<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 JUNE 30, 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
------ ------
<TABLE>
<CAPTION>
Title of class of Number of shares
common stock outstanding as of August 7, 1996
- ----------------------------- -----------------------------------
<S> <C>
Common stock, $2.00 par value 28,146,146
</TABLE>
<PAGE> 2
<TABLE>
TABLE OF CONTENTS
<CAPTION>
Page
----
<S> <C>
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 6 - EXHIBITS AND REPORTS ON FORM 8-K 17
SIGNATURE PAGE 18
EXHIBIT INDEX 19
</TABLE>
2
<PAGE> 3
<TABLE>
PART I - FINANCIAL INFORMATION
- ------------------------------
ITEM 1. FINANCIAL STATEMENTS
- ----------------------------
MAGNA GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(IN THOUSANDS, EXCEPT SHARE DATA)
<CAPTION>
JUNE 30 DECEMBER 31
1996 1995
---------- -----------
<S> <C> <C>
ASSETS
Cash and due from banks $ 139,016 $ 175,167
Federal funds sold 17,544 47,046
Securities:
Held-to-maturity 142,410 126,248
Available-for-sale 1,522,388 1,238,616
Loans 3,350,786 3,205,374
Unearned income (1,503) (2,608)
Reserve for loan losses (44,464) (42,623)
---------- ----------
Net Loans 3,304,819 3,160,143
Premises and equipment 82,857 81,691
Other assets 141,140 118,588
---------- ----------
TOTAL ASSETS $5,350,174 $4,947,499
========== ==========
LIABILITIES
Deposits:
Noninterest bearing $ 521,083 $ 570,262
Interest bearing 3,507,078 3,318,004
---------- ----------
Total Deposits 4,028,161 3,888,266
Federal funds purchased 107,950 41,790
Repurchase agreements 519,894 368,861
Other short-term borrowings 84,924 50,000
Long-term debt 94,327 93,071
Other liabilities 63,399 59,467
---------- ----------
TOTAL LIABILITIES 4,898,655 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 - 28,741,576
and 27,997,889 shares issued,
respectively 57,483 55,996
Capital surplus 225,892 211,588
Retained earnings 195,158 177,438
Treasury stock 550,000 shares, at cost (12,952) -
Net unrealized gains (losses)
on securities (14,103) 981
---------- ----------
TOTAL STOCKHOLDERS' EQUITY 451,519 446,044
---------- ----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $5,350,174 $4,947,499
========== ==========
See accompanying notes.
</TABLE>
3
<PAGE> 4
<TABLE>
MAGNA GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30 JUNE 30
------------------ ------------------
1996 1995 1996 1995
------------------ ------------------
<S> <C> <C> <C> <C>
Interest Income:
Interest and fees on loans $71,125 $65,705 $140,392 $128,805
Securities:
Taxable 23,932 16,748 45,005 33,888
Tax-exempt 1,739 1,770 3,460 3,580
------- ------- -------- --------
25,671 18,518 48,465 37,468
Other interest income 148 803 855 1,016
------- ------- -------- --------
TOTAL INTEREST INCOME 96,944 85,026 189,712 167,289
Interest Expense:
Deposits 38,533 34,384 76,386 64,442
Federal funds purchased 1,287 198 1,976 1,220
Repurchase agreements 5,015 3,599 9,579 7,403
Other short-term borrowings 1,030 175 1,870 348
Long-term debt 1,797 1,380 3,494 2,900
------- ------- -------- --------
TOTAL INTEREST EXPENSE 47,662 39,736 93,305 76,313
------- ------- -------- --------
NET INTEREST INCOME 49,282 45,290 96,407 90,976
Provision for Loan Losses 2,799 2,262 5,282 3,929
------- ------- -------- --------
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 46,483 43,028 91,125 87,047
Noninterest Income:
Service charges on deposits 5,993 5,653 11,539 11,114
Trust 2,382 2,244 4,746 4,563
Securities gains, net 17 297 690 363
Other 4,180 3,929 7,819 7,164
------- ------- -------- --------
12,572 12,123 24,794 23,204
Noninterest Expense:
Employee compensation and
other benefits 17,269 18,078 34,889 36,661
Net occupancy 4,512 4,933 8,985 8,905
Equipment 2,223 2,160 4,473 4,362
FDIC insurance premiums 51 2,059 83 4,117
Other 10,725 10,916 21,224 21,390
------- ------- -------- --------
34,780 38,146 69,654 75,435
------- ------- -------- --------
INCOME BEFORE INCOME TAXES 24,275 17,005 46,265 34,816
Income Tax Expense 8,416 4,606 16,063 10,782
------- ------- -------- --------
NET INCOME $15,859 $12,399 $ 30,202 $ 24,034
======= ======= ======== ========
Average Shares Outstanding:
Primary 28,626 27,821 28,499 27,757
Fully Diluted 30,132 28,750 30,017 28,722
Per Share Data:
Net income:
Primary $.55 $.45 $1.06 $ .87
==== ==== ===== =====
Fully Diluted $.54 $.44 $1.04 $ .85
==== ==== ===== =====
Dividends declared $.22 $.20 $.44 $.40
==== ==== ==== ====
See accompanying notes.
</TABLE>
4
<PAGE> 5
<TABLE>
MAGNA GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(IN THOUSANDS)
<CAPTION>
SIX MONTHS ENDED
JUNE 30
--------------------------------
1996 1995
---- ----
<S> <C> <C>
NET CASH PROVIDED BY OPERATING ACTIVITIES $ 43,347 $ 32,425
INVESTING ACTIVITIES
Proceeds from maturities of held-to-maturity
securities 2,069 10,274
Proceeds from sales of held-to-maturity securities - 738
Purchases of held-to-maturity securities (8,073) (10,485)
Proceeds from maturities of available-
for-sale securities 205,709 74,890
Proceeds from sales of available-for-
sale securities 38,991 70,352
Purchases of available-for-sale securities (473,914) (86,179)
Net increase in loans (105,074) (133,281)
Proceeds from sales of foreclosed property 3,614 2,796
Purchases of premises and equipment (4,153) (13,025)
Proceeds from sales of premises and equipment 756 103
Purchase of financial organization,
net of cash received (2,412) -
-------- --------
NET CASH USED IN INVESTING ACTIVITIES (342,487) (83,817)
FINANCING ACTIVITIES
Net increase in deposits 4,065 180,178
Cash dividends (12,481) (11,062)
Increase (decrease) in federal funds purchased 66,160 (112,630)
Increase (decrease) in repurchase agreements 150,217 (29,568)
Net increase in other short-term borrowings 10,501 -
Proceeds from long-term debt 25,000 -
Payments of long-term debt (4) -
Purchase of treasury stock (12,952) -
Other 2,981 2,701
-------- --------
NET CASH PROVIDED BY FINANCING ACTIVITIES 233,487 29,619
-------- --------
DECREASE IN CASH AND CASH EQUIVALENTS (65,653) (21,773)
Cash and cash equivalents at beginning of period 222,213 281,930
-------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $156,560 $260,157
======== ========
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 condition 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.
NOTE E--CAPITAL
In January, 1995, Magna announced a common stock repurchase program
authorizing the repurchase of up to 5% of its outstanding shares of common
stock or 1.4 million shares. During the second quarter of 1996, Magna
repurchased 550,000 shares.
6
<PAGE> 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
- ----------------------------------------------------------
CONDITION AND RESULTS OF OPERATIONS
- -----------------------------------
OVERVIEW
Net income for the second quarter of 1996 was $15.9 million, or 55
cents per common share, compared with $12.4 million, or 45 cents per share,
for the second quarter of 1995. For the first six months of 1996, net income
was $30.2 million, or $1.06 per common share, compared with $24.0 million, or
87 cents per share, in 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 periods presented.
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
June 30 Change
----------------------- ---------------------
1996 1995 Amount Percent
------- ------- -------- -------
<S> <C> <C> <C> <C>
Total interest income
(fully tax-equivalent) $98,218 $86,277 $11,941 13.8%
Total interest expense 47,662 39,736 7,926 19.9
------- ------- -------
Net interest income 50,556 46,541 4,015 8.6
Provision for loan losses 2,799 2,262 537 23.7
Noninterest income:
Service charges on deposits 5,993 5,653 340 6.0
Trust 2,382 2,244 138 6.1
Other 4,180 3,929 251 6.4
------- ------- -------
12,555 11,826 729 6.2
Securities gains, net 17 297 (280) (94.3)
------- ------- -------
Total 12,572 12,123 449 3.7
------- ------- -------
Noninterest expense:
Employee compensation and
other benefits 17,269 18,078 (809) (4.5)
Net occupancy 4,512 4,933 (421) (8.5)
Equipment 2,223 2,160 63 2.9
FDIC insurance premiums 51 2,059 (2,008) (97.5)
Other 10,725 10,916 (191) (1.7)
------- ------- -------
Total 34,780 38,146 (3,366) (8.8)
------- ------- -------
Income before income taxes 25,549 18,256 7,293 39.9
Less: tax-equivalent adjustment 1,274 1,251 23 1.8
Income tax expense 8,416 4,606 3,810 82.7
------- ------- -------
Net income $15,859 $12,399 $ 3,460 27.9
======= ======= =======
7
<PAGE> 8
<CAPTION>
Six Months Ended
June 30 Change
------------------------ --------------------
1996 1995 Amount Percent
-------- --------- -------- -------
<S> <C> <C> <C> <C>
Total interest income
(fully tax-equivalent) $192,210 $169,769 $22,441 13.2%
Total interest expense 93,305 76,313 16,992 22.3
-------- -------- -------
Net interest income 98,905 93,456 5,449 5.8
Provision for loan losses 5,282 3,929 1,353 34.4
Noninterest income:
Service charges on deposits 11,539 11,114 425 3.8
Trust 4,746 4,563 183 4.0
Other 7,819 7,164 655 9.1
-------- -------- -------
24,104 22,841 1,263 5.5
Securities gains, net 690 363 327 90.1
-------- -------- -------
Total 24,794 23,204 1,590 6.9
-------- -------- -------
Noninterest expense:
Employee compensation and
other benefits 34,889 36,661 (1,772) (4.8)
Net occupancy 8,985 8,905 80 .9
Equipment 4,473 4,362 111 2.5
FDIC insurance premiums 83 4,117 (4,034) (98.0)
Other 21,224 21,390 (166) (.8)
-------- -------- -------
Total 69,654 75,435 (5,781) (7.7)
-------- -------- -------
Income before income taxes 48,763 37,296 11,467 30.7
Less: tax-equivalent adjustment 2,498 2,480 18 .7
Income tax expense 16,063 10,782 5,281 49.0
-------- -------- -------
Net income $ 30,202 $ 24,034 $ 6,168 25.7
======== ======== =======
</TABLE>
The following paragraphs discuss more fully significant changes and
trends as they relate to Magna's results of operations during the three month
and six month periods ended June 30, 1996 and its financial condition, asset
quality, capital resources and liquidity as of June 30, 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 8.6% for the second quarter
of 1996 compared with 1995 and increased 5.8% for the first six months of
1996 compared with the same period in 1995. The increases primarily resulted
from an increase in the volume of earning assets offset by a reduced net
interest margin. Tax-equivalent net interest income also was positively
impacted in 1996 by the effect of the acquisition consummated during the
first quarter.
The net interest margin was 4.09% for the second quarter of 1996, which
was stable when compared to the first quarter of 1996, but below 4.36% for
the second quarter of 1995. The net interest margin for the first six months
of 1996 was 4.09% compared with 4.45% for the six months of 1995. The
decline during the 1996 periods compared to the 1995 periods occurred as the
yield on earning assets
8
<PAGE> 9
declined while the cost of funds increased. The decline in the yield on
earning assets was principally associated with an overall decline in rates
earned on Magna's investment 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. In
addition, during the first six months of 1996, when compared to the first six
months of 1995, Magna experienced a shift in the deposit mix as customers
favored the higher yielding time deposits.
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 1996 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."
NONINTEREST INCOME
Total noninterest income was $12.6 million for the second quarter of 1996
compared with $12.1 million for the second quarter of 1995. Noninterest
income for the first six months of 1996 was $24.8 million compared with $23.2
million for the same period of 1995. Increased levels of trust income and
brokerage and insurance-related income were recorded during the 1996 periods
compared with 1995. In addition, increased levels of fee income from
non-sufficient fund items and fees associated with Magna's corporate cash
management product contributed to the increases in service charges on deposit
accounts for the periods compared.
For the second quarter of 1996, noninterest income as a percentage of
average assets, on an annualized basis, was .96% compared with 1.05% for the
second quarter of 1995.
NONINTEREST EXPENSE
Total noninterest expense was $34.8 million for the second quarter of 1996
compared with $38.1 million for the second quarter of 1995. For the first
six months of 1996, total noninterest expense was $69.7 million compared with
$75.4 million for the same period of 1995.
The decrease in employee compensation and other benefits for the 1996
periods 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, severance costs
and compensation and benefits attributable to the consummated acquisition.
The decrease in net occupancy expense during the second quarter of 1996
compared to the second quarter of 1995 was primarily attributable to a
reduction in moving and relocation expenses. During the second
9
<PAGE> 10
quarter of 1995, a new operations center was placed in service. At that time,
moving and relocation costs were incurred as a significant number of
back-office functions, previously housed in separate offices, were relocated
to this center. 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 second quarter of
1996 compared to the second quarter of 1995 and a $4.0 million decrease for
the six month periods compared.
For the second quarter of 1996, noninterest expense as a percentage of
average assets, on an annualized basis, was 2.65% compared with 3.31% for the
second quarter of 1995.
Magna recorded income tax expense of $8.4 million for the second quarter
of 1996 compared with $4.6 million for the second quarter of 1995. For the
first six months of 1996, income tax expense was $16.1 million compared with
$10.8 million for the same period of 1995. During the second quarter of
1995, Magna recorded a $.9 million non-recurring benefit. This benefit
resulted from the elimination of valuation allowances on certain federal and
state net operating loss carryforwards which management believed to be, more
likely than not, realizable.
The effective income tax rate was 34.7% and 27.1% for the second quarter
of 1996 and 1995, respectively. The effective income tax rate was 34.7% and
31.0% for the first six months of 1996 and 1995, respectively. Excluding the
effects of the non-recurring tax benefit, the increase in the effective tax
rate for the periods compared primarily resulted from generally higher levels
of earnings coupled with reduced levels of tax-exempt interest as a
percentage of total interest income.
FINANCIAL CONDITION
GENERAL
Certain components of Magna's consolidated balance sheet at June 30, 1996
compared with December 31, 1995 are presented in summary form in Table 2
below.
<TABLE>
TABLE 2 -- Selected Comparative Balance Sheet Items
(In thousands)
<CAPTION>
Change
June 30 December 31 -------------------
1996 1995 Amount Percent
---------- ---------- -------- -------
<S> <C> <C> <C> <C>
Total assets . . . . . . . . . $5,350,174 $4,947,499 $402,675 8.1%
Loans, net of unearned income . 3,349,283 3,202,766 146,517 4.6
Investments . . . . . . . . . . 1,664,798 1,364,864 299,934 22.0
Deposits . . . . . . . . . . . 4,028,161 3,888,266 139,895 3.6
Federal funds purchased . . . . 107,950 41,790 66,160 158.3
Repurchase agreements:
Cash management . . . . . . . 416,390 294,328 122,062 41.5
Other . . . . . . . . . . . . 103,504 74,533 28,971 38.9
Other short-term borrowings . . 84,924 50,000 34,924 69.8
Long-term debt . . . . . . . . 94,327 93,071 1,256 1.3
</TABLE>
10
<PAGE> 11
LOANS
Loans, net of unearned income, increased 4.6%, or $146.5 million, from
year-end 1995 to June 30, 1996. A portion of this increase was derived from
the consummated acquisition. In addition to acquired loans, Magna also has
experienced steady growth in its commercial, financial and agricultural,
commercial real estate and real estate construction categories.
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.
<TABLE>
TABLE 3 -- Loan Portfolio Composition
(In thousands)
<CAPTION>
June 30 December 31 June 30
1996 1995 1995
--------------- --------------- ---------------
Commercial borrowers: Amount Percent Amount Percent Amount Percent
- --------------------- ------ ------- ------ ------- ------ -------
<S> <C> <C> <C> <C> <C> <C>
Commercial, financial
and agricultural $ 618,747 18.5% $ 593,664 18.5% $ 558,721 18.1%
Commercial real estate 1,091,394 32.6 996,464 31.1 947,396 30.6
Real estate
construction 181,686 5.4 156,978 4.9 148,969 4.8
---------- ----- ---------- ----- ---------- -----
Total commercial 1,891,827 56.5 1,747,106 54.5 1,655,086 53.5
---------- ----- ---------- ----- ---------- -----
Consumer borrowers:
- -------------------
1-4 family residential
real estate 928,669 27.7 934,826 29.2 917,258 29.7
Other consumer loans,
net of unearned income 528,787 15.8 520,834 16.3 520,060 16.8
---------- ----- ---------- ----- ---------- -----
Total consumer 1,457,456 43.5 1,455,660 45.5 1,437,318 46.5
---------- ----- ---------- ----- ---------- -----
Total loans, net of
unearned income $3,349,283 100.0% $3,202,766 100.0% $3,092,404 100.0%
========== ===== ========== ===== ========== =====
</TABLE>
INVESTMENTS
Total investments increased 22.0%, or $299.9 million, at June 30, 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 primarily from the consummated
acquisition and growth associated with increased cash management account
balances.
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
June 30 December 31 -----------------
1996 1995 Amount Percent
---------- ----------- -------- -------
<S> <C> <C> <C> <C>
Held-to-maturity securities . . $ 142,410 $ 126,248 $ 16,162 12.8%
Available-for-sale securities. . 1,522,388 1,238,616 283,772 22.9
---------- ---------- --------
Total investments . . . . . . $1,664,798 $1,364,864 $299,934 22.0
========== ========== ========
</TABLE>
11
<PAGE> 12
DEPOSITS
Total deposits increased $139.9 million to $4.0 billion at June 30, 1996
from year-end 1995. The majority of this increase was derived from the
acquisition consummated during the first quarter of 1996. Excluding the
effects of the acquisition, interest bearing deposits, particularly time
deposits, increased from year-end 1995. This increase was partially offset
by a decrease in noninterest bearing deposits. The decrease in noninterest
bearing deposits was due to seasonal factors which generally increase
deposits at the end of a calendar year coupled with a shift towards higher
yielding time deposits. More aggressive sales efforts also contributed to
the increase in interest bearing deposits, primarily time deposits.
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>
June 30 December 31
1996 1995 Change
------------------- ---------------- ----------------
Amount Percent Amount Percent Amount Percent
------ ------- ------ ------- ------ -------
<S> <C> <C> <C> <C> <C> <C>
Noninterest bearing $ 521,083 12.9% $ 570,262 14.7% $(49,179) (8.6)%
NOW and other
transaction accounts 523,080 13.0 496,590 12.8 26,490 5.3
Savings and market
rate deposits 832,852 20.7 794,423 20.4 38,429 4.8
Time deposits less than
$100,000 1,745,442 43.3 1,674,305 43.0 71,137 4.2
Time deposits $100,000
or more 405,704 10.1 352,686 9.1 53,018 15.0
---------- ----- ---------- ----- --------
Total deposits $4,028,161 100.0% $3,888,266 100.0% $139,895 3.6
========== ===== ========== ===== ========
</TABLE>
FEDERAL FUNDS PURCHASED AND REPURCHASE AGREEMENTS
Federal funds purchased and repurchase agreements increased $217.2
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 $34.9 million at
June 30, 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 $11.4 million borrowing in the form of a treasury tax and
loan
12
<PAGE> 13
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.
ASSET QUALITY
Magna's asset quality management program includes the establishment of
investment and credit policies, the continued evaluation of the quality and
trends of material assets and the prompt implementation of appropriate
actions in view of the results of such evaluation. The objective of Magna's
asset quality management program, particularly with regard to loans, is to
reduce the risk of non-collection, which is a significant risk faced by a
financial institution.
Management continues to monitor the asset quality of the loan portfolio,
promptly following up on problem credits and implementing workout strategies
to manage the level of nonperforming assets. These workout strategies, which
include intensified collection efforts on potential 90-day past due credits,
negotiated settlements and third-party refinancings, resulted in a decline in
nonperforming loans of 7.9%, or $2.4 million, from year-end 1995 to June 30,
1996. Charge-offs associated with certain nonaccrual loans also impacted the
nonperforming loan reduction. At June 30, 1996, nonperforming assets totaled
$31.7 million, or .59% of total assets, compared with nonperforming assets at
year-end 1995 of $35.8 million, or .72% of total assets. The $1.7 million
reduction in foreclosed property from year-end 1995 to June 30, 1996 was a
major contributing factor to the improvement in the nonperforming assets to
total asset ratio. Magna does not anticipate any significant losses on the
disposition of other real estate owned at June 30, 1996.
Net charge-offs for the first six months of 1996 totaled $4.3 million and
reflects a 6.9%, or $.3 million, decline from the comparable period of 1995.
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.
Table 6 sets forth a summary of Magna's loan portfolio mix and
nonperforming assets.
13
<PAGE> 14
<TABLE>
TABLE 6 - Loan Portfolio Mix and Nonperforming Assets
(In thousands)
<CAPTION>
June 30, 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 $ 618,747 $ 6,757 $ 593,664 $ 7,197
Commercial real estate 1,091,394 7,885 996,464 8,294
Real estate construction 181,686 1,450 156,978 1,979
---------- ------- ---------- -------
Total commercial 1,891,827 16,092 1,747,106 17,470
Consumer borrowers:
- -------------------
1-4 family residential
real estate 928,669 10,236 934,826 10,914
Other consumer loans, net
of unearned income 528,787 2,044 520,834 2,436
---------- ------- ---------- -------
Total consumer 1,457,456 12,280 1,455,660 13,350
---------- ------- ---------- -------
Total loans, net of
unearned income 3,349,283 28,372 3,202,766 30,820
Foreclosed property 3,280 3,280 5,009 5,009
---------- ------- ---------- -------
Total $3,352,563 $31,652 $3,207,775 $35,829
========== ======= ========== =======
Nonaccrual loans $21,195 $24,564
Loans past due 90 days or more 7,129 6,198
Restructured loans 48 58
------- -------
Total nonperforming loans 28,372 30,820
Foreclosed property 3,280 5,009
------- -------
Total nonperforming assets $31,652 $35,829
======= =======
Nonperforming loans to
total loans .85% .96%
Nonperforming assets to total
loans and foreclosed property .94 1.12
</TABLE>
Table 7 presents information pertaining to the activity in and an
analysis of Magna's reserve for loan losses for the periods presented.
14
<PAGE> 15
<TABLE>
TABLE 7 - Reserve For Loan Losses
(In thousands)
<CAPTION>
Three Months Ended Six Months Ended
June 30 June 30
------------------ ----------------
1996 1995 1996 1995
------- ------- ------- -------
<S> <C> <C> <C> <C>
Balance at beginning of period . . . . . . $43,905 $43,748 $42,623 $43,991
Reserves of acquired institutions . . . . . - - 890 -
Loans charged off:
Commercial borrowers:
Commercial, financial and agricultural . (1,180) (1,190) (2,553) (2,093)
Commercial real estate . . . . . . . . . (308) (759) (839) (2,089)
Real estate construction . . . . . . . . (210) (47) (272) (47)
------- ------- ------- -------
Total commercial . . . . . . . . . . . (1,698) (1,996) (3,664) (4,229)
Consumer borrowers:
1-4 family residential real estate . . . (413) (690) (692) (901)
Other consumer loans . . . . . . . . . . (1,343) (1,198) (2,520) (2,025)
------- ------- ------- -------
Total consumer . . . . . . . . . . . . (1,756) (1,888) (3,212) (2,926)
------- ------- ------- -------
Total charge-offs . . . . . . . . . (3,454) (3,884) (6,876) (7,155)
------- ------- ------- -------
Recoveries of loans previously charged off:
Commercial borrowers:
Commercial, financial and agricultural . 634 600 1,405 1,063
Commercial real estate . . . . . . . . . 189 245 288 698
Real estate construction . . . . . . . . 3 2 17 50
------- ------- ------- -------
Total commercial . . . . . . . . . . . 826 847 1,710 1,811
Consumer borrowers:
1-4 family residential real estate . . . 106 22 232 155
Other consumer loans . . . . . . . . . . 282 275 603 539
------- ------- ------- -------
Total consumer . . . . . . . . . . . . 388 297 835 694
------- ------- ------- -------
Total recoveries . . . . . . . . . . 1,214 1,144 2,545 2,505
------- ------- ------- -------
Net loans charged off . . . . . . . . . . . (2,240) (2,740) (4,331) (4,650)
------- ------- ------- -------
Provision for loan losses charged
to operations . . . . . . . . . . . . . . 2,799 2,262 5,282 3,929
------- ------- ------- -------
Balance at end of period . . . . . . . . . $44,464 $43,270 $44,464 $43,270
======= ======= ======= =======
Net loan charge-offs (annualized) to
average loans . . . . . . . . . . . . . . .27% .36% .27% .31%
Reserve for loan losses to total loans . . 1.33 1.40 1.33 1.40
Reserve for loan losses to
nonperforming loans . . . . . . . . . . . 156.72 111.95 156.72 111.95
</TABLE>
15
<PAGE> 16
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 June 30, 1996, Magna's
Tier 1 and Total Capital ratios were 12.60% and 13.81%, 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
June 30, 1996 was 8.16%.
In January, 1995, Magna announced a common stock repurchase program
authorizing the repurchase of up to 5% of its outstanding shares of common
stock or 1.4 million shares. During the second quarter of 1996, Magna
repurchased 550,000 shares.
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 $171 million at June 30, 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.
16
<PAGE> 17
PART II - OTHER INFORMATION
- ---------------------------
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
- -----------------------------------------
(a) Exhibits: See Exhibit Index on page 19 hereof.
(b) Reports on Form 8-K: No reports on Form 8-K were filed by Magna
during the second quarter of 1996.
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: August 9, 1996 By: /s/ G. Thomas Andes
- -------------------------------- --------------------------------------
G. Thomas Andes
Chairman of the Board and
Chief Executive Officer
DATE: August 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
<TABLE>
EXHIBIT INDEX
-------------
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------
<C> <S>
10.1 Amended and restated employment agreement
between Magna Group, Inc. and G. Thomas Andes
effective January 1, 1995, and amended
and restated June 6, 1996.
11.1 Computation of Net Income Per Common
Share, filed herewith.
27.1 Financial Data Schedule, filed herewith.
</TABLE>
19
<PAGE> 1
MAGNA GROUP, INC.
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
This agreement ("Agreement") has been entered into
effective the 1st day of January, 1995, and amended and restated
the 6th day of June , 1996, by and between Magna
-------- ---------------
Group, Inc., a Delaware corporation ("Company"), and G. Thomas
Andes, 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
shareholders to reinforce and encourage the continued attention and
dedication of the Executive to the Company as a member of the
Company's management 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 himself 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) "CASH COMPENSATION" means the Executive's
Annual Base Salary (as defined in Section
2.4(a)) plus the Incentive Bonus (as
defined in Section 2.4(b)) anticipated to
be awarded to the Executive in any given
year.
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 "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
<PAGE> 2
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 are
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 seventy percent (70%) 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) "EMPLOYMENT PERIOD" means the period
beginning on the Effective Date and
ending on December 31, 1999.
1.1(h) "EFFECTIVE DATE" shall mean January 1,
1995.
1.1(i) "EXCHANGE ACT" means the Securities
Exchange Act of 1934, as amended.
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 close of business on
December 31, 1999, or (ii) the Date of
Termination as defined in Section 3.6.
-2-
<PAGE> 3
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 PERIOD OF EMPLOYMENT. Throughout the Term of this
Agreement, the Executive shall remain in the employ of the Company
in accordance with the terms and provisions of this Agreement.
2.2 POSITIONS AND DUTIES.
2.2(a) Throughout the Term of this Agreement, 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 on the Effective Date of
this Agreement.
2.2(b) Throughout the Term of this Agreement (but
excluding any periods of vacation and sick leave to
which he 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 his reasonable best efforts to perform
faithfully and efficiently such responsibilities as are
assigned to him 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 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 on the Effective Date.
2.3 SITUS OF EMPLOYMENT. Throughout the Term of this
Agreement, the Executive's services shall be performed at the
location where the Executive was employed on the Effective Date, or
any office which is the headquarters of the Company and is located
in the greater St. Louis area.
2.4 COMPENSATION. The Executive's annual Compensation
and other benefits described in this Section 2.4, shall be provided
by the Company.
2.4(a) ANNUAL BASE SALARY. For the first
calendar year within the Term of this Agreement, the
Executive shall receive an annual base salary of three
hundred and seventy-five thousand dollars
($375,000.00), which shall be paid in equal or
substantially equal monthly installments. During the
Term of this Agreement, 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.
-3-
<PAGE> 4
"Annual Base Salary" as used herein shall mean the
annual base salary for a then current year.
2.4(b) INCENTIVE BONUSES. In addition to Annual
Base Salary, the Executive shall be entitled to
participate in any incentive bonuses ("Incentive
Bonuses") provided through any incentive compensation
plan, which is generally available to other peer
executives of the Company. To the extent any incentive
bonus is paid in shares of restricted stock, there
shall be included in Cash Compensation 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.
To the extent any incentive bonus is calculated for a
year in which the bonus has not been paid, such amount
shall be the highest amount that would be paid assuming
a) The Company performance was at or above the level
permitting the maximum award, b) the individual
performance was at or above the level permitting the
maximum award and c) any discretionary award was made
at the maximum level.
2.4(c) INCENTIVE, SAVINGS AND RETIREMENT PLANS.
Throughout the Term of this Agreement, the Executive
shall be entitled to participate in all incentive,
savings and retirement plans generally available to
other peer executives of the Company.
2.4(d) WELFARE BENEFIT PLANS. Throughout the
Term of this Agreement (and thereafter, subject to
Section 4.1(c) hereof), the Executive and/or the
Executive's family, as the case may be, shall be
eligible for participation in and shall receive all
benefits under welfare benefit plans, practices,
policies and programs provided by the Company
(including, without limitation, medical, prescription,
dental, disability, salary continuance, employee life,
group life, accidental death and travel accident
insurance plans and programs) to the extent generally
available to other peer executives of the Company.
2.4(e) EXPENSES. Throughout the Term of this
Agreement, the Executive shall be entitled to receive
prompt reimbursement for all reasonable expenses
incurred by the Executive in accordance with the most
favorable policies, practices and procedures generally
applicable to other peer executives of the Company.
2.4(f) FRINGE BENEFITS. Throughout the Term of
this Agreement, the Executive shall be entitled to such
fringe benefits as generally are provided to other peer
executives of the Company.
2.4(g) OFFICE AND SUPPORT STAFF. Throughout the
Term of this Agreement, the Executive shall be entitled
to an office or offices of a size and with furnishings
and other appointments, and to exclusive personal
secretarial and other assistance, at least equal to
those generally provided to other peer executives of
the Company.
2.4(h) VACATION. Throughout the Term of this
Agreement, the Executive shall be entitled to paid
vacation in accordance with the most favorable plans,
policies, programs and practices generally provided
with respect to other peer executives of the Company.
SECTION 3: TERMINATION OF EMPLOYMENT.
-4-
<PAGE> 5
3.1 DEATH. The Executive's employment shall
terminate automatically upon the Executive's death during the
Employment Period.
3.2 DISABILITY. If the Company determines in good
faith that the Disability of the Executive has occurred during the
Employment Period (pursuant to the definition of Disability set
forth below), it may give to the Executive written notice in
accordance with Section 7.1 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 examinations and tests as such
physician deems necessary to make any such Disability
determination.
3.3 TERMINATION FOR CAUSE. The Company may terminate
the Executive's employment during the Employment Period for
"Cause," which shall mean termination based upon: (i) the
Executive's willful and continued failure to perform substantially
his 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 him by the Chairman of the
Compensation Committee of the Board, which specifically identifies
the manner in which the Executive has not substantially performed
his 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 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) he receives a Notice of Termination (as
defined in Section 3.5) from the Chairman of the Compensation
Committee of the Board, (ii) he is given the opportunity, with
counsel, to be heard before the Board, and (iii) the Board finds,
in its good faith opinion, that the Executive was guilty of the
conduct set forth in the Notice of Termination.
3.4 GOOD REASON. The Executive may terminate his
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 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) (a) 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 as specified in Section 2.4, (b)
the taking of any action by the Company which would
adversely affect the Executive's participation in, or
materially
-5-
<PAGE> 6
reduce the Executive's benefits under, any plans
described in Section 2.4, or deprive the Executive
of any material fringe benefit enjoyed by the
Executive as described in Section 2.4(f), or (c)
the failure by the Company to provide the Executive
with the number of paid vacation days to which the
Executive is entitled as described in Section 2.4(h).
(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 his sole and absolute
discretion, determines and notifies the Company in
writing, that he does not wish to continue his
employment with the Company.
For purposes of this Section any good faith determination of "Good
Reason" made by the Executive shall be conclusive.
3.5 NOTICE OF TERMINATION. Any termination by the
Company for Cause or Disability, or by the Executive for Good
Reason, shall be communicated by Notice of Termination to the other
party, given in accordance with Section 7.1. 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.
3.6 DATE OF TERMINATION. "Date of Termination" means
(i) if the Executive's employment is terminated by the Company for
Cause, 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, (ii) if the Executive's employment is terminated by
him for Good Reason as provided in Section 3.4 hereof, the Date of
Termination shall be the date on which the Executive receives
benefits under Section 4.2 hereof, (iii) 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, or (iv) if the
Executive's employment is terminated by the Company other than for
Cause, death, or Disability, the Date of Termination shall be the
date of receipt of the Notice of Termination; provided that if
within thirty (30) days after any Notice of Termination is given,
the party receiving such Notice of Termination
-6-
<PAGE> 7
notifies the other party that a dispute exists concerning the termination, the
Date of Termination shall be the date on which the dispute is finally
determined, either by mutual written agreement of the parties, or
by a final judgment, order or decree of a court of competent
jurisdiction (the time for appeal therefrom having expired and no
appeal having been perfected).
SECTION 4: CERTAIN BENEFITS UPON TERMINATION.
4.1 TERMINATION WITHOUT CAUSE OR FOR GOOD REASON
PRIOR TO A CHANGE IN CONTROL. If, prior to a Change in Control,
during the Employment Period: (i) the Company shall terminate the
Executive's employment without Cause, or (ii) the Executive shall
terminate employment with the Company for Good Reason, the
Executive shall be entitled to the benefits provided below:
4.1(a) "Accrued Obligations": On the fifth
(5th) business day following the Date of Termination,
the Company shall pay to the Executive the sum of (1)
the Executive's Annual Base Salary through the Date of
Termination to the extent not previously paid, (2) any
compensation previously deferred by the Executive
(together with any accrued interest or earnings
thereon), (3) any accrued vacation pay; in each case
to the extent not previously paid, and in the event of
a termination pursuant to Section 4.1, 4.2, 4.3 or 4.4
hereof (and excluding any termination pursuant to
Section 4.5) part or all of the Incentive Bonus for
the year in which the Date of Termination occurs based
on a fraction of the number of whole or part months of
the year through the Date of Termination divided by
twelve.
4.1(b) "Annual Base Salary Continuation": For
the remainder of the Employment Period, the Company
shall pay to the Executive, the Executive's then-
current Annual Base Salary as would have been paid to
the Executive had the Executive remained in the
Company's employ throughout the Employment Period.
The Company at any time may elect to pay the balance
of such payments then remaining in a lump sum, in
which case the total of such payments shall be
discounted to present value as determined according to
Code Section 280G(d)(4).
4.1(c) "Welfare Benefit Continuation": For the
remainder of the Employment Period, or such longer
period as any plan, program, practice or policy may
provide, the Company shall continue benefits to the
Executive and/or the Executive's family at least equal
to those which would have been provided to them in
accordance with the plans, programs, practices and
policies described in Section 2.4(d) if the
Executive's employment had not been terminated, in
accordance with the most favorable plans, practices,
programs or policies 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 at any time
after the Effective Date to other peer executives of
the Company and their families; provided, however,
that if the Executive becomes reemployed with another
employer and is eligible to receive medical or other
welfare benefits under another employer-provided plan,
the medical and other welfare benefits described
herein shall be secondary to those provided under such
other plan during such applicable period of
eligibility. For purposes of determining eligibility
of the Executive for retiree benefits pursuant to such
plans, practices, programs and policies, the Executive
shall be considered to have remained employed until
the end of the Employment Period and to have retired
on the last day of such period.
-7-
<PAGE> 8
4.1(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.
The Executive shall not be required to mitigate
the amount of any payment provided for in this Section
by seeking other employment or otherwise, nor shall
the amount of any payment provided for in this Section
be reduced by any compensation earned by the Executive
as the result of employment by another employer after
the Date of Termination, or otherwise.
4.2 BENEFITS UPON TERMINATION AFTER A CHANGE IN
CONTROL. If a Change in Control occurs during the Employment Period
and within two (2) years after a 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 fifth
(5th) business day following the Date of Termination,
the Company shall pay to the Executive the sum of (1)
the Executive's Annual Base Salary through the Date of
Termination to the extent not previously paid, (2) any
compensation previously deferred by the Executive
(together with any accrued interest or earnings
thereon) and (3) any accrued vacation pay; in each
case to the extent not previously paid. No amount
shall be paid as Annual Base Salary for any period
following the Date of Termination.
4.2(b) "Severance Amount": On the fifth (5th)
business day following the Date of Termination, the
Company shall pay to the Executive as severance pay in
a lump sum, in cash, an amount equal to 2.99 times his
Cash Compensation for the most recent calendar year in
which occurs the Date of Termination.
4.2(c) "Other Benefits": To the extent not
previously paid or provided, and for a period ending
on the third anniversary of the Date of Termination,
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 applicable to the
Executive and for his family as well 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(d) "Certain Additional Payments by the
Company":
-8-
<PAGE> 9
(i) Anything in this Agreement to the
contrary notwithstanding, in the event (A) it
shall be determined that any payment or
distribution by the Company to or for the
benefit of the Executive (whether paid or
payable or distributed or distributable pursuant
to the terms of this Agreement or otherwise) (a
"Payment") would be subject to the excise tax
imposed by Code Section 4999, or (B) any
interest or penalties are incurred by the
Executive with respect to such excise tax (such
excise tax, together with any interest and
penalties, are hereinafter collectively referred
to as the "Excise Tax"), then the Executive
shall be entitled to receive an additional
payment (a "Gross-Up Payment") in an amount
equal to the Excise Tax imposed on the Payment
and on the Gross-Up Payment as well as any
additional income tax, employment tax and Excise
Tax payable with respect to such additional
payment (including any interest or penalties
imposed with respect to such excise tax). The
Gross-Up Payment shall not include any amount
for the payment of any income or employment
taxes imposed on the Payment, but shall include
any income or employment taxes payable with
respect to any Gross-Up Payment (and any
interest and penalties imposed with respect
thereto).
(ii) Subject to the provisions of
Section 4.2(d)(iii), all determinations required
to be made under this Section, including whether
and when a Gross-Up Payment is required and the
amount of such Gross-Up Payment and the
assumptions to be utilized in arriving at such
determination, shall be made by an independent
accountant which shall provide detailed
supporting calculations both to the Company and
the Executive within fifteen (15) business days
of the receipt of notice from the Executive that
there has been a Payment, or such earlier time
as is requested by the Company. All fees and
expenses of the independent accountant shall be
borne solely by the Company. Any Gross-Up
Payment, as determined pursuant to this Section
4.2(d), shall be paid by the Company to the
Executive within five (5) days of the receipt of
the independent accountant's determination. If
the independent accountant determines that no
Excise Tax is payable by the Executive, it shall
furnish the Executive with a written opinion
that failure to report the Excise Tax on the
Executive's applicable Federal income tax return
would not result in the imposition of a
negligence or similar penalty. Any
determination by the independent accountant
shall be binding upon the Company and the
Executive. As a result of the uncertainty in
the application of Code Section 4999 at the time
of the initial determination by the independent
accountant hereunder, it is possible that
Gross-Up Payments which will not have been made
by the Company should have been made
("Underpayment"), consistent with the
calculations required to be made hereunder. In
the event that the Company exhausts its remedies
pursuant to Section 4.2(d)(iii) and the
Executive thereafter is required to make a
payment of any Excise Tax, the independent
accountant shall determine the amount of the
Underpayment that has occurred and any such
Underpayment, as well as any interest and
penalties imposed thereon, shall be promptly
paid by the Company to or for the benefit of the
Executive.
(iii)The Executive shall notify the
Company in writing of any claim by the Internal
Revenue Service that, if successful, would
require the payment by the Company of the
Gross-Up Payment. Such notification shall be
given as soon as practicable but no later than
ten (10) business days after the Executive is
informed in writing of such claim and shall
apprise the Company of the nature of such claim
and the date on which such claim is requested to
be paid. The Executive shall not pay such claim
prior to the expiration of the thirty (30) day
period following the date on which
-9-
<PAGE> 10
the Executive gives such notice to the Company (or such
shorter period ending on the date that any payment of taxes
with respect to such claim is due). If the Company notifies
the Executive in writing prior to the expiration of such
period that it desires to contest such claim, the Executive
shall:
(a) give the Company any information
reasonably requested by the Company
relating to such claim,
(b) take such action in connection with
contesting such claim as the Company
shall reasonably request in writing from
time to time, including without
limitation, accepting legal
representation with respect to such claim
by an attorney reasonably selected by the
Company,
(c) cooperate with the Company in good
faith in order to effectively contest
such claim, and
(d) permit the Company to participate in
any proceedings relating to such claim;
provided, however, that the Company shall bear
and pay directly all costs and expenses
(including additional interest and penalties)
incurred in connection with such contest and
shall indemnify and hold the Executive harmless,
on an after-tax basis, for any Excise Tax or
income tax (including interest and penalties
with respect thereto) imposed as a result of
such representation and payment of costs and
expenses. Without limitation on the foregoing
provisions of this Section 4.2(d), the Company
shall control all proceedings taken in
connection with such contest and, at its sole
option, may pursue or forego any and all
administrative appeals, proceedings, hearings
and conferences with the taxing authority in
respect of such claim and may, at its sole
option, either direct the Executive to pay the
tax claimed and sue for a refund or contest the
claim in any permissible manner, and the
Executive agrees to prosecute such contest to a
determination before any administrative
tribunal, in a court of initial jurisdiction and
in one or more appellate courts, as the Company
shall determine; provided, however, that if the
Company directs the Executive to pay such claim
and sue for a refund, the Company shall advance
the amount of such payment to the Executive, on
an interest-free basis and shall indemnify and
hold the Executive harmless, on an after-tax
basis, from any Excise Tax or income tax
(including interest or penalties with respect
thereto) imposed with respect to such advance or
with respect to any imputed income with respect
to such advance; and further provided that any
extension of the statute of limitations relating
to payment of taxes for the taxable year of the
Executive with respect to which such contested
amount is claimed to be due is limited solely to
such contested amount. Furthermore, the
Company's control of the contest shall be
limited to issues with respect to which a
Gross-Up Payment would be payable hereunder and
the Executive shall be entitled to settle or
contest, as the case may be, any other issue
raised by the Internal Revenue Service or any
other taxing authority.
(iv) If, after the receipt by the
Executive of an amount advanced by the Company
pursuant to Section 4.2(d)(iii), the Executive
becomes entitled to receive any refund with
respect to such claim, the Executive shall
(subject to the Company's compliance with the
requirements of Section 4.2(d)(iii)) promptly
pay to the Company the amount
-10-
<PAGE> 11
of such refund (together with any interest paid or credited
thereon after taxes applicable thereto). If, after the
receipt by the Executive of an amount advanced by the
Company pursuant to Section 4.2(d)(iii), a determination is
made that the Executive shall not be entitled to any refund
with respect to such claim and the Company does not notify
the Executive in writing of its intent to contest such
denial or refund prior to the expiration of thirty (30) days
after such determination, then such advance shall be
forgiven and shall not be required to be repaid and the
amount of such advance shall offset, to the extent thereof,
the amount of Gross-Up Payment required to be paid.
4.3 DEATH. If the Executive's employment is
terminated by reason of the Executive's death during the Employment
Period (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 (i) payment of Accrued Obligations (as defined in Section
4.1(a)) (which shall be paid to the Executive's estate or
beneficiary, as applicable, in a lump sum in cash within five (5)
days of the Date of Termination) and (ii) the timely payment or
provision of Other Benefits (as defined in Section 4.1(d)),
including death benefits pursuant to the terms of any plan, policy,
or arrangement of the Company.
4.4 DISABILITY. If the Executive's employment is
terminated by reason of the Executive's Disability during the
Employment Period (either prior or subsequent to a Change in
Control), this Agreement shall terminate without further
obligations to the Executive, other than for (i) payment of Accrued
Obligations (as defined in Section 4.1(a)) (which shall be paid to
the Executive in a lump sum in cash within five (5) days of the
Date of Termination) and (ii) the timely payment or provision of
Other Benefits (as defined in Section 4.1(d)) including disability
benefits pursuant to the terms of any plan, policy or arrangement
of the Company.
4.5 TERMINATION FOR CAUSE; OTHER THAN GOOD REASON.
If the Executive's employment shall be terminated for Cause during
the Employment Period (either prior 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(a)).
If the Executive terminates employment with the Company during the
Employment Period, (excluding a termination for Good Reason), this
Agreement shall terminate without further obligations to the
Executive, other than for Accrued Obligations (as defined in
Section 4.1(a)) and the timely payment or provision of Other
Benefits (as defined in Section 4.1(d)). In such case, all Accrued
Obligations shall be paid to the Executive in a lump sum in cash
within thirty (30) days of the Date of Termination. If the
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. Except as provided in
Sections 4.1(c) 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,
-11-
<PAGE> 12
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, except as provided in Sections 4.1(c), such
amounts shall not be reduced whether or not the Executive obtains
other employment. The Company agrees 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 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 4.1 or 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: NON-COMPETITION WITH AND SERVICES FOR THE COMPANY.
5.1 NON-COMPETE AGREEMENT.
5.1(a) It is agreed that either: (i) during the
Term of this Agreement and for a period ending three
(3) years thereafter; or (ii) if the Executive's
employment is terminated during the Term of this
Agreement, then until the date three (3) years after
the date of termination, the Executive shall not,
without prior written approval of the Board, become an
officer, employee, agent, partner, or director of any
business enterprise in substantial direct competition
(as defined in Section 5.1(b)) with the Company.
5.1(b) For purposes of Section 5.1, a business
enterprise with which the Executive becomes associated
as an officer, employee, agent, partner, or director
shall be considered in substantial direct competition,
if such entity competes with the Company in any
business in which the Company is engaged and is within
in the Company's market area (as defined herein) as of
the Date of Termination. The Company's market area is
defined for this purpose, as the area which
constitutes Central and Southern Illinois and the St.
Louis metropolitan area, and if the Company becomes
the successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) after
the Effective Date, to all or substantially all of the
business and/or assets of another business enterprise,
the geographical areas in which such predecessor
business enterprise conducts substantial business
activity.
-12-
<PAGE> 13
5.2 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 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.
5.3 SERVICES FOLLOWING A CHANGE IN CONTROL. If a
Change in Control of the Company shall occur and the Executive
shall receive the payment provided in Section 4.2 hereof, then
following the Date of Termination, and for a period of six months
thereafter, the Executive shall make himself available for no
additional payment other than his reasonable expenses incurred in
the performance of his duties hereunder at such reasonable times
and places as shall be set forth in writing by notice from the
Chief Executive Officer of the Company to him to perform such
reasonable services as may be requested in writing of him. No
services hereunder shall be required on a "full time" basis.
5.4 MODIFICATION. If any court of competent
jurisdiction determines that, consistent with the established
precedent of the forum of jurisdiction, any restriction contained
in Section 5.1 of this Agreement is unenforceable or unreasonable,
a lesser restriction shall be enforced in its place to the maximum
extent deemed enforceable or reasonable, and the remaining
covenants and restrictions shall be enforceable independently of
each other.
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 prior to the effectiveness of any such succession shall
be a breach of this Agreement and shall entitle the Executive to
terminate the Agreement at his 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: MISCELLANEOUS.
7.1 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
-13-
<PAGE> 14
respective addresses as set forth below; provided that all notices to the
Company shall be directed to the attention of the President 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.
Notice to Executive:
-------------------
G. Thomas Andes
409 Lake Christine Drive
Belleville, Illinois 62221
Notice to Company:
-----------------
Magna Group, Inc.
One Magna Place
1401 South Brentwood Blvd.
St. Louis, Missouri 63144-1401
7.3 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.
7.4 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.
7.5 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 3.4 shall not be
deemed to be a waiver of such provision or right or any other
provision or right of this Agreement.
7.6 REPLACEMENT OF PRIOR AGREEMENT. This Agreement
supersedes and replaces the Agreement between the undersigned dated
January 1, 1995.
-14-
<PAGE> 15
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/ G. Thomas Andes
------------------------------------------------
G. Thomas Andes
MAGNA GROUP, INC.
By /s/ Carolyn B. Ryseff
----------------------------------------------
Name: Carolyn B. Ryseff
-------------------------------------------
Title: Senior Vice President and Secretary
------------------------------------------
-15-
<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 Six Months Ended
June 30 June 30
1996 1995 1996 1995
---------- --------- --------- ---------
<S> <C> <C> <C> <C>
Primary
- -------
Average common shares outstanding 28,509 27,683 28,380 27,633
Assumed exercise of employee stock options 117 138 119 124
---------- --------- --------- ---------
Total 28,626 27,821 28,499 27,757
========== ========= ========= =========
Net income $15,859 $12,399 $30,202 $24,034
Less preferred stock dividends:
Class B voting preferred (1) (1) (2) (2)
---------- --------- --------- ---------
Net income $15,858 $12,398 $30,200 $24,032
========== ========= ========= =========
Per common share:
Net income $0.55 $0.45 $1.06 $0.87
========== ========= ========= =========
Fully Diluted<FA>
- -----------------
Average common shares outstanding 28,509 27,683 28,380 27,633
Assumed exercise of employee stock options 130 156 135 168
Assumed conversion of:
7% convertible subordinated capital notes 799 911 809 921
8-3/4% convertible subordinated debentures 694 -- 693 --
---------- --------- --------- ---------
Average common shares and common share
equivalents 30,132 28,750 30,017 28,722
========== ========= ========= =========
Net income $15,859 $12,399 $30,202 $24,034
Less preferred stock dividends:
Class B voting preferred (1) (1) (2) (2)
Elimination of interest net of related tax
effects on:
7% convertible subordinated capital notes 164 200 337 400
8-3/4% convertible subordinated debentures 359 -- 713 --
---------- --------- --------- ---------
Fully diluted net income $16,381 $12,598 $31,250 $24,432
========== ========= ========= =========
Per common share:
Net income $0.54 $0.44<FA> $1.04 $0.85<FA>
========== ========= ========= =========
<FN>
<FA>Inclusion of common share equivalents for the 8-3/4% convertible
subordinated debentures for the three month and six month
periods ended June 30, 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 June 30, 1996, and is qualified in its entirety by
reference to such report.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 139,016
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 17,544
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 1,522,388
<INVESTMENTS-CARRYING> 142,410
<INVESTMENTS-MARKET> 141,767
<LOANS> 3,349,283
<ALLOWANCE> 44,464
<TOTAL-ASSETS> 5,350,174
<DEPOSITS> 4,028,161
<SHORT-TERM> 712,768
<LIABILITIES-OTHER> 63,399
<LONG-TERM> 94,327
0
41
<COMMON> 57,483
<OTHER-SE> 393,995
<TOTAL-LIABILITIES-AND-EQUITY> 5,350,174
<INTEREST-LOAN> 140,392
<INTEREST-INVEST> 48,465
<INTEREST-OTHER> 855
<INTEREST-TOTAL> 189,712
<INTEREST-DEPOSIT> 76,386
<INTEREST-EXPENSE> 93,305
<INTEREST-INCOME-NET> 96,407
<LOAN-LOSSES> 5,282
<SECURITIES-GAINS> 690
<EXPENSE-OTHER> 69,654
<INCOME-PRETAX> 46,265
<INCOME-PRE-EXTRAORDINARY> 46,265
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 30,302
<EPS-PRIMARY> 1.06
<EPS-DILUTED> 1.04
<YIELD-ACTUAL> 4.09
<LOANS-NON> 21,195
<LOANS-PAST> 7,129
<LOANS-TROUBLED> 48
<LOANS-PROBLEM> 0<F1>
<ALLOWANCE-OPEN> 42,623
<CHARGE-OFFS> 6,876
<RECOVERIES> 2,545
<ALLOWANCE-CLOSE> 44,464
<ALLOWANCE-DOMESTIC> 44,464
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0<F1>
<FN>
<F1>Information not currently available; is reported on an annual basis only.
</TABLE>
