the Date of Termination. If the
-8-
<PAGE> 9
Executive's employment shall terminate for the reasons stated in this
Section, the provisions of Section 5 shall continue to apply.
4.6 NON-EXCLUSIVITY OF RIGHTS. Nothing in this Agreement
shall prevent or limit the Executive's continuing or future participation
in any plan, program, policy or practice provided by the Company and for
which the Executive may qualify, nor shall anything herein limit or
otherwise affect such rights as the Executive may have under any contract
or agreement with the Company. Amounts which are vested benefits of which
the Executive is otherwise entitled to receive under any plan, policy,
practice or program of, or any contract or agreement with, the Company at
or subsequent to the Date of Termination, shall be payable in accordance
with such plan, policy, practice or program or contract or agreement
except as explicitly modified by this Agreement.
4.7 FULL SETTLEMENT. The Company's obligation to make the
payments provided for in this Agreement and otherwise to perform its
obligations hereunder shall not be affected by any set-off, counterclaim,
recoupment, defense or other claim, right or action which the Company may
have against the Executive or others. In no event shall the Executive be
obligated to seek other employment or take any other action by way of
mitigation of the amounts payable to the Executive under any of the
provisions of this Agreement and such amounts shall not be reduced whether
or not the Executive obtains other employment. The Company agrees, only
on and after a Change in Control Date to pay promptly as incurred, to the
full extent permitted by law, all legal fees and expenses which the
Executive may reasonable incur as a result of any contest (regardless of
the outcome thereof) by the Company, the Executive or others of the
validity or enforceability of, or liability under, any provision of this
Agreement or any guarantee of performance thereof (including as a result
of any contest by the Executive regarding the amount of any payment
pursuant to this Agreement), plus in each case interest on any delayed
payment at the applicable Federal rate provided for in Code Section
7872(f)(2)(A).
4.8 RESOLUTION OF DISPUTES. If there shall be any dispute
between the Company and the Executive (i) in the event of any termination
of the Executive's employment by the Company, whether such termination was
for Cause, or (ii) in the event of any termination of employment by the
Executive, whether Good Reason existed, then, unless and until there is a
final, nonappealable judgment by a court of competent jurisdiction
declaring that such termination was for Cause or that the determination by
the Executive of the existence of Good Reason was not made in good faith,
the Company shall, only on and after a Change in Control Date pay all
amounts, and provide all benefits, to the Executive and/or the Executive's
family or other beneficiaries, as the case may be, that the Company would
be required to pay or provide pursuant to Section 4.2 as though such
termination were by the Company without Cause or by the Executive with
Good Reason; provided, however, that the Company shall not be required to
pay any disputed amounts pursuant to this paragraph except upon receipt of
an undertaking by or on behalf of the Executive to repay all such amounts
to which the Executive is ultimately adjudged by such court not to be
entitled.
SECTION 5: CONFIDENTIAL INFORMATION.
CONFIDENTIAL INFORMATION. The Executive shall hold in a
fiduciary capacity for the benefit of the Company all secret or
confidential information, knowledge or data relating to the Company or any
of its affiliated companies, and their respective businesses, which shall
have been obtained by the Executive during the Executive's employment by
the Company and which shall not be or become public knowledge (other than
by acts by the Executive or representatives of the Executive in violation
of this
-9-
<PAGE> 10
Agreement). After termination of the Executive's employment with the
Company, the Executive shall not, without the prior written consent of
the Company, or as may otherwise be required by law or legal process,
communicate or divulge any such information, knowledge or data to anyone
other than the Company and those designated by it. In no event shall an
asserted violation of the provisions of this Section constitute a basis
for deferring or withholding any amounts otherwise payable to the
Executive under this Agreement.
SECTION 6: SUCCESSORS.
6.1 SUCCESSORS OF EXECUTIVE. This Agreement is personal to
the Executive and, without the prior written consent of the Company,
amounts receivable hereunder shall not be assignable by the Executive
otherwise than by will or the laws of descent and distribution. This
Agreement shall inure to the benefit of and be enforceable by the
Executive's legal representatives.
6.2 SUCCESSORS OF COMPANY. The Company will require any
successor (whether direct or indirect, by purchase, merger, consolidation
or otherwise) to all or substantially all of the business and/or assets of
the Company to assume expressly and agree to perform this Agreement in the
same manner and to the same extent that the Company would be required to
perform it if no such succession had taken place. Failure of the Company
to obtain such agreement upon the effectiveness of any such succession
shall be a breach of this Agreement and shall entitle the Executive to
terminate the Agreement at the Executive's option on or after the Change
in Control Date for Good Reason. As used in this Agreement, "Company"
shall mean the Company as hereinbefore defined and any successor to its
business and/or assets which assumes and agrees to perform this Agreement
by operation of law, or otherwise.
SECTION 7: TERMS OF AGREEMENT.
This Agreement will automatically renew for annual one-year
periods beginning on January 1 of each year and ending on the following
December 31; provided that, the last annual period shall be the twelve
(12) month period beginning on January 1 and ending on the following
December 31 during which written notice is given by December 1, by either
party, of such party's intent not to renew this Agreement. If notice is
given by either party after December 1 of any year, but prior to January 1
of the next succeeding year, then the last renewal period shall be the
twelve (12) month period which begins on the January 1 following the date
notice is given and ending the following December 31. Notwithstanding the
foregoing, in the event a Change in Control shall have occurred, this
Agreement shall terminate two (2) years after a Change in Control Date.
SECTION 8: MISCELLANEOUS.
8.1 NOTICE. For purposes of this Agreement, notices and all
other communications provided for in the Agreement shall be in writing and
shall be deemed to have been duly given when delivered or mailed by
certified or registered mail, return receipt requested, postage prepaid,
addressed to the respective addresses as set forth below; provided that
all notices to the Company shall be directed to the attention of the
Chairman of the Board of the Company with a copy to the Secretary of the
Company, or to such other address as one party may have furnished to the
other in writing in accordance herewith, except that notice of change of
address shall be effective only upon receipt.
-10-
<PAGE> 11
Notice to Executive:
-------------------
Ronald A. Buerges
13328 Bahnfyre
St. Louis, Missouri 63128
Notice to Company:
-----------------
Magna Group, Inc.
1401 South Brentwood Blvd
St. Louis, Missouri 63144
8.2 VALIDITY. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement.
8.3 WITHHOLDING. The Company may withhold from any amounts
payable under this Agreement such Federal, state or local taxes as shall
be required to be withheld pursuant to any applicable law or regulation.
8.4 WAIVER. The Executive's or the Company's failure to insist
upon strict compliance with any provision hereof or any other provision of
this Agreement or the failure to assert any right the Executive or the
Company may have hereunder, including, without limitation, the right of
the Executive to terminate employment for Good Reason pursuant to Section
3.5 shall not be deemed to be a waiver of such provision or right or any
other provision or right of this Agreement.
8.5 EFFECT ON OTHER EMPLOYMENT AGREEMENTS. The terms of
this Agreement shall supersede all other employment or other agreements
with respect to severance entered into by and between the Executive and
the Company, or the Executive and any other employer, and this Agreement
shall constitute the sole agreement pursuant to which the Company shall
have an obligation to the Executive upon the termination of the
Executive's relationship with the Company or any subsidiary.
IN WITNESS WHEREOF, the Executive and the Company, pursuant to
the authorization from its Board, have caused this Agreement to be
executed in its name on its behalf, all as of the day and year first above
written.
/s/ Ronald A. Buerges
----------------------------------------
Executive
MAGNA GROUP, INC.
By /s/ G. Thomas Andes
--------------------------------------
Name: G. Thomas Andes
Title: Chairman of the Board, President
and Chief Executive Officer
-11-
<PAGE> 1
<TABLE>
MAGNA GROUP, INC. Exhibit 11.1
COMPUTATION OF NET INCOME PER COMMON SHARE ------------
(In thousands, except per share data)
<CAPTION>
Three Months Ended March 31
1996 1995
--------- ---------
<S> <C> <C>
Primary
- -------
Average common shares outstanding 28,251 27,583
Assumed exercise of employee stock options 120 111
--------- ---------
Total 28,371 27,694
========= =========
Net income $14,343 $11,635
Less preferred stock dividends:
Class B voting preferred (1) (1)
--------- ---------
Net income $14,342 $11,634
========= =========
Per common share:
Net income $0.51 $0.42
========= =========
Fully Diluted <FA>
- ------------------------
Average common shares outstanding 28,251 27,583
Assumed exercise of employee stock options 123 129
Assumed conversion of:
7% convertible subordinated capital notes 819 932
8-3/4% convertible subordinated debentures -- --
--------- ---------
Average common shares and common share equivalents 29,193 28,644
========= =========
Net income $14,343 $11,635
Less preferred stock dividends:
Class B voting preferred (1) (1)
Elimination of interest net of related tax effects on:
7% convertible subordinated capital notes 173 200
8-3/4% convertible subordinated debentures -- --
--------- ---------
Fully diluted net income $14,515 $11,834
========= =========
Per common share:
Net income $0.50 $0.41
========= =========
<FN>
<FA> Inclusion of common share equivalents for the 8-3/4% convertible
subordinated debentures for the three month periods ended March 31,
1996 and 1995 in the calculation of fully diluted net income per
common share results in antidilution, and therefore, these are
excluded from the computation.
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
This schedule contains summary financial information extracted from the Magna
Group, Inc. quarterly report on Form 10-Q for the quarterly period ended
March 31, 1996, and is qualified in its entirety by reference to such report.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 141,955
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 6,815
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 1,511,587
<INVESTMENTS-CARRYING> 137,025
<INVESTMENTS-MARKET> 138,684
<LOANS> 3,275,514
<ALLOWANCE> 43,905
<TOTAL-ASSETS> 5,252,627
<DEPOSITS> 4,051,076
<SHORT-TERM> 580,171
<LIABILITIES-OTHER> 65,390
<LONG-TERM> 94,380
0
41
<COMMON> 57,324
<OTHER-SE> 404,245
<TOTAL-LIABILITIES-AND-EQUITY> 5,252,627
<INTEREST-LOAN> 69,267
<INTEREST-INVEST> 22,794
<INTEREST-OTHER> 707
<INTEREST-TOTAL> 92,768
<INTEREST-DEPOSIT> 37,853
<INTEREST-EXPENSE> 45,643
<INTEREST-INCOME-NET> 47,125
<LOAN-LOSSES> 2,483
<SECURITIES-GAINS> 673
<EXPENSE-OTHER> 34,874
<INCOME-PRETAX> 21,990
<INCOME-PRE-EXTRAORDINARY> 21,990
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 14,343
<EPS-PRIMARY> .51
<EPS-DILUTED> .50
<YIELD-ACTUAL> 4.09
<LOANS-NON> 21,624
<LOANS-PAST> 10,867
<LOANS-TROUBLED> 53
<LOANS-PROBLEM> 0<F1>
<ALLOWANCE-OPEN> 42,623
<CHARGE-OFFS> 3,422
<RECOVERIES> 1,331
<ALLOWANCE-CLOSE> 43,905
<ALLOWANCE-DOMESTIC> 43,905
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0<F1>
<FN>
<F1>Information not currently available; is reported on an annual basis only.
</TABLE>
