MERCANTILE BANCORPORATION INC, S-4, 1995-06-12

MERCANTILE BANCORPORATION INC
S-4, 1995-06-12
NATIONAL COMMERCIAL BANKS

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<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 12, 1995
Registration No. 33------
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------------
FORM S-4
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
--------------------------
MERCANTILE BANCORPORATION INC.
(Exact name of registrant as specified in its charter)
MISSOURI 6712 43-0951744
(State or other jurisdiction (Primary Standard (I.R.S. Employer
of incorporation or Industrial Classification Identification
organization) Code Number) Number)

P.O. Box 524
St. Louis, Missouri 63166-0524
(314) 425-2525
(Address, including ZIP code, and telephone number, including area
code, of registrant's principal executive offices)
--------------------------
W. RANDOLPH ADAMS
Chief Financial Officer
Mercantile Bancorporation Inc.
P.O. Box 524
St. Louis, Missouri 63166-0524
(314) 425-2525
(Name, address, including ZIP code, and telephone number, including
area code, of agent for service)
--------------------------
Copy to:
JON W. BILSTROM, ESQ. ROBERT M. LaROSE, ESQ. O.J. TAYLOR, ESQ.
General Counsel Thompson & Mitchell Taylor, Stafford, Woody,
and Secretary One Mercantile Center Clithero & Fitzgerald
Mercantile Bancorporation St. Louis, Missouri 63101 Glenstone at Sunshine
Inc. (314) 231-7676 Springfield, Missouri
P.O. Box 524 65804
St. Louis, Missouri (417) 887-2020
63166-0524
(314) 425-2525
--------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES TO
THE PUBLIC: As soon as practicable after the effective date of this
Registration Statement.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance
with General Instruction G, check the following box. / /
--------------------------
<TABLE>
CALCULATION OF REGISTRATION FEE
===================================================================================================================================
<CAPTION>
Title of each class of Amount to be Proposed maximum Proposed maximum Amount of
securities to be registered registered offering price per unit aggregate offering price <F2> registration fee
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $5.00 par value <F1> 675,000 N/A $15,500,000 $5,344.87
shares
====================================================================================================================================
<FN>
<F1> Includes one attached Preferred Share Purchase Right per share.

<F2> Estimated solely for purposes of computing the Registration
Fee pursuant to the provisions of Rule 457(f), and based
upon the $15,500,000 aggregate book value of 35,981 shares
of Common Stock, $10.00 par value, of Southwest Bancshares,
Inc. as of May 31, 1995.
</TABLE>

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

The Registrant hereby amends this Registration Statement on such
date or dates as may be necessary to delay its effective date until
the Registrant shall file a further amendment which specifically
states that this Registration Statement shall thereafter become
effective in accordance with Section 8(a) of the Securities Act of
1933 or until the Registration Statement shall become effective on
such date as the Commission, acting pursuant to said Section 8(a),
may determine.
===============================================================================

<PAGE> 2
MERCANTILE BANCORPORATION INC.

<TABLE>
CROSS REFERENCE SHEET FURNISHED PURSUANT TO ITEM 501(b)
OF REGULATION S-K SHOWING HEADING OR LOCATION IN PROSPECTUS
OF INFORMATION REQUIRED BY ITEMS IN PART I OF FORM S-4
-----------------------------------------------------------

<CAPTION>
Form S-4 Item Number and Caption Heading or Location in Prospectus
- -------------------------------- ---------------------------------

<S> <C>
A. Information about the Transaction

1. Forepart of Registration Facing Page; Cross Reference Sheet; Outside
Statement and Outside Front Front Cover Page of Prospectus
Cover Page of Prospectus

2. Inside Front and Outside Back Available Information; Incorporation of
Cover Pages of Prospectus Certain Information by Reference; Table of
Contents

3. Risk Factors, Ratio of Earnings Summary Information; Pro Forma Financial
to Fixed Charges and Other Information
Information

4. Terms of the Transaction Summary Information; Incorporation of
Certain Information by Reference; Terms of
the Proposed Merger; Certain Federal
Income Tax Consequences of the Merger;
Information Regarding MBI Common Stock

5. Pro Forma Financial Pro Forma Financial Information
Information

6. Material Contacts with the Summary Information; Terms of the
Company Being Acquired Proposed Merger

7. Additional Information Required Not Applicable
for Reoffering by Persons and
Parties Deemed to be
Underwriters

8. Interests of Named Experts and Legal Matters
Counsel

9. Disclosure of Commission Not Applicable
Position on Indemnification for
Securities Act Liabilities

- i -
<PAGE> 3

<CAPTION>
Form S-4 Item Number and Caption Heading or Location in Prospectus
- -------------------------------- ---------------------------------

<S> <C>
B. Information About the Registrant

10. Information with Respect to S-3 Incorporation of Certain Information by
Registrants Reference; Summary Information;
Information Regarding MBI Common Stock

11. Incorporation of Certain Incorporation of Certain Information by
Information by Reference Reference

12. Information with Respect to S-2 Not Applicable
or S-3 Registrants

13. Incorporation of Certain Not Applicable
Information by Reference

14. Information with Respect to Not Applicable
Registrants Other Than S-2 or
S-3 Registrants

C. Information About the Company Being Acquired

15. Information with Respect to S-3 Not Applicable
Companies

16. Information with Respect to S-2 Not Applicable
or S-3 Companies

17. Information with Respect to Summary Information; Information
Companies Other Than S-2 or Regarding Southwest
S-3 Companies

D. Voting and Management Information

18. Information if Proxies, Consents Information Regarding Special Meeting;
or Authorizations are to be Incorporation of Certain Information by
Solicited Reference; Rights of Dissenting Shareholders
of Southwest; Information Regarding
Southwest

19. Information if Proxies, Consents Not Applicable
or Authorizations are not to be
Solicited in an Exchange Offer
</TABLE>

- ii -
<PAGE> 4

[SOUTHWEST BANCSHARES, INC.]

--------------------, 1995

Dear Fellow Shareholder:

The Board of Directors cordially invites you to attend a
Special Meeting of Shareholders of Southwest Bancshares, Inc.
("Southwest") to be held at --:00 -.m. Central Time, on
- ------------, ---------------, 1995, at ------------------------,
- -------------------------, Bolivar, Missouri (the "Special
Meeting"). At this important meeting, you will be asked to
consider and vote upon the Agreement and Plan of Merger dated
January 27, 1995 (the "Merger Agreement"), pursuant to which
Southwest will be merged with and into a wholly owned subsidiary of
Mercantile Bancorporation Inc. ("MBI").

I have enclosed the following items relating to the
Special Meeting and the merger:

1. Proxy Statement/Prospectus;

2. Proxy card; and

3. A pre-addressed return envelope to Southwest for
the proxy card.

The Proxy Statement/Prospectus and related proxy materials set
forth, or incorporate by reference, financial data and other
important information relating to Southwest and MBI and describe
the terms and conditions of the proposed merger. The Board of
Directors requests that you carefully review these materials before
completing the enclosed proxy card or attending the Special
Meeting.

THE BOARD OF DIRECTORS OF SOUTHWEST CAREFULLY CONSIDERED
AND APPROVED THE TERMS OF THE MERGER AGREEMENT AS BEING IN THE BEST
INTEREST OF SOUTHWEST AND ITS SHAREHOLDERS. THE SOUTHWEST BOARD
UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE PROPOSAL TO
APPROVE THE MERGER AGREEMENT.

APPROVAL OF THE MERGER AGREEMENT BY THE SOUTHWEST
SHAREHOLDERS IS A CONDITION TO THE CONSUMMATION OF THE MERGER.
Accordingly, it is important that your shares be represented at the
Special Meeting, whether or not you plan to attend the Special
Meeting in person. Please complete, date and sign the enclosed
proxy card and return it to Southwest in the enclosed pre-addressed
envelope, which requires no postage if mailed within the United
States. If you later decide to attend the Special Meeting and vote
in person, or if you wish to revoke your proxy for any reason prior
to the vote at the Special Meeting, you may do so and your proxy
will have no further effect. You may revoke your proxy by
delivering to the Secretary of Southwest a written notice of
revocation or another proxy relating to the same shares bearing a
later date than the proxy being revoked or by attending the Special
Meeting and voting in person. Attendance at the Special Meeting
will not in itself constitute a revocation of an earlier dated
proxy.

If you need assistance in completing your proxy card or
if you have any questions about the Proxy Statement/Prospectus,
please feel free to contact ---------------- at (---) --------.

Sincerely,

Joe F. Rayl
Chairman

<PAGE> 5

SOUTHWEST BANCSHARES, INC.
102 South Springfield Street
Bolivar, Missouri 65613

NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To Be Held
-------------, 1995

TO THE SHAREHOLDERS OF SOUTHWEST BANCSHARES, INC.:

Notice is hereby given that a Special Meeting of
Shareholders of SOUTHWEST BANCSHARES, INC., a Missouri corporation
("Southwest"), will be held at ------------------------,
- -----------------------------, Bolivar, Missouri on -----------,
- --------------, 1995, at --:00 -.m. Central Time, for the following
purposes:

(1) To consider and vote upon the adoption and approval
of the Agreement and Plan of Merger dated January 27, 1995,
pursuant to which Southwest will be merged (the "Merger") with and
into Ameribanc, Inc., a Missouri corporation and wholly owned
subsidiary of Mercantile Bancorporation Inc. ("MBI"), in a
transaction which would result in the business and operations of
Southwest being continued through such wholly owned subsidiary, and
whereby, upon the consummation of the Merger, each share of
Southwest common stock will be converted into the right to receive
18.7599 shares of MBI common stock, as set forth in detail in the
attached Proxy Statement/Prospectus.

(2) To transact such other business as may properly come
before the Special Meeting or any adjournments or postponements
thereof.

The record date for determining the shareholders entitled
to receive notice of, and to vote at, the Special Meeting or any
adjournments or postponements thereof has been fixed as of the
close of business on -----------------, 1995.

WHETHER OR NOT YOU EXPECT TO ATTEND THE SPECIAL MEETING,
PLEASE COMPLETE, DATE AND SIGN THE ENCLOSED PROXY CARD AND RETURN
IT IN THE ACCOMPANYING ENVELOPE. THE PROXY MAY BE REVOKED AT ANY
TIME PRIOR TO THE VOTE AT THE SPECIAL MEETING BY FOLLOWING THE
PROCEDURES SET FORTH IN THE ACCOMPANYING PROXY STATEMENT/
PROSPECTUS.

BY ORDER OF THE BOARD OF DIRECTORS

-----------------------------------
Secretary
Bolivar, Missouri
- -----------, 1995

<PAGE> 6

MERCANTILE BANCORPORATION INC.
PROSPECTUS

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

SOUTHWEST BANCSHARES, INC.
PROXY STATEMENT
SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON ----------------, 1995

This Prospectus of Mercantile Bancorporation Inc. ("MBI")
relates to up to 675,000 shares of Common Stock, $5.00 par value,
and attached Preferred Share Purchase Rights (the "Rights"), of MBI
(the Common Stock and Rights are collectively referred to herein as
the "MBI Common Stock"), to be issued to the shareholders of
Southwest Bancshares, Inc., a Missouri corporation ("Southwest"),
upon consummation of the proposed merger (the "Merger") of
Southwest with and into Ameribanc, Inc., a Missouri corporation
("ABNK") which is a wholly owned subsidiary of MBI. Upon receipt
of the requisite shareholder and regulatory approvals, the Merger
will be consummated pursuant to the terms of the Agreement and Plan
of Merger dated January 27, 1995 (the "Merger Agreement"), by and
among MBI, ABNK and Southwest. This Prospectus also serves as the
Proxy Statement of Southwest for use in connection with the Special
Meeting of Shareholders of Southwest (the "Special Meeting"), which
will be held on ------------------, 1995, at the time and place and
for the purposes stated in the Notice of Special Meeting of
Shareholders accompanying this Proxy Statement/Prospectus.

Pursuant to the Merger, MBI will issue up to an aggregate
of 675,000 shares of MBI Common Stock. Upon consummation of the
Merger, the business and operations of Southwest will be continued
through ABNK and each share of Southwest common stock, $10.00 par
value ("Southwest Common Stock"), will be converted into the right
to receive 18.7599 shares of MBI Common Stock. The fair market
value of MBI Common Stock to be received pursuant to the Merger may
fluctuate and at the consummation of the Merger may be more or less
than the current fair market value of such shares. See "TERMS OF
THE PROPOSED MERGER - General Description of the Merger." No
fractional shares of MBI Common Stock will be issued in the Merger,
but cash will be paid in lieu of such fractional shares. See
"TERMS OF THE PROPOSED MERGER - Fractional Shares."

The transaction is intended to qualify as a
reorganization under the Internal Revenue Code of 1986, as amended
(the "Code"). The Merger generally is intended to achieve certain
tax-deferral benefits for federal income tax purposes for Southwest
shareholders. See "SUMMARY INFORMATION - Federal Income Tax
Consequences in General" and "CERTAIN FEDERAL INCOME TAX
CONSEQUENCES OF THE MERGER."

MBI Common Stock is traded on the New York Stock Exchange
(the "NYSE") under the symbol "MTL." On June 9, 1995 the closing
sale price for MBI Common Stock as reported on the NYSE Composite
Tape was $40.625.

This Proxy Statement/Prospectus, the Notice of Special
Meeting and the form of proxy were first mailed to the shareholders
of Southwest on or about ----------------, 1995.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION (THE "COMMISSION") OR ANY STATE
SECURITIES COMMISSION NOR HAS THE COMMISSION OR ANY STATE
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROXY
STATEMENT/PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

The date of this Proxy Statement/Prospectus is ----------------, 1995.

<PAGE> 7
AVAILABLE INFORMATION
---------------------

MBI is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"),
and, in accordance therewith, files reports, proxy statements and
other information with the Commission. Such reports, proxy
statements and other information filed by MBI with the Commission
can be inspected and copied at the public reference facilities
maintained by the Commission at 450 Fifth Street, N.W., Washington,
D.C. 20549 and at the Commission's regional offices located at
Suite 1300, Seven World Trade Center, New York, New York 10048 and
Room 1400, Northwestern Atrium Center, 500 West Madison Street,
Chicago, Illinois 60661. MBI Common Stock is listed on the NYSE,
and such reports, proxy statements and other information concerning
MBI are available for inspection and copying at the offices of the
NYSE, 20 Broad Street, New York, New York 10005.

This Proxy Statement/Prospectus does not contain all of
the information set forth in the Registration Statement on Form S-4
and exhibits thereto (the "Registration Statement") covering the
securities offered hereby which has been filed by MBI with the
Commission. As permitted by the rules and regulations of the
Commission, this Proxy Statement/Prospectus omits certain
information contained or incorporated by reference in the
Registration Statement. Statements contained in this Proxy
Statement/Prospectus provide a summary of the contents of any
contract or other document referenced herein but are not
necessarily complete and in each instance reference is made to the
copy of such contract or other document filed as an exhibit to the
Registration Statement. For such further information, reference is
made to the Registration Statement.

INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
-------------------------------------------------

THIS PROXY STATEMENT/PROSPECTUS INCORPORATES BY REFERENCE
DOCUMENTS WHICH ARE NOT PRESENTED HEREIN OR DELIVERED HEREWITH.
DOCUMENTS RELATING TO MBI, EXCLUDING EXHIBITS UNLESS SPECIFICALLY
INCORPORATED THEREIN, ARE AVAILABLE, WITHOUT CHARGE, UPON WRITTEN
OR ORAL REQUEST TO JON W. BILSTROM, GENERAL COUNSEL AND SECRETARY,
MERCANTILE BANCORPORATION INC., P.O. BOX 524, ST. LOUIS, MISSOURI
63166-0524, TELEPHONE (314) 425-2525. IN ORDER TO ENSURE TIMELY
DELIVERY OF THE DOCUMENTS, ANY REQUEST SHOULD BE MADE BY
- -----------------, 1995.

The following documents filed with the Commission by MBI
under the Exchange Act are incorporated herein by reference:

(a) MBI's Report on Form 10-K for the year ended
December 31, 1994.

(b) MBI's Report on Form 10-Q for the quarter ended
March 31, 1995.

(d) The description of MBI's Common Stock set forth in
Item 1 of MBI's Registration Statement on Form 8-A,
dated March 5, 1993, and any amendment or report
filed for the purpose of updating such description.

(e) The description of MBI's Preferred Share Purchase
Rights set forth in Item 1 of MBI's Registration
Statement on Form 8-A, dated March 5, 1993, and any
amendment or report filed for the purpose of
updating such description.

- 2 -
<PAGE> 8
All documents filed by MBI pursuant to Sections 13(a),
13(c), 14 and 15(d) of the Exchange Act after the date hereof and
until the date of the Special Meeting shall be deemed to be
incorporated by reference herein and made a part hereof from the
date any such document is filed. The information relating to MBI
contained in this Proxy Statement/Prospectus does not purport to be
complete and should be read together with the information in the
documents incorporated by reference herein. Any statement
contained herein or in a document incorporated herein by reference
shall be deemed to be modified or superseded for purposes hereof to
the extent that a subsequent statement contained herein or in any
other subsequently filed document incorporated by reference herein
modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part hereof.

Any statements contained in this Proxy
Statement/Prospectus involving matters of opinion, whether or not
expressly so stated, are intended as such and not as
representations of fact.

NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR
TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROXY STATEMENT/
PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY
MBI OR SOUTHWEST. THIS PROXY STATEMENT/PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY
ANY SECURITIES OTHER THAN THE SHARES OF MBI COMMON STOCK TO WHICH
IT RELATES OR AN OFFER TO ANY PERSON IN ANY JURISDICTION WHERE SUCH
AN OFFER WOULD BE UNLAWFUL. NEITHER THE DELIVERY OF THIS PROXY
STATEMENT/PROSPECTUS NOR ANY DISTRIBUTION OF SECURITIES PURSUANT
HERETO SHALL IMPLY OR CREATE AN IMPLICATION THAT THERE HAS BEEN NO
CHANGE IN THE AFFAIRS OF MBI OR SOUTHWEST OR ANY OF THEIR
SUBSIDIARIES OR IN THE INFORMATION SET FORTH HEREIN SUBSEQUENT TO
THE DATE HEREOF.

- 3 -
<PAGE> 9
<TABLE>
TABLE OF CONTENTS
<CAPTION>
Page
----
<S> <C>
AVAILABLE INFORMATION. . . . . . . . . . . . . . . . . . . . . . . 2

INCORPORATION OF CERTAIN INFORMATION BY REFERENCE. . . . . . . . . 2

SUMMARY INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . 7
Business of MBI. . . . . . . . . . . . . . . . . . . . . . . 7
Business of ABNK . . . . . . . . . . . . . . . . . . . . . . 8
Business of Southwest. . . . . . . . . . . . . . . . . . . . 8
The Proposed Merger. . . . . . . . . . . . . . . . . . . . . 8
Other Agreements . . . . . . . . . . . . . . . . . . . . . . 9
Interests of Certain Persons in the Merger . . . . . . . . . 9
Special Meeting of Southwest Shareholders. . . . . . . . . . 10
Reasons for the Merger . . . . . . . . . . . . . . . . . . . 10
Fractional Shares. . . . . . . . . . . . . . . . . . . . . . 11
Waiver and Amendment . . . . . . . . . . . . . . . . . . . . 11
Federal Income Tax Consequences in General . . . . . . . . . 11
Regulatory Approval. . . . . . . . . . . . . . . . . . . . . 11
Accounting Treatment . . . . . . . . . . . . . . . . . . . . 12
Dissenters' Rights . . . . . . . . . . . . . . . . . . . . . 12
Markets and Market Prices. . . . . . . . . . . . . . . . . . 12
Comparative Unaudited Per Share Data . . . . . . . . . . . . 13
Summary Financial Data . . . . . . . . . . . . . . . . . . . 14

INFORMATION REGARDING SPECIAL MEETING. . . . . . . . . . . . . . . 17
General. . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Date, Time and Place . . . . . . . . . . . . . . . . . . . . 17
Record Date; Vote Required . . . . . . . . . . . . . . . . . 17
Voting and Revocation of Proxies . . . . . . . . . . . . . . 17
Solicitation of Proxies. . . . . . . . . . . . . . . . . . . 18

TERMS OF THE PROPOSED MERGER . . . . . . . . . . . . . . . . . . . 18
General Description of the Merger. . . . . . . . . . . . . . 19
Other Agreements . . . . . . . . . . . . . . . . . . . . . . 20
Interests of Certain Persons in the Merger . . . . . . . . . 20
Background of and Reasons for the Merger; Board
Recommendations. . . . . . . . . . . . . . . . . . . . . . 20
Conditions of the Merger . . . . . . . . . . . . . . . . . . 22
Termination of the Merger Agreement. . . . . . . . . . . . . 23
Indemnification. . . . . . . . . . . . . . . . . . . . . . . 24
Closing Date . . . . . . . . . . . . . . . . . . . . . . . . 24
Surrender of Southwest Stock Certificates and Receipt of
MBI Common Stock . . . . . . . . . . . . . . . . . . . . . 24
Fractional Shares. . . . . . . . . . . . . . . . . . . . . . 25
Regulatory Approval. . . . . . . . . . . . . . . . . . . . . 25
Business Pending the Merger. . . . . . . . . . . . . . . . . 26
Waiver and Amendment . . . . . . . . . . . . . . . . . . . . 28
Accounting Treatment . . . . . . . . . . . . . . . . . . . . 28

CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER. . . . . . . 29

- 4 -
<PAGE> 10
<CAPTION>
Page
----
<S> <C>
RIGHTS OF DISSENTING SHAREHOLDERS OF SOUTHWEST . . . . . . . . . . 32

PRO FORMA FINANCIAL INFORMATION. . . . . . . . . . . . . . . . . . 33
Comparative Unaudited Per Share Data . . . . . . . . . . . . 33
Pro Forma Combined Consolidated Financial Statements
(Unaudited). . . . . . . . . . . . . . . . . . . . . . . . 34

INFORMATION REGARDING SOUTHWEST. . . . . . . . . . . . . . . . . . 44
Business . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Management's Discussion and Analysis of Financial
Condition. . . . . . . . . . . . . . . . . . . . . . . . . 45
Results of Operation . . . . . . . . . . . . . . . . . . . . 45
Financial Condition, Capital Resources and Liquidity . . . . 48
Impact Of Future Accounting Pronouncements . . . . . . . . . 56
Results Of Operation (First Quarter Comparison). . . . . . . 57
Liquidity And Capital Resources (First Quarter
Comparison). . . . . . . . . . . . . . . . . . . . . . . . 57
Properties . . . . . . . . . . . . . . . . . . . . . . . . . 58
Legal Proceedings. . . . . . . . . . . . . . . . . . . . . . 58
Security Ownership of Certain Beneficial Owners and
Management . . . . . . . . . . . . . . . . . . . . . . . . 59

INFORMATION REGARDING MBI STOCK. . . . . . . . . . . . . . . . . . 60
Description of MBI Common Stock and Attached Preferred
Share Purchase Rights. . . . . . . . . . . . . . . . . . . 60
Restrictions on Resale of MBI Stock by Affiliates. . . . . . 62
Comparison of the Rights of Shareholders of MBI and
Southwest. . . . . . . . . . . . . . . . . . . . . . . . . 62

SUPERVISION AND REGULATION . . . . . . . . . . . . . . . . . . . . 65
General. . . . . . . . . . . . . . . . . . . . . . . . . . . 65
Certain Transactions with Affiliates . . . . . . . . . . . . 65
Payment of Dividends . . . . . . . . . . . . . . . . . . . . 65
Capital Adequacy . . . . . . . . . . . . . . . . . . . . . . 66
FDIC Insurance Assessments . . . . . . . . . . . . . . . . . 67
Support of Subsidiary Banks. . . . . . . . . . . . . . . . . 67
FIRREA and FDICIA. . . . . . . . . . . . . . . . . . . . . . 68
Depositor Preference Statute . . . . . . . . . . . . . . . . 69
The Interstate Banking and Community Development
Legislation. . . . . . . . . . . . . . . . . . . . . . . . 69

RELATIONSHIP WITH INDEPENDENT ACCOUNTANTS. . . . . . . . . . . . . 69

LEGAL MATTERS. . . . . . . . . . . . . . . . . . . . . . . . . . . 70

EXPERTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70

OTHER MATTERS. . . . . . . . . . . . . . . . . . . . . . . . . . . 70

SHAREHOLDER PROPOSALS. . . . . . . . . . . . . . . . . . . . . . . 70

CONSOLIDATED FINANCIAL STATEMENTS. . . . . . . . . . . . . . . . . 71

- 5 -
<PAGE> 11
<CAPTION>
Page
----
<S> <C>
ANNEXES

Annex A --
Dissenters' Rights Provisions of The General and Business
Corporation Law of Missouri. . . . . . . . . . . . . . . . A-1
</TABLE>

- 6 -
<PAGE> 12
SUMMARY INFORMATION
-------------------

The following is a summary of the important terms of the
proposed Merger and related information discussed elsewhere in this
Proxy Statement/Prospectus but does not purport to be complete and
is qualified in its entirety by reference to the more detailed
information which appears elsewhere in this Proxy
Statement/Prospectus and the documents incorporated by reference
herein. Shareholders of Southwest are urged to read this Proxy
Statement/Prospectus in its entirety. All MBI per share data
reflect a three-for-two stock split distributed in the form of a
dividend on April 11, 1994.

BUSINESS OF MBI

MBI, a Missouri corporation, was organized in 1970 and is
a registered bank holding company under the federal Bank Holding
Company Act of 1956, as amended (the "BHCA"). At May 31, 1995,
MBI owned, directly or indirectly, all of the capital stock of
Mercantile Bank of St. Louis National Association ("Mercantile
Bank") and 50 other commercial banks which operate from 324
banking offices and 309 Fingertip Banking automated teller
machines located throughout Missouri, southern Illinois, eastern
Kansas, Arkansas and Iowa. MBI's services concentrate in
four major lines of business -- consumer, corporate, investment
banking and trust services. MBI also operates non-banking
subsidiaries which provide related financial services, including
investment management, brokerage services and asset-based lending.
As of March 31, 1995, MBI had 52,749,516 shares of its Common Stock
outstanding. As of March 31, 1995, MBI reported, on a restated
consolidated basis, total assets of $15.2 billion, total deposits
of $11.3 billion, total loans of $10.1 billion and shareholders'
equity of $1.3 billion.

On January 3, 1995, MBI completed the acquisitions of (i)
UNSL Financial Corp. ("UNSL"), a Delaware corporation and a savings
and loan holding company under the Home Owners Loan Act ("HOLA"),
located in Lebanon, Missouri, and (ii) Wedge Bank ("Wedge"), an
Illinois state-chartered bank located in Alton, Illinois. These
acquisitions were accounted for under the pooling-of-interests
method of accounting. As of January 3, 1995, UNSL and Wedge
reported total assets of $508 million and $196 million,
respectively, and total deposits of $381 million and $153 million,
respectively.

On May 1, 1995, MBI completed the acquisitions of
(i) Central Mortgage Bancshares, Inc. ("CMB"), a Missouri
corporation and registered bank holding company under the BHCA,
located in Kansas City, Missouri, and (ii) TCBankshares, Inc.
("TCB"), an Arkansas corporation and a registered bank holding
company under the BHCA, located in North Little Rock, Arkansas.
These acquisitions were accounted for under the pooling-of-interest
method of accounting. As of March 31, 1995, CMB and TCB reported
total assets of $655 million and $1.4 billion, respectively, and
deposits of $570 million and $1.2 billion, respectively.

In connection with the acquisitions of UNSL, CMB and TCB,
MBI has restated its consolidated financial statements as of and
for the years ended December 31, 1994, 1993 and 1992. MBI has
filed supplemental financial statements as of and for the years
ended December 31, 1994, 1993 and 1992 in a Current Report on Form
8-K, dated May 31, 1995, which has been incorporated by reference
into this Proxy Statement/Prospectus. Due to the immateriality of
the financial condition and results of operation of Wedge to that
of MBI, the supplemental financial statements of MBI do not reflect
the Wedge transaction.

On December 23, 1994, MBI entered into an agreement to
acquire Plains Spirit Financial Corporation ("Plains Spirit"),
located in Davenport, Iowa. Plains Spirit, a Delaware

- 7 -
<PAGE> 13
corporation, is a registered savings and loan holding company under
the HOLA which owns one federally-chartered stock savings bank. As
of March 31, 1995, Plains Spirit reported total assets of $452
million, total deposits of $271 million, total loans of $261
million and stockholders' equity of $56 million.

On February 16, 1995, MBI entered into an agreement to
acquire AmeriFirst Bancorporation, Inc. ("AmeriFirst"), located in
Sikeston, Missouri. AmeriFirst, a Missouri corporation, is a
registered bank holding company under the BHCA which owns one
commercial bank. As of March 31, 1995, AmeriFirst reported total
assets of $157 million, total deposits of $131 million, total loans
of $116 million and shareholders' equity of $15 million.

MBI's principal executive offices are located at One
Mercantile Center, St. Louis, Missouri 63101 and its telephone
number is (314) 425-2525.

BUSINESS OF ABNK

ABNK, a Missouri corporation, is a wholly owned
subsidiary of MBI which was organized in 1991. ABNK is a
registered bank holding company under the BHCA. ABNK currently
owns all of the capital stock of 21 banks and 1 trust company which
operate from 178 locations in Missouri. ABNK, which will continue
to be a subsidiary of MBI, will be the surviving corporation upon
consummation of the Merger with Southwest.

BUSINESS OF SOUTHWEST

Southwest, a Missouri corporation, commenced operations
in 1962 and is a registered bank holding company under the BHCA.
Southwest currently owns all of the issued and outstanding shares
of capital stock of Southwest Bank, a Missouri state-chartered bank
which operates from 11 locations in certain southwestern Missouri
communities. As of January 27, 1995, 35,981 shares of Southwest
Common Stock were issued and outstanding. As of March 31, 1995,
Southwest reported, on a consolidated basis, total assets of $180.6
million, total deposits of $149.4 million, total loans of $126.8
million and shareholders' equity of $15.2 million. See
"INFORMATION REGARDING SOUTHWEST."

Southwest's principal executive offices are located at
102 South Springfield Street, Bolivar, Missouri and its telephone
number is (417) 326-2265.

THE PROPOSED MERGER

Subject to the satisfaction of the terms and conditions
set forth in the Merger Agreement described below, Southwest will
be merged with and into ABNK. Upon consummation of the Merger,
Southwest's corporate existence will terminate and ABNK will
continue as the surviving entity. Simultaneously with the
effectiveness of the Merger, each share of Southwest Common Stock
will be converted into the right to receive 18.7599 shares of MBI
Common Stock. Such consideration is subject to certain anti-
dilution protections but is not adjustable based upon the operating
results, financial condition or other factors affecting either MBI
or Southwest prior to the consummation of the Merger. The fair
market value of MBI Common Stock to be received pursuant to the
Merger may fluctuate and at the consummation of the Merger may be
more or less than the current fair market value of such shares.

- 8 -
<PAGE> 14

KeyCorp Shareholder Services, Inc., the transfer agent
for MBI Common Stock, has been selected as the Exchange Agent (the
"Exchange Agent") for purposes of effecting the conversion of
Southwest Common Stock into MBI Common Stock upon consummation of
the Merger.

The Merger Agreement provides that the consummation of
the Merger is subject to certain terms and conditions, including
the approval of the Merger Agreement by the affirmative vote of the
holders of at least two-thirds of the outstanding shares of
Southwest Common Stock and receipt of the requisite regulatory
approval and an opinion of counsel regarding certain federal income
tax aspects of the transaction. For a discussion of each of the
conditions to the Merger, see "TERMS OF THE PROPOSED MERGER -
Conditions of the Merger." The Merger will be consummated and
become effective on the date and at the time (the "Effective Time")
that the certificate of merger is issued by the Missouri Secretary
of State.

Unless the parties otherwise agree, the date of the
closing of the Merger (the "Closing Date") shall occur on such date
as MBI shall notify Southwest in writing but (i) not earlier than
(A) the approval of the Merger Agreement by the shareholders of
Southwest and (B) the fifteenth day after the approval of the
Merger by the Board of Governors of the Federal Reserve System (the
"Federal Reserve Board") and (ii) not later than the first business
day of the first full calendar month commencing at least five days
after the approval date of the Merger by the Federal Reserve Board,
and the expiration of all required waiting periods. The Merger
Agreement may be terminated at any time prior to the Closing Date
by the mutual consent of the parties or, unilaterally, by either
party upon the occurrence of certain events or if the Merger is not
consummated by January 27, 1996. See "TERMS OF THE PROPOSED MERGER
- - Conditions of the Merger" and "- Termination of the Merger
Agreement."

OTHER AGREEMENTS

Concurrent with the execution of the Merger Agreement,
MBI and each of the directors of Southwest executed separate Voting
Agreements (the "Voting Agreements") by which each such director
agreed that he or she will vote all of the shares of Southwest
Common Stock then owned or subsequently acquired in favor of the
approval of the Merger Agreement at the Special Meeting. In
addition, until the earliest to occur of the Effective Time of the
Merger, the termination of the Voting Agreement or the termination
of the Merger Agreement, each director further agreed he or she
will not vote any such shares in favor of the approval of any other
competing acquisition proposal involving Southwest and a third
party. Each director also agreed that he or she will not transfer
shares of Southwest Common Stock unless, prior to such transfer,
the transferee executes an agreement in substantially the same form
as the Voting Agreement. As of the Record Date (as defined below),
the directors of Southwest owned beneficially an aggregate of
27,334 shares of Southwest Common Stock, or approximately 75.96% of
the issued and outstanding shares.

INTERESTS OF CERTAIN PERSONS IN THE MERGER

Joe F. Rayl, Chairman of Southwest, has entered into
an agreement with MBI whereby Mr. Rayl will serve as Chairman of
Mercantile Bank of Springfield for a period of two years commencing
on the Closing Date. During such two year period, Mr. Rayl will
receive a base salary of $60,000 per year (inclusive of director's
fees) and be entitled to participate in MBI's welfare plans and
executive incentive programs, to use a company-owned vehicle and to
be reimbursed for country club dues. Alva R. Ellison, Vice
Chairman of Southwest, has entered into an agreement with MBI
whereby he will serve as a director of Mercantile Bank of
Springfield for a period of one year commencing on the Closing
Date. Mr. Ellison will receive the same fees as other members of

- 9 -
<PAGE> 15

the Board of Directors of Mercantile Bank of Springfield. See
"TERMS OF THE PROPOSED MERGER - Interests of Certain Persons in the
Merger."

SPECIAL MEETING OF SOUTHWEST SHAREHOLDERS

The Special Meeting will be held on --------------, 1995,
at --:00 -.m. Central Time, at ------------------------------,
- -------------------------, Bolivar, Missouri. Approval by the
Southwest shareholders of the Merger Agreement requires the
affirmative vote of the holders of at least two-thirds of the
outstanding shares of Southwest Common Stock. Only holders of
record of Southwest Common Stock at the close of business on
- ------------------, 1995 (the "Record Date") will be entitled to
notice of, and to vote at, the Special Meeting. At such date,
there were 35,981 shares of Southwest Common Stock outstanding.

As of the Record Date, directors and officers of
Southwest and their affiliates owned beneficially an aggregate of
27,334 shares of Southwest Common Stock, or approximately 75.96% of
the shares entitled to vote at the Special Meeting. All of
Southwest's directors and officers and their affiliates have
indicated their intention to vote their shares for the approval of
the Merger Agreement. Additionally, each of the directors of
Southwest, pursuant to the terms of his or her respective Voting
Agreement, has committed to vote his or her shares of Southwest
Common Stock for the approval of the Merger Agreement. As of the
Record Date, such directors owned beneficially an aggregate of
27,334 shares of Southwest Common Stock, or approximately 75.96% of
the issued and outstanding shares.

THE BOARD OF DIRECTORS OF SOUTHWEST CAREFULLY CONSIDERED
AND UNANIMOUSLY APPROVED THE TERMS OF THE MERGER AS BEING IN THE
BEST INTEREST OF SOUTHWEST AND ITS SHAREHOLDERS. THE SOUTHWEST
BOARD UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE
---
PROPOSAL TO APPROVE THE MERGER AGREEMENT.

REASONS FOR THE MERGER

The Board of Directors of Southwest believes that the
Merger is in the best interest of Southwest and its shareholders.
In the course of reaching its determination to approve the Merger
and recommend the approval of the Merger Agreement to the
shareholders of Southwest, the Board of Directors, without
assigning any relative or specific weights, considered a number of
factors, including (i) the exchange ratio and other terms of the
Merger Agreement, (ii) the tax-deferred nature of the Merger for
the shareholders of Southwest, (iii) the benefits expected to
result from the combination of Southwest and MBI, (iv) the
financial condition, results of operations and prospects of
Southwest and MBI on a combined basis, (v) the market prices of and
dividend policies in respect of Southwest Common Stock, (vi) the
results of due diligence investigations of MBI by Southwest and
(vii) the recent federal and state legislative changes affecting
the banking industry in general. See "TERMS OF THE PROPOSED MERGER
- - Background of and Reasons for the Merger; Board Recommendations."

MBI's Board of Directors believes that the Merger will
enable MBI to (i) increase its presence in southwestern Missouri
through the acquisition of an established banking organization and
(ii) enhance MBI's ability to compete in the increasingly
competitive banking and financial services industry. See "TERMS OF
THE PROPOSED MERGER - Background of and Reasons for the Merger;
Board Recommendations."

- 10 -
<PAGE> 16

FRACTIONAL SHARES

No fractional shares of MBI Common Stock will be issued
to the shareholders of Southwest in connection with the Merger.
Each holder of Southwest Common Stock who otherwise
would have been entitled to receive a fraction of a share of MBI
Common Stock shall receive in lieu thereof cash, without interest, in
an amount equal to the holder's fractional share interest multiplied
by the closing stock price of MBI Common Stock on the NYSE Composite
Tape as reported in The Wall Street Journal on the Closing Date of the
Merger. Cash received by Southwest shareholders in lieu of
fractional shares may give rise to taxable income. See "CERTAIN
FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER."

WAIVER AND AMENDMENT

Any provision of the Merger Agreement, including, without
limitation, the conditions to the consummation of the Merger and
the restrictions described under the caption "TERMS OF THE PROPOSED
MERGER - Business Pending the Merger," may be (i) waived in writing
at any time by the party that is, or whose shareholders are,
entitled to the benefits thereof or (ii) amended at any time by
written agreement of the parties approved by or on behalf of their
respective Boards of Directors, whether before or after the Special
Meeting; provided, however, that after approval of the Merger
Agreement by the shareholders of Southwest at the Special Meeting
no such modification may (i) alter or change the amount or kind of
the consideration to be received by the Southwest shareholders in
the Merger or (ii) adversely affect the tax treatment to the
Southwest shareholders as a result of receiving shares of MBI
Common Stock in the Merger.

FEDERAL INCOME TAX CONSEQUENCES IN GENERAL

Thompson & Mitchell, MBI's legal counsel, has delivered
its opinion to the effect that, assuming the Merger occurs in
accordance with the Merger Agreement and conditioned on the
accuracy of certain representations made by MBI, Southwest and
certain shareholders of Southwest, the Merger will constitute a
"reorganization" for federal income tax purposes and that,
accordingly, no gain or loss will be recognized by Southwest
shareholders who exchange their shares of Southwest Common Stock
solely for shares of MBI Common Stock in the Merger. However, cash
received in lieu of fractional shares may give rise to taxable
income. Southwest shareholders who dissent and receive cash in
exchange for all of their Southwest Common Stock may recognize
taxable income, but not in excess of the amount of cash received.
EACH SOUTHWEST SHAREHOLDER IS URGED TO CONSULT HIS OR HER OWN TAX
ADVISOR TO DETERMINE THE SPECIFIC TAX CONSEQUENCES OF THE MERGER TO
SUCH SHAREHOLDER, INCLUDING THE APPLICABILITY OF VARIOUS STATE,
LOCAL AND FOREIGN TAX LAWS. See "CERTAIN FEDERAL INCOME TAX
CONSEQUENCES OF THE MERGER."

REGULATORY APPROVAL

An application regarding the Merger has been filed with
the Federal Reserve Board. The Merger cannot be consummated until
receipt of approval from such agency. In reviewing the Merger, the
Federal Reserve Board will consider various factors, including
possible anticompetitive effects of the Merger, and will examine
the financial and managerial resources and future prospects of the
combined organization. The Merger may ordinarily not be
consummated sooner than thirty (30) days after approval by the
Federal Reserve Board; however, if the Antitrust Division of the
United States Department of Justice (the "Department of Justice")
does not oppose the Merger, then the Federal Reserve Board may
prescribe an earlier date for consummation of the Merger, but in no
event less than fifteen (15) days following such approval. There
can be no assurance that the necessary regulatory approval will be
received or as to the timing of such approval. See "TERMS OF THE
PROPOSED MERGER - Regulatory Approval" and "SUPERVISION AND
REGULATION."

- 11 -
<PAGE> 17

ACCOUNTING TREATMENT

It is intended that the Merger will be accounted for under the
pooling-of-interests method of accounting. See "TERMS OF THE
PROPOSED MERGER - Accounting Treatment."

DISSENTERS' RIGHTS

Under Missouri law, a holder of Southwest Common Stock may
dissent from the Merger and receive payment of the "fair value" of
such shares in cash if the Merger is consummated by following
certain procedures set forth in Section 351.455 of The General and
Business Corporation Law of Missouri (the "Missouri Act"), the text
of which is attached hereto as Annex A. Failure to follow such
-------
procedures may result in the loss of dissenters' rights. Any
Southwest shareholder returning an executed proxy card which does
not provide instructions to vote against the approval of the Merger
Agreement will be deemed to have approved the Merger Agreement,
thereby waiving any such dissenters' rights. See "RIGHTS OF
DISSENTING SHAREHOLDERS OF SOUTHWEST."

MARKETS AND MARKET PRICES

MBI Common Stock is currently traded on the NYSE under the
symbol "MTL." Prior to March 25, 1993, MBI Common Stock was quoted
on Nasdaq under the symbol "MTRC." The last sale price reported
for MBI Common Stock on January 27, 1995, the last trading date
preceding the public announcement of the Merger, was $34.00. There
is no established public trading market for Southwest Common Stock.
The following table sets forth for the periods indicated the high
and low trading prices of Southwest Common Stock known to
management of Southwest. Since 1989, Southwest has sold or traded
to investors shares of Southwest Common Stock. In 1992, Southwest
sold 975 shares to various investors and traded 667 shares to
minority stockholders of a subsidiary bank. In 1993, Southwest
sold 314 shares directly to an investor. The trade and the sales
were all based on book value as shown on the most current financial
statements of Southwest. Management of Southwest does not have
knowledge of the prices paid in all transactions involving its
shares. Because of the lack of an established public market for
shares of Southwest Common Stock, the prices indicated may not
reflect the prices which would be paid for such shares on an active
market.
<TABLE>
<CAPTION>
MBI <F1> Southwest
------------------------------ ------------------------------------
Sales Price Cash Sales Price Cash
------------------ Dividend ----------------------- Dividend
High Low Declared High Low Declared
---- --- -------- ---- --- --------
<S> <C> <C> <C> <C> <C> <C>
1993
- ----
First Quarter $35.625 $30.625 $ .2475 $ -- $ -- $ --
Second Quarter 37.625 29.375 .2475 318.47 318.47 --
Third Quarter 34.375 31.625 .2475 -- -- --
Fourth Quarter 34.625 29.125 .2475 -- -- --

1994
- ----
First Quarter $34.125 $29.875 $ .28 $ -- $ -- $ --
Second Quarter 38.125 31.125 .28 -- -- --
Third Quarter 39.250 34.875 .28 -- -- --
Fourth Quarter 36.875 29.500 .28 -- -- --

1995
- ----
First Quarter $37.250 $31.250 $ .33 $ -- $ -- $ --
Second Quarter (through
June 9, 1995) 42.125 36.000 .33 -- -- --
<FN>
- -----------------------

<F1> For a recent sale price of MBI Common Stock, see the cover of
this Proxy Statement/Prospectus.
</TABLE>

- 12 -
<PAGE> 18

COMPARATIVE UNAUDITED PER SHARE DATA

The following table sets forth for the periods indicated
selected historical per share data of MBI and Southwest and the
corresponding pro forma and pro forma equivalent per share amounts
giving effect to the proposed Merger, the acquisitions of UNSL, CMB
and TCB, the proposed acquisitions of Plains Spirit and AmeriFirst
and the acquisition of ABNK, which was completed on April 30, 1992.
The data presented is based upon the supplemental consolidated
financial statements and related notes of MBI and the consolidated
financial statements and related notes of Southwest, Plains Spirit
and AmeriFirst included in this Proxy Statement/Prospectus or in
documents incorporated herein by reference, and the pro forma
combined consolidated balance sheet and income statements,
including the notes thereto, appearing elsewhere herein. This
information should be read in conjunction with such historical and
pro forma financial statements and related notes thereto. The
assumptions used in the preparation of this table appear in the
notes to the pro forma financial information appearing elsewhere in
this Proxy Statement/Prospectus. See "PRO FORMA FINANCIAL
INFORMATION." These data are not necessarily indicative of the
results of the future operations of the combined organization or
the actual results that would have occurred if the Merger, the
completed mergers of ABNK, UNSL, CMB and TCB or the proposed
mergers of Plains Spirit and AmeriFirst had been consummated prior
to the periods indicated.

<TABLE>
<CAPTION>
MBI/ Southwest/
Southwest Southwest MBI/All Entities All Entities
MBI Southwest Pro Forma Pro Forma Pro Forma Pro Forma
Reported Reported Combined <F1> Equivalent <F2> Combined <F3> Equivalent <F2>
-------- -------- ------------- --------------- ------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Book Value per Share:
March 31, 1995 $ 24.12 $ 422.78 $ 24.08 $451.74 $ 24.10 $ 452.11
December 31, 1994 23.70 401.26 23.66 443.86 23.69 444.42

Cash Dividends Declared per Share:
Quarter ended March 31, 1995 $ 0.33 $ -- $ 0.33 $ 6.19 $ 0.33 $ 6.19
Year ended December 31, 1994 1.12 -- 1.12 21.01 1.12 21.01
Year ended December 31, 1993 0.99 -- 0.99 18.57 0.99 18.57
Year ended December 31, 1992 0.93 -- 0.93 17.45 0.93 17.45

Earnings per Share:
Quarter ended March 31, 1995 $ 0.93 $ 19.30 $ 0.94 $ 17.63 $ 0.95 $ 17.82
Year ended December 31, 1994 3.22 63.19 3.22 60.41 3.27 61.34
Year ended December 31, 1993 2.79 42.92 2.78 52.15 2.83 53.09
Year ended December 31, 1992 2.42 35.82 2.38 44.65 2.41 45.21

Market Price per Share:
At January 27, 1995 <F4> $ 34.00 $ 318.47 n/a n/a n/a n/a
At June 9, 1995 <F4> 40.63 318.47 n/a n/a n/a n/a

<FN>
- --------------------------
<F1> Includes the effect of pro forma adjustments for Southwest
and ABNK, as appropriate. See "PRO FORMA FINANCIAL
INFORMATION."

<F2> Based on the pro forma combined per share amounts multiplied
by 18.7599, the conversion ratio applicable to one share of
Southwest Common Stock. Further explanation of the
assumptions used in the preparation of the pro forma combined
consolidated financial statements is included in the notes to
pro forma financial statements. See "PRO FORMA FINANCIAL
INFORMATION."

<F3> Includes the effect of pro forma adjustments for Southwest,
ABNK, Plains Spirit and AmeriFirst, as appropriate. See "PRO
FORMA FINANCIAL INFORMATION."

<F4> The market value of MBI Common Stock was determined as of the
last trading day preceding the public announcement of the
proposed acquisition and as of the latest available date
prior to the filing of the Proxy Statement/Prospectus, based
on the last sale price as reported on the NYSE Composite
Tape. There are no publicly available quotations of
Southwest Common Stock. The market value disclosed is the
price paid for Southwest Common Stock in a transaction
occurring in May 1993, the last transaction in Southwest
Common Stock for which a price is known to management of
Southwest prior to the public announcement of the proposed
acquisition.
</TABLE>

- 13 -
<PAGE> 19

SUMMARY FINANCIAL DATA

The following table sets forth for the periods
indicated certain summary historical consolidated financial
information for MBI and Southwest. The balance sheet data and
income statement data included in the summary financial data for
the five years ended December 31, 1994 are taken from audited
supplemental consolidated financial statements of MBI as of the
end of and for each such year. The balance sheet data and income
statement data included in the summary financial data for the
four years ended December 31, 1994 are taken from the audited
consolidated financial statements of Southwest as of the end of
and for each such year. The balance sheet data and income
statement data for the year ended December 31, 1990 are taken
from the unaudited consolidated financial statements of Southwest
as of the end of and for December 31, 1990. The balance sheet
data and income statement data included in the summary financial
data as of and for the three months ended March 31, 1995 and 1994
are taken from the unaudited supplemental consolidated financial
statements of MBI and the unaudited consolidated financial
statements of Southwest as of and for the three months ended
March 31, 1995 and 1994. These data include all adjustments
which are, in the opinion of the respective managements of MBI
and Southwest, necessary to present a fair statement of these
periods and are of a normal recurring nature. Results for the
three months ended March 31, 1995 are not necessarily indicative
of results for the entire year. The following information should
be read in conjunction with the supplemental consolidated
financial statements of MBI and the consolidated financial
statements of Southwest, and the related notes thereto, included
herein or in documents incorporated herein by reference, and in
conjunction with the unaudited pro forma combined consolidated
financial information, including the notes thereto, appearing
elsewhere in this Proxy Statement/Prospectus. See "INCORPORATION
OF CERTAIN INFORMATION BY REFERENCE" and "PRO FORMA FINANCIAL
INFORMATION."

- 14 -
<PAGE> 20

<TABLE>
MERCANTILE BANCORPORATION INC.
SUMMARY FINANCIAL DATA
<CAPTION>
As of or for the
Three Months Ended As of or for the
March 31 Year Ended December 31
-------------------- -----------------------------------------------------------
1995 1994 1994 1993 1992 1991 1990
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
PER SHARE DATA
Net income <F1>. . . . . . . . . . . $ .93 $ .88 $ 3.22 $ 2.79 $ 2.42 $ 2.25 $ 1.99
Dividends declared . . . . . . . . . .33 .28 1.12 .99 .93 .93 .93
Book value at period end . . . . . . 24.12 22.46 23.70 21.92 19.76 19.48 18.04
Average common shares outstanding
(thousands) . . . . . . . . . . . . 52,920 51,724 51,957 50,965 47,276 39,391 37,847
EARNINGS (THOUSANDS)
Interest income. . . . . . . . . . . $ 279,789 $ 236,106 $ 994,896 $ 971,482 $ 1,011,544 $ 1,018,688 $ 1,022,441
Interest expense . . . . . . . . . . 127,046 90,791 399,349 390,911 485,253 588,993 642,365
--------- --------- --------- --------- ----------- ----------- -----------
Net interest income. . . . . . . . . 152,743 145,315 595,547 580,571 526,291 429,695 380,076
Provision for possible loan losses . 13,975 8,879 43,201 63,513 77,874 62,360 56,196
Other income . . . . . . . . . . . . 56,803 55,094 209,758 219,703 201,965 170,770 150,508
Other expense. . . . . . . . . . . . 119,243 119,884 492,070 508,043 471,903 431,155 361,992
Income taxes . . . . . . . . . . . . 26,625 26,051 101,705 85,467 61,072 24,029 31,759
--------- --------- --------- --------- ----------- ----------- -----------
Net income . . . . . . . . . . . . . $ 49,703 $ 45,595 $ 168,329 $ 143,251 $ 117,407 $ 82,921 $ 80,637
========= ========= ========= ========= =========== =========== ===========
ENDING BALANCE SHEET (MILLIONS)
Total assets . . . . . . . . . . . . $ 15,151 $ 14,180 $ 14,806 $ 14,423 $ 14,190 $ 12,377 $ 11,674
Earning assets . . . . . . . . . . . 14,095 13,145 13,671 13,259 12,989 11,331 10,447
Investment securities. . . . . . . . 3,851 4,152 3,844 4,180 4,106 2,949 2,286
Loans and leases,
net of unearned income. . . . . . . 10,074 8,816 9,670 8,702 8,525 7,881 7,827
Deposits . . . . . . . . . . . . . . 11,333 11,283 11,189 11,599 11,629 10,211 9,660
Long-term debt . . . . . . . . . . . 290 307 299 288 310 216 247
Shareholders' equity . . . . . . . . 1,272 1,164 1,234 1,133 996 805 683
Reserve for possible loan losses . . 196 183 195 185 179 158 159
SELECTED RATIOS
Return on average assets . . . . . . 1.32% 1.26% 1.16% 1.00% 0.86% 0.70% 0.73%
Return on average equity . . . . . . 15.71 15.81 14.07 13.37 12.71 10.96 12.30
Net interest rate margin . . . . . . 4.47 4.49 4.55 4.55 4.34 4.12 3.95
Equity to assets . . . . . . . . . . 8.40 8.21 8.34 7.85 7.02 6.50 5.85
Reserve for possible loan losses to:
Outstanding loans . . . . . . . . . 1.94 2.07 2.01 2.12 2.10 2.00 2.04
Non-performing loans. . . . . . . . 546.22 377.76 579.62 278.23 147.60 105.33 108.49

<FN>
<F1> Based on weighted average common shares outstanding.
</TABLE>

- 15 -
<PAGE> 21

<TABLE>
SOUTHWEST BANCSHARES, INC.
SUMMARY FINANCIAL DATA

<CAPTION>
As of or for the
Three Months Ended As of or for the
March 31 Year Ended December 31
-------------------- -----------------------------------------------------------
1995 1994 1994 1993 1992 1991 1990
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
PER SHARE DATA
Net income . . . . . . . . . . . . . $ 19.30 $ 10.45 $ 63.19 $ 42.92 $ 35.82 $ 36.02 $ 30.01
Dividends declared . . . . . . . . . -- -- -- -- -- -- --
Book value at period end . . . . . . 422.78 360.52 401.26 348.13 305.25 269.62 233.60
Average common shares outstanding. . 35,981 35,981 35,981 35,856 34,542 34,025 34,025
EARNINGS (THOUSANDS)
Interest income. . . . . . . . . . . $ 3,317 $ 2,529 $ 11,318 $ 10,047 $ 11,362 $ 13,537 $ 13,674
Interest expense . . . . . . . . . . 1,564 1,216 5,205 4,900 6,353 8,499 9,113
--------- --------- --------- --------- ----------- ----------- -----------
Net interest income. . . . . . . . . 1,753 1,313 6,113 5,147 5,009 5,038 4,561
Provision for possible loan losses . -- -- -- -- 155 111 182
Other income . . . . . . . . . . . . 183 174 795 712 791 822 724
Other expense. . . . . . . . . . . . 880 896 3,570 3,534 3,719 3,711 3,421
Minority interest in net income
of consolidated subsidiary. . . . . -- -- -- -- 18 25 24
Income taxes . . . . . . . . . . . . 362 215 1,064 786 671 787 637
--------- --------- --------- --------- ----------- ----------- -----------
Net income . . . . . . . . . . . . . $ 694 $ 376 $ 2,274 $ 1,539 $ 1,237 $ 1,226 $ 1,021
========= ========= ========= ========= =========== =========== ===========
ENDING BALANCE SHEET (THOUSANDS)
Total assets . . . . . . . . . . . . $ 180,584 $ 174,134 $ 175,576 $ 172,670 $ 166,461 $ 163,858 $ 150,753
Earning assets . . . . . . . . . . . 170,967 160,002 167,625 163,994 158,537 156,542 141,955
Investment securities. . . . . . . . 35,666 32,809 35,751 32,558 36,810 49,638 53,074
Loans and leases, net of
unearned income. . . . . . . . . . 126,796 120,793 126,482 118,987 102,072 91,106 84,349
Deposits . . . . . . . . . . . . . . 149,448 143,834 146,045 143,425 141,123 142,210 134,777
Long-term debt . . . . . . . . . . . 6,010 6,669 6,551 7,207 3,650 2,677 2,884
Shareholders' equity . . . . . . . . 15,212 12,972 14,438 12,526 10,887 9,174 7,948
Reserve for possible loan losses . . 1,093 1,102 1,093 1,103 1,118 1,063 982
SELECTED RATIOS
Return on average assets . . . . . . 1.56% .88% 1.30% .93% .75% .78% .70%
Return on average equity . . . . . . 18.76 11.60 16.75 13.08 12.13 14.07 13.49
Net interest rate margin . . . . . . 4.16 3.16 3.68 3.27 3.20 3.35 3.29
Average equity to average assets . . 8.29 7.42 7.78 7.14 6.21 5.54 5.20
Reserve for possible loan losses to:
Outstanding loans . . . . . . . . . .86 .91 .86 .93 1.10 1.17 1.16
Non-performing loans. . . . . . . . 144.96 163.26 179.77 155.79 187.27 109.81 101.55
</TABLE>

- 16 -
<PAGE> 22

INFORMATION REGARDING SPECIAL MEETING
-------------------------------------

GENERAL

This Proxy Statement/Prospectus is being furnished to
holders of Southwest Common Stock in connection with the
solicitation of proxies by the Board of Directors of Southwest for
use at the Special Meeting and any adjournments or postponements
thereof at which the shareholders of Southwest will consider and
vote upon a proposal to approve the Merger Agreement and consider
and vote upon any other business which may properly be brought
before the Special Meeting or any adjournments or postponements
thereof. Each copy of this Proxy Statement/Prospectus is
accompanied by the Notice of Special Meeting of Shareholders of
Southwest, a proxy card and related instructions and a self-
addressed return envelope to Southwest for the proxy card.

This Proxy Statement/Prospectus is also furnished by MBI
to each holder of Southwest Common Stock as a prospectus in
connection with the issuance by MBI of shares of MBI Common Stock
upon the consummation of the Merger. This Proxy
Statement/Prospectus and the Notice of Special Meeting, proxy card
and related materials are being first mailed to shareholders of
Southwest on ----------, 1995.

DATE, TIME AND PLACE

The Special Meeting will be held at --------------------,
- --------------------, Bolivar, Missouri, on ----------,
- ---------------, 1995, at ---:--- --.m. Central Time.

RECORD DATE; VOTE REQUIRED

On the Record Date, there were 35,981 shares of Southwest
Common Stock outstanding and entitled to vote at the Special
Meeting. Each such share is entitled to one vote on each matter
properly brought before the Special Meeting. The affirmative vote
of the holders of at least two-thirds of the outstanding shares of
Southwest Common Stock is required to approve the Merger Agreement.

As of the Record Date, directors and officers of
Southwest and their affiliates owned beneficially an aggregate of
27,334 shares of Southwest Common Stock, or approximately 75.96% of
the outstanding shares of Southwest Common Stock entitled to vote
at the Special Meeting. All directors and officers of Southwest
and their affiliates have indicated their intention to vote their
shares for the approval of the Merger Agreement at the Special
Meeting. Additionally, each director of Southwest, pursuant to the
terms of his or her respective Voting Agreement, has committed to
vote his or her shares of Southwest Common Stock for approval of
the Merger Agreement. As of the Record Date, directors of
Southwest owned beneficially an aggregate of 27,334 shares of
Southwest Common Stock, or approximately 75.96% of the issued and
outstanding shares.

VOTING AND REVOCATION OF PROXIES

Shares of Southwest Common Stock which are represented by
a properly executed proxy received prior to the vote at the Special
Meeting will be voted at such Special Meeting in the manner
directed on the proxy card, unless such proxy is revoked in the
manner set forth herein in advance of such vote. ANY SOUTHWEST
SHAREHOLDER RETURNING AN EXECUTED PROXY CARD WHICH DOES NOT PROVIDE
INSTRUCTIONS TO VOTE AGAINST THE APPROVAL OF THE MERGER AGREEMENT
WILL BE DEEMED TO HAVE APPROVED THE MERGER AGREEMENT. Failure to
return a properly executed proxy card or to vote in person at the
Special Meeting will have the practical effect of a vote against
the approval of the Merger Agreement.

- 17 -
<PAGE> 23

Shares subject to abstentions will be treated as shares
that are present and voting at the Special Meeting for purposes of
determining the presence of a quorum. Such votes will have the
effect of votes against the approval of the Merger Agreement.
Broker "non-votes" (i.e., proxies from brokers or nominees
indicating that such persons have not received instructions from
the beneficial owners or other persons entitled to vote shares with
respect to which the brokers or nominees do not have discretionary
power to vote without such instructions) will be considered as
present for the purposes of determining the presence of a quorum
but will not be considered as voting at the Special Meeting.
Broker non-votes will have the effect of votes against the approval
of the Merger Agreement.

Any shareholder of Southwest giving a proxy may revoke it
at any time prior to the vote at the Special Meeting. Shareholders
of Southwest wishing to revoke a proxy prior to the vote may do so
by delivering to the Secretary of Southwest at 102 South
Springfield Street, Bolivar, Missouri 65613 a written notice of
revocation bearing a later date than the proxy or a later dated
proxy relating to the same shares, or by attending the Special
Meeting and voting such shares in person. Attendance at the
Special Meeting will not in itself constitute the revocation of a
proxy.

The Board of Directors of Southwest is not currently
aware of any business to be brought before the Special Meeting
other than that described herein. If, however, other matters are
properly brought before such Special Meeting, or any adjournments
or postponements thereof, the persons appointed as proxies will
have discretionary authority to vote the shares represented by duly
executed proxies in accordance with their discretion and judgment
as to the best interest of Southwest.

SOLICITATION OF PROXIES

Southwest will bear its own costs of soliciting proxies,
except that MBI will pay printing and mailing expenses and
registration fees incurred in connection with preparing this Proxy
Statement/Prospectus. Proxies will initially be solicited by mail,
but directors, officers and selected other employees of Southwest
may also solicit proxies in person or by telephone. Directors,
executive officers and any other employees of Southwest who solicit
proxies will not be specially compensated for such services.
Brokerage houses, nominees, fiduciaries and other custodians will
be requested to forward proxy materials to beneficial owners and
will be reimbursed for their reasonable expenses incurred in
sending proxy materials to beneficial owners.

HOLDERS OF SOUTHWEST COMMON STOCK ARE REQUESTED TO
COMPLETE, DATE AND SIGN THE ACCOMPANYING PROXY CARD AND RETURN IT
PROMPTLY IN THE ENCLOSED POSTAGE-PREPAID ENVELOPE.

TERMS OF THE PROPOSED MERGER
----------------------------

The following is a summary of the material terms and
conditions of the Merger Agreement, which document is incorporated
by reference herein. This summary is qualified in its entirety by
the full text of the Merger Agreement. MBI, upon written or oral
request, will furnish a copy of the Merger Agreement, without
charge, to any person who receives a copy of this Proxy
Statement/Prospectus. Such requests should be directed to Jon W.
Bilstrom, General Counsel and Secretary, Mercantile Bancorporation
Inc., P.O. Box 524, St. Louis, Missouri 63166-0524, telephone (314)
425-2525.

- 18 -
<PAGE> 24

GENERAL DESCRIPTION OF THE MERGER

Pursuant to the Merger Agreement, Southwest, a Missouri
corporation, will be merged on the Closing Date with and into ABNK,
a Missouri corporation which is a wholly owned subsidiary of MBI.
Upon consummation of the Merger, Southwest's corporate existence
will terminate and ABNK will continue as the surviving entity.
Simultaneously with the effectiveness of the Merger, each share of
Southwest Common Stock will be converted into the right to receive
18.7599 shares of MBI Common Stock. Such consideration is subject
to certain anti-dilution protections but is not adjustable based
upon the operating results, financial condition or other factors
affecting either MBI or Southwest prior to the consummation of the
Merger. The fair market value of MBI Common Stock received
pursuant to the Merger may fluctuate and at the consummation of the
Merger may be more or less than the current fair market value of
such shares.

The amount and nature of the consideration was
established through arm's-length negotiations between MBI and
Southwest, and reflects the balancing of a number of countervailing
factors. The total amount of the consideration reflects a price
both parties concluded was appropriate. See "- Background of and
Reasons for the Merger; Board Recommendations." The fact that the
consideration is payable in shares of MBI Common Stock reflects the
potential for change in the value of the MBI Common Stock and the
desire to have the favorable tax attributes of a "reorganization"
for federal income tax purposes. See "CERTAIN FEDERAL INCOME TAX
CONSEQUENCES OF THE MERGER."

NO ASSURANCE CAN BE GIVEN THAT THE CURRENT FAIR MARKET
VALUE OF MBI COMMON STOCK WILL BE EQUIVALENT TO THE FAIR MARKET
VALUE OF MBI COMMON STOCK ON THE DATE SUCH STOCK IS RECEIVED BY A
SOUTHWEST SHAREHOLDER OR AT ANY OTHER TIME. THE FAIR MARKET VALUE
OF MBI COMMON STOCK RECEIVED BY A SOUTHWEST SHAREHOLDER MAY BE
GREATER OR LESS THAN THE CURRENT FAIR MARKET VALUE OF MBI COMMON
STOCK DUE TO NUMEROUS MARKET FACTORS.

Following the Closing Date, each shareholder of Southwest
will be required to submit to the Exchange Agent a properly
executed letter of transmittal and surrender to the Exchange Agent
the stock certificate(s) formerly representing the shares of
Southwest Common Stock in order to receive a new stock certificate
evidencing the shares of MBI Common Stock to which such shareholder
is entitled. Following the Closing Date, the Exchange Agent will
mail to each Southwest shareholder a notice of consummation of the
Merger and a form of letter of transmittal, together with
instructions and a return envelope to facilitate the exchange of
such holder's certificate(s) formerly representing Southwest Common
Stock for certificate(s) evidencing MBI Common Stock. No dividends
or other distributions will be paid to a former Southwest
shareholder with respect to shares of MBI Common Stock until such
shareholder's letter of transmittal and stock certificates formerly
representing Southwest Common Stock, or documentation reasonably
acceptable to the Exchange Agent in lieu of lost or destroyed
certificates, is delivered to the Exchange Agent. See "TERMS OF
THE PROPOSED MERGER - Surrender of Southwest Stock Certificates and
Receipt of MBI Common Stock." No fractional shares of MBI Common
Stock will be issued in the Merger, but cash will be paid in lieu
of such fractional shares, such cash being calculated by
multiplying the holder's fractional share interest by the closing
stock price of MBI Common Stock on the NYSE Composite Tape as
reported in The Wall Street Journal on the Closing Date of the
Merger. See "- Fractional Shares." The shares of MBI Common Stock
to be issued pursuant to the Merger will be freely transferable
except by certain shareholders of Southwest who are deemed to be
"affiliates" of Southwest. The shares of MBI Common Stock issued
to such affiliates will be restricted in their transferability in
accordance with the rules and regulations promulgated by the
Commission. See "INFORMATION REGARDING MBI STOCK - Restrictions on
Resale of MBI Stock by Affiliates."

- 19 -
<PAGE> 25

OTHER AGREEMENTS

Concurrent with the execution of the Merger Agreement,
MBI and each of the directors of Southwest executed separate Voting
Agreements by which each such director agreed that he or she will
vote all of the shares of Southwest Common Stock that he or she
then owned or subsequently acquires in favor of the approval of the
Merger Agreement at the Special Meeting. In addition, until the
earliest to occur of the Effective Time of the Merger, the
termination of the Voting Agreements or the abandonment of the
Merger, each such director further agreed that he or she will not
vote any such shares in favor of the approval of any other
competing acquisition proposal involving Southwest and a third
party. Each director also agreed that he or she will not transfer
shares of Southwest Common Stock owned by him or her unless, prior
to such transfer, the transferee executes an agreement in
substantially the same form as the Voting Agreement. As of the
Record Date, the directors of Southwest owned beneficially an
aggregate of 27,334 shares of Southwest Common Stock, or
approximately 75.96% of the issued and outstanding shares.

INTERESTS OF CERTAIN PERSONS IN THE MERGER

BACKGROUND OF AND REASONS FOR THE MERGER; BOARD RECOMMENDATIONS

SOUTHWEST'S REASONS AND BOARD RECOMMENDATION. The Board
of Directors of Southwest has periodically evaluated Southwest's
corporate strategy based upon general conditions in the banking
industry, legislative changes and other developments affecting the
industry in general and Southwest specifically. These developments
have included the ongoing consolidation of the banking industry,
and recent state and federal legislative changes that will
facilitate nationwide consolidation of the banking industry.

With the rapid changes occurring in the banking industry
in the past two decades, it has been the sound philosophy of the
Board of Directors of Southwest, to be receptive to all
possibilities which would successfully address those changes, and
to have a strategic plan of action in place for the future. As
early as 1989, the Board of Directors of Southwest was taking
important steps to minimize costs while maximizing efficiency and
return on assets and equity. In December of 1989, Southwest merged
its four independently chartered affiliate banks into one bank,
with eleven locations throughout southwest Missouri. That merger
laid a strong foundation for future growth, stability and earnings
through the consolidation of management and expenses.

In the past five years, pressures in the banking industry
have continued to increase. To remain in full compliance with all
regulations now requires full-time specialists in their respective
departments. The training, education and compensation for those
skilled individuals is costly. Also, competition from larger banks
and from financial firms outside the banking industry continues to
increase. Matching the full range of products and services which
are offered by larger banks, and meeting the needs

- 20 -
<PAGE> 26

of a public which is becoming more sophisticated in its financial needs
(such as ATM's, brokerage service, trust departments, title insurance,
etc.), cannot be done as profitably by a small bank. Further, the
Chief Executive Officer and principal shareholder of Southwest, is
nearing the age of retirement, and has expressed his desire to
explore avenues which will insure the continued stability and good
reputation of Southwest after his departure.

It is for those reasons that the Board of Directors of
Southwest, made the decision to give consideration to those
financial institutions who had approached Southwest and made
inquiries as to the interest of Southwest in being acquired. The
Board considered various offers and, after careful review,
determined that a merger with MBI would be in the best interest of
the shareholders, employees and customers of Southwest.

The banking philosophy of MBI is compatible with that of
Southwest. MBI is a strong lender, is customer service oriented
and emphasizes community banking and has a relationship in
southwest Missouri which spans over 50 years. In addition, MBI has
quality training programs, and in-house legal and accounting
departments. Further, MBI's data processing capabilities and
product availability should greatly enhance what can be offered to
the customers of Southwest. The Board of Directors of Southwest
considered the depth and management strength of MBI and the
significant market presence the combined organization would have
within the market served by Southwest. Further, growth prospects,
historical dividend and market performance, and the fact that MBI
Common Stock is traded on the NYSE were factors considered.

During the latter part of 1994, and during January of
1995, representatives of MBI and Southwest, and their respective
counsels negotiated the form of the Merger Agreement, and on
January 26, 1995, the Board of Directors of Southwest met to
consider the Merger Agreement. After careful study and evaluation
of economic, financial, legal and market factors, the Board of
Directors of Southwest unanimously approved the Merger Agreement.
The Merger Agreement was executed on January 27, 1995 by
representatives of Southwest and MBI, and MBI publicly announced
the execution of the Merger Agreement as of the close of business
on January 27, 1995.

The Board of Directors of Southwest recommends approval
of the Merger Agreement. It is the conclusion of the Board of
Directors that the terms of the Merger Agreement are fair and that
the Exchange Ratio and the Merger are in the best interest of
Southwest and its shareholders. The members of the Board of
Directors have unanimously indicated that they intend to vote their
shares of Southwest Common Stock in favor of the Merger Agreement.

THE BOARD OF DIRECTORS OF SOUTHWEST UNANIMOUSLY
RECOMMENDS THAT SHAREHOLDERS OF SOUTHWEST VOTE FOR THE PROPOSAL TO
---
APPROVE THE MERGER AGREEMENT.

MBI'S REASONS AND BOARD RECOMMENDATIONS. The Executive
Committee of the Board of Directors of MBI considered a number of
factors, including, among other things, the financial condition of
Southwest and projected synergies which are anticipated to result
from the Merger. The Executive Committee concluded that the Merger
presents an unique opportunity for MBI to increase its presence in
southwestern Missouri through the acquisition of an established
banking organization having operations in the targeted area. MBI's
decision to pursue discussions with Southwest was primarily a
result of MBI's assessment of the value of Southwest's banking
franchise, its substantial asset base within that area and the
compatibility of the businesses of the two banking organizations.

- 21 -
<PAGE> 27

CONDITIONS OF THE MERGER

The respective obligations of MBI and Southwest to
consummate the Merger are subject to the satisfaction of certain
mutual conditions, including the following:

(1) The Merger Agreement shall be approved by the
holders of at least two-thirds of the outstanding shares
of Southwest Common Stock at the Special Meeting.

(2) The Merger Agreement and the transactions
contemplated therein shall have been approved by the
Federal Reserve Board and any other federal and/or state
regulatory agency whose approval is required for the
consummation of the transactions contemplated therein,
and all waiting periods after such approvals required by
law or regulation have been satisfied.

(3) The Registration Statement of which this Proxy
Statement/Prospectus is a part, registering shares of MBI
Common Stock to be issued in the Merger, shall have been
declared effective and not be subject to a stop order or
any threatened stop order.

(4) Neither Southwest, MBI nor ABNK shall be
subject to any order, decree or injunction of a court or
agency of competent jurisdiction which enjoins or
prohibits the consummation of the Merger.

The obligation of MBI and ABNK to consummate the Merger
is subject to the satisfaction, unless waived, of certain other
conditions, including the following:

(1) The representations and warranties of Southwest
made in the Merger Agreement shall be true and correct in
all material respects, except for inaccuracies therein
that are not of a magnitude as to have a material adverse
effect on Southwest and its subsidiaries, taken as a
whole, as of January 27, 1995 and as of the Effective
Time, and all obligations required to be performed by
Southwest prior to or at the Closing Date shall have been
performed in all material respects, and MBI shall have
received an officers' certificate from Southwest to that
effect.

(2) Southwest shall have obtained any and all
material permits, authorizations, consents, waivers and
approvals required of Southwest for the lawful
consummation of the Merger.

(3) Since January 27, 1995, there shall have been
no material adverse change in the business, financial
condition or results of operations of Southwest or its
subsidiaries, taken as a whole, except as may have
resulted from changes to laws and regulations, generally
accepted or regulatory accounting principles, or
interpretations thereof, or changes in economic
conditions, including interest rates, applicable to
commercial banking institutions generally.

(4) MBI and ABNK shall have received an opinion of
KPMG Peat Marwick LLP, satisfactory to MBI, that the
Merger will qualify for pooling-of-interests accounting
treatment, which opinion shall not have been withdrawn at
or prior to the Effective Time.

(5) Taylor, Stafford, Woody, Clithero & Fitzgerald,
counsel to Southwest, shall have delivered to MBI an
opinion regarding certain legal matters.

- 22 -
<PAGE> 28

Southwest's obligation to consummate the Merger is
subject to the satisfaction, unless waived, of certain other
conditions, including the following:

(1) The representations and warranties of MBI and
ABNK made in the Merger Agreement shall be true and
correct in all material respects, except for inaccuracies
therein that are not of a magnitude as to have a material
adverse effect on MBI and its subsidiaries, taken as a
whole, as of January 27, 1995 and as of the Effective
Time, and all obligations required to be performed by MBI
and ABNK prior to or at the Effective Time shall have
been performed in all material respects, and Southwest
shall have received an officers' certificate from MBI to
that effect.

(2) MBI and ABNK shall have obtained any and all
material permits, authorizations, consents, waivers and
approvals required of MBI or ABNK for the lawful
consummation of the Merger.

(3) Since January 27, 1995, there shall have been
no material adverse change in the business, financial
condition or results of operations of MBI and its
subsidiaries on a consolidated basis, taken as a whole,
except as may have resulted from changes to laws and
regulations, generally accepted or regulatory accounting
principles, or interpretations thereof, or changes in
economic conditions, including interest rates, applicable
to commercial banking institutions generally.

(4) Thompson & Mitchell, counsel to MBI, shall have
delivered to Southwest an opinion regarding certain legal
matters.

(5) Southwest shall have received from Thompson &
Mitchell an opinion (which opinion shall not have been
withdrawn at or prior to the Effective Time) reasonably
satisfactory in form and substance to it to the effect
that the Merger will constitute a reorganization within
the meaning of Section 368 of the Code and to the effect
that, as a result of the Merger, except with respect cash
received in lieu of fractional share interests, holders
of Southwest Common Stock who receive MBI Common Stock in
the Merger will not recognize gain or loss for federal
income tax purposes, the basis of such MBI Common Stock
will equal the basis of the Southwest Common Stock for
which it is exchanged and the holding period of such MBI
Common Stock will include the holding period of the
Southwest Common Stock for which it is exchanged,
assuming that such Southwest Common Stock is a capital
asset in the hands of the holder thereof as of the
Effective Time.

TERMINATION OF THE MERGER AGREEMENT

The Merger Agreement may be terminated at any time prior
to the Closing Date, whether before or after approval by the
shareholders of Southwest, by mutual consent of the Executive
Committee of the Board of Directors of MBI and the Boards of
Directors of Southwest and ABNK, or unilaterally by the Executive
Committee of the Board of Directors of MBI or the Boards of
Directors of Southwest or ABNK: (i) at any time after January 27,
1996, if the Merger has not been consummated by such date (provided
that the terminating party is not then in material breach of any
representation, warranty, covenant or other agreement contained in
the Merger Agreement); (ii) if the Federal Reserve Board or any
other federal and/or state regulatory authority whose approval is
required for consummation of the Merger shall have issued a final
nonappealable denial of such approval; (iii) if the shareholders of
Southwest shall not have approved the Merger Agreement at the
Special Meeting; or (iv) in the event of a breach by the

- 23 -
<PAGE> 29

other party of any representation, warranty or agreement contained in
the Merger Agreement, which breach is not cured within 30 days after
written notice thereof is given to the party committing such breach
or is not waived by such other party. No assurance can be given
that the Merger will be consummated on or before January 27, 1996
or that MBI, ABNK or Southwest will not elect to terminate the
Merger Agreement if the Merger has not been consummated on or
before such date.

In the event of the termination of the Merger Agreement,
it shall become void and there shall be no liability on the part of
any party except, that (i) confidentiality and indemnification
obligations shall survive termination, (ii) MBI shall pay all
printing, mailing and filing expenses with respect to the
Registration Statement and this Proxy Statement/Prospectus and
(iii) in the case of termination due to continued material breach
after notice and opportunity to cure, the breaching party shall not
be relieved of liability to the nonbreaching party arising from the
willful nonperformance of any covenant in the Merger Agreement.

INDEMNIFICATION

Southwest, MBI and ABNK have agreed to indemnify each
other against any claims or liabilities to which any such party may
become subject under federal or state securities laws or
regulations, to the extent that such claim or liability arises out
of information furnished to the party subject to such liability by
the other party, or out of an omission by such other party to state
a necessary or material fact in the Registration Statement of which
this Proxy Statement/Prospectus is a part.

CLOSING DATE

The Merger will be consummated and become effective on
the Closing Date upon issuance of a certificate of merger by the
Missouri Secretary of State. Under the Merger Agreement, unless
the parties otherwise agree, the Closing Date shall be the first
business day of the month beginning at least five business days
after the month in which the later of the following events occurs:
(i) the receipt of the requisite approval of the Merger Agreement
by the shareholders of Southwest; and (ii) the approval of the
Merger by the Federal Reserve Board and any other federal and/or
state regulatory agency whose approval is required, and all waiting
periods for such approvals have been satisfied.

SURRENDER OF SOUTHWEST STOCK CERTIFICATES AND RECEIPT OF MBI COMMON
STOCK

At the Effective Time of the Merger, each outstanding
share of Southwest Common Stock will be converted into the right to
receive 18.7599 shares of MBI Common Stock. See "- General
Description of the Merger." Each holder of Southwest Common Stock,
upon submission to the Exchange Agent of a properly executed letter
of transmittal and surrender to the Exchange Agent of the stock
certificate(s) formerly representing shares of Southwest Common
Stock, will be entitled to receive a stock certificate evidencing
the shares of MBI Common Stock to which such shareholder is
entitled.

Following the Effective Time of the Merger, the Exchange
Agent will mail to each Southwest shareholder of record as of the
Effective Time notification of the consummation of the Merger. The
Exchange Agent will also provide a letter of transmittal and
instructions as to the procedure for the surrender of the stock
certificates evidencing the Southwest Common Stock and the receipt
of shares of MBI Common Stock. It will be the responsibility of
each holder of Southwest shares to submit all certificates formerly
evidencing such holder's shares of Southwest Common Stock to the
Exchange Agent. No dividends or other distribution will be paid to
a former Southwest shareholder with respect to shares of MBI Common
Stock until such shareholder's properly completed letter of
transmittal and stock certificates formerly representing Southwest
Common Stock, or, in lieu thereof, such evidence of a lost,

- 24 -
<PAGE> 30

stolen or destroyed certificate and/or such insurance bond as the Exchange
Agent may reasonably require in accordance with customary exchange
practices, are delivered to the Exchange Agent. All dividends or
other distributions on the MBI Common Stock declared between the
Closing Date of the Merger and the date of the surrender of a
Southwest stock certificate will be held for the benefit of the
shareholder and will be paid to the shareholder, without interest
thereon, upon the surrender of such stock certificate or
documentation and/or insurance bond in lieu thereof.

FRACTIONAL SHARES

No fractional shares of MBI Common Stock will be issued
to the former shareholders of Southwest in connection with the
Merger. Each holder of Southwest Common Stock who otherwise would
have been entitled to receive a fraction of a share of MBI Common
Stock shall receive in lieu thereof cash, without interest, in an
amount equal to the holder's fractional share interest multiplied
by the closing stock price of MBI Common Stock on the NYSE
Composite Tape as reported in The Wall Street Journal on the
Closing Date of the Merger. Cash received by Southwest
shareholders in lieu of fractional shares may give rise to taxable
income. See "CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE
MERGER."

REGULATORY APPROVAL

In addition to the approval of the Merger Agreement by
the shareholders of Southwest, the obligations of the parties to
effect the Merger are subject to prior approval of the Federal
Reserve Board. As a bank holding company, MBI is subject to
regulation under the BHCA. The Merger is subject to prior approval
by the Federal Reserve Board under Section 3 of the BHCA. Under
the BHCA, the Federal Reserve Board may withhold approval of the
Merger if, among other things, it determines that the effect of the
Merger would be to substantially lessen competition in the relevant
markets. In addition, the Federal Reserve Board must consider
whether the combined organization meets the requirements of the
Community Reinvestment Act of 1977, as amended, by assessing the
involved entities' respective records of meeting the credit needs
of the local communities in which they are chartered, consistent
with the safe and sound operation of such institutions. In its
review, the Federal Reserve Board must also examine the financial
and managerial resources and future prospects of the combined
organization and analyze the capital structure and soundness of the
resulting entity. The Federal Reserve Board has the authority to
deny an application if it concludes that the combined organization
would have inadequate capital.

An application for such approval has been filed with the
Federal Reserve Board. The Merger may ordinarily not be
consummated sooner than thirty (30) days after approval by the
Federal Reserve Board; however, if the Department of Justice does
not oppose the Merger, then the Federal Reserve Board may prescribe
an earlier date, but in no event less than fifteen (15) days
following approval.

MBI and Southwest are not aware of any governmental
approvals or actions that may be required for consummation of the
Merger other than as described above. Should any other approval or
action be required, it is presently contemplated that such approval
or action would be sought. There can be no assurance that any
necessary regulatory approvals or actions will be timely received
or taken, that no action will be brought challenging such approval
or action or, if such a challenge is brought, as to the result
thereof, or that any such approval or action will not be
conditioned in a manner that would cause the parties to abandon the
Merger. See "SUPERVISION AND REGULATION."

- 25 -
<PAGE> 31

BUSINESS PENDING THE MERGER

The Merger Agreement provides that, during the period
from January 27, 1995 to the Effective Time, Southwest will conduct
its business according to the ordinary and usual course consistent
with past and current practices and use its best efforts to
maintain and preserve its business organization, employees and
advantageous business relationships and retain the services of its
officers and key employees.

Furthermore, from the date of the Merger Agreement to the
Closing Date, except as provided in the Merger Agreement, Southwest
will not, and will not permit any of its subsidiaries to, without
the prior written consent of MBI:

(1) declare, set aside or pay any dividends or
other distributions, directly or indirectly, in respect
of its capital stock (other than dividends from any of
the Southwest subsidiaries to Southwest);

(2) enter into or amend any employment, severance
or similar agreement or arrangement with any director,
officer or employee, or materially modify any of the
Southwest employee plans or policies or grant any salary
or wage increase or materially increase any employee
benefit (including incentive or bonus payments), except
normal individual increases in compensation to employees
consistent with past practice, or as required by law or
contract, and except for such increases of which
Southwest notifies MBI in writing and which MBI does not
disapprove within ten days of the receipt of such notice;

(3) authorize, recommend, propose or announce an
intention to authorize, recommend or propose, or enter
into an agreement in principle with respect to, any
merger, consolidation or business combination (other than
the Merger), any acquisition of a material amount of
assets or securities, any disposition of a material
amount of assets or securities or any release or
relinquishment of any material contract rights;

(4) propose or adopt any amendments to the Articles
of Incorporation or the Articles of Association of
Southwest or any subsidiary of Southwest, as the case may
be, or its respective by-laws or charter;

(5) issue, sell, grant, confer or award any
options, warrants, conversion rights or other rights or
effect any stock split or adjust, combine, reclassify or
otherwise change its capitalization as it existed on
January 27, 1995;

(6) purchase, redeem, retire, repurchase or
exchange, or otherwise acquire or dispose of, directly or
indirectly, any capital stock, options, warrants,
conversion rights or other rights, whether pursuant to
the terms of such capital stock, options, warrants,
conversion rights or other rights or otherwise;

(7) (i) without first consulting with MBI, enter
into, renew or increase any loan or credit commitment
(including stand-by letters of credit) to, or invest or
agree to invest in any person or entity or modify any of
the material provisions or renew or otherwise extend the
maturity date of any existing loan or credit commitment
(collectively, "Lend to") in an amount in excess of
$200,000, or in any amount which, when aggregated with
any and all loans or credit commitments of Southwest and its

- 26 -
<PAGE> 32

subsidiaries to such person or entity, would be in
excess of $200,000; (ii) without first obtaining the
written consent of MBI, Lend to any person or entity in
an amount in excess of $1,000,000 or in any amount which,
or when aggregated with any and all loans or credit
commitments of Southwest and its subsidiaries to such
person or entity, would be in excess of $1,000,000; (iii)
Lend to any person other than in accordance with lending
policies as in effect on January 27, 1995, except that in
the case of clauses (i) and (iii) hereof, Southwest or
any of its subsidiaries may make any such loan in the
event (A) Southwest or any of its subsidiaries has
delivered to MBI or ABNK or their designated
representative a notice of its intention to make such
loan and such information as MBI or ABNK or their
designated representative may reasonably require in
respect thereof and (B) MBI or ABNK or their designated
representative shall not have reasonably objected to such
loan by giving written or facsimile notice of such
objection within two business days following the delivery
to MBI or ABNK or their designated representative of the
notice of intention and information as aforesaid; or (iv)
Lend to any person or entity any of the loans or other
extensions of credit to which or investments in which are
on a "watch list" or similar internal report of Southwest
or any subsidiary of Southwest (except those denoted
"pass" thereon), in an amount in excess of $50,000;
provided, however, that Southwest and any Southwest
subsidiary shall not be prohibited from honoring any
contractual obligation in existence on January 27, 1995
or, with respect to loans described in clause (i) above,
making such loans after consulting with MBI.
Notwithstanding clauses (i) and (ii), Southwest shall be
authorized, without first consulting with MBI or
obtaining MBI's prior written consent, to increase the
aggregate amount of the credit facilities theretofore
established in favor of any person or entity (the "Pre-
Existing Facilities"), provided that the aggregate amount
of any and all such increases shall not be in excess of
five percent (5%) of such Pre-Existing Facilities or
$25,000, whichever is greater;

(8) directly or indirectly, including through its
officers, directors, employees or other representatives:

(i) initiate, solicit or encourage any
discussions, inquiries or proposals with any third
party (other than MBI or ABNK) relating to the
disposition of any significant portion of the
business or assets of Southwest or any of its
subsidiaries or the acquisition of the capital
stock (or rights or options exercisable for, or
securities convertible or exchangeable into,
capital stock) of Southwest or any of its
subsidiaries or the merger of Southwest or any of
its subsidiaries with any person (other than MBI or
ABNK) or any similar transaction (each such
transaction being referred to herein as an
"Acquisition Transaction"), or

(ii) provide any third party with information
or assistance or negotiate with any third party
with respect to an Acquisition Transaction, and
Southwest shall promptly notify MBI orally of all
the relevant details relating to all inquiries,
indications of interest and proposals which it or
any of its subsidiaries may receive with respect to
any Acquisition Transaction.

(9) take any action that would (i) materially
impede or delay the consummation of the transactions
contemplated by the Merger Agreement or the ability of
MBI or Southwest to obtain any approval of any regulatory
authority required for the transactions contemplated by
the Merger Agreement or to perform its covenants and

- 27 -
<PAGE> 33

agreements under the Merger Agreement, or (ii) prevent or
impede the Merger from qualifying as a reorganization
within the meaning of Section 368 of the Code;

(10) other than in the ordinary course of business
consistent with past practice, incur any indebtedness for
borrowed money or assume, guarantee, endorse or otherwise
as an accommodation become responsible or liable for the
obligations of any other individual, corporation or other
entity;

(11) materially restructure or change its investment
securities portfolio, through purchases, sales or
otherwise, or the manner in which the portfolio is
classified or reported, or execute individual investment
transactions of greater than $500,000 for U.S. Treasury
Securities and $250,000 for all other investment
instruments;

(12) agree in writing or otherwise to take any of
the foregoing actions or engage in any activity, enter
into any transaction or intentionally take or omit to
take any other act which would make any of the
representations and warranties in the Merger Agreement
untrue or incorrect in any material respect if made anew
after engaging in such activity, entering into such
transaction, or taking or omitting such other act; or

(13) enter into, increase or renew any loan or
credit commitment (including standby letters of credit)
to any executive officer or director of Southwest or any
subsidiary of Southwest, any shareholder of Southwest, or
any entity controlled, directly or indirectly, by any of
the foregoing or engage in any transaction with any of
the foregoing which is of the type or nature sought to be
regulated in 12 U.S.C. Section 371c and 12 U.S.C.
Section 371c-1, without first obtaining the prior written
consent of MBI, which consent shall not be unreasonably
withheld.

WAIVER AND AMENDMENT

Any provision of the Merger Agreement, including, without
limitation, the conditions to the consummation of the Merger and
the restrictions described under "- Business Pending the Merger,"
may be (i) waived in writing at any time by the party that is, or
whose shareholders are, entitled to the benefits thereof, or
(ii) amended at any time by written agreement of the parties
approved by or on behalf of their respective Boards of Directors or
Executive Committees, whether before or after the Special Meeting;
provided, however, that after approval of the Merger Agreement by
the shareholders of Southwest at the Special Meeting no such
modification may (i) alter or change the amount or kind of
consideration to be received by the Southwest shareholders in the
Merger, or (ii) adversely affect the tax treatment to Southwest
shareholders as a result of receiving the shares of MBI Common
Stock in the Merger.

ACCOUNTING TREATMENT

The Merger is intended to be accounted for under the
pooling-of-interests method of accounting. Data regarding the
financial condition and results of operations of Southwest will be
included in MBI's consolidated financial statements for all periods
presented by MBI as if the Merger had occurred on the first day of
the earliest period presented. It is a condition to MBI's and
ABNK's consummation of the Merger, unless otherwise waived, that
KPMG Peat Marwick LLP, MBI's independent accountants, deliver to MBI and
ABNK an opinion that the Merger will qualify for pooling-of-interests
accounting treatment.

- 28 -
<PAGE> 34

CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER
-----------------------------------------------------

The following discussion has been prepared by Thompson &
Mitchell, counsel to MBI ("Counsel"), and, except as otherwise
indicated, reflects Counsel's opinion. The discussion is a general
summary of the material federal income tax consequences of the
Merger to certain Southwest shareholders and does not purport to be
a complete analysis or listing of all potential tax effects
relevant to a decision whether to vote for the approval of the
Merger. The discussion does not address all aspects of federal
income taxation that may be applicable to Southwest shareholders
subject to special federal income tax treatment including (without
limitation) foreign persons, insurance companies, tax-exempt
entities, retirement plans, dealers in securities and persons who
acquired their Southwest Common Stock pursuant to the exercise of
employee stock options or otherwise as compensation. The
discussion addresses neither the effect of any applicable state,
local or foreign tax laws, nor the effect of any federal tax laws
other than those pertaining to federal income taxes. IN VIEW OF THE
INDIVIDUAL NATURE OF FEDERAL INCOME TAX CONSEQUENCES, EACH
SOUTHWEST SHAREHOLDER IS URGED TO CONSULT HIS OR HER OWN TAX
ADVISOR TO DETERMINE THE SPECIFIC TAX CONSEQUENCES OF THE MERGER TO
SUCH SHAREHOLDER.

The discussion is based on the Code, regulations and
rulings now in effect or proposed thereunder, current
administrative rulings and practice, and judicial precedent, all of
which are subject to change. Any such change, which may or may not
be retroactive, could alter the tax consequences discussed herein.
The discussion is also based on certain assumptions regarding the
factual circumstances that will exist at the Effective Time of the
Merger, including certain representations of MBI, Southwest and
certain shareholders of Southwest. If any of these factual
assumptions is inaccurate, the tax consequences of the Merger could
differ from those described herein. The discussion assumes that
shares of Southwest Common Stock are held as capital assets (within
the meaning of Section 1221 of the Code) at the Effective Time.

Assuming the Merger occurs in accordance with the Merger
Agreement, the Merger will constitute a "reorganization" for
federal income tax purposes under Section 368(a)(1)(A) of the Code,
by reason of the application of Section 368(a)(2)(D) of the Code,
with the following federal income tax consequences:

(1) Southwest shareholders will recognize no gain
or loss as a result of the exchange of their Southwest
Common Stock solely for shares of MBI Common Stock
pursuant to the Merger, except with respect to cash
received in lieu of fractional shares, if any, as
discussed below.

(2) The aggregate adjusted tax basis of the shares
of MBI Common Stock received by each Southwest
shareholder in the Merger (including any fractional share
of MBI Common Stock deemed to be received, as described
in paragraph (4) below) will be equal to the aggregate
adjusted tax basis of the shares of Southwest Common
Stock surrendered.

(3) The holding period of the shares of MBI Common
Stock received by each Southwest shareholder in the
Merger (including any fractional share of MBI Common
Stock deemed to be received, as described in paragraph 4
below) will include the holding period of the shares of
Southwest Common Stock exchanged therefor.

(4) A Southwest shareholder who receives cash in
the Merger in lieu of a fractional share of MBI Common
Stock will be treated as if the fractional share had been
received by the shareholder in the Merger and then
redeemed by MBI in return for the

- 29 -
<PAGE> 35

cash. The receipt of such cash will cause the recipient to
recognize capital gain or loss equal to the difference between
the amount of cash received and the portion of such holder's
adjusted tax basis in the shares of MBI Common Stock
allocable to the fractional share interest.

(5) A Southwest shareholder who receives only cash
as a result of the exercise of dissenters' rights will
realize gain or loss for federal income tax purposes
(determined separately as to each block of Southwest
Common Stock exchanged) in an amount equal to the
difference between (x) the amount of cash received by
such shareholder, and (y) such shareholder's tax basis
for the shares of Southwest Common Stock surrendered in
exchange therefor, provided that the cash payment does
not have the effect of the distribution of a dividend.
Any such gain or loss will be recognized for federal
income tax purposes and will be treated as capital gain
or loss. However, if the cash payment does have the
effect of the distribution of a dividend, the amount of
taxable income recognized generally will equal the amount
of cash received; such income generally will be taxable
as a dividend; and no loss (or other recovery of such
shareholder's tax basis for the shares of Southwest
Common Stock surrendered in the exchange) generally will
be recognized by such shareholder. The determination of
whether a cash payment has the effect of the distribution
of a dividend will be made pursuant to the provisions and
limitations of Section 302 of the Code, taking into
account the constructive stock ownership rules of Section
318 of the Code. See "Impact of Section 302 of the
Code," below.

IMPACT OF SECTION 302 OF THE CODE. With regard to
dissenters, the determination of whether a cash payment has the
effect of the distribution of a dividend generally will be made
pursuant to the provisions of Section 302 of the Code. A cash
payment to a Southwest shareholder will be considered not to have
the effect of the distribution of a dividend under Section 302 of
the Code and such shareholder will recognize capital gain or loss
only if the cash payment (i) results in a "complete redemption" of
such shareholder's actual and constructive stock interest, (ii)
results in a "substantially disproportionate" reduction in such
shareholder's actual and constructive stock interest or (iii) is
"not essentially equivalent to a dividend."

A cash payment will result in a "complete redemption" of
a shareholder's stock interest and such shareholder will recognize
capital gain or loss if such shareholder does not actually or
constructively own any stock after the receipt of the cash payment.
A reduction in a shareholder's stock interest will be
"substantially disproportionate" and such shareholder will
recognize capital gain or loss if (i) the percentage of outstanding
shares actually and constructively owned by such shareholder after
the receipt of the cash payment is less than four-fifths (i.e.,
----
80%) of the percentage of outstanding shares actually and
constructively owned by such shareholder immediately prior to the
receipt of the cash payment and (ii) such shareholder actually and
constructively owns less than 50% of the number of shares
outstanding after the receipt of the cash payment. A cash payment
will qualify as "not essentially equivalent to a dividend" and a
shareholder will recognize capital gain or loss if it results in a
meaningful reduction in the percentage of outstanding shares
actually and constructively owned by such shareholder. No specific
tests apply to determine whether a reduction in a shareholder's
ownership interest is meaningful; rather, such determination will
be made based on all the facts and circumstances applicable to such
Southwest shareholder. No general guidelines dictating the
appropriate interpretation of facts and circumstances have been
announced by the courts or issued by the Internal Revenue Service
(the "Service"). However, the Service has indicated in Revenue
Ruling 76-385 that a minority shareholder (i.e., a holder who
----
exercises no control over corporate affairs and whose proportionate
stock interest is minimal in relation to the number of shares
outstanding) generally is treated as having had a "meaningful

- 30 -
<PAGE> 36

reduction" in interest if a cash payment reduces such holder's
actual and constructive stock ownership to any extent.

Under the traditional analysis (which apparently
continues to be used by the Service), Section 302 of the Code will
apply as though the cash payment were made by Southwest in a
hypothetical redemption of Southwest Common Stock immediately prior
to, and in a transaction separate from, the Merger (a "deemed
Southwest redemption"). Thus, under the traditional analysis, the
determination of whether a cash payment results in a complete
redemption of interest, qualifies as a substantially
disproportionate reduction of interest, or is not essentially
equivalent to a dividend will be made by comparing (x) the
shareholder's actual and constructive stock interest in Southwest
before the deemed Southwest redemption, with (y) such shareholder's
actual and constructive stock interest in Southwest after the
deemed Southwest redemption (but before the Merger). However, the
law is unclear regarding whether the deemed redemption approach of
the Service is correct, and Counsel has rendered no opinion on the
correctness of the Service's approach. Counsel has noted in its
opinion that some tax practitioners believe that the determination
of whether a cash payment has the effect of a distribution of a
dividend should be made as if the Southwest Common Stock exchanged
for cash in the Merger had instead been exchanged in the Merger for
shares of MBI Common Stock followed immediately by a redemption of
such shares by MBI for the cash payment (a "deemed MBI
redemption"). Under this analysis, the determination of whether a
cash payment satisfies any of the foregoing tests would be made by
comparing (i) the shareholder's actual and constructive stock
interest in MBI before the deemed MBI redemption (determined as if
such shareholder had received solely MBI Common Stock in the
Merger) with (ii) such shareholder's actual and constructive stock
interest in MBI after the deemed MBI redemption. Because this
analysis is more likely to result in capital gain treatment than
the traditional analysis, each Southwest shareholder who receives
solely cash in exchange for all of the Southwest Common Stock he or
she actually owns should consult his or her own tax advisor with
regard to the proper treatment of such cash.

The determination of ownership for purposes of the three
foregoing tests will be made by taking into account both shares
owned actually by such shareholder and shares owned constructively
by such shareholder pursuant to Section 318 of the Code. Under
Section 318 of the Code, a shareholder will be deemed to own stock
that is actually or constructively owned by certain members of his
or her family (spouse, children, grandchildren and parents) and
other related parties including, for example, certain entities in
which such shareholder has a direct or indirect interest (including
partnerships, estates, trusts and corporations), as well as shares
of stock that such shareholder (or a related person) has the right
to acquire upon exercise of an option or conversion right. Section
302(c)(2) of the Code provides certain exceptions to the family
attribution rules for the purpose of determining whether a complete
redemption of a shareholder's interest has occurred for purposes of
Section 302 of the Code.

Because the determination of whether a payment will be
treated as having the effect of the distribution of a dividend will
generally depend upon the facts and circumstances of each Southwest
shareholder, Southwest shareholders are strongly advised to consult
their own tax advisors regarding the tax treatment of cash received
in the Merger.

Southwest has received from Counsel an opinion to the
effect that the Merger will be a "reorganization" for federal
income tax purposes under Section 368(a)(1)(A) of the Code, by
reason of Section 368(a)(2)(D) of the Code, and that the federal
income tax consequences of the Merger are in all material respects
as described in this section. The opinion is available without
charge upon written request to Jon W. Bilstrom, General Counsel and
Secretary, Mercantile Bancorporation Inc., P.O. Box 524, St. Louis,
Missouri 63166-0524. Such opinion is subject to the conditions and
assumptions stated therein and relies on various representations
made by MBI, Southwest and certain shareholders of Southwest. An
opinion of counsel, unlike a private letter ruling from the
Service, has no binding effect on the Service. The Service could
take a position contrary to counsel's opinion and, if the matter is
litigated,

- 31 -
<PAGE> 37

a court may reach a decision contrary to the opinion. The
Service is not expected to issue a ruling on the tax effects
of the Merger, and no such ruling has been requested.

THE FOREGOING IS A GENERAL DISCUSSION OF THE MATERIAL
FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER AND IS INCLUDED FOR
GENERAL INFORMATION ONLY. THE FOREGOING DISCUSSION DOES NOT TAKE
INTO ACCOUNT THE PARTICULAR FACTS AND CIRCUMSTANCES OF EACH
SOUTHWEST SHAREHOLDER'S TAX STATUS AND ATTRIBUTES. AS A RESULT,
THE FEDERAL INCOME TAX CONSEQUENCES ADDRESSED IN THE FOREGOING
DISCUSSION MAY NOT APPLY TO EACH SOUTHWEST SHAREHOLDER. IN VIEW OF
THE INDIVIDUAL NATURE OF INCOME TAX CONSEQUENCES, EACH SOUTHWEST
SHAREHOLDER SHOULD CONSULT HIS OR HER OWN TAX ADVISOR REGARDING THE
SPECIFIC TAX CONSEQUENCES OF THE MERGER TO SUCH SHAREHOLDER,
INCLUDING THE APPLICATION AND EFFECT OF FEDERAL, STATE, LOCAL AND
OTHER TAX LAWS AND THE POSSIBLE EFFECTS OF CHANGES IN FEDERAL AND
OTHER TAX LAWS.

RIGHTS OF DISSENTING SHAREHOLDERS OF SOUTHWEST
----------------------------------------------

Each holder of Southwest Common Stock has the right to
dissent from the Merger and receive the fair value of such shares
of Southwest in cash if the shareholder follows the procedures set
forth under Section 351.455 of the Missouri Act set forth as Annex
A hereto and the material provisions of which are summarized below.
Under Section 351.455 of the Missouri Act, a holder of Southwest
Common Stock may dissent and ABNK, as the surviving corporation,
will pay to such shareholder the fair value of such shareholder's
shares of Southwest Common Stock as of the day prior to the Special
Meeting if such shareholder (1) files with Southwest prior to or at
the Special Meeting a written objection to the Merger; (2) does not
vote in favor of the approval of the Merger Agreement; and (3)
within 20 days after the Closing Date of the Merger makes written
demand on ABNK for payment of the fair value of the shares held by
such shareholder as of the day prior to the date of the Special
Meeting. MBI will include notice of the Closing Date of the Merger
in its letter to all shareholders of Southwest notifying them of
the procedures to exchange their shares for those of MBI. Such
letter will be sent promptly following the Closing Date of the
Merger. Such demand by a dissenting shareholder shall state the
number of shares owned by such dissenting shareholder. Any
shareholder failing to make demand within the 20-day period shall
be conclusively presumed to have consented to the Merger and shall
be bound by the terms thereof. A PROXY OR VOTE AGAINST THE
APPROVAL OF THE MERGER AGREEMENT WILL NOT, BY ITSELF, BE REGARDED
AS A WRITTEN OBJECTION FOR PURPOSES OF ASSERTING DISSENTERS'
RIGHTS.

If within 30 days after the Closing Date of the Merger,
the value of such shares is agreed upon between the dissenting
shareholder and ABNK, payment therefor shall be made within 90 days
after the Closing Date of the Merger, upon the surrender by such
shareholder of the certificate or certificates representing said
shares. Upon payment of the agreed value, the dissenting
shareholder shall cease to have any interest in such shares or in
ABNK or MBI.

If within 30 days after the Closing Date of the Merger,
the shareholder and ABNK do not agree as to value, then the
dissenting shareholder may, within 60 days after the expiration of
the 30-day period, file a petition in any court of competent
jurisdiction asking for a finding and determination of the fair
value of such shares, and shall be entitled to judgment against
ABNK for the amount of such fair value as of the day prior to the
date of the Special Meeting with interest thereon to the date of
such judgment. The "fair value" determined by the court may be
more or less than the amount offered to Southwest shareholders
under the Merger Agreement. The judgment shall be payable only
upon and

- 32 -
<PAGE> 38

simultaneously with the surrender to ABNK of the certificate
or certificates representing said shares. Upon the payment
of the judgment, the dissenting shareholder shall cease to
have any interest in such shares or in ABNK or MBI. Unless a
dissenting shareholder shall file such petition within such 60-day
period, such shareholder and all persons claiming under such
shareholder shall be conclusively presumed to have approved and
ratified the Merger Agreement, and shall be bound by the terms
thereof.

THE ABOVE SUMMARY OF THE PROVISIONS REGARDING DISSENTERS'
RIGHTS UNDER THE MISSOURI ACT IS QUALIFIED IN ITS ENTIRETY BY THE
TEXT OF SECTION 351.455 OF THE MISSOURI ACT WHICH IS ATTACHED
HERETO AS ANNEX A.
-------

Southwest shareholders who are interested in perfecting
dissenters' rights pursuant to Section 351.455 of the Missouri Act
in connection with the Merger should consult with their counsel for
advice as to the procedures required to be followed.

PRO FORMA FINANCIAL INFORMATION
-------------------------------

COMPARATIVE UNAUDITED PER SHARE DATA

The following table sets forth for the periods indicated
selected historical per share data of MBI and Southwest and the
corresponding pro forma and pro forma equivalent per share amounts
giving effect to the proposed Merger, the acquisitions of UNSL, CMB
and TCB, the proposed acquisitions of Plains Spirit and AmeriFirst
and the acquisition of Ameribanc, Inc. by merger with and into a
wholly owned subsidiary of MBI, which was completed on April 30,
1992 (ABNK is the surviving entity from that merger). The data
presented is based upon the supplemental consolidated financial
statements and related notes of MBI and the consolidated financial
statements and related notes of Southwest, Plains Spirit and
AmeriFirst included in this Proxy Statement/Prospectus or in
documents incorporated herein by reference, and the pro forma
combined consolidated balance sheet and income statements,
including the notes thereto, appearing elsewhere herein. This
information should be read in conjunction with such historical and
pro forma financial statements and related notes thereto. The
assumptions used in the preparation of this table appear in the
notes to the pro forma financial information appearing elsewhere in
this Proxy Statement/Prospectus. See "PRO FORMA FINANCIAL
INFORMATION." This data is not necessarily indicative of the
results of the future operations of the combined organization or
the actual results that would have occurred if the Merger, the
completed mergers of ABNK, UNSL, CMB or TCB or the proposed mergers
of Plains Spirit and AmeriFirst had been consummated prior to the
periods indicated.

- 33 -
<PAGE> 39

<TABLE>
<CAPTION>
MBI/ MBI/ALL Southwest/
Southwest Southwest Entities All Entities
MBI Southwest Pro Forma Pro Forma Pro Forma Pro Forma
Reported Reported Combined<F1> Equivalent<F2> Combined<F3> Equivalent<F2>
-------- --------- ------------ -------------- ------------ --------------
<S> <C> <C> <C> <C> <C> <C>
Book Value per Share:
March 31, 1995 $ 24.12 $ 422.78 $ 24.08 $ 451.74 $ 24.10 $ 452.11
December 31, 1994 23.70 401.26 23.66 443.86 23.69 444.42

Market Price per Share:
At January 27, 1995<F4> $ 34.00 $ 318.47 n/a n/a n/a n/a
At June 7, 1995<F4> 41.50 318.47 n/a n/a n/a n/a

- ------------------------------------
<FN>
<F1> Includes the effect of pro forma adjustments for Southwest and ABNK,
as appropriate. See "PRO FORMA FINANCIAL INFORMATION."

<F2> Based on the pro forma combined per share amounts multiplied by
18.7599, the conversion ratio applicable to one share of Southwest
Common Stock. Further explanation of the assumptions used in the
preparation of the pro forma combined consolidated financial
statements is included in the notes to pro forma financial
statements. See "PRO FORMA FINANCIAL INFORMATION."

<F3> Includes the effect of pro forma adjustments for Southwest, ABNK,
Plains Spirit and AmeriFirst as appropriate. See "PRO FORMA
FINANCIAL INFORMATION."

<F4> The market value of MBI Common Stock was determined as of the last
trading day preceding the public announcement of the proposed
acquisition and as of the latest available date prior to the filing
of the Proxy Statement/Prospectus, based on the last sale price as
reported on the NYSE Composite Tape. There are no publicly available
quotations of Southwest Common Stock. The market value disclosed is
the price paid for Southwest Common Stock in a transaction occurring
in May 1993, the last transaction in Southwest Common Stock for which
a price is known to management of Southwest prior to the public
announcement of the proposed acquisition.
</TABLE>

PRO FORMA COMBINED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

The following unaudited pro forma combined consolidated
balance sheet gives effect to the Merger, the acquisitions of UNSL,
CMB and TCB and the proposed acquisitions of Plains Spirit and
AmeriFirst as if each of the mergers were consummated on
December 31, 1994.

MBI acquired ABNK on April 30, 1992, which acquisition
was accounted for under the purchase method of accounting.
Accordingly, the historical results of operations of MBI include
the results of operations of ABNK from May 1, 1992 forward. The
following pro forma combined consolidated income statements include
the results of operations of ABNK from January 1, 1992 through the
date of acquisition.

The following pro forma combined consolidated income
statements for the three months ended March 31, 1995 and 1994 and
for the years ended December 31, 1994, 1993 and 1992 set forth the
results of operations of MBI combined with the results of
operations of Southwest, UNSL, CMB, Plains Spirit, TCB and
AmeriFirst as if the Merger, the acquisitions of UNSL, CMB and TCB
and the proposed acquisitions of Plains Spirit and AmeriFirst had
occurred as of the first day of the period presented. As

- 34 -
<PAGE> 40

stated above, the pro forma combined consolidated income statements
for the year ended December 31, 1992 include the results of operations
of ABNK from January 1, 1992 through the date of acquisition.

The unaudited pro forma combined consolidated financial
statements should be read in conjunction with the accompanying
Notes to the Pro Forma Combined Consolidated Financial Statements
and with the historical financial statements of MBI, Southwest,
UNSL, CMB, Plains Spirit, TCB, AmeriFirst and ABNK. The historical
interim financial information for the three months ended March 31,
1995 and 1994, used as a basis for the pro forma combined
consolidated financial statements, include all necessary
adjustments, which, in management's opinion, are necessary to
present the data fairly. These pro forma combined consolidated
financial statements may not be indicative of the results of
operations that actually would have occurred if the completed and
proposed mergers had been consummated on the dates assumed above or
of the results of operations that may be achieved in the future.

- 35 -
<PAGE> 41

<TABLE>
MERCANTILE BANCORPORATION INC.
PRO FORMA COMBINED CONSOLIDATED BALANCE SHEET
MARCH 31, 1995
(THOUSANDS)
(UNAUDITED)

MBI, Southwest
Pro Forma
Southwest Combined
MBI<F1> Southwest Adjustments<F2> Consolidated
------- --------- --------------- ------------
<S> <C> <C> <C> <C>
ASSETS
Cash and due from banks. . . . . . . . . . . . $ 680,581 $ 7,113 $ (2,278)<F3> $ 685,416
Due from banks-interest bearing. . . . . . . . 23,441 3,080 26,521
Federal funds sold and repurchase agreements . 146,389 5,425 151,814
Investments in debt and equity securities. . .
Trading. . . . . . . . . . . . . . . . . . 11,542 -- 11,542
Available-for-sale . . . . . . . . . . . . 439,061 35,666 474,727
Held-to-maturity . . . . . . . . . . . . . 3,400,420 -- 3,400,420
----------- ---------- --------- -----------
Total. . . . . . . . . . . . . . . . . 3,851,023 35,666 -- 3,886,689
Loans and leases . . . . . . . . . . . . . . . 10,074,377 126,796 10,201,173
Reserve for possible loan losses . . . . . . . (195,683) (1,093) (196,776)
----------- ---------- --------- -----------
Net Loans and Leases . . . . . . . . . . . 9,878,694 125,703 -- 10,004,397
Other assets . . . . . . . . . . . . . . . . . 570,443 3,597 15,212 <F4> 574,040
(15,212)<F5>

----------- ---------- --------- -----------
Total Assets . . . . . . . . . . . . . . . . $15,150,571 $ 180,584 $ (2,278) $15,328,877
=========== ========== ========= ===========

All Entities
Plains Spirit Pro Forma
AmeriFirst Combined
Plains Spirit AmeriFirst Adjustments<F2><F6> Consolidated
------------- ---------- ------------------- ------------
<S> <C> <C> <C> <C>
ASSETS
Cash and due from banks. . . . . . . . . . . . $ 2,731 $ 6,356 $ (19,725)<F7> $ 640,797
Due from banks-interest bearing. . . . . . . . 4,050 -- (33,981)<F3> 30,571
Federal funds sold and repurchase agreements . -- 3,150 154,964
Investments in debt and equity securities. . .
Trading. . . . . . . . . . . . . . . . . . -- -- 11,542
Available-for-sale . . . . . . . . . . . . 93,385 9,663 577,775
Held-to-maturity . . . . . . . . . . . . . 79,107 17,424 3,496,951
----------- ---------- --------- -------------
Total. . . . . . . . . . . . . . . . . 172,492 27,087 -- 4,086,268
Loans and leases . . . . . . . . . . . . . . . 261,101 116,297 10,578,571
Reserve for possible loan losses . . . . . . . (2,001) (972) (199,749)
----------- ---------- --------- -------------
Net Loans and Leases . . . . . . . . . . . 259,100 115,325 -- 10,378,822
Other assets . . . . . . . . . . . . . . . . . 13,258 4,650 56,376 <F7> 599,572
7,624 <F8>
(56,376)<F9>
14,789 <F10>
(14,789)<F11>
----------- ---------- --------- -------------
Total Assets . . . . . . . . . . . . . . . . $ 451,631 $ 156,568 $ (46,082) $ 15,890,994
=========== ========== ========= =============
</TABLE>

- 36 -
<PAGE> 42

<TABLE>
MERCANTILE BANCORPORATION INC.
PRO FORMA COMBINED CONSOLIDATED BALANCE SHEET
MARCH 31, 1995
(THOUSANDS)
(UNAUDITED)

MBI, Southwest
Pro Forma
Southwest Combined
MBI<F1> Southwest Adjustments<F2> Consolidated
------- --------- --------------- ------------
<S> <C> <C> <C> <C>
LIABILITIES
Deposits
Non-interest bearing . . . . . . . . . . . . $ 1,610,841 $ 18,020 $ -- $ 1,628,861
Interest bearing . . . . . . . . . . . . . . 9,482,958 131,428 9,614,386
Foreign. . . . . . . . . . . . . . . . . . . 239,499 -- 239,499
------------- ------------ -------- --------------
Total Deposits . . . . . . . . . . . . . . 11,333,298 149,448 -- 11,482,746
Federal funds purchased and repurchase
agreements. . . . . . . . . . . . . . . . . . 1,608,407 8,768 1,617,175
Other borrowings . . . . . . . . . . . . . . . 730,271 6,010 736,281
Other liabilities. . . . . . . . . . . . . . . 206,422 1,146 207,568
------------- ------------ -------- --------------

Total Liabilities . . . . . . . . . . . . . 13,878,398 165,372 -- 14,043,770

SHAREHOLDERS' EQUITY
Preferred stock. . . . . . . . . . . . . . . . 12,153 -- -- 12,153

Common stock . . . . . . . . . . . . . . . . . 267,573 360 3,375 <F4> 270,948
(360)<F5>

Capital surplus. . . . . . . . . . . . . . . . 176,011 3,641 626 <F4> 176,637
(3,641)<F5>

Retained earnings. . . . . . . . . . . . . . . 843,710 11,211 11,211 <F4> 854,921
(11,211)<F5>

Treasury stock . . . . . . . . . . . . . . . . (27,274) -- (2,278)<F3> (29,552)
------------- ------------ -------- --------------

Total Shareholders' Equity . . . . . . . . . 1,272,173 15,212 (2,278) 1,285,107
------------- ------------ -------- --------------

Total Liabilities and Shareholders' Equity . $ 15,150,571 $ 180,584 $ (2,278) $ 15,328,877
============= ============ ======== ==============

All Entities
Plains Spirit Pro Forma
AmeriFirst Combined
Plains Spirit AmeriFirst Adjustments<F2><F6> Consolidated
------------- ---------- ------------------- ------------
<S> <C> <C> <C> <C>
LIABILITIES
Deposits
Non-interest bearing . . . . . . . . . . . . $ 6,039 $ 19,186 $ -- $ 1,654,086
Interest bearing . . . . . . . . . . . . . . 265,420 111,471 9,991,277
Foreign. . . . . . . . . . . . . . . . . . . -- -- 239,499
------------- ------------ -------- -------------
Total Deposits . . . . . . . . . . . . . . 271,459 130,657 -- 11,884,862
Federal funds purchased and repurchase
agreements. . . . . . . . . . . . . . . . . . -- 9,100 1,626,275
Other borrowings . . . . . . . . . . . . . . . 114,000 728 851,009
Other liabilities. . . . . . . . . . . . . . . 9,796 1,294 218,658
------------- ------------ -------- -------------

Total Liabilities . . . . . . . . . . . . . 395,255 141,779 -- 14,580,804

SHAREHOLDERS' EQUITY
Preferred stock. . . . . . . . . . . . . . . . -- -- -- 12,153

Common stock . . . . . . . . . . . . . . . . . 20 1,522 7,000 <F7> 281,255
(20)<F9>
3,307 <F10>
(1,522)<F11>

Capital surplus. . . . . . . . . . . . . . . . 23,323 7,128 37,275 <F7> 219,255
(23,323)<F9>
5,343 <F10>
(7,128)<F11>

Retained earnings. . . . . . . . . . . . . . . 33,033 6,139 (33,033)<F9> 861,060
6,139 <F10>
(6,139)<F11>

Treasury stock . . . . . . . . . . . . . . . . -- -- (33,981)<F3> (63,533)
------------- ------------ -------- -------------

Total Shareholders' Equity . . . . . . . . . 56,376 14,789 (46,082) 1,310,190
------------- ------------ -------- -------------

Total Liabilities and Shareholders' Equity . $ 451,631 $ 156,568 $(46,082) $ 15,890,994
============= ============ ======== =============

See notes to pro forma combined consolidated financial statements.
</TABLE>

- 37 -
<PAGE> 43

<TABLE>
MERCANTILE BANCORPORATION INC.
PRO FORMA COMBINED CONSOLIDATED INCOME STATEMENT
FOR THE THREE MONTHS ENDED MARCH 31, 1995
(THOUSANDS EXCEPT PER SHARE DATA)
(UNAUDITED)

MBI, Southwest All Entities
Pro Forma Pro Forma
Combined Plains Combined
MBI<F1> Southwest Consolidated Spirit<F13> AmeriFirst Consolidated
------- --------- ------------ ----------- ---------- ------------

<S> <C> <C> <C> <C> <C> <C>
Interest Income. . . . . . . . . . . . $ 279,789 $ 3,318 $ 283,107 $ 7,655 $ 2,903 $ 293,665
Interest Expense . . . . . . . . . . . 127,046 1,564 128,610 4,324 1,381 134,315
-------------- -------- ------------ -------- -------- -----------

Net Interest Income . . . . . . . . . 152,743 1,754 154,497 3,331 1,522 159,350
Provision for Possible Loan Losses . . 13,975 -- 13,975 60 22 14,057
-------------- -------- ------------ -------- -------- -----------

Net Interest Income after Provision
for Possible Loan Losses. . . . . . 138,768 1,754 140,522 3,271 1,500 145,293
Other Income
Trust . . . . . . . . . . . . . . . . 15,398 -- 15,398 -- -- 15,398
Service charges . . . . . . . . . . . 16,500 123 16,623 362 159 17,144
Credit card fees. . . . . . . . . . . 6,576 -- 6,576 -- -- 6,576
Securities gains (losses) . . . . . . (43) -- (43) -- -- (43)
Other . . . . . . . . . . . . . . . . 18,372 60 18,432 190 42 18,664
-------------- -------- ------------ -------- -------- -----------

Total Other Income. . . . . . . . . 56,803 183 56,986 552 201 57,739
Other Expense
Salaries and employee benefits. . . . 64,758 447 65,205 1,233 623 67,061
Net occupancy and equipment . . . . . 17,129 126 17,255 337 104 17,696
Other . . . . . . . . . . . . . . . . 37,356 307 37,663 563 364 38,590
-------------- -------- ------------ -------- -------- -----------

Total Other Expense . . . . . . . . 119,243 880 120,123 2,133 1,091 123,347
-------------- -------- ------------ -------- -------- -----------

Income Before Income Taxes. . . . . 76,328 1,057 77,385 1,690 610 79,685
Income Taxes . . . . . . . . . . . . . 26,625 363 26,988 580 201 27,769
-------------- -------- ------------ -------- -------- -----------

Net Income. . . . . . . . . . . . . $ 49,703 $ 694 $ 50,397 $ 1,110 $ 409 $ 51,916
============== ======== ============ ======== ======== ===========
Per Share Data
Average Common Shares Outstanding . . 52,919,978 53,527,978 54,524,363
Net Income. . . . . . . . . . . . . . $ 0.93 $ 0.94 $ 0.95

See notes to pro forma combined consolidated financial statements.
</TABLE>

- 38 -
<PAGE> 44

<TABLE>
MERCANTILE BANCORPORATION INC.
PRO FORMA COMBINED CONSOLIDATED INCOME STATEMENT
FOR THE THREE MONTHS ENDED MARCH 31, 1994
(THOUSANDS EXCEPT PER SHARE DATA)
(UNAUDITED)

<S> <C> <C> <C> <C> <C> <C>
Interest Income. . . . . . . . . . . $ 236,106 $ 2,529 $ 238,635 $ 5,628 $ 2,382 $ 246,645
Interest Expense . . . . . . . . . . 90,791 1,217 92,008 2,635 1,090 95,733
-------------- -------- ------------ -------- -------- -----------

Net Interest Income . . . . . . . . 145,315 1,312 146,627 2,993 1,292 150,912
Provision for Possible Loan Losses 8,879 -- 8,879 40 43 8,962
-------------- -------- ------------ -------- -------- -----------

Net Interest Income after Provision
for Possible Loan Losses. . . . . 136,436 1,312 137,748 2,953 1,249 141,950
Other Income
Trust . . . . . . . . . . . . . . . 15,877 -- 15,877 -- -- 15,877
Service charges . . . . . . . . . . 17,034 121 17,155 730 144 18,029
Credit card fees. . . . . . . . . . 5,858 -- 5,858 -- -- 5,858
Securities gains. . . . . . . . . . 1,418 -- 1,418 654 6 2,078
Other . . . . . . . . . . . . . . . 14,907 54 14,961 109 54 15,124
-------------- -------- ------------ -------- -------- -----------

Total Other Income. . . . . . . . 55,094 175 55,269 1,493 204 56,966
Other Expense
Salaries and employee benefits. . . 63,777 439 64,216 1,302 648 66,166
Net occupancy and equipment . . . . 17,526 125 17,651 323 106 18,080
Other . . . . . . . . . . . . . . . 38,581 332 38,913 683 381 39,977
-------------- -------- ------------ -------- -------- -----------

Total Other Expense . . . . . . . 119,884 896 120,780 2,308 1,135 124,223
-------------- -------- ------------ -------- -------- -----------

Income Before Income Taxes. . . . 71,646 591 72,237 2,138 318 74,693
Income Taxes . . . . . . . . . . . . 26,051 215 26,266 742 104 27,112
-------------- -------- ------------ -------- -------- -----------

Net Income. . . . . . . . . . . . $ 45,595 $ 376 $ 45,971 $ 1,396 $ 214 $ 47,581
============== ======== ============ ======== ======== ===========

Per Share Data
Average Common Shares Outstanding 51,723,559 52,331,559 53,327,944
Net Income. . . . . . . . . . . . . $ 0.88 $ 0.87 $ 0.89

See notes to pro forma combined consolidated financial statements.
</TABLE>

- 39 -
<PAGE> 45

<TABLE>
MERCANTILE BANCORPORATION INC.
PRO FORMA COMBINED CONSOLIDATED INCOME STATEMENT
FOR THE YEAR ENDED DECEMBER 31, 1994
(THOUSANDS EXCEPT PER SHARE DATA)
(UNAUDITED)

<S> <C> <C> <C> <C> <C> <C>
Interest Income. . . . . . . . . . . $ 994,896 $ 11,318 $ 1,006,214 $ 24,807 $ 10,482 $ 1,041,503
Interest Expense . . . . . . . . . . 399,349 5,205 404,554 12,271 4,916 421,741
-------------- -------- ------------ -------- -------- -----------

Net Interest Income . . . . . . . . 595,547 6,113 601,660 12,536 5,566 619,762
Provision for Possible Loan Losses 43,201 -- 43,201 200 (123) 43,278
-------------- -------- ------------ -------- -------- -----------

Net Interest Income after Provision
for Possible Loan Losses. . . . . 552,346 6,113 558,459 12,336 5,689 576,484
Other Income
Trust . . . . . . . . . . . . . . . 60,769 -- 60,769 -- -- 60,769
Service charges . . . . . . . . . . 68,783 494 69,277 2,191 626 72,094
Credit card fees. . . . . . . . . . 24,895 -- 24,895 -- -- 24,895
Securities gains. . . . . . . . . . 1,727 36 1,763 734 7 2,504
Other . . . . . . . . . . . . . . . 53,584 265 53,849 322 143 54,314
-------------- -------- ------------ -------- -------- -----------

Total Other Income. . . . . . . . 209,758 795 210,553 3,247 776 214,576
Other Expense
Salaries and employee benefits. . . 258,546 1,746 260,292 4,869 2,645 267,806
Net occupancy and equipment . . . . 69,784 541 70,325 1,341 454 72,120
Other . . . . . . . . . . . . . . . 163,740 1,283 165,023 2,542 1,443 169,008
-------------- -------- ------------ -------- -------- -----------

Total Other Expense . . . . . . . 492,070 3,570 495,640 8,752 4,542 508,934
-------------- -------- ------------ -------- -------- -----------

Income Before Income Taxes. . . . 270,034 3,338 273,372 6,831 1,923 282,126
Income Taxes . . . . . . . . . . . . 101,705 1,064 102,769 2,359 680 105,808
-------------- -------- ------------ -------- -------- -----------

Net Income. . . . . . . . . . . . $ 168,329 $ 2,274 $ 170,603 $ 4,472 $ 1,243 $ 176,318
============== ======== ============ ======== ======== ===========

Per Share Data
Average Common Shares Outstanding 51,957,002 52,565,002 53,561,387
Net Income. . . . . . . . . . . . . $ 3.22 $ 3.22 $ 3.27

See notes to pro forma combined consolidated financial statements.
</TABLE>

- 40 -
<PAGE> 46
<TABLE>

MERCANTILE BANCORPORATION INC.
PRO FORMA COMBINED CONSOLIDATED INCOME STATEMENT
FOR THE YEAR ENDED DECEMBER 31, 1993
(THOUSANDS EXCEPT PER SHARE DATA)
(UNAUDITED)

MBI, Southwest All Entities
Pro Forma Pro Forma
Combined Plains Combined
MBI<F1> Southwest Consolidated Spirit<F12> AmeriFirst Consolidated
--------- ---------- ------------ ----------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Interest Income. . . . . . . . . . . . . . $ 971,482 $ 10,047 $ 981,529 $ 23,774 $ 9,661 $ 1,014,964
Interest Expense . . . . . . . . . . . . . 390,911 4,900 395,811 11,569 4,341 411,721
----------- --------- ----------- --------- --------- -----------

Net Interest Income . . . . . . . . . . . 580,571 5,147 585,718 12,205 5,320 603,243
Provision for Possible Loan Losses . . . . 63,513 -- 63,513 706 124 64,343
----------- --------- ----------- --------- --------- -----------

Net Interest Income after Provision
for Possible Loan Losses. . . . . . . . 517,058 5,147 522,205 11,499 5,196 538,900
Other Income
Trust . . . . . . . . . . . . . . . . . . 61,996 -- 61,996 -- -- 61,996
Service charges . . . . . . . . . . . . . 67,144 511 67,655 1,921 551 70,127
Credit card fees. . . . . . . . . . . . . 24,312 -- 24,312 -- -- 24,312
Securities gains. . . . . . . . . . . . . 5,121 -- 5,121 1,477 -- 6,598
Other . . . . . . . . . . . . . . . . . . 61,130 201 61,331 360 160 61,851
----------- --------- ----------- --------- --------- -----------

Total Other Income. . . . . . . . . . . 219,703 712 220,415 3,758 711 224,884
Other Expense
Salaries and employee benefits. . . . . . 245,469 1,692 247,161 4,656 2,437 254,254
Net occupancy and equipment . . . . . . . 70,911 496 71,407 1,248 419 73,074
Other . . . . . . . . . . . . . . . . . . 191,663 1,346 193,009 2,626 1,430 197,065
----------- --------- ----------- --------- --------- -----------

Total Other Expense . . . . . . . . . . 508,043 3,534 511,577 8,530 4,286 524,393
----------- --------- ----------- --------- --------- -----------

Income Before Income Taxes. . . . . . . 228,718 2,325 231,043 6,727 1,621 239,391
Income Taxes . . . . . . . . . . . . . . . 85,467 786 86,253 2,459 557 89,269
----------- --------- ----------- --------- --------- -----------
Net Income Before Change in
Accounting Principle. . . . . . . . . $ 143,251 $ 1,539 $ 144,790 $ 4,268 $ 1,064 $ 150,122
=========== ========= =========== ========= ========= ===========

Per Share Data
Average Common Shares Outstanding . . . . 50,965,103 51,573,103 52,569,488
Net Income Before Change in Accounting
Principle . . . . . . . . . . . . . . . $ 2.79 $ 2.78 $ 2.83

See notes to pro forma combined consolidated financial statements.
</TABLE>

- 41 -
<PAGE> 47

<TABLE>
MERCANTILE BANCORPORATION INC.
PRO FORMA COMBINED CONSOLIDATED INCOME STATEMENT
FOR THE YEAR ENDED DECEMBER 31, 1992
(THOUSANDS EXCEPT PER SHARE DATA)
(UNAUDITED)

<CAPTION>
MBI, ABNK
MBI, ABNK Southwest All Entities
Pro Forma Pro Forma Pro Forma
Combined Combined Plains Combined
MBI<F1> Consolidated<F14> Southwest Consolidated Spirit<F12> AmeriFirst Consolidated
--------- ----------------- --------- ------------ ----------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Interest Income. . . . . . . . . . . . $ 1,011,544 $ 1,040,492 $ 11,363 $ 1,051,855 $ 26,962 $ 9,844 $ 1,088,661
Interest Expense . . . . . . . . . . . 485,253 501,802 6,354 508,156 16,385 4,905 529,446
----------- ----------- --------- ----------- -------- ------- -----------

Net Interest Income . . . . . . . . . 526,291 538,690 5,009 543,699 10,577 4,939 559,215
Provision for Possible Loan Losses . . 77,874 79,787 155 79,942 583 154 80,679
----------- ----------- --------- ----------- -------- ------- -----------

Net Interest Income after Provision
for Possible Loan Losses. . . . . . 448,417 458,903 4,854 463,757 9,994 4,785 478,536
Other Income
Trust . . . . . . . . . . . . . . . . 58,222 58,835 -- 58,835 -- -- 58,835
Service charges . . . . . . . . . . . 62,670 64,813 492 65,305 1,280 533 67,118
Credit card fees. . . . . . . . . . . 21,658 21,745 -- 21,745 -- -- 21,745
Securities gains. . . . . . . . . . . 5,590 5,590 10 5,600 477 -- 6,077
Other . . . . . . . . . . . . . . . . 53,825 55,091 289 55,380 139 122 55,641
----------- ----------- --------- ----------- -------- ------- -----------

Total Other Income. . . . . . . . . 201,965 206,074 791 206,865 1,896 655 209,416
Other Expense
Salaries and employee benefits. . . . 217,749 224,948 1,733 226,681 3,880 2,169 232,730
Net occupancy and equipment . . . . . 62,470 64,466 508 64,974 927 394 66,295
Other . . . . . . . . . . . . . . . . 191,684 196,930 1,496 198,426 2,604 1,432 202,462
----------- ----------- --------- ----------- -------- ------- -----------

Total Other Expense . . . . . . . . 471,903 486,344 3,737 490,081 7,411 3,995 501,487
----------- ----------- --------- ----------- -------- ------- -----------

Income Before Income Taxes. . . . . 178,479 178,633 1908 180,541 4,479 1,445 186,465
Income Taxes . . . . . . . . . . . . . 61,072 60,990 671 61,661 1,718 494 63,873
----------- ----------- --------- ----------- -------- ------- -----------
Net Income Before Change in
Accounting Principle. . . . . . . $ 117,407 $ 117,643 $ 1,237 $ 118,880 $ 2,761 $ 951 $ 122,592
=========== =========== ========= =========== ======== ======= ===========

Per Share Data
Average Common Shares Outstanding . . 47,275,834 47,972,446 48,580,446 49,576,831
Net Income Before Change in Accounting
Principle . . . . . . . . . . . . . $ 2.42 $ 2.39 $ 2.38 $ 2.41

See notes to pro forma combined consolidated financial statements.
</TABLE>

- 42 -
<PAGE> 48

MERCANTILE BANCORPORATION INC.
NOTES TO PRO FORMA COMBINED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

[FN]
<F1> Represents MBI restated historical consolidated financial
statements reflecting the acquisition of UNSL effective January
3, 1995 and the acquisitions of CMB and TCB effective May 1,
1995, each of which was accounted for as a pooling-of-
interests.

<F2> The acquisitions of Southwest and AmeriFirst will be accounted
for as poolings-of-interests.

<F3> As part of an ongoing stock repurchase program, MBI will
repurchase 1,132,000 shares of its own common stock in the open
market.

<F4> Acquisition of Southwest with 675,000 shares of MBI Common
Stock.

<F5> Elimination of MBI's investment in Southwest.

<F6> The acquisition of Plains Spirit will be accounted for as a
purchase transaction. Purchase accounting adjustments are
considered immaterial to the income statements of the pro
forma combined entity.

<F7> Purchase entry of Plains Spirit with consideration of $64
million consisting of cash and 1,400,000 shares of MBI Common
Stock at $31.625 per share, which was the closing price on
December 22, 1994, the day preceding the execution of the
definitive merger agreement.

<F8> The pro forma excess of cost over fair value of net assets
acquired ("goodwill") was $7,624,000 as of March 31, 1995.
This amount may vary depending on final purchase price
adjustments and adjustment to equity of Plains Spirit for
income, dividends and FAS 115 prior to the closing date of the
acquisition. See footnote (6) above.

<F9> Elimination of MBI's investment in Plains Spirit.

<F10> Acquisition of AmeriFirst with 661,385 shares of MBI Common
Stock.

<F11> Elimination of MBI's investment in AmeriFirst.

<F12> Plains Spirit's fiscal year end is September 30, so those
amounts are used for the December 31, 1994, 1993 and 1992
pro forma income statements.

<F13> Plains Spirit's fiscal year end is September 30, so the
three months ending December 31 amounts are used for the
March 31, 1995 and 1994 pro forma income statements.

<F14> The acquisition of ABNK by MBI, on April 30, 1992, was
accounted for as a purchase transaction. The MBI historical
financial data includes ABNK from the date of acquisition.
The results of operations of ABNK were included in the MBI
pro forma combined income statement from January 1, 1992.

- 43 -
<PAGE> 49

INFORMATION REGARDING SOUTHWEST
-------------------------------

BUSINESS

GENERAL. Southwest, a registered bank holding company
under the BHCA and headquartered in Bolivar, Missouri, is engaged
primarily in the banking business in several southwestern Missouri
communities. As of March 31, 1995, Southwest had consolidated
total assets of $181 million. For the three month period ended
March 31, 1995, Southwest reported consolidated net income of
$694,000, or $19.30 per share.

BANK, FACILITIES AND MARKET AREA. Southwest Bank is a
community bank operating facilities in several communities in
southwest Missouri and has historically emphasized single family
real estate loans, both for the construction and purchase of new
residences and for the refinancing of existing residences. Also,
commercial and installment loans to local businesses and consumers
are emphasized. Southwest Bank, with its various locations,
includes rural, small community and large city markets. These
areas range from the growing and prosperous town of Bolivar, to the
ever expanding city of Springfield, to the lake resort area of
Hermitage and to the rural communities of Humansville, Buffalo and
surrounding areas. The main banking office is located in Bolivar,
Missouri, with facilities located in Springfield, Republic,
Buffalo, Hermitage, Weaubleau, Cross Timbers, Humansville, Fair
Grove and Fair Play, Missouri.

Southwest Bank offers a full range of financial services
to individual and commercial customers, including short and medium
term loans, real estate loans, agricultural loans, installment and
consumer loans, and equipment financing. In addition, each
location offers safe deposit box rental, interest and non-interest
bearing checking accounts along with savings accounts and
certificates of deposit. Upon request, credit cards are issued
through Mercantile Bank of Illinois National Association.
Southwest Bank also has trust powers and offers trust services to
all customers. Southwest also owns and operates an insurance
agency.

Southwest receives dividends from Southwest Bank. These
dividends are declared periodically and are only in the amount
needed by Southwest to pay its expenses and retire its debt. No
charges for services supplied by Southwest are made.

COMPETITION. The activities in which Southwest Bank
engages are highly competitive. Those activities in the geographic
markets served involve primarily competition with other banks, most
of which are affiliated with larger bank holding companies.
Competition among financial institutions is based upon interest
rates offered on deposit accounts, interest rates charged on loans
and other credit and service charges, the quality of services
rendered, the convenience of banking facilities and, in the case of
loans to large commercial borrowers, relative lending limits.

In addition to competition with other banks within its
primary service areas, Southwest Bank also competes with other
financial institutions, such as savings and loan associations,
credit unions, industrial loan associations, securities firms,
insurance companies, small loan companies, finance companies,
mortgage companies, real estate investment trusts, certain
governmental agencies, credit organizations and other enterprises.
Additional competition for depositors' funds comes from United
States Government securities, private issuers of debt obligations,
mutual funds and suppliers of other investment alternatives
for depositors. Many of Southwest Bank's non-bank competitors
are not subject to the same extensive federal regulations that
govern bank holding companies and federally insured banks

- 44 -
<PAGE> 50
and state regulations governing state chartered banks. As a
result, such non-bank competitors may have certain advantages over
Southwest Bank in providing some services.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

This section presents an analysis of the consolidated
financial condition of Southwest and its subsidiary at December 31,
1994 and 1993 and the consolidated results of operations for the
years ended December 31, 1994, 1993 and 1992. This review should
be read in conjunction with the consolidated financial statements,
notes to consolidated financial statements and other financial data
presented elsewhere in this Proxy Statement/Prospectus.

DECEMBER 31, 1994, 1993 AND 1992

RESULTS OF OPERATION

NET INCOME. Net income for the year ended December 31,
1994, was $2.3 million, or $63.19 per share, which represents an
increase of 47.7% over the prior year's respective figures of $1.5
million and $42.92 per share. The improvement in net income was
primarily due to a $1.0 million increase in net interest income and
tight operating expense controls. Total operating expenses for the
year ended December 31, 1994 increased by approximately $36,000
over 1993, which represents an increase of one percent.

Net income for the year ended December 31, 1993 was $1.5
million, or $42.92 per share, which represents an increase of 24.4%
over the prior year's figures of $1.2 million and $35.82 per share,
respectively. The primary reason for this increase was a $185,000
decrease in operating expenses and a $293,000 increase in net
interest income after provision for loan losses.

NET INTEREST INCOME. The $1.0 million improvement in
net interest income for the year ended December 31, 1994, as
compared to the year ended December 31, 1993, was primarily due to
a 6.3% increase in net loans during 1994 and an improved net
interest margin. The increase in net loans allowed Southwest Bank
to have a better mix of earning assets which resulted in interest
income on loans increasing by $1.4 million for the year ended
December 31, 1994.

Net interest income increased during the year ended
December 31, 1993 by $138,000, or 2.8%, as compared to 1992. This
improvement resulted from a higher level and a more profitable mix
of earning assets.

The following table sets forth certain information
relating to Southwest's average consolidated statements of
financial condition and reflects the yield on average assets and
cost of average liabilities for the periods indicated. Such yields
and costs are derived by dividing income or expense by the average
balance of assets or liabilities.

- 45 -
<PAGE> 51

<TABLE>
AVERAGE BALANCES, YIELDS AND RATES
<CAPTION>
YEAR ENDED DECEMBER 31
------------------------------------------------------------
1994 1993
------------------------------ -----------------------------
AVERAGE AVERAGE
INTEREST YIELD/ INTEREST YIELD/
AVERAGE INCOME/ RATE AVERAGE INCOME/ RATE
BALANCE<F2> EXPENSE PAID BALANCE<F2> EXPENSE PAID
----------- -------- ------- ----------- -------- -------
(dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Loans (net of unearned interest) (1) . . . . $ 123,474 $ 9,438 7.64% $110,138 $ 8,026 7.29%
Investment securities: (3)
Taxable . . . . . . . . . . . . . . . . . . 30,798 1,344 4.36 34,279 1,567 4.57
Tax exempt (4). . . . . . . . . . . . . . . 1,200 69 5.75 1,173 69 5.88
Equity investments. . . . . . . . . . . . . 1,185 64 5.40 999 64 6.41
Interest-bearing deposits. . . . . . . . . . 5,388 189 3.51 5,802 140 2.41
Federal funds sold . . . . . . . . . . . . . 4,008 214 5.34 4,935 181 3.67
--------- ------- -------- -------
Total interest earning assets/
interest income/overall yield . . . . . . . 166,053 11,318 6.82 157,326 10,047 6.39
Allowance for loan losses. . . . . . . . . . (1,090) (1,125)
Noninterest-bearing deposits and cash. . . . 6,079 5,748
Other assets . . . . . . . . . . . . . . . . 3,380 2,867
--------- --------

Total assets. . . . . . . . . . . . . . . . $ 174,422 $164,816
========= ========

LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing demand deposits . . . . . . $ 49,306 $ 1,646 3.34% $ 42,926 $ 1,396 3.25%
Savings deposits . . . . . . . . . . . . . . 12,005 330 2.75 11,063 304 2.75
Time deposits. . . . . . . . . . . . . . . . 62,474 2,469 3.95 64,148 2,592 4.04
Repurchase agreements. . . . . . . . . . . . 9,058 366 4.04 10,116 324 3.20
Long-term debt . . . . . . . . . . . . . . . 6,623 394 5.95 4,892 284 5.81
--------- ------- -------- -------
Total interest-bearing liabilities/
interest expense/overall rate . . . . . . 139,466 5,205 3.73 133,145 4,900 3.68
Demand deposits. . . . . . . . . . . . . . . 20,392 19,067
Other liabilities. . . . . . . . . . . . . . 988 835
Total liabilities . . . . . . . . . . . . . 160,846 153,047
Shareholders' equity . . . . . . . . . . . . 13,576 11,769
--------- --------
Total liabilities and
shareholders' equity. . . . . . . . . . . $ 174,422 $164,816
========= ========

Net interest income/
interest rate spread. . . . . . . . . . . . $ 6,113 3.09% $ 5,147 2.71%
======= ===== ======= =====

Net earning assets/net yield on average
interest-earning assets . . . . . . . . . . $ 26,587 3.68% $ 24,181 3.27%
========= ===== ======== =====
<FN>
- --------------------
<F1> Average balances include nonaccrual loans and loans 90 days
or more past due.
<F2> Average balances for a period have been calculated using the
average of month-end balances during such period.
<F3> Investments for 1993 stated at amortized costs. Investments
for 1994 stated at fair market value under SFAS 115.
<F4> Interest and yields are presented based upon actual amounts
earned.
</TABLE>

- 46 -
<PAGE> 52

The following table sets forth changes in net interest income
attributable to changes in the volume of interest-earning assets and
interest-bearing liabilities compared to changes in interest rates for
the periods indicated.

<TABLE>

VOLUME AND RATE VARIANCE
<CAPTION>

INCREASE (DECREASE) ATTRIBUTABLE TO CHANGE IN
--------------------------------------------------------------------------
YEAR ENDED YEAR ENDED
DECEMBER 31, 1994 DECEMBER 31, 1993
COMPARED TO COMPARED TO
DECEMBER 31, 1993 DECEMBER 31, 1992
-------------------------------- --------------------------------------
RATE/ RATE/
RATE VOLUME VOLUME NET RATE VOLUME VOLUME NET
---- ------ ------ --- ---- ------ ------ ---
(dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
INTEREST INCOME
Interest-earning assets:
Loans <F1> . . . . . . . . . . . . .$ 393 $ 971 $ 48 $ 1,412 $ (885) $ 1,076 $ (119) $ 72
Investment securities:
Taxable. . . . . . . . . . . . . . (71) (159) 7 (223) (896) (359) 119 (1,136)
Tax exempt <F2>. . . . . . . . . . (2) 2 -- -- -- (11) -- (11)
Equity investments . . . . . . . . (10) 12 (2) -- 9 6 2 17
Interest-bearing deposits. . . . . . 64 (10) (5) 49 (112) (222) 60 (274)
Federal funds sold . . . . . . . . . 82 (34) (15) 33 22 (5) (1) 16
----- ----- ------ -------- -------- -------- -------- --------
Total interest income. . . . . . . 456 782 33 1,271 (1,862) 485 61 (1,316)

INTEREST EXPENSE
Interest-bearing demand deposits . . 37 207 6 250 (321) 255 (54) (120)
Savings deposits . . . . . . . . . . -- 26 -- 26 (11) (1) -- (12)
Time deposits. . . . . . . . . . . . (57) (68) 2 (123) (887) (633) 141 (1,379)
Repurchase agreements. . . . . . . . 85 (34) (9) 42 (70) 78 (16) (8)
Long-term debt . . . . . . . . . . . 7 101 2 110 16 46 4 66
----- ----- ------ -------- -------- -------- -------- --------
Total interest expense . . . . . . 72 232 1 305 (1,273) (255) 75 (1,453)
----- ----- ------ -------- -------- -------- -------- --------
Net interest income. . . . . . . .$ 384 $ 550 $ 32 $ 966 $ (589) $ 740 $ (14) $ 137
===== ===== ====== ======== ======== ======== ======== ========
<FN>
- --------------------

<F1> Average balances include nonaccrual loans and loans 90 days
or more past due.
<F2> Presented on actual amounts earned.

</TABLE>

NONINTEREST INCOME. The following table sets forth
Southwest's noninterest income for the periods indicated.

<TABLE>
NONINTEREST INCOME
<CAPTION>
YEAR ENDED DECEMBER 31
--------------------------
1994 1993 1992
--------------------------
(dollars in thousands)
<S> <C> <C> <C>
Service charges on deposit accounts. . . . $494 $512 $492
Investment securities gains. . . . . . . . 36 -- 10
Other operating income . . . . . . . . . . 265 200 289
---- ---- ----
Total noninterest income . . . . . . . . $795 $712 $791
==== ==== ====

Noninterest income as a percent of
average total assets . . . . . . . . . . . .46% .43% .48%

</TABLE>

- 47 -
<PAGE> 53
Noninterest income for the year ended December 31, 1994
increased by $83,000 as compared to the year ended December 31,
1993. There has been no significant change in noninterest income
over the last three years.

NONINTEREST EXPENSE. The following table sets forth
Southwest's noninterest expenses for the periods indicated.

<TABLE>
NONINTEREST EXPENSE
<CAPTION>
YEAR ENDED DECEMBER 31
----------------------------
1994 1993 1992
----------------------------
(dollars in thousands)
<S> <C> <C> <C>
Salaries and employee benefits . . . $1,746 $1,692 $1,733
Occupancy and equipment expense. . . 541 496 508
FDIC and state assessments . . . . . 342 295 376
Data processing. . . . . . . . . . . 229 236 241
Other operating expense. . . . . . . 712 815 861
------ ------ ------
Total noninterest expense. . . . . $3,570 $3,534 $3,719
====== ====== ======
</TABLE>

Noninterest expenses have shown no significant changes
over the past three years. There has been a $149,000 decrease
between the years ended December 31, 1994 and December 31, 1992.
This decrease represents management's ongoing efforts to control
expenses through consolidation of duties and constant review of
expenses.

FINANCIAL CONDITION, CAPITAL RESOURCES AND LIQUIDITY

LENDING ACTIVITIES. Southwest's major source of income
is interest on loans. The increase in Southwest's loan portfolio
largely reflects Southwest Bank's continued emphasis on mortgage
lending. The following table presents the composition of
Southwest's loan portfolio net of unearned interest at the end of
each of the periods indicated.

<TABLE>
LOAN PORTFOLIO
<CAPTION>
DECEMBER 31
------------------------------------
1994 1993
--------------- -----------------
AMOUNT PERCENT AMOUNT PERCENT
--------------- -----------------
(dollars in thousands)
<S> <C> <C> <C> <C>
Commercial, financial and other. . . . . . $10,965 8.7% $14,572 12.2%
Agricultural . . . . . . . . . . . . . . . 2,893 2.3 3,228 2.7
Real Estate:
Mortgage-residential (1-4 family). . . . 41,624 32.9 37,020 31.1
Mortgage-commercial and multi-family . . 48,983 38.7 41,747 35.1
Construction . . . . . . . . . . . . . . 6,305 5.0 6,589 5.5
Agricultural real estate . . . . . . . . 9,349 7.4 8,973 7.6
Consumer . . . . . . . . . . . . . . . . . 6,403 5.0 6,894 5.8
-------- ------ --------- ------
Total loans. . . . . . . . . . . . . . . 126,522 100.0% 119,023 100.0%
======= =======
Less:
Unearned interest. . . . . . . . . . . . 40 36

-------- ---------
Total loans receivable, net. . . . . . . $126,482 $118,987
======== =========
</TABLE>

- 48 -
<PAGE> 54

The following table sets forth the remaining maturities,
based on contractual maturity dates, for certain loan categories at
December 31, 1994.

<TABLE>
MATURITIES OF LOANS
<CAPTION>
ONE YEAR ONE TO OVER
OR LESS FIVE YEARS FIVE YEARS TOTAL
------- ---------- ---------- -----
(dollars in thousands)
<S> <C> <C> <C> <C>
Commercial, financial and other. . . . . . $6,721 $3,381 $863 $10,965
Agricultural . . . . . . . . . . . . . . . 2,153 158 582 2,893
Real estate construction . . . . . . . . . 4,433 203 1,669 6,305
</TABLE>

<TABLE>
The following table indicates loans with fixed and
adjustable rates which mature in greater than one year.

<CAPTION>
FLOATING OR
ADJUSTING
FIXED RATES RATES
----------- -----------
(dollars in thousands)
<S> <C> <C>
Commercial, financial and other . . . $ 882 $ 3,362
Agricultural. . . . . . . . . . . . . 146 594
Real estate construction. . . . . . . 15 1,857
-------- --------
Total loans . . . . . . . . . . . . $ 1,043 $ 5,813
======== ========
</TABLE>

Southwest makes substantially all its loans to customers
located within Southwest Bank's service areas. Southwest has no
foreign loans or highly leveraged transaction loans as defined by
the Federal Reserve Board.

DISCUSSION OF LENDING ACTIVITIES. Net loans at December
31, 1994, were $126 million, an increase of $7 million from
December 31, 1993, which was primarily due to Southwest Bank's
ongoing business development program.

The quality of the loan portfolio continues to be
preserved by close adherence to prudent underwriting standards.
Loan committees and lending authorities have been appropriately
established in order to ensure compliance with Southwest Bank's
loan policy and documentation procedures. As testimony to the
quality of the loan portfolio, net loan charge offs to average
loans outstanding for the years ended December 31, 1994 and 1993
were 0.01%.

Commercial, financial and other lending activities are
directed primarily towards small- to medium-sized businesses.
Commercial, financial and other loans decreased $3.6 million due to
tighter underwriting standards and a concerted effort to increase
the real estate loan portfolio.

Agricultural loans, including agricultural real estate,
remained steady in 1994 at a level of $12.2 million. These loans
were made primarily to family farms for the purpose of livestock
operations and crop production. Real estate loans increased by
$11.6 million in 1994 to $96.9 million which is 76.6% of the total
loan portfolio.

Residential real estate loans increased by $4.6 million
in 1994 to $41.6 million while construction loans experienced
a nominal decrease of $284,000 to $6.3 million in 1994. The
single largest growth category was commercial and multi-family
real estate loans which increased $7.2 million in 1994

- 49 -
<PAGE> 55
to $49 million. The increases in the respective real estate loan
categories were a direct result of an on-going business
development/marketing program. Consumer loans are primarily loans
to individuals for the purchase of automobiles, boats, recreational
vehicles and other personal and household items. Consumer loans
decreased by $491,000 in 1994.

NONPERFORMING LOANS. Loans that are on a nonaccrual
basis and loans which are contractually past due 90 days or more
totaled $478,000 at December 31, 1994. This represents 0.38% of
the total loan portfolio which is consistent to the 1993 respective
figure of 0.37%.

Loans that are nonperforming and loans that require
frequent attention are reviewed by management monthly or more
frequently whenever it is warranted. If the collection of interest
is doubtful, the loans are placed on nonaccrual status and the
recognition of interest income is stopped. Whenever management
believes that a loan will not be collected in its entirety, the
loan will be charged off at the time the determination of
uncollectability is made.

The following table sets forth the amounts of such loans
at the end of the periods indicated.
<TABLE>
NONPERFORMING ASSETS
<CAPTION>
DECEMBER 31
-------------------
1994 1993
---- ----
(dollars in thousands)
<S> <C> <C>
Nonaccrual loans . . . . . . . . . . . . . . . . . . $ 130 $ 263
Loans contractually past due 90 days or more . . . . 348 182
-------- --------

Total nonperforming loans. . . . . . . . . . . . . 478 445
Foreclosed assets held for sale. . . . . . . . . . . 29 8
-------- --------

Total nonperforming assets . . . . . . . . . . . . $ 507 $ 453
======== ========

Nonperforming loans to total loans . . . . . . . . . 0.38% 0.37%
Nonperforming assets to total loans
plus foreclosed assets held for sale . . . . . . . 0.40 0.38
Nonperforming assets to total assets . . . . . . . . 0.29 0.26
</TABLE>

In 1994, Southwest would have reported an additional
$13,000 in interest income if the nonaccrual loans at December 31,
1994 had been current. Southwest actually reported $2,000 in
interest income for nonaccrual loans at December 31, 1994.

Nonperforming assets increased by $54,000 in 1994. It
should be noted that net loan chargeoffs for 1994 and 1993 were
10,000 and 15,000, respectively. Management considers the
nonperforming loans to be at a reasonable level. In comparison to
peer group banks the percentages are extremely low.

ALLOWANCE FOR LOAN LOSSES. The allowance for loan losses
is based on factors that include the overall composition of the loan
portfolio, class of loans, past due and chargeoff experience, potential
substandard and doubtful credits and other factors that need to be
evaluated in estimating potential loan losses. The adequacy of the
allowance for loan losses is calculated quarterly, using chargeoff
history and any anticipated losses with respect to specific loans
during the systematic review of the loan portfolio. The results of
these reviews are reported to the management and board of directors.

- 50 -
<PAGE> 56
While there can be no assurance that the allowance for loan losses
will be adequate to cover all losses, management believes that the
allowance is adequate. In addition, various regulatory agencies
periodically review the allowance for loan losses, as an integral part
of their examination process.

The following table summarizes, for the period indicated,
activity in the allowance for loan losses, including amounts of
loans charged-off, amounts of recoveries and additions to the
allowance charged to operating expenses, and the ratio of net
charge-offs to the average loans outstanding.

<TABLE>
ALLOWANCE FOR LOAN LOSSES
<CAPTION>
DECEMBER 31
-------------------
1994 1993
---- ----
(dollars in thousands)
<S> <C> <C>
Allowance at beginning of period . . . . . $ 1,103 $ 1,118

Loans charged-off:
Commercial, financial, agricultural
and other. . . . . . . . . . . . . . . 54 20
Real estate:
Construction . . . . . . . . . . . . . -- --
Mortgage . . . . . . . . . . . . . . . 1 25
Consumer . . . . . . . . . . . . . . . . -- --
-------- --------

Total. . . . . . . . . . . . . . . . . . 55 45
-------- --------

Recoveries:
Commercial, financial, agricultural
and other. . . . . . . . . . . . . . . 35 20
Real estate:
Construction . . . . . . . . . . . . . -- --
Mortgage . . . . . . . . . . . . . . . 10 10
Consumer . . . . . . . . . . . . . . . . -- --
-------- --------

Total. . . . . . . . . . . . . . . . . . 45 30
-------- --------

Net loans charged-off. . . . . . . . . . 10 15

Additions to allowance charged to
operating expense. . . . . . . . . . . . -- --
-------- --------

Allowance at end of period . . . . . . . . $ 1,093 $ 1,103
======== ========

Ratio of net loan charge-offs during
period to average loans outstanding. . . 0.01% 0.01%
</TABLE>

Net loan charge-offs were immaterial, less than $20,000,
during 1994 and 1993. Management feels that these small charge-
offs are a further reflection of the adequacy of the allowance for
loan losses, the quality of the loan portfolio and the overall
credit granting procedures.

- 51 -
<PAGE> 57

The following table summarizes Southwest's allocation of
the allowance for loan losses to the various loan categories at the
dates indicated.

<TABLE>
ALLOCATION OF THE ALLOWANCE FOR LOAN LOSSES
<CAPTION>
DECEMBER 31
---------------------------------------------
1994 1993
--------------------- ---------------------
PERCENT PERCENT
OF LOANS OF LOANS
IN EACH IN EACH
CATEGORY CATEGORY
TO TOTAL TO TOTAL
ALLOWANCE LOANS ALLOWANCE LOANS
--------- -------- --------- --------
(dollars in thousands)
<S> <C> <C> <C> <C>
Commercial, financial agricultural
and other . . . . . . . . . . . . . . $ 119 10.6% $ 166 14.6%
Real estate:
Construction. . . . . . . . . . . . . 52 5.0 58 5.5
Mortgage. . . . . . . . . . . . . . . 868 79.4 816 74.1
Consumer. . . . . . . . . . . . . . . . 54 5.0 63 5.8
-------- ------ -------- ------
Total . . . . . . . . . . . . . . . . $ 1,093 100.0% $ 1,103 100.0%
======== ====== ======== ======
</TABLE>

INVESTMENT SECURITIES. The objectives of the investment
portfolio are to provide Southwest with a source of liquidity
through maturities and earnings.

The following table sets forth Southwest's investment
securities portfolio at carrying value at the dates indicated.

<TABLE>
INVESTMENT PORTFOLIO COMPOSITION
<CAPTION>
AT DECEMBER 31
--------------------------------------------
1994 1993
--------------------- ---------------------
BOOK PERCENT OF BOOK PERCENT OF
VALUE<F1> PORTFOLIO VALUE<F2> PORTFOLIO
-------------------- --------------------
(dollars in thousands)
<S> <C> <C> <C> <C>
U.S. Government and agency securities. . . $ 33,345 93.27% $ 30,433 93.47%
State and municipal securities . . . . . . 1,241 3.47 1,116 3.43
Other securities . . . . . . . . . . . . . 1,165 3.26 1,009 3.10
-------- ------- -------- -------
Total. . . . . . . . . . . . . . . . . . $ 35,751 100.00% $ 32,558 100.00%
======== ======= ======== =======
<FN>
- --------------------

<F1> During 1994, Southwest adopted Statement of Financial
Accounting Standards No. 115, Accounting for Certain
Investments in Debt and Equity Securities. The investment
security portfolio at December 31, 1994 was recorded at its
market value. The amortized cost was $36.3 million.

<F2> The market value of Southwest's investment portfolio was
$33.0 million at December 31, 1993.

</TABLE>

- 52 -
<PAGE> 58

<TABLE>
The following table sets forth the maturities and
weighted average yields of the debt securities portfolio at
December 31, 1994.
<CAPTION>
OVER ONE OVER FIVE
ONE YEAR THROUGH THROUGH AFTER
OR LESS FIVE YEARS TEN YEARS TEN YEARS
------------------------- ------------------------- ----------------------- -----------------------
AMORT. MARKET AMORT. MARKET AMORT. MARKET AMORT. MARKET
COST VALUE YIELD<F1> COST VALUE YIELD<F1> COST VALUE YIELD<F1> COST VALUE YIELD<F1>
---- ----- --------- ---- ----- --------- ---- ----- --------- ---- ----- ---------
(dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
U.S. Government and
agency securities . $13,553 $13,361 3.60% $20,255 $19,733 5.56% $ 250 $ 233 6.50% $ 18 $ 18 6.09%
State and municipal
securities. . . . . 616 616 5.45 299 308 6.99 325 317 6.06 -- -- --
------- ------- ------- ------- ----- ----- ---- ----
Total. . . . . . . $14,169 $13,977 3.67% $20,554 $20,041 5.58% $ 575 $ 550 6.25% $ 18 $ 18 6.09%
======= ======= ======= ======= ===== ===== ==== ====
<FN>
- --------------------

<F1> Rates on obligations of state and municipal securities are based
upon actual amounts earned.
</TABLE>

Investment securities increased by $3.2 million at
December 31, 1994 as compared to December 31, 1993. Investments
are selected by management based upon quality, rate of return and
the liquidity needs of Southwest Bank.

DEPOSITS. Southwest has a stable core deposit base from
within its market areas. Southwest has no brokered deposits and it
is management's decision not to accept any such deposits. Deposits
have shown a normal increase over the past two years.

The following table sets forth the distribution of
Southwest's deposit accounts at the dates indicated and the
weighted average nominal interest rates on each category of
deposit.

<TABLE>
DEPOSITS
<CAPTION>
DECEMBER 31
-----------------------------------------------------
1994 1993
------------------------- -------------------------
PERCENT PERCENT
OF OF
AMOUNT DEPOSITS RATE AMOUNT DEPOSITS RATE
------ -------- ---- ------ -------- ----
(dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Demand deposits. . . . . . $ 20,238 13.86% --% $ 19,519 13.61% --%
Savings accounts . . . . . 12,004 8.22 2.75 12,308 8.58 2.75
NOW and MMDA accounts. . . 49,353 33.79 3.34 49,285 34.36 3.25
Time deposits. . . . . . . 64,450 44.13 3.95 62,312 43.45 4.04
-------- ------- -------- -------
Total deposits . . . . . $146,045 100.00% $143,424 100.00%
======== ======= ======== =======
</TABLE>

- 53 -
<PAGE> 59

The following table indicates, as of December 31, 1994,
the amount of Southwest's jumbo certificates of deposit by time
remaining until maturity. Jumbo certificates of deposit require
minimum deposits of $100,000 and rates paid on such accounts are
negotiable.

<TABLE>
AMOUNT AND MATURITIES OF TIME DEPOSITS OF $100,000 OR MORE
<CAPTION>
CERTIFICATES
MATURITY PERIOD OF DEPOSITS
(dollars in thousands)
<S> <C>
Three months or less. . . . . . . . . . . . $2,656
Over three months through six months. . . . 3,727
Over six months through twelve months . . . 4,136
Over twelve months. . . . . . . . . . . . . 1,426
-------

Total . . . . . . . . . . . . . . . . . . . $11,945
=======
</TABLE>

CAPITAL RESOURCES. Financial institutions are required
to maintain capital ratios in accordance with guidelines adopted by
the Federal Reserve Board. These guidelines are commonly known as
"Risk Based Guidelines" as they define the capital level
requirements of a financial institution based upon the level of
risk associated with holding various categories of assets. On
December 31, 1994, Southwest exceeded all capital requirements.

At December 31, 1994 and 1993, Southwest and the
Southwest Bank's capital ratios were as follows.

<TABLE>
CAPITAL RATIOS
<CAPTION>
RISK-BASED
----------------------------------
TOTAL CAPITAL TIER 1 LEVERAGE
------------- ------ --------
DECEMBER 31 DECEMBER 31 DECEMBER 31
----------- ----------- -----------
1994 1993 1994 1993 1994 1993
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Southwest Bancshares, Inc. . . 13.76% 12.52% 12.80% 11.51% 8.22% 7.25%
Southwest Bank . . . . . . . . 14.82 13.61 13.86 12.61 9.01 8.05
</TABLE>

LIQUIDITY. Liquidity is measured by a financial
institution's ability to raise funds through deposits, borrowed
funds or additional capital. Additional sources of liquidity,
including cash flow from both the repayment of loans and the
securitization of assets, are also considered in determining
whether liquidity is satisfactory. Liquidity is also achieved
through growth of core deposits and liquid assets, and access to
the money and capital markets. The funds are used to meet deposit
withdrawals, maintain reserve requirements, fund loans and operate
the organization. The ratio of temporary investments (those
maturing within one year) to volatile liabilities (time deposits
over $100,000) was 117.0% at December 31, 1994. Core deposits,
defined as demand deposits, NOW accounts, and total savings and
certificates of deposit less than $100,000 were 91.8% and 91.9% of
total deposits at December 31, 1994 and 1993, respectively.

- 54 -
<PAGE> 60

The following table sets forth certain information regarding
short-term borrowings for the periods indicated.

<TABLE>
SHORT-TERM BORROWINGS
<CAPTION>
DECEMBER 31
-----------
1994 1993
---- ----
(dollars in thousands)
<S> <C> <C>
Securities sold under agreement to repurchase:
End of period balance . . . . . . . . . . . . . . . . . . $7,752 $8,781
Maximum amount outstanding at any month-end . . . . . . . 10,720 11,176
Average balance outstanding during the period . . . . . . 9,058 10,116
Average rate at the end of the period . . . . . . . . . . 5.40% 3.14%
Average rate for the period . . . . . . . . . . . . . . . 4.04 3.20
</TABLE>

ASSET-LIABILITY MANAGEMENT. Southwest actively manages its
assets and liabilities through coordinating the levels of interest rate
sensitive assets and liabilities to minimize changes in net interest income
despite changes in market interest rates. Southwest defines interest rate
sensitive assets and liabilities as any instrument that can be repriced
within 180 days, either because the instrument will mature during the
period or because it carries a variable interest rate. Changes in net
interest income occur when interest rates on loans and investments change
in a different time period from that of changes in interest rates on
liabilities, or when the mix and volume of interest-earning assets and
interest-bearing liabilities change. The interest rate sensitivity gap
represents the dollar amount of difference between rate sensitive assets
and rate sensitive liabilities within a given time period (GAP). A GAP
ratio is determined by dividing rate sensitive assets by rate sensitive
liabilities. A ratio of 100% indicates a matched position, in which the
effect on net interest income due to interest rate movements would be
minimized.

Southwest's strategy with respect to asset-liability management
is to maximize net interest income while limiting Southwest's exposure to
risks associated with volatile interest rates. Southwest Bank's Funds
Management Committee is responsible for monitoring its GAP position.

- 55 -
<PAGE> 61

The following table sets forth Southwest's interest rate
sensitivity at December 31, 1994.

<TABLE>
INTEREST SENSITIVITY ANALYSIS
<CAPTION>
OVER
THREE OVER ONE
THREE THROUGH THROUGH OVER
MONTHS TWELVE FIVE FIVE
OR LESS MONTHS YEARS YEARS TOTAL
------- ------- -------- ----- -----
(dollars in thousands)
<S> <C> <C> <C> <C> <C>
Interest-earning assets:
Interest-bearing deposits . . . . . . . . $ 3,641 $ -- $ -- $ -- $ 3,641
Taxable investment securities . . . . . . 16,599 3,378 11,144 3,389 34,510
Tax-exempt investment securities. . . . . 70 546 308 317 1,241
Federal funds sold. . . . . . . . . . . . 1,750 -- -- -- 1,750
Loans<F1> . . . . . . . . . . . . . . . . 49,070 41,614 25,626 9,965 126,275
------- ------- ------- ------- --------
Total interest rate sensitive assets . . $71,130 $45,538 $37,078 $13,671 $167,417
======= ======= ======= ======= ========

Interest-bearing liabilities:
Interest-bearing demand deposits. . . . . $49,353 $ -- $ -- $ -- $ 49,353
Savings deposits. . . . . . . . . . . . . 12,004 -- -- -- 12,004
Time deposits . . . . . . . . . . . . . . 19,466 33,569 11,380 35 64,450
Repurchase agreements . . . . . . . . . . 4,509 2,500 702 41 7,752
Long-term debt. . . . . . . . . . . . . . 500 1,667 3,676 708 6,551
------- ------- ------- ------- --------
Total rate sensitive liabilities . . . . $85,832 $37,736 $15,758 $ 784 $140,110
======= ======= ======= ======= ========

Interest Sensitivity GAP:
Periodic. . . . . . . . . . . . . . . . . $(14,702) $ 7,802 $21,320 $12,887 $ 27,307
Cumulative. . . . . . . . . . . . . . . . (14,702) (6,900) 14,420 27,307
======= ======= ======= =======

Cumulative GAP to total assets . . . . . . (8.37)% (3.93)% 8.21% 15.55%
Ratio of Interest-Sensitive Assets to
Interest Sensitive Liabilities:
Periodic . . . . . . . . . . . . . . . . 82.87 120.68 235.30 n/a
Cumulative . . . . . . . . . . . . . . . 82.87 94.42 110.35 119.49
<FN>
- --------------------
<F1> Loans exclude overdrafts and nonaccrual loans.
</TABLE>

EFFECTS OF INFLATION. The consolidated financial statements and
related consolidated financial data presented herein have been prepared in
accordance with generally accepted accounting principles and practices
within the banking industry which require the measurement of financial
position and operating results in terms of historical dollars without
considering the changes in the relative purchasing power of money over time
due to inflation. Unlike most industrial companies, liabilities of a
financial institution are monetary in nature. As a result, interest rates
have a more significant impact on a financial institution's performance
than the effects of general levels of inflation.

IMPACT OF FUTURE ACCOUNTING PRONOUNCEMENTS

In October 1994, the Financial Accounting Standards Board issued
SFAS 119, "Disclosure About Derivative Financial Instruments and Fair Value
of Financial Instruments." The adoption of SFAS 119 was required for
fiscal years ending after December 15, 1994. The statement requires
disclosures about derivative financial instruments and other financial
instruments with similar characteristics that are not subject to SFAS 105,
"Disclosure of Information About Financial Instruments with Off-Balance Sheet

- 56 -
<PAGE> 62
Risk and Financial Instruments with Concentrations of Credit Risk."
Southwest does not hold any derivative financial instruments for which
disclosure would be required under SFAS 119.

In May 1993, the Financial Accounting Standards Board issued SFAS
114, "Accounting by Creditors for Impairment of a Loan," as amended by
SFAS 118, which was issued in October 1994. The Statement requires impaired
loans to be measured based on the present value of expected future cash
flows discounted at the loan's effective interest rate. The adoption of
SFAS 114, required in 1995, is not expected to have a material impact on
Southwest's financial condition or results of operations.

RESULTS OF OPERATION (FIRST QUARTER COMPARISON)

NET INCOME. Net income for the first quarter ended March 31,
1995, increased 84.6% to $694,000, or $19.30 per share, compared to net
income for the first quarter in 1994 of $376,000, or $10.45 per share. The
increase in net income was due primarily to an increase in net interest
income of $440,000 coupled with tight operating expense controls.

NET INTEREST INCOME. Net interest income increased by $440,000,
or 33.5%, for the first quarter of 1995 as compared to the first quarter
of 1994. The improvement in net interest income was the result of an
increase in average earning assets and a higher yielding earning asset mix.

NONINTEREST INCOME. Noninterest income increased by 5.2% to
$183,000 for the first quarter of 1995 compared to the first quarter of
1994.

NONINTEREST EXPENSE. Noninterest expense decreased 1.8% to
$880,000 for the first quarter of 1995 as compared to the first quarter of
1994. Tight expense control was the contributing factor to this decrease.

TOTAL ASSETS. Total assets were $180.6 million at March 31, 1995
as compared to $175.6 million at December 31, 1994. The increase in total
assets was due primarily to Southwest Bank's business development/marketing
program.

LOANS. Loans, net of unearned interest, were $126.8 million at
March 31, 1995, a 0.2% increase as compared to $126.5 million at
December 31, 1994.

DEPOSITS. Total deposits were $149.4 million at March 31, 1995,
a 2.3% increase as compared to $146.0 million at December 31, 1994. Much
of this deposit growth occurred in Time Deposits.

LIQUIDITY AND CAPITAL RESOURCES (FIRST QUARTER COMPARISON)

Liquid assets of Southwest, at March 31, 1995, consisted of total
cash and cash equivalents and investment securities maturing in one year
or less. These liquid assets totaled $30.5 million at March 31, 1995, or
20.4% of total deposits.

- 57 -
<PAGE> 63

Shareholders' equity at March 31, 1995 was $15.2 million, which
is an increase of $774,000 compared to December 31, 1994. Southwest
currently exceeds all regulatory capital requirements as shown in the
following table.

<TABLE>
CAPITAL RATIOS
<CAPTION>
RISK-BASED
---------------------------------
TOTAL CAPITAL TIER 1 LEVERAGE
------------- ------ --------
MARCH 31 MARCH 31 MARCH 31
-------- -------- --------
1995 1994 1995 1994 1995 1994
---- ---- ---- ---- ---- ----
<C> <C> <C> <C> <C> <C>
14.27% 13.05% 13.31% 12.04% 8.42% 7.52%
</TABLE>

PROPERTIES

All of the real estate and buildings are owned by Southwest Bank
or Southwest, except for the banking facilities located in Republic,
Missouri and Springfield, Missouri, which are leased. None of the
properties owned are subject to any mortgages or material encumbrances.
Southwest believes that the facilities are adequate for its operations.

LEGAL PROCEEDINGS

There were no known material legal proceedings pending against
Southwest as of March 31, 1995.

- 58 -
<PAGE> 64

<TABLE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth as of the Record Date the number
of shares of Southwest Common Stock beneficially owned and the percentage
of ownership of outstanding shares of Southwest Common Stock by (a) each
director of Southwest, (b) each person who is known by Southwest to own
beneficially 5% or more of such stock and (c) all directors and executive
officers of Southwest as a group:

<CAPTION>
BENEFICIALLY PERCENT OF
NAME OF BENEFICIAL OWNER ADDRESS OWNED CLASS
- ------------------------ ------- ------------ ----------
<S> <C> <C> <C>
Joe F. Rayl P.O. Box 197 24,547<F1> 68.22%
Bolivar, MO 65613

Alva R. Ellison P.O. Box 10969 2,771<F2> 7.70%
Springfield, MO 65808

Gary E. Metzger 1947 E. Norshire 4 .01%
Springfield, MO 65804

Morris G. Lawson Route 3, Box 630 4 .01%
Bolivar, MO 65613

Alan Murray P.O. Box 281 4 .01%
Hermitage, MO 65668

Debra G. McCaslin Route 2, Box 251A 4 .01%
Halfway, MO 65663

Directors and Executive
Officers as a group
(6 persons) 27,334 75.96%

<FN>
- --------------------
<F1> Includes 105 shares of Southwest Common Stock held by Joe F. Rayl,
and 24,442 shares of Southwest Common Stock held by Joe F. and Jane
Rayl, Tenancy by the Entirety.

<F2> Includes 70 shares of Southwest Common Stock held by Alva R. Ellison,
and 2,701 shares of Southwest Common Stock held by Alva Ray Ellison
and Patrician Alverta Ellison, Joint Revocable Living Trust, U/T/A,
dated November 8, 1993.
</TABLE>

For purposes of the above table, a person is deemed to be a
beneficial owner of shares of Southwest Common Stock if the person has or
shares the power to vote or to dispose of such shares. Unless otherwise
indicated in the footnotes, each person has sole voting and investment
power with respect to shares shown in the table as beneficially owned by
such person and disclaims beneficial ownership in shares described in the
footnotes as being "held by" other persons.

- 59 -
<PAGE> 65

INFORMATION REGARDING MBI STOCK
-------------------------------

DESCRIPTION OF MBI COMMON STOCK AND ATTACHED PREFERRED SHARE PURCHASE
RIGHTS

GENERAL. MBI has authorized 5,000,000 shares of MBI Preferred
Stock, no par value, and 100,000,000 shares of MBI Common Stock, $5.00 par
value. At March 31, 1995, on a restated basis, MBI had 14,806 shares of
MBI Preferred Stock issued and outstanding and 52,749,516 shares of MBI
Common Stock outstanding. Under Missouri law, MBI's Board of Directors may
generally approve the issuance of authorized shares of Preferred Stock and
Common Stock without shareholder approval.

MBI's Board of Directors is also authorized to fix the number of
shares and determine the designation of any series of Preferred Stock and
to determine or alter the rights, preferences, privileges and restrictions
granted to or imposed upon any series of MBI Preferred Stock. Except for
the designation and reservation of Series A Junior Participating Preferred
Stock pursuant to MBI's Preferred Share Purchase Rights Plan described
below, and, in connection with the acquisition of TCB on May 1, 1995, the
designation and issuance of (i) 5,306 shares of Series B-1 Preferred Stock
and (ii) 9,500 shares of Series B-2 Preferred Stock, MBI's Board of
Directors has not acted to designate or issue any shares of MBI Preferred
Stock.

The existence of a substantial number of unissued and unreserved
shares of MBI Common Stock and undesignated shares of MBI Preferred Stock
may enable the Board of Directors to issue shares to such persons and in
such manner as may be deemed to have an anti-takeover effect.

DIVIDENDS. The holders of MBI Common Stock are entitled to share
ratably in dividends when, as and if declared by the Board of Directors
from funds legally available therefor, after full cumulative dividends have
been paid or declared, and funds sufficient for the payment thereof set
apart, on all series of MBI Preferred Stock ranking superior as to
dividends to MBI Common Stock.

The Board of Directors of MBI intends to maintain its present
policy of paying quarterly cash dividends on MBI Common Stock, when
justified by the financial condition of MBI and its subsidiaries. The
declaration and amount of future dividends will depend on circumstances
existing at the time, including MBI's earnings, financial condition and
capital requirements as well as regulatory limitations, note and indenture
provisions and such other factors as the Board of Directors may deem
relevant. The payment of dividends to MBI by subsidiary banks is subject
to extensive regulation by various state and federal regulatory agencies.
See "SUPERVISION AND REGULATION."

VOTING RIGHTS. Each holder of MBI Common Stock has one vote for
each share held on matters presented for consideration by the shareholders,
except that, in the election of directors, each shareholder has cumulative
voting rights which entitle such shareholder to the number of votes which
equals the number of shares held by the shareholder multiplied by the
number of directors to be elected. All such votes may be cast for one
candidate for election as a director or may be distributed among two or
more candidates.

PREEMPTIVE RIGHTS. The holders of MBI Common Stock have no
preemptive right to acquire any additional unissued shares or treasury
shares of MBI.

LIQUIDATION RIGHTS. In the event of liquidation, dissolution
or winding up of MBI, whether voluntary or involuntary, the holders
of MBI Common Stock will be entitled to share ratably in any of its
assets or funds that are available for distribution to its
shareholders after the satisfaction of its

- 60 -
<PAGE> 66
liabilities (or after adequate provision is made therefor) and after
preferences on any outstanding MBI Preferred Stock.

ASSESSMENT AND REDEMPTION. Shares of MBI Common Stock are and
will be, when issued, fully paid and nonassessable. Such shares do not
have any redemption provisions.

PREFERRED SHARE PURCHASE RIGHTS PLAN. One preferred share
purchase right (a "Right") is attached to each share of MBI Common Stock.
The Rights trade automatically with shares of MBI Common Stock, and become
exercisable and will trade separately from the MBI Common Stock on the
tenth day after public announcement that a person or group has acquired,
or has the right to acquire, beneficial ownership of 20% or more of the
outstanding shares of MBI Common Stock, or upon commencement or
announcement of intent to make a tender offer for 20% or more of the
outstanding shares of MBI Common Stock, in either case without prior
written consent of the Board. When exercisable, each Right will entitle
the holder to buy 1/100 of a share of MBI Series A Junior Participating
Preferred Stock at an exercise price of $100 per Right. In the event a
person or group acquires beneficial ownership of 20% or more of MBI Common
Stock, holders of Rights (other than the acquiring person or group) may
purchase MBI Common Stock having a market value of twice the then current
exercise price of each Right. If MBI is acquired by any person or group
after the Rights become exercisable, each Right will entitle its holder to
purchase stock of the acquiring company having a market value of twice the
current exercise price of each Right. The Rights are designed to protect
the interests of MBI and its shareholders against coercive takeover
tactics. The purpose of the Rights is to encourage potential acquirors to
negotiate with MBI's Board of Directors prior to attempting a takeover and
to give the Board leverage in negotiating on behalf of all shareholders the
terms of any proposed takeover. The Rights may deter certain takeover
proposals. The Rights, which can be redeemed by MBI's Board of Directors
in certain circumstances, expire by their terms on June 3, 1998.

CLASSIFICATION OF BOARD OF DIRECTORS. The Board of Directors of
MBI is divided into three classes, and the directors are elected by
classes to three-year terms, so that one of the three classes of the
directors of MBI will be elected at each annual meeting of the
shareholders. While this provision promotes stability and continuity of
the Board of Directors, classification of the Board of Directors may also
have the effect of decreasing the number of directors that could otherwise
be elected at each annual meeting of shareholders by a person who obtains
a controlling interest in the MBI Common Stock and thereby could impede a
change in control of MBI. Because fewer directors will be elected at each
annual meeting, such classification also will reduce the effectiveness of
cumulative voting as a means of establishing or increasing minority
representation on the Board of Directors.

OTHER MATTERS. MBI's Restated Articles of Incorporation and By-
Laws also contain provisions which: (i) require the affirmative vote of
holders of at least 75% of the voting power of all of the shares of
outstanding capital stock of MBI entitled to vote in the election of
directors to remove a director or directors without cause; (ii) require the
affirmative vote of the holders of at least 75% of the voting power of all
shares of the outstanding capital stock of MBI to approve certain "business
combinations" with "interested parties" unless at least two-thirds of the
Board of Directors first approves such business combinations; and
(iii) require an affirmative vote of at least 75% of the voting power of
all shares of the outstanding capital stock of MBI for the amendment,
alteration, change or repeal of any of the above provisions unless at least
two-thirds of the Board of Directors first approves such an amendment,
alteration, change or repeal. Such provisions may be deemed to have an
anti-takeover effect.

- 61 -
<PAGE> 67

RESTRICTIONS ON RESALE OF MBI STOCK BY AFFILIATES

Under Rule 145 of the Securities Act of 1933 (the "Securities
Act"), certain persons who receive MBI Common Stock pursuant to the Merger
and who are deemed to be "affiliates" of Southwest will be limited in their
right to resell the stock so received. The term "affiliate" is defined to
include any person who, directly or indirectly, controls, or is controlled
by, or is under common control with Southwest at the time the Merger is
submitted to a vote of the shareholders of Southwest. Each affiliate of
Southwest (generally any director or executive officer or shareholder of
Southwest who beneficially owns a substantial number of outstanding shares
of Southwest Common Stock) who desires to resell the MBI Common Stock
received in the Merger must sell such stock either pursuant to an effective
Registration Statement or in accordance with an applicable exemption, such
as the applicable provisions of Rule 145(d) under the Securities Act.

Rule 145(d) provides that persons deemed to be affiliates may
resell their stock received in the Merger pursuant to certain of the
requirements of Rule 144 under the Securities Act if such stock is sold
within the first two years after the receipt thereof. After two years if
such person is not an affiliate of MBI and if MBI is current with respect
to its required public filings, a former affiliate of Southwest may freely
resell the stock received in the Merger without limitation. After three
years from the issuance of the stock, if such person is not an affiliate
of MBI at the time of sale and for at least three months prior to such
sale, such person may freely resell such stock, without limitation,
regardless of the status of MBI's required public filings. The shares of
MBI Common Stock to be received by affiliates of Southwest in the Merger
will be legended as to the restrictions imposed upon resale of such stock.

COMPARISON OF THE RIGHTS OF SHAREHOLDERS OF MBI AND SOUTHWEST

Both MBI and Southwest are incorporated under the laws of the
State of Missouri and the rights of the shareholders of each of MBI and
Southwest are governed by their respective Articles of Incorporation and
By-Laws and the Missouri Act. The rights of Southwest shareholders who
receive shares of MBI Common Stock in the Merger will thereafter be
governed by MBI's Restated Articles of Incorporation and By-Laws and by the
Missouri Act. The material rights of such shareholders, and, where
applicable, the differences between the rights of MBI shareholders and
Southwest shareholders, are summarized below.

PREFERRED SHARE PURCHASE RIGHTS PLAN. As described above under
"- Preferred Share Purchase Rights Plan," MBI Common Stock has attached
Rights, which may deter certain takeover proposals. Southwest does not
have a rights plan.

SUPERMAJORITY PROVISIONS. MBI's Restated Articles of
Incorporation and MBI's By-Laws contain provisions requiring a
supermajority vote of the shareholders of MBI to approve certain proposals.
Under both MBI's Restated Articles and By-Laws, removal by the shareholders
of the entire Board of Directors or any individual director from office
without cause requires the affirmative vote of not less than 75% of the
total votes entitled to be voted at a meeting of shareholders called for
the election of directors. Amendment by the shareholders of MBI's Restated
Articles or By-Laws relating to (i) the number or qualification of directors;
(ii) the classification of the Board of Directors; (iii) the filling of
vacancies on the Board of Directors; or (iv) the removal of directors,
requires the affirmative vote of not less than 75% of the total votes of
MBI's then outstanding shares of capital stock entitled to vote, voting
together as a single class, unless such amendment has previously been
expressly approved by at least two-thirds of the Board of Directors. The
Restated Articles of MBI additionally provide that, in addition to any
shareholder vote required under the Missouri Act, the affirmative vote of
the holders of not less than 75% of the total votes to which all of the then
outstanding shares of capital stock of MBI are entitled, voting together as

- 62 -
<PAGE> 68
a single class (the "Voting Stock"), shall be required for the approval
of any Business Combination. A "Business Combination" is defined
generally to include sales, exchanges, leases, transfers or other
dispositions of assets, mergers or consolidations, issuances of securities,
liquidations or dissolutions of MBI, reclassifications of securities or
recapitalizations of MBI, involving MBI on the one hand, and an Interested
Shareholder or an affiliate of an Interested Shareholder on the other hand.
An "Interested Shareholder" is defined generally to include any person,
firm, corporation or other entity which is the beneficial owner of 5% or
more of the voting power of the outstanding Voting Stock. If, however, at
least two-thirds of the Board of Directors of MBI approve the Business
Combination, such Business Combination shall require only the vote of
shareholders as provided by Missouri law or otherwise. The amendment of
the provisions of MBI's Restated Articles relating to the approval of
Business Combinations requires the affirmative vote of the holders of at
least 75% of the Voting Stock unless such amendment has previously been
approved by at least two-thirds of the Board of Directors.

To the extent that a potential acquiror's strategy depends on the
passage of proposals which require a supermajority vote of MBI's
shareholders, such provisions requiring a supermajority vote may have the
effect of discouraging takeover attempts that do not have Board approval
by making passage of such proposals more difficult. Neither Southwest's
Articles of Incorporation nor Southwest's By-Laws require a supermajority
vote of shareholders with respect to any item.

VOTING FOR DIRECTORS. MBI's By-Laws provide for cumulative
voting in the election of directors. Cumulative voting entitles each
shareholder to cast an aggregate number of votes equal to the number of
voting shares held, multiplied by the number of directors to be elected.
Each shareholder may cast all such votes for one nominee or distribute them
among two or more nominees, thus permitting holders of less than a majority
of the outstanding shares of voting stock to achieve board representation.
Southwest's By-Laws also provide for cumulative voting.

CLASSIFIED BOARD. As described under "- Classification of Board
of Directors," the Board of Directors of MBI is divided into three classes
of directors, with each class being elected to a staggered three-year term.
By reducing the number of directors to be elected in any given year, the
existence of a classified Board diminishes the benefits of the cumulative
voting rights to minority shareholders. Southwest does not have a
classified Board of Directors.

ANTI-TAKEOVER STATUTES. The Missouri Act contains certain
provisions applicable to Missouri corporations such as MBI and Southwest
which may be deemed to have an anti-takeover effect. Such provisions
include Missouri's business combination statute and the control share
acquisition statute.

The Missouri business combination statute protects domestic
corporations after hostile takeovers by prohibiting certain transactions
once an acquiror has gained control. The statute restricts certain
"Business Combinations" between a corporation and an "Interested
Shareholder" or affiliates of the Interested Shareholder for a period of
five years unless certain conditions are met. A "Business Combination"
includes a merger or consolidation, certain sales, leases, exchanges,
pledges and similar dispositions of corporate assets or stock and certain
reclassifications and recapitalizations. An "Interested Shareholder"
includes any person or entity which beneficially owns or controls 20% or
more of the outstanding voting shares of the corporation.

During the initial five-year restricted period, no Business
Combination may occur unless such Business Combination or the transaction
in which an Interested Shareholder becomes "interested" is approved by the
board of directors of the corporation. Business Combinations may occur
during such five-year period if: (i) prior to the stock acquisition by the
Interested Shareholder, the board of directors approves the transaction in
which the Interested Shareholder became an Interested Shareholder or approves

-63 -
<PAGE> 69
the Business Combination in question; (ii) the holders of a majority of the
outstanding voting stock, other than stock owned by the Interested Shareholder,
approve the Business Combination; or (iii) the Business Combination satisfies
certain detailed fairness and procedural requirements.

The Missouri Act exempts from its provisions: (i) corporations
not having a class of voting stock registered under Section 12 of the
Exchange Act; (ii) corporations which adopt provisions in their articles
of incorporation or bylaws expressly electing not to be covered by the
statute; and (iii) certain circumstances in which a shareholder
inadvertently becomes an Interested Shareholder. Neither MBI's Restated
Articles of Incorporation and By-Laws nor Southwest's Articles of
Incorporation and By-Laws "opt out" of the Missouri business combination
statute.

The Missouri Act also contains a "Control Share Acquisition
Statute" which provides that an "Acquiring Person" who after any
acquisition of shares of a publicly traded corporation has the voting
power, when added to all shares of the same corporation previously owned
or controlled by the Acquiring Person, to exercise or direct the exercise
of: (i) 20% but less than 33%, (ii) 33% or more but less than a majority
or (iii) a majority, of the voting power of outstanding stock of such
corporation, must obtain shareholder approval for the purchase of the
"Control Shares." If approval is not given, the Acquiring Person's shares
lose the right to vote. The statute prohibits an Acquiring Person from
voting its shares unless certain disclosure requirements are met and the
retention or restoration of voting rights is approved by both: (i) a
majority of the outstanding voting stock, and (ii) a majority of the
outstanding voting stock after exclusion of "Interested Shares."
Interested Shares are defined as shares owned by the Acquiring Person, by
directors who are also employees, and by officers of the corporation.
Shareholders are given dissenters' rights with respect to the vote on
Control Share Acquisitions and may demand payment of the fair value of
their shares.

A number of acquisitions of shares are deemed not to constitute
Control Share Acquisitions, including good faith gifts, transfers pursuant
to wills, purchases pursuant to an issuance by the corporation, mergers
involving the corporation which satisfy the other requirements of the
Missouri Act, transactions with a person who owned a majority of the voting
power of the corporation within the prior year, or purchases from a person
who has previously satisfied the provisions of the Control Share
Acquisition Statute so long as the transaction does not result in the
purchasing party having voting power after the purchase in a percentage
range (such ranges are as set forth in the immediately preceding paragraph)
beyond the range for which the selling party previously satisfied the
provisions of the statute. Additionally, a corporation may exempt itself
from application of the statute by inserting a provision in its articles
of incorporation or bylaws expressly electing not to be covered by the
statute. Neither MBI's Restated Articles of Incorporation and By-Laws nor
Southwest's Articles of Incorporation and By-Laws "opt out" of the Control
Share Acquisition Statute.

DISSENTERS' RIGHTS. Under Section 351.455 of the Missouri Act,
a shareholder of any corporation which is a party to a merger or
consolidation, or which sells all or substantially all of its assets, has
the right to dissent from such corporate action and to demand payment of
the value of such shares. In the circumstances set forth in the statute,
dissenters' rights provisions of the Missouri Act are applicable to the
shareholders of both MBI and Southwest.

SHAREHOLDERS' RIGHT TO INSPECT. Under Section 351.215 of the
Missouri Act, any shareholder may inspect the corporation's books and
records for any reasonable and proper purpose. Such inspection may be made
at all proper times, subject to regulations as may be prescribed by the by-
laws of the corporation.

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<PAGE> 70

SIZE OF BOARD OF DIRECTORS. As permitted under the Missouri Act,
the number of directors on the Board of Directors of MBI is set forth in
MBI's By-Laws which provide that the number of directors may be fixed from
time to time at not less than 12 nor more than 24 by an amendment of the
By-Laws or by a resolution of the Board of Directors, in either case,
adopted by the vote or consent of at least two-thirds of the number of
directors then authorized under the By-Laws. MBI's Board of Directors
currently has 17 members. Southwest's By-Laws provide that the number of
directors of the Board of Directors shall be designated in Southwest's
Articles of Incorporation. Currently, Southwest's Articles of
Incorporation fix the number of directors at six. The supermajority vote
required for the amendment of MBI's By-Laws regarding a change in the
number of directors may have the effect of making it more difficult to
force an immediate change in the composition of a majority of the Board of
Directors and may be deemed to have an anti-takeover effect.

SUPERVISION AND REGULATION
--------------------------

GENERAL

As a bank holding company, MBI is subject to regulation under the
BHCA and its examination and reporting requirements. Under the BHCA, a
bank holding company may not directly or indirectly acquire the ownership
or control of more than 5% of the voting shares or substantially all of the
assets of any company, including a bank or savings and loan association,
without the prior approval of the Federal Reserve Board. In addition, bank
holding companies are generally prohibited under the BHCA from engaging in
nonbanking activities, subject to certain exceptions.

MBI and its subsidiaries are subject to supervision and
examination by applicable federal and state banking agencies. The earnings
of MBI's subsidiaries, and therefore the earnings of MBI, are affected by
general economic conditions, management policies and the legislative and
governmental actions of various regulatory authorities, including the
Federal Reserve Board, the FDIC and the Comptroller of the Currency (the
"Comptroller"). In addition, there are numerous governmental requirements
and regulations that affect the activities of MBI and its subsidiaries.

CERTAIN TRANSACTIONS WITH AFFILIATES

There are various legal restrictions on the extent to which a
bank holding company and certain of its nonbank subsidiaries can borrow or
otherwise obtain credit from its bank subsidiaries. In general, these
restrictions require that any such extensions of credit must be on
non-preferential terms and secured by designated amounts of specified
collateral and be limited, as to any one of the holding company or such
nonbank subsidiaries, to 10% of the lending bank's capital stock and
surplus, and as to the holding company and all such nonbank subsidiaries
in the aggregate, to 20% of such capital stock and surplus.

PAYMENT OF DIVIDENDS

MBI is a legal entity separate and distinct from its banking and
other subsidiaries. The principal source of MBI's revenues is dividends
from its national and state banking subsidiaries. Various federal and state
statutory provisions limit the amount of dividends the affiliate banks can pay
to MBI without regulatory approval. The approval of the appropriate bank
regulator is required for any dividend by a national bank or state member bank
if the total of all dividends declared by the bank in any calendar year would
exceed the total of its net profits, as defined by regulatory agencies, for
such year combined with its retained net profits for the preceding two years.
In addition, a national bank or a state member bank may not pay a dividend
in an amount greater than its net profits then on hand. The payment of

- 65 -
<PAGE> 71
dividends by any affiliate bank may also be affected by other factors, such as
the maintenance of adequate capital for such affiliate bank.

CAPITAL ADEQUACY

The Federal Reserve Board has issued standards for measuring
capital adequacy for bank holding companies. These standards are designed
to provide risk-responsive capital guidelines and to incorporate a
consistent framework for use by financial institutions operating in major
international financial markets. The banking regulators have issued
standards for banks that are similar to, but not identical with, the
standards for bank holding companies.

In general, the risk-related standards require banks and bank
holding companies to maintain capital based on "risk adjusted" assets so
that categories of assets with potentially higher credit risk will require
more capital backing than categories with lower credit risk. In addition,
banks and bank holding companies are required to maintain capital to
support off-balance sheet activities such as loan commitments.

The standards classify total capital for this risk-based measure
into two tiers referred to as Tier 1 and Tier 2. Tier 1 capital consists
of common shareholders' equity, certain non-cumulative and cumulative
perpetual preferred stock, and minority interests in equity accounts of
consolidated subsidiaries; Tier 2 capital consists of the allowance for
loan and lease losses (within certain limits), perpetual preferred stock
not included in Tier 1, hybrid capital instruments, term subordinated debt,
and intermediate-term preferred stock. Bank holding companies are required
to meet a minimum ratio of 8% of qualifying total capital to risk-adjusted
assets, and a minimum ratio of 4% of qualifying Tier 1 capital to risk-
adjusted assets. Capital that qualifies as Tier 2 capital is limited in
amount to 100% of Tier 1 capital in testing compliance with the total risk-
based capital minimum standards.

In addition, the Federal Reserve Board has established minimum
leverage ratio guidelines for bank holding companies. These guidelines
provide for a minimum ratio of Tier 1 capital to adjusted average total
assets (the "leverage ratio") of 3% for bank holding companies that meet
certain specified criteria, including having the highest regulatory rating.
Other bank holding companies generally are required to maintain a leverage
ratio of at least 3% plus 100 to 200 basis points. The guidelines also
provide that bank holding companies experiencing internal growth or making
acquisitions will be expected to maintain strong capital positions
substantially above minimum supervisory levels, without significant
reliance on intangible assets. Furthermore, the Federal Reserve Board has
indicated that it may consider other indicia of capital strength in
evaluating proposals for expansion or new activities.

The federal bank regulatory agencies have issued various
proposals to amend the risk-based capital guidelines for banks and bank
holding companies. Under one proposal, banks would be required to give
explicit consideration to interest rate risk as an element of capital
adequacy by maintaining capital to compensate for such risk in an amount
measured by the bank's exposure to interest rate risk in excess of a
regulatory threshold. Another proposal would revise the treatment given
to (i) low-level recourse arrangements to reduce the amount of capital
required and (ii) certain direct credit substitutes provided by banking
organizations to require that capital be maintained against the value of
the assets enhanced or the loans protected. A proposal recently issued by
the Federal Reserve Board and expected to be joined in by the other bank
regulatory agencies increases the amount of capital required to be carried
against certain long-term derivative contracts; in addition, the proposal
recognizes the effect of certain bilateral netting arrangements in reducing
potential future exposure under these contracts. MBI believes that these
changes will not, if adopted, have a material effect on its compliance with
capital adequacy requirements.

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<PAGE> 72

FDIC INSURANCE ASSESSMENTS

The subsidiary banks of MBI are subject to FDIC deposit insurance
assessments. The FDIC has adopted a risk-based premium schedule. Under
this schedule, the annual premiums initially range from $.23 to $.31 for
every $100 of deposits. Each financial institution is assigned to one of
three capital groups--well capitalized, adequately capitalized or
undercapitalized--and further assigned to one of three subgroups within a
capital group, on the basis of supervisory evaluations by the institution's
primary federal and, if applicable, state supervisors and on the basis of
other information relevant to the institution's financial condition and the
risk posed to the applicable insurance fund. The actual assessment rate
applicable to a particular institution will, therefore, depend in part upon
the risk assessment classification so assigned to the institution by the
FDIC. See "- FIRREA and FDICIA."

The legislation adopted in August 1989 to provide for the
resolution of insolvent savings associations also required the FDIC to
establish separate deposit insurance funds -- the Bank Insurance Fund
("BIF") for banks and the Savings Association Insurance Fund ("SAIF") for
savings associations. The law also requires the FDIC to set deposit
insurance assessments at such levels as will cause BIF and SAIF to reach
their "designated reserve ratios" of 1.25 percent of the deposits insured
by them within a reasonable period of time. Due to low costs of resolving
bank insolvencies in the last few years, BIF is expected to reach its
designated reserve ratio in 1995. As a result, FDIC recently proposed to
lower deposit insurance assessment rates on banks by revising the range to
$.04 to $.31 for every $100 of deposits. However, the balance in SAIF is
not expected to reach the designated reserve ratio until about the year
2002, as the law provides that a significant portion of the costs of
resolving past insolvencies of savings associations must be paid from this
source. Accordingly, it is likely that SAIF rates will be significantly
higher than BIF rates in the future. Since MBI has acquired substantial
amounts of SAIF-insured deposits during the years from 1989 to the present
which cannot be converted from SAIF to BIF under present law, it will be
required to pay insurance assessments on these acquired deposits at rates
significantly higher than the rates charged by BIF until such time that the
rates are equalized or the deposits are converted from the SAIF to the BIF.
The latter cannot occur until the SAIF reaches the designated reserve
ratio. MBI does not expect that such additional deposit insurance costs
will have a significant, adverse effect on its earnings.

SUPPORT OF SUBSIDIARY BANKS

Under Federal Reserve Board policy, MBI is expected to act as a
source of financial strength to each subsidiary bank and to commit
resources to support each of the subsidiaries in circumstances where it
might not choose to do so absent such a policy. This support may be
required at times when MBI may not find itself able to provide it. In
addition, any capital loans by MBI to any of its subsidiaries would also be
subordinate in right of payment to deposits and certain other indebtedness
of such subsidiary.

Consistent with this policy regarding bank holding companies
serving as a source of financial strength for their subsidiary banks, the
Federal Reserve Board has stated that, as a matter of prudent banking, a
bank holding company generally should not maintain a rate of cash dividends
unless its net income available to common shareholders has been sufficient
to fully fund the dividends, and the prospective rate of earnings retention
appears consistent with the bank holding company's capital needs, asset
quality and overall financial condition.

- 67 -
<PAGE> 73

FIRREA AND FDICIA

The Financial Institutions Reform, Recovery, and Enforcement Act
of 1989 ("FIRREA") contains a cross-guarantee provision which could result
in insured depository institutions owned by MBI being assessed for losses
incurred by the FDIC in connection with assistance provided to, or the
failure of, any other insured depository institution owned by MBI. Under
FIRREA, failure to meet the capital guidelines could subject a banking
institution to a variety of enforcement remedies available to federal
regulatory authorities, including the termination of deposit insurance by
the FDIC.

The Federal Deposit Insurance Corporation Improvement Act of 1991
("FDICIA") made extensive changes to the federal banking laws. FDICIA
instituted certain changes to the supervisory process, including provisions
that mandate certain regulatory agency actions against undercapitalized
institutions within specified time limits. FDICIA contains various other
provisions that may affect the operations of banks and savings
institutions.

The prompt corrective action provision of FDICIA requires the
federal banking regulators to assign each insured institution to one of
five capital categories ("well capitalized," "adequately capitalized" or
one of three "undercapitalized" categories) and to take progressively more
restrictive actions based on the capital categorization, as specified
below. Under FDICIA, capital requirements would include a leverage limit,
a risk-based capital requirement and any other measure of capital deemed
appropriate by the federal banking regulators for measuring the capital
adequacy of an insured depository institution. All institutions,
regardless of their capital levels, are restricted from making any capital
distribution or paying any management fees that would cause the institution
to fail to satisfy the minimum levels for any relevant capital measure.
An institution that fails to meet the minimum level for any relevant
capital measure (an "undercapitalized institution") may be: (i) subject
to increased monitoring by the appropriate federal banking regulator;
(ii) required to submit an acceptable capital restoration plan within 45
days; (iii) subject to asset growth limits; and (iv) required to obtain
prior regulatory approval for acquisitions, branching and new lines of
businesses. The capital restoration plan must include a guarantee by the
institution's holding company (under which the holding company would be
liable up to the lesser of 5% of the institution's total assets or the
amount necessary to bring the institution into capital compliance as of the
date it failed to comply with its capital restoration plan) that the
institution will comply with the plan until it has been adequately
capitalized on average for four consecutive quarters.

The FDIC and the Federal Reserve Board adopted capital-related
regulations under FDICIA. Under those regulations, a bank will be well
capitalized if it: (i) had a risk-based capital ratio of 10% or greater;
(ii) had a ratio of Tier 1 capital to risk-adjusted assets of 6% or
greater; (iii) had a ratio of Tier 1 capital to adjusted total assets of
5% or greater; and (iv) was not subject to an order, written agreement,
capital directive, or prompt corrective action directive to meet and
maintain a specific capital level for any capital measure. An association
will be adequately capitalized if it was not "well capitalized" and:
(i) had a risk-based capital ratio of 8% or greater; (ii) had a ratio of
Tier 1 capital to risk-adjusted assets of 4% or greater; and (iii) had a
ratio of Tier 1 capital to adjusted total assets of 4% or greater (except
that certain associations rated "Composite 1" under the federal banking
agencies' CAMEL rating system may be adequately capitalized if their ratios
of core capital to adjusted total assets were 3% or greater).

FDICIA also makes extensive changes in existing rules regarding
audits, examinations and accounting. It generally requires annual on-site,
full scope examinations by each bank's primary federal regulator. It also
imposes new responsibilities on management, the independent audit committee
and outside accountants to develop or approve reports regarding the
effectiveness of internal controls, legal compliance and off-balance sheet
liabilities and assets.

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<PAGE> 74

DEPOSITOR PREFERENCE STATUTE

Legislation enacted in August 1993 provides a preference for
deposits and certain claims for administrative expenses and employee
compensation against an insured depository institution, such as Southwest's
and MBI's insured bank subsidiaries, in the liquidation or other resolution
of such an institution by any receiver. Such obligations would be afforded
priority over other general unsecured claims against such an institution,
including federal funds and letters of credit, as well as any obligation
to shareholders of such an institution in their capacity as such.

THE INTERSTATE BANKING AND COMMUNITY DEVELOPMENT LEGISLATION

In September 1994, legislation was enacted that is expected to
have a significant effect in restructuring the banking industry in the
United States. The Riegle-Neal Interstate Banking and Branching Efficiency
Act of 1994 facilitates the interstate expansion and consolidation of
banking organizations by permitting (i) bank holding companies that are
adequately capitalized and managed, one year after enactment of the
legislation, to acquire banks located in states outside their home states
regardless of whether such acquisitions are authorized under the law of the
host state, (ii) the interstate merger of banks after June 1, 1997, subject
to the right of individual states to "opt in" or to "opt out" of this
authority before that date, (iii) banks to establish new branches on an
interstate basis provided that such action is specifically authorized by
the law of the host state, (iv) foreign banks to establish, with approval
of the regulators in the United States, branches outside their home states
to the same extent that national or state banks located in the home state
would be authorized to do so, and (v) beginning September 29, 1995, banks
to receive deposits, renew time deposits, close loans, service loans and
receive payments on loans and other obligations as agent for any bank or
thrift affiliate, whether the affiliate is located in the same state or a
different state. One effect of this legislation will be to permit MBI to
acquire banks located in any state and to permit bank holding companies
located in any state to acquire banks and bank holding companies in
Missouri. Overall, this legislation is likely to have the effects of
increasing competition and promoting geographic diversification in the
banking industry.

The Riegle Community Development and Regulatory Improvement Act
of 1994, also enacted in September 1994, is intended to (i) increase the
flow of loans to businesses in distressed communities by providing
incentives to lenders to provide credit within those communities, (ii)
remove impediments to the securitization of small business loans, (iii)
provide for a reduction in paperwork and to streamline bank regulation
through, for example, the coordination of examinations in a bank holding
company context, a reduction in the number of currency transaction reports
required and improvements to the National Flood Insurance Program that
include enabling lenders to force place flood insurance and (iv) increase
the level of consumer protection provided to customers in banking
transactions. MBI believes that these provisions of the new law will not
have a material effect on its operation.

RELATIONSHIP WITH INDEPENDENT ACCOUNTANTS
-----------------------------------------

KPMG Peat Marwick LLP served as MBI's independent accountants for
the year ended December 31, 1994 and continues to serve in such capacity.
Services provided in connection with the audit function included
examination of the annual consolidated financial statements, review and
consultation regarding filings with the Securities and Exchange Commission
and other regulatory authorities and consultation on financial accounting
and reporting matters.

Kirkpatrick, Phillips and Miller served as Southwest's independent
accountants for the year ended December 31, 1994 and continues to serve in such
capacity. Services provided in connection with the audit function included
examination of the annual consolidated financial statements, review and

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<PAGE> 75
consultation regarding regulatory authorities and consultation on financial
accounting and reporting matters. Kirkpatrick, Phillips and Miller intends to
have a representative present at the Special Meeting to answer relevant
questions regarding the Merger.

LEGAL MATTERS
-------------

Certain legal matters will be passed upon for MBI by Thompson &
Mitchell, St. Louis, Missouri and for Southwest by Taylor, Stafford, Woody,
Clithero & Fitzgerald, Springfield, Missouri.

EXPERTS
-------

The consolidated financial statements of Mercantile
Bancorporation Inc. as of December 31, 1994, 1993 and 1992, and for each
of the years in the three-year period ended December 31, 1994, incorporated
by reference in MBI's Annual Report on Form 10-K, and the supplemental
consolidated financial statements of Mercantile Bancorporation Inc. as of
December 31, 1994, 1993 and 1992, and for each of the years in the three-
year period ended December 31, 1994, contained in MBI's Current Report on
Form 8-K dated May 31, 1995, have been incorporated by reference herein in
reliance upon the reports of KPMG Peat Marwick LLP, independent certified
public accountants, incorporated by reference herein, and upon the
authority of said firm as experts in accounting and auditing.

The consolidated financial statements of Southwest Bancshares,
Inc. as of December 31, 1994 and 1993 and for each of the years in the
three-year period ended December 31, 1994 have been included herein in
reliance upon the report of Kirkpatrick, Phillips and Miller, independent
certified public accountants, whose report is included herein, and upon the
authority of such firm as experts in accounting and auditing.

OTHER MATTERS
-------------

The Board of Directors of Southwest, at the date hereof, is not
aware of any business to be presented at the Special Meeting other than
that referred to in the Notice of Special Meeting and discussed herein.
If any other matter should properly come before the Special Meeting, the
persons named as proxies will have discretionary authority to vote the
shares represented by proxies in accordance with their discretion and
judgment as to the best interests of Southwest.

SHAREHOLDER PROPOSALS
---------------------

If the Merger is approved, the other conditions to the Merger are
satisfied and the Merger is consummated, shareholders of Southwest will
become shareholders of MBI at the Effective Time. MBI shareholders may
submit to MBI proposals for formal consideration at the 1996 annual meeting
of MBI's shareholders and inclusion in MBI's proxy statement for such
meeting. All such proposals must have been received in writing by the
Corporate Secretary at Mercantile Bancorporation Inc., P.O. Box 524,
St. Louis, Missouri 63166-0524 by November 25, 1995.

- 70 -
<PAGE> 76

<TABLE>
CONSOLIDATED FINANCIAL STATEMENTS

INDEX
<CAPTION>
Page
----
<S> <C>
INDEPENDENT ACCOUNTANTS' REPORT. . . . . . . . . . . . . . . .F-1

CONSOLIDATED BALANCE SHEETS AS OF MARCH 31, 1995 (UNAUDITED)
AND DECEMBER 31, 1994 AND 1993 . . . . . . . . . . . . . . .F-2

CONSOLIDATED STATEMENTS OF INCOME FOR THE THREE MONTHS
ENDED MARCH 31, 1995 AND 1994 (UNAUDITED) AND THE
YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992 . . . . . . . .F-3

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS'
EQUITY FOR THE THREE MONTHS ENDED MARCH 31,
1995 (UNAUDITED) AND THE YEARS ENDED
DECEMBER 31, 1994, 1993 AND 1992 . . . . . . . . . . . . . .F-4

CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE
THREE MONTHS ENDED MARCH 31, 1995 AND 1994 (UNAUDITED)
AND THE YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992 . . . .F-5 to F-6

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS . . . . . . . . . .F-7 to F-19

</TABLE>

- 71 -
<PAGE> 77
INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Stockholders
Southwest Bancshares, Inc. and Subsidiary
Springfield, Missouri

We have audited the accompanying consolidated balance sheets of
Southwest Bancshares, Inc. and Subsidiary as of December 31, 1994
and 1993, and the related consolidated statements of income,
changes in stockholders' equity and cash flows for each of the
three years in the period ended December 31, 1994. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial
statements based on our audit.

We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit
provides a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the financial
position of Southwest Bancshares, Inc. and Subsidiary as of
December 31, 1994 and 1993, and the results of their operations and
their cash flows for each of the three years in the period ended
December 31, 1994, in conformity with generally accepted accounting
principles.

/S/ KIRKPATRICK, PHILLIPS & MILLER

February 3, 1995
Springfield, Missouri

F - 1
<PAGE> 78
<TABLE>
SOUTHWEST BANCSHARES, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS

<CAPTION>
DECEMBER 31,
MARCH 31, --------------------------
1995 1994 1993
--------- ---- ----
ASSETS (Unaudited)
- ------
<S> <C> <C> <C>
Cash and cash equivalents $ 7,113,332 $ 5,561,099 $ 7,146,321
Interest-bearing deposit accounts 3,079,771 3,641,346 6,598,696
Federal funds sold 5,425,000 1,750,000 5,850,000
Investment securities held-for-investment (Notes 1 and 2) - - 32,557,823
Investment securities available-for-sale (Notes 1 and 2) 35,666,178 35,751,485 -
Loans (Notes 1 and 4) 126,795,842 126,481,924 118,987,337
Less allowance for credit losses (1,093,067) (1,092,785) (1,103,048)
------------ ------------ ------------
Net loans 125,702,775 125,389,139 117,884,289
------------ ------------ ------------
Accrued interest receivable - investments 228,305 263,021 228,515
Accrued interest receivable - loans 925,308 818,582 640,451
Prepaid expenses 129,072 48,880 55,771
Property and equipment, net of
accumulated depreciation (Notes 1 and 3) 1,958,366 1,962,148 1,648,412
Deferred tax benefit (Notes 1 and 6) 293,720 340,779 -
Other real estate 22,127 22,127 8,000
Goodwill, net of amortization (Note 1) 15,755 18,049 27,225
Other assets 24,495 9,768 24,323
------------ ------------ ------------

TOTAL ASSETS $180,584,204 $175,576,423 $172,669,826
============ ============ ============

LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Liabilities:
Deposits:
Demand $ 18,019,988 $ 20,238,317 $ 19,519,452
Savings and NOW 64,190,930 61,356,733 61,592,737
Time (Note 5) 67,237,031 64,449,553 62,312,463
------------ ------------ ------------
Total deposits 149,447,949 146,044,603 143,424,652
Securities sold under repurchase agreements (Note 13) 8,768,377 7,751,740 8,781,084
Accounts payable and accrued expenses 69,963 72,244 148,790
Accrued interest payable 692,058 571,730 491,840
Income taxes payable (Notes 1 and 6) 382,975 146,890 90,204
Debt maturing within one year (Note 7) 1,670,600 2,167,400 355,700
Long-term debt (Note 7) 4,339,734 4,383,663 6,851,058
Other liabilities - directors' stock 500 500 500
------------ ------------ ------------
Total liabilities 165,372,156 161,138,770 160,143,828
------------ ------------ ------------

Stockholders' equity:
Common stock; par value $10; authorized 100,000
shares; issued and outstanding 35,981 shares 359,810 359,810 359,810
Additional paid-in capital 3,641,242 3,641,242 3,641,242
Retained earnings 11,492,765 10,798,502 8,524,946
Unrealized loss on securities available-for-sale,
net of applicable deferred income taxes of
$165,484 and $212,542, respectively (Note 1) (281,769) (361,901) -
------------ ------------ ------------
Total stockholders' equity 15,212,048 14,437,653 12,525,998
------------ ------------ ------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $180,584,204 $175,576,423 $172,669,826
============ ============ ============

The accompanying notes are an integral part of these consolidated financial statements
</TABLE>

F - 2
<PAGE> 79
<TABLE>
SOUTHWEST BANCSHARES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME

<CAPTION>
THREE MONTHS ENDED
MARCH 31, YEARS ENDED DECEMBER 31,
------------------ ------------------------------------
1995 1994 1994 1993 1992
---- ---- ---- ---- ----
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
INTEREST INCOME:
Interest and fees on loans $ 2,768,014 $ 2,087,185 $ 9,438,159 $ 8,026,148 $ 7,953,683
Interest on investment securities:
Taxable interest income 427,860 313,468 1,344,022 1,566,950 2,702,927
Tax-exempt interest income 17,675 16,123 69,311 69,188 80,433
Dividends 16,463 12,344 63,386 64,187 47,082
Interest on federal funds sold 45,036 50,057 188,837 180,447 164,760
Interest on deposits in banks 42,600 50,181 214,079 139,875 413,828
----------- ----------- ----------- ----------- -----------
Total interest income 3,317,648 2,529,358 11,317,794 10,046,795 11,362,713
----------- ----------- ----------- ----------- -----------

INTEREST EXPENSE:
Interest on deposits:
Savings and NOW 591,570 465,161 1,976,444 1,700,066 1,831,636
Time 755,453 583,139 2,469,126 2,591,580 3,970,924
Interest on securities sold
under repurchase agreements 120,578 72,682 365,632 324,328 331,961
Interest on borrowed funds 96,707 95,549 393,574 283,592 218,888
----------- ----------- ----------- ----------- -----------
Total interest expense 1,564,308 1,216,531 5,204,776 4,899,566 6,353,409
----------- ----------- ----------- ----------- -----------

Net interest income 1,753,340 1,312,827 6,113,018 5,147,229 5,009,304
Provision for credit losses
(Notes 1 and 4) - - - - 155,000
----------- ----------- ----------- ----------- -----------

Net interest income after
provision for credit losses 1,753,340 1,312,827 6,113,018 5,147,229 4,854,304
----------- ----------- ----------- ----------- -----------

OTHER INCOME:
Service charges on deposit accounts 122,703 120,465 494,439 511,576 491,450
Investment securities gains - - 35,584 - 10,101
Other operating income 60,232 53,688 264,807 200,486 289,028
----------- ----------- ----------- ----------- -----------
Total other income 182,935 174,153 794,830 712,062 790,579
----------- ----------- ----------- ----------- -----------

OTHER EXPENSES:
Salaries and employee benefits 447,776 439,398 1,746,249 1,692,145 1,733,237
Occupancy and equipment expense 125,919 125,237 540,799 496,363 508,045
FDIC and state assessments 88,212 84,086 341,582 294,820 375,500
Data processing 56,940 59,567 229,415 235,544 241,319
Other operating expense 160,739 187,648 712,164 815,498 860,948
----------- ----------- ----------- ----------- -----------
Total other expenses 879,586 895,936 3,570,209 3,534,370 3,719,049
----------- ----------- ----------- ----------- -----------

MINORITY INTERESTS IN NET INCOME
OF CONSOLIDATED SUBSIDIARY - - - - 17,676
----------- ----------- ----------- ----------- -----------

Income before taxes 1,056,689 591,044 3,337,639 2,324,921 1,908,158
Income tax expense (Note 6) 362,426 215,118 1,064,083 786,096 670,761
----------- ----------- ----------- ----------- -----------

NET INCOME $ 694,263 $ 375,926 $ 2,273,556 $ 1,538,825 $ 1,237,397
=========== =========== =========== =========== ===========

NET INCOME PER SHARE
OF COMMON STOCK $ 19.30 $ 10.45 $ 63.19 $ 42.92 $ 35.82
=========== =========== =========== =========== ===========

AVERAGE SHARES OUTSTANDING 35,981 35,981 35,981 35,856 34,542
=========== =========== =========== =========== ===========

The accompanying notes are an integral part of these consolidated financial statements
</TABLE>

F - 3
<PAGE> 80
<TABLE>
SOUTHWEST BANCSHARES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992 AND
THREE MONTHS ENDED MARCH 31, 1995 (UNAUDITED)

<CAPTION>
NET
UNREALIZED
APPRECIATION
COMMON STOCK (LOSSES) ON
----------------- ADDITIONAL AVAILABLE- TOTAL
PAID-IN RETAINED FOR-SALE STOCKHOLDERS'
SHARES PAR VALUE CAPITAL EARNINGS SECURITIES EQUITY
------ --------- ---------- -------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Balances, December 31, 1991 34,025 $340,250 $3,084,844 $ 5,748,724 $ - $ 9,173,818

Issuance of stock - 975 shares 975 9,750 272,854 - - 282,604

Acquired 6.05% minority
interest in subsidiary, at book
value, by issuing 667 shares
of the Company in exchange 667 6,670 186,684 - - 193,354

Net income, year ended
December 31, 1992 - - - 1,237,397 - 1,237,397
------ -------- ---------- ----------- ---------- -----------

Balances, December 31, 1992 35,667 356,670 3,544,382 6,986,121 - 10,887,173

Issuance of stock - 314 shares 314 3,140 96,860 - - 100,000

Net income, year ended
December 31, 1993 - - - 1,538,825 - 1,538,825
------ -------- ---------- ----------- ---------- -----------

Balances, December 31, 1993 35,981 359,810 3,641,242 8,524,946 - 12,525,998

Net unrealized appreciation at
January 1, 1994 on securities
available-for-sale, net of taxes - - - - 255,031 255,031

Net income, year ended
December 31, 1994 - - - 2,273,556 - 2,273,556

Net change in unrealized appre-
ciation (losses) on securities
available-for-sale, net of taxes - - - - (616,932) (616,932)
------ -------- ---------- ----------- ---------- -----------

Balances, December 31, 1994 35,981 359,810 3,641,242 10,798,502 (361,901) 14,437,653

Net income, period ended
March 31, 1995 (unaudited) - - - 694,263 - 694,263

Net change in unrealized
appreciation on securities
available-for-sale, net of taxes - - - - 80,132 80,132
------ -------- ---------- ----------- ---------- -----------

Balances, March 31, 1995
(unaudited) 35,981 $359,810 $3,641,242 $11,492,765 $ (281,769) $15,212,048
====== ======== ========== =========== ========== ===========

The accompanying notes are an integral part of these consolidated financial statements
</TABLE>

F - 4
<PAGE> 81
<TABLE>
SOUTHWEST BANCSHARES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS

<CAPTION>
THREE MONTHS ENDED
MARCH 31, YEARS ENDED DECEMBER 31,
------------------ ------------------------------------
1995 1994 1994 1993 1992
---- ---- ---- ---- ----
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 694,263 $ 375,926 $ 2,273,556 $ 1,538,825 $ 1,237,397
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation 35,473 39,825 186,272 165,088 159,650
Amortization 2,294 2,294 9,176 9,176 9,176
Donation of property - - 17,696 - -
Provision for loan losses - - - - 155,000
Premiums and discounts on
investment securities (2,070) 5,493 7,856 225,779 353,974
Minority interests in net income
of consolidated subsidiaries - - - - 17,676
Gain on sale of equipment - (142) (142) (1,557) -
Gain on sale of repossessions (150) - (327) (286) (555)
Gain on sale of other real estate - - (31,555) (1,611) (3,927)
Gain on sale of investment securities - - (35,584) - (10,101)
Write down of other real estate - - - 13,222 -
Net change in operating accounts:
Accrued interest receivable - investments 34,716 90,642 (34,506) 144,277 398,679
Accrued interest receivable - loans (106,726) (49,000) (178,131) (19,241) 116,644
Prepaid expenses (80,192) (68,886) 6,891 (9,383) 7,365
Other assets (1,168) 1,367 21,901 (9,401) (1,437)
Unearned interest on loans (5,435) 4,599 3,959 898 (16,776)
Accounts payable and accrued expenses (2,281) 17,513 (76,546) 76,610 36,800
Accrued interest payable 120,328 (23,640) 79,890 (101,837) (433,713)
Income taxes payable 236,085 121,214 56,686 693 (29,765)
Deferred income taxes - - (128,235) - -
---------- ---------- ----------- ----------- -----------
Net cash provided by operating
activities 925,137 517,205 2,178,857 2,031,252 1,996,087
---------- ---------- ----------- ----------- -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
Net decrease (increase) in interest-bearing
deposits with banks 561,575 (159,973) 2,957,350 (918,736) 10,117,260
Purchases of property and equipment (31,691) (15,271) (517,362) (119,187) (147,194)
Proceeds from sale of property & equipment - 2,800 2,800 4,000 -
Purchases of investment securities
held-for-investment - - - (20,690,101) (23,850,080)
Purchases of investment securities
available-for-sale (450,000) (2,872,812) (11,062,023) - -
Proceeds from sales of investment
securities held-for-investment - - - - 784,213
Proceeds from sales of investment
securities available-for-sale - - 1,741,944 - -
Proceeds from maturities of investment
securities held-for-investment - - - 24,716,912 35,549,909
Proceeds from maturities of investment
securities available-for-sale 664,568 2,726,621 5,579,700 - -
Net decrease (increase) in federal
funds sold (3,675,000) (300,000) 4,100,000 8,125,000 (13,975,000)
Net increase in loans (347,485) (1,814,868) (7,576,201) (16,973,104) (11,268,353)
Proceeds from sales of other real estate 22,700 1,203 69,331 61,896 206,065
Proceeds from sales of repossessions 3,175 3,800 5,470 15,047 9,411
---------- ---------- ----------- ----------- -----------
Net cash used for investing activities (3,252,158) (2,428,500) (4,698,991) (5,778,273) (2,573,769)
---------- ---------- ----------- ----------- -----------

F - 5
<PAGE> 82
<CAPTION>
THREE MONTHS ENDED
MARCH 31, YEARS ENDED DECEMBER 31,
------------------ ------------------------------------
1995 1994 1994 1993 1992
---- ---- ---- ---- ----
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in demand deposits
and savings accounts $ 615,868 $1,398,991 $ 482,861 $ 9,200,093 $ 14,998,398
Net increase (decrease) in
time deposits 2,787,478 (989,492) 2,137,090 (6,898,458) (16,085,532)
Net increase (decrease) in securities
sold under repurchase agreements 1,016,637 990,599 (1,029,344) (664,201) 1,020,094
Repayment of long-term debt (540,729) (537,866) (655,695) (443,242) (277,000)
Repayment of short-term debt - - - (600,000) -
Proceeds from borrowings - - - 4,000,000 1,850,000
Proceeds from issuance of
common stock - - - 100,000 282,604
Redemption of common stock - - - - (1,971)
Dividends paid to minority interests - - - - (11,380)
---------- ---------- ---------- ----------- ------------
Net cash provided from
financing activities 3,879,254 862,232 934,912 4,694,192 1,775,213
---------- ---------- ---------- ----------- ------------

NET INCREASE (DECREASE) IN
CASH AND CASH EQUIVALENTS 1,552,233 (1,049,063) (1,585,222) 947,171 1,197,531

Cash and cash equivalents -
beginning of period 5,561,099 7,146,321 7,146,321 6,199,150 5,001,619
---------- ---------- ---------- ----------- ------------

CASH AND CASH EQUIVALENTS -
END OF PERIOD $7,113,332 $6,097,258 $5,561,099 $ 7,146,321 $ 6,199,150
========== ========== ========== =========== ============

SUPPLEMENTAL DISCLOSURES OF
CASH FLOW INFORMATION:

Cash paid during the year for:
Interest $1,443,980 $1,240,171 $5,124,886 $ 5,001,403 $ 6,787,122
Income taxes 126,341 93,904 1,135,464 778,269 705,314

SUPPLEMENTAL SCHEDULE OF NONCASH
INVESTING AND FINANCING ACTIVITIES:

Loans, other real estate and
repossessions charged off to reserve $ 3,000 $ 3,595 $ 55,315 $ 45,240 $ 137,611
Loans transferred to other
real estate and repossessions 41,663 4,268 67,792 42,607 234,496
Repossessions and other real
estate transferred to fixed assets - 1,797 3,000 5,823 6,500
Company stock issued for 6.05%
interest in subsidiary - - - - 193,354

The accompanying notes are an integral part of these consolidated financial statements
</TABLE>

F - 6
<PAGE> 83

SOUTHWEST BANCSHARES, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992

(1) SUMMARY OF SIGNIFICANT ACCOUNTING AND REPORTING POLICIES
--------------------------------------------------------

NATURE OF BUSINESS - Southwest Bancshares, Inc. (the Company)
is the parent company for Southwest Bank, a wholly-owned
subsidiary of the Company. The subsidiary's principal
operation is commercial banking. The Company is also
engaged in the sale of insurance.

PRINCIPLES OF CONSOLIDATION - The accompanying consolidated
financial statements include the accounts of the Company
and its subsidiary as described above. All significant
inter-company transactions and balances have been
eliminated in consolidation.

CONSOLIDATED STATEMENTS OF CASH FLOWS - For purposes of the
consolidated statements of cash flows, cash consists of
cash on hand and deposits with other financial
institutions which are unrestricted as to withdrawal or
use. Cash equivalents include highly-liquid instruments
with an original maturity of three months or less.

MERGER - The assets, liabilities and equity for four
subsidiaries, formerly Southwest Bank of Polk County,
Southwest Bank of Hickory County, Southwest Bank of
Buffalo and Southwest Bank, NA, were merged on December
23, 1992, to form Southwest Bank.

INVESTMENT SECURITIES - During the year ended December 31,
1994, the Company adopted Statement of Financial
Accounting Standards (SFAS) No. 115, Accounting for
Certain Investments in Debt and Equity Securities, which
established three classifications of investment
securities: held-to-maturity, trading and available-for-
sale. Trading securities are acquired principally for the
purpose of near term sales. Such securities are reported
at fair value and unrealized gains and losses are included
in income. Securities which are designated as held-to-
maturity are designated as such because the investor has
the ability and intent to hold these securities to
maturity. Such securities are reported at amortized cost.

All other securities are designated as available-for-sale,
a designation which provides the investor with certain
flexibility in managing its investment portfolio. Such
securities are reported at fair value; net unrealized
gains and losses are excluded from income and reported net
of applicable income taxes as a separate component of
stockholders' equity. Gains or losses on sales of
securities are recognized in operations at the time of
sale and are determined by the difference between the net
sales proceeds and the cost of the securities using the
specific identification method, adjusted for any
unamortized premiums or discounts. Premiums or discounts
are amortized or accreted to income using the interest
method over the period to maturity.

In adopting SFAS No. 115, the Company modified its
accounting policies and designated its securities in
accordance with the three classifications. The net
unrealized losses have been reported as a separate
component of stockholders' equity. At December 31, 1994,
the Company had no securities designated as trading or
held-to-maturity securities.

For the years ended December 31, 1993 and 1992, the
Company has presented all investment securities as being
held-for-investment in the consolidated statements of
financial condition and cash flows.

F - 7
<PAGE> 84

SOUTHWEST BANCSHARES, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992

(1) SUMMARY OF SIGNIFICANT ACCOUNTING AND REPORTING POLICIES (CONTINUED)
--------------------------------------------------------------------

LOANS AND ALLOWANCE FOR CREDIT LOSSES - Loans are stated at
the amount of unpaid principal, reduced by unearned
discounts and an allowance for credit losses. Unearned
discounts on installment loans are recognized as income
over the terms of the loans by the interest method.
Interest on other loans is calculated by using the simple
interest method on daily balances of the principal amount
outstanding. The allowance for credit losses is
established through a provision for credit losses charged
to expense. Loans are charged against the allowance for
credit losses when management believes that the
collectability of principal is unlikely. The allowance is
an amount that management believes will be adequate to
absorb possible losses, based on evaluations of the
collectability of credits and prior loss experience. The
evaluations take into consideration such factors as
changes in the nature and volume of the credits, overall
portfolio quality, review of specific problem credits, and
current economic conditions that may affect the borrowers'
ability to pay. Accrual of interest is discontinued on
loans when management believes, after considering economic
and business conditions and collection efforts, that the
borrowers' financial condition is such that collection of
interest is doubtful.

REAL ESTATE ACQUIRED IN SETTLEMENT OF LOANS - Real estate
acquired in settlement of loans is carried at the lower of
the balance of the related loan at the time of foreclosure
or net realizable value.

LOAN ORIGINATION FEES - The subsidiary credits fees for
originating loans to income at the time a loan is closed,
and charges direct loan origination costs to expense in
the period they are incurred. The amortization of loan
origination fees charged by the subsidiary would
approximate the amortized direct costs of underwriting and
closing loans. As a result, the items to which SFAS No.
91, Accounting for Nonrefundable Fees and Costs Associated
With Originating or Acquiring Loans and Initial Direct
Costs of Leases apply are immaterial to the Company's
financial statements, and the provisions of SFAS No. 91
have not been adopted.

NET INCOME PER SHARE OF COMMON STOCK - Net income per share of
common stock is computed by dividing net income by the
weighted average number of shares of common stock
outstanding during the period.

<TABLE>
PROPERTY AND EQUIPMENT AND RELATED DEPRECIATION - Property and
equipment has been stated at cost. Depreciation has been
principally computed by applying the following methods and
estimated lives:

<CAPTION>
CATEGORY ESTIMATED LIFE METHOD
------------------------------------ -------------- -----------------

<S> <C> <C>
Automobiles 5 years Straight-line and
declining-balance
Furniture, fixtures and equipment 5-10 years Straight-line and
declining-balance
Buildings and leasehold improvements 15-40 years Straight-line and
declining-balance
</TABLE>

GOODWILL - Goodwill represents the excess cost of an acquired
financial institution over the fair value of its net
assets at date of acquisition, and is being amortized on
the straight-line method over ten years. Amortization
expense charged to operations for 1994, 1993 and 1992 was
$9,176 per year; accumulated amortization at December 31,
1994 and 1993 was $73,408 and $64,232, respectively.

F - 8
<PAGE> 85

SOUTHWEST BANCSHARES, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992

(1) SUMMARY OF SIGNIFICANT ACCOUNTING AND REPORTING POLICIES (CONTINUED)
--------------------------------------------------------------------

INCOME TAXES - The Company files a consolidated federal income
tax return with its wholly-owned subsidiary. The income
tax effect of timing differences in reporting transactions
for financial reporting and income tax purposes is
reflected in the financial statements as deferred income
taxes.

During the year ended December 31, 1992, the Company
adopted SFAS No. 109, Accounting for Income Taxes. Under
SFAS No. 109, income taxes are accounted for under the
asset and liability method. Under this method, deferred
income taxes are recognized for temporary differences by
applying enacted statutory rates applicable to future
years to differences between the financial statement
carrying amounts and the tax basis of existing assets and
liabilities. The effect on deferred taxes of a change in
tax rates is recognized in income in the period that
includes the enactment date.

OFF BALANCE SHEET FINANCIAL INSTRUMENTS - In the ordinary
course of business the subsidiary has entered into off
balance sheet financial instruments consisting of
commitments to extend credit and standby letters of
credit. Such financial instruments are recorded in the
financial statements when they become payable.

FAIR VALUES OF FINANCIAL INSTRUMENTS - The following methods
and assumptions were used to estimate the fair value of
each class of financial instruments for which it is
practicable to estimate that value:

Cash and short-term investments - The carrying amounts
reported in the balance sheet for cash and short-term
instruments approximate those assets' fair values.

Investment securities - Fair values for investment
securities are based on quoted market prices.

Loans receivable - For variable-rate mortgage loans that
reprice frequently and with no significant change in
credit risk, fair values are based on carrying values.
The fair value for all other loans is estimated using
discounted cash flow analyses, utilizing interest
rates currently being offered for loans with similar
terms. The carrying amount of accrued interest
approximates its fair value.

Off balance sheet financial instruments - The fair values
of commitments to extend credit and standby letters of
credit could not be reasonably estimated. Adequate
information about effective interest rates and
maturity periods was not available.

Deposit liabilities - The fair value of demand deposits,
savings accounts, and money market deposits is the
amount payable on demand at the reporting date. The
fair value of fixed-maturity certificates of deposit
is estimated using the rates currently offered for
deposits of similar remaining maturities.

F - 9
<PAGE> 86

SOUTHWEST BANCSHARES, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992

(1) SUMMARY OF SIGNIFICANT ACCOUNTING AND REPORTING POLICIES (CONTINUED)
--------------------------------------------------------------------

Short-term borrowings - The carrying amounts of federal
funds purchased, borrowings under repurchase
agreements, and other short-term borrowings
approximate their fair values. Fair values of other
short-term borrowings are estimated using discounted
cash flow analyses based on the Company's current
incremental borrowing rates for similar types of
borrowing arrangements.

Long-term borrowings - The fair values of the Company's
long-term debt at December 31, 1994, are estimated
using discounted cash flow analyses based on the
Company's borrowing arrangements. At December 31,
1993, the carrying amount approximates its fair
values.

UNAUDITED FINANCIAL STATEMENTS - Information at March 31,
1995, and for the three months ended March 31, 1995 and
1994, is unaudited. In the opinion of management, the
unaudited consolidated financial statements contain all
adjustments (none of which were other than normal
recurring entries) necessary for a fair presentation of
the results of operations for the interim periods.

NEW ACCOUNTING STANDARDS - In October 1994, FASB issued SFAS
119, "Disclosure About Derivative Financial Instruments
and Fair Value of Financial Instruments." The adoption of
SFAS 119 is required for fiscal years ending after
December 15, 1994. The statement requires disclosures
about derivative financial instruments and other financial
instruments with similar characteristics that are not
subject to SFAS 105, "Disclosure of Information About
Financial Instruments with Off-Balance Sheet Risk and
Financial Instruments with Concentrations of Credit Risk."
The Company does not hold any derivative financial
instruments for which disclosure would be required under
SFAS 119.

In May 1993, the FASB issued SFAS 114, "Accounting by
Creditors for Impairment of a Loan," as amended by SFAS
118, which was issued in October 1994. The Statement
requires impaired loans to be measured based on the
present value of expected future cash flows discounted at
the loan's effective interest rate. The adoption of
SFAS 114, required in 1995, is not expected to have a
material impact on Southwest's financial condition or
results of operations.

RECLASSIFICATION - Certain accounts in the prior year
financial statements have been reclassified for
comparative purposes to conform with the presentation in
the current year financial statements.

F - 10
<PAGE> 87

SOUTHWEST BANCSHARES, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992

(2) INVESTMENT SECURITIES
---------------------

<TABLE>
Investment securities as shown in the consolidated balance
sheets at December 31 were as follows:

<CAPTION>
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
------------ ----------- ----------- ------------
<S> <C> <C> <C> <C>
Securities Available-for-Sale
December 31, 1994:
U.S. government & agency securities $ 34,076,627 $ 2,500 $ 734,170 $ 33,344,957
State and municipal securities 1,240,001 16,231 14,879 1,241,353
Other securities 1,009,300 155,875 -- 1,165,175
------------ ---------- ---------- ------------
Total $ 36,325,928 $ 174,606 $ 749,049 $ 35,751,485
============ ========== ========== ============

Securities Held-for-Investment
December 31, 1993:
U.S. government & agency securities $ 30,432,923 $ 178,457 $ 25,931 $ 30,585,449
State and municipal securities 1,115,600 38,575 788 1,153,387
Other securities 1,009,300 214,498 -- 1,223,798
------------ ---------- ---------- ------------
Total $ 32,557,823 $ 431,530 $ 26,719 $ 32,962,634
============ ========== ========== ============
</TABLE>

Investment securities with original costs of $29,323,808 and
$28,038,526 and market values of $28,693,240 and $28,092,018
for 1994 and 1993, respectively, were pledged to secure public
deposits and for other purposes required or permitted by law.
Other securities consist of marketable equity securities with
original costs of $1,009,300 and $1,009,300 and market values
of $1,165,175 and $1,223,798 at December 31, 1994 and 1993,
respectively.

Gross realized gains on sales of U. S. Government and agency
securities totaled $35,584 for 1994 and $10,101 for 1992.
Income taxes relating to these gains totaled $13,200 for 1994
and $3,700 for 1992.

<TABLE>
The maturities of investment securities at December 31, 1994,
were as follows:

<CAPTION>
AMORTIZED MARKET
COST VALUE
------------ ------------

<S> <C> <C>
Due in one year or less $ 14,169,073 $ 13,976,703
Due from one to five years 20,554,167 20,041,254
Due from five to ten years 575,000 550,666
Due after ten years 18,388 17,687
Marketable equity securities 1,009,300 1,165,175
------------ ------------
$ 36,325,928 $ 35,751,485
============ ============
</TABLE>

F - 11
<PAGE> 88
SOUTHWEST BANCSHARES, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 1994 1993 AND 1992

(3) PROPERTY AND EQUIPMENT
----------------------

<TABLE>
<CAPTION>
1994 1993
----------------------------------- ----------------------------------
Accum. Accum.
Category Cost Deprec. Net Cost Deprec. Net
------------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Land $ 656,340 $ -- $ 656,340 $ 234,893 $ -- $ 234,893
Buildings and
improvements 1,990,723 927,988 1,062,735 1,938,847 855,682 1,083,165
Equipment 1,572,654 1,329,581 243,073 1,549,382 1,219,028 330,354
---------- ---------- ---------- ---------- ---------- ----------
$4,219,717 $2,257,569 $1,962,148 $3,723,122 $2,074,710 $1,648,412
========== ========== ========== ========== ========== ==========
</TABLE>

Depreciation expense amounted to $186,272, $165,088 and $159,650 for
the years ended December 31, 1994, 1993 and 1992, respectively.

(4) LOANS
-----

<TABLE>
The components of loans in the consolidated balance sheets were as
follows:

<CAPTION>
1994 1993
--------------- ---------------
<S> <C> <C>
Commercial, financial and other $ 10,965,614 $ 14,571,746
Agricultural 2,893,052 3,227,785
Real estate:
Mortgage - residential (1-4 family) 41,624,671 37,020,464
Mortgage - commercial and multi-family 48,982,593 41,747,323
Construction 6,304,613 6,589,243
Agricultural - real estate 9,348,841 8,972,934
Consumer 6,362,540 6,857,842
--------------- ---------------
Total loans $ 126,481,924 $ 118,987,337
=============== ===============
</TABLE>

<TABLE>
Changes in the reserve for credit losses were as follows:

<CAPTION>
1994 1993 1992
------------- ------------- -------------
<S> <C> <C> <C>
Balances, beginning of year $ 1,103,048 $ 1,117,599 $ 1,062,775
Provision charged to operations -- -- 155,000
Loans charged off (55,315) (45,240) (137,611)
Recoveries 45,052 30,689 37,435
------------- ------------- -------------
Balances, end of year $ 1,092,785 $ 1,103,048 $ 1,117,599
============= ============= =============
</TABLE>

The estimated market value of loans was $124,892,393 and $118,022,802 at
December 31, 1994 and 1993, respectively.

The Company's subsidiary primarily grants real estate and commercial
loans to customers throughout southwest Missouri. The loans are
typically secured by real estate or personal property.

(5) TIME DEPOSITS
-------------

The aggregate amount of jumbo certificates of deposit with a minimum
denomination of $100,000 was $11,945,000 and $11,651,115 at December
31, 1994 and 1993, respectively.

F - 12
<PAGE> 89

SOUTHWEST BANCSHARES, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 1994 1993 AND 1992

(5) TIME DEPOSITS (CONTINUED)
-------------------------

The estimated market value of time deposits was $64,064,632 and
$62,606,321 at December 31, 1994 and 1993, respectively.

(6) INCOME TAXES
------------

<TABLE>
The provision for income tax expense for the years ended December 31
are as follows:

<CAPTION>
1994 1993 1992
------------- ------------ ------------
<S> <C> <C> <C>
Currently payable:
Federal $ 1,045,986 $ 711,635 $ 606,708
State 146,334 74,461 64,053
------------- ------------ ------------
1,192,320 786,096 670,761
Deferred (128,237) -- --
------------- ------------ ------------
$ 1,064,083 $ 786,096 $ 670,761
============= ============ ============
</TABLE>

<TABLE>
The provision for income taxes differs from that computed by applying
the federal statutory rate of 34% in 1994, 1993 and 1992, as indicated
in the following analysis:
<CAPTION>
1994 1993 1992
------------ ---------- ----------
<S> <C> <C> <C>
Tax based on statutory rate $ 1,134,797 $ 790,473 $ 648,774
Effect of:
Tax-exempt income (34,995) (40,076) (51,725)
Credit loss provisions -- (4,947) 38,671
Dividends received deduction (3,157) (3,079) (3,010)
Interest and other nondeductible expenses 17,702 26,263 13,910
Other (net) (1,589) (22,955) (18,938)
Recognition of net deferred tax benefits
related to prior years timing differences (133,235) -- --
Provision for state taxes - net of
federal tax benefit 84,560 40,417 43,079
------------ ---------- ----------

$ 1,064,083 $ 786,096 $ 670,761
============ ========== ==========
</TABLE>

<TABLE>
The components of deferred tax assets and liabilities as of December
31, 1994, consisted of:

<S> <C>
Deferred tax assets:
Reserve for loan losses $ 404,330
Unrealized losses on
securities available-for-sale 270,218
-----------
Total gross deferred tax benefits 674,548
-----------

Deferred tax liabilities:
Bad debt reserve for tax purposes 200,870
Federal Home Loan Bank stock dividends 34,040
Unrealized gains on securities available-for-sale 57,674
Tax depreciation in excess of book depreciation 24,811
Deferred loan fees 4,098
Deferred accretion on investment securities 3,314
Other 8,962
-----------
Total gross deferred tax liabilities 333,769
-----------
Net deferred tax benefits $ 340,779
===========
</TABLE>

F - 13
<PAGE> 90

SOUTHWEST BANCSHARES, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 1994 1993 AND 1992

(7) LONG-TERM DEBT
--------------

<TABLE>
Long-term debt consists of the following:
<CAPTION>
1994 1993
----------- ------------
<S> <C> <C>
Advances from the Federal Home Loan Bank of Des Moines,
secured by Federal Home Loan Bank stock, loans, invest-
ment securities and deposit accounts of the subsidiary,
with the following interest rates, repayment terms and
maturity dates:

5.8%, interest payable monthly, matures January 1995 $ 500,000 $ 500,000

6.75%, interest payable monthly, matures January 1997 500,000 500,000

6.08%, interest payable monthly, matures August 1997 250,000 250,000

5.495%, principal and interest payable monthly, matures
July 1998 946,009 984,709

5.00%, principal and interest payable monthly, matures
September 1998 1,903,370 1,981,366

5.356%, principal and interest payable monthly, matures
September 2000 951,684 990,683

Prime (floating) note to Mercantile Bank of St. Louis
National Association, interest payable quarterly,
principal payable in annual installments, matures
January 1995, secured by the common stock of the
subsidiary 1,500,000 2,000,000

Less debt maturing within one year (2,167,400) (355,700)
------------ ------------

Noncurrent portion of long-term debt $ 4,383,663 $ 6,851,058
------------ ------------
</TABLE>

Under terms of the loan agreement with Mercantile Bank of St. Louis,
the Company and subsidiary are required to maintain certain ratios and
capital levels, the more important of which are as follows:

- Maintain, on a consolidated basis, an equity capital base of at
least 5 percent of total assets.

- Maintain total equity capital, on a consolidated basis, of not less
than $8,800,000.

- Cause the subsidiary to maintain a ratio of net income to average
total assets for each calendar year of at least .6 percent.

F - 14
<PAGE> 91

SOUTHWEST BANCSHARES, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 1994 1993 AND 1992

(7) LONG-TERM DEBT (CONTINUED)
--------------------------

Additional provisions restrict expenditures for the purchase of the
Company's stock, the creation of liens on certain property, and the
creation, incurrence or assumption of debt.

<TABLE>
Maturities of long-term debt are as follows:

<S> <C>
1995 $2,167,400
1996 180,100
1997 943,700
1998 2,495,700
1999 56,000
Later years 708,163
----------
$6,551,063
==========
</TABLE>

The estimated market value of debt was $6,138,896 at December 31,
1994.

(8) LEASES
------

The subsidiary of the Company leases space for two main branch
facilities from two entities which are related to the Company through
common control and ownership. One branch is leased under a ten-year
operating lease, expiring October 14, 2004, with a monthly rental of
$5,035. A second branch is leased under a five-year operating lease
expiring October 1, 1995, with renewal terms of three and five years,
and monthly rental of $3,413. Rent expense, inclusive of the above
amounts paid to related parties, was $101,397, $101,517 and $101,816
for the years ended December 31, 1994, 1993 and 1992, respectively.

<TABLE>
The future minimum lease payments under noncancelable operating leases
at December 31, 1994, are as follows:

(9) DEFERRED COMPENSATION PLAN
--------------------------

The Company has established a deferred compensation plan under Section
401(k) of the Internal Revenue Code. The Plan covers all employees
that meet minimum age requirements at the start of employment. The
Company matches fifty cents for each dollar of eligible employee
contributions, up to a maximum of three percent of an employee's
total salary. Employee contributions may not exceed eight percent of
their salary. Additional contributions can be made by the Company at
the discretion of the Board of Directors. Contributions by the
Company to the Plan for the years ended December 31, 1994, 1993 and
1992, amounted to $123,394, $68,511 and $28,430, respectively.

F - 15
<PAGE> 92

SOUTHWEST BANCSHARES, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 1994 1993 AND 1992

(10) RELATED-PARTY TRANSACTIONS
--------------------------

<TABLE>
In the ordinary course of business, the subsidiary makes loans to its
directors and policy-making officers on substantially the same terms,
including interest rates and collateral, as those prevailing for
comparable transactions with other customers. Loans outstanding, both
direct and indirect, to directors and policy-making officers of the
subsidiary was as follows:

<CAPTION>
YEAR ENDED DECEMBER 31, 1994
----------------------------

<S> <C>
Beginning balance $ 847,568
Originations and advances 649,650
Principal payments 811,222
----------

Ending Balance $ 685,996
==========
</TABLE>

(11) CONTINGENT LIABILITIES AND COMMITMENTS
--------------------------------------

<TABLE>
The consolidated financial statements do not reflect various
commitments and contingent liabilities which arise in the normal
course of business and which involve elements of credit risk, interest
rate risk and liquidity risk. These commitments and contingent
liabilities are standby letters of credit. A summary of the Bank's
commitments and contingent liabilities at December 31, 1994, is as
follows:

<S> <C>
Standby letters of credit $1,088,975
==========
</TABLE>

Commitments for standby letters of credit include exposure to some
credit loss in the event of nonperformance of the customer. The
subsidiary's credit policies and procedures for credit commitment and
financial guarantees are the same as those for extension of credit
that are recorded on the consolidated statements of condition.
Because these instruments have fixed maturity dates, and because many
of them expire without being drawn upon, they do not generally present
any significant liquidity risk.

(12) REGULATORY MATTERS
------------------

<TABLE>
The subsidiary is required to maintain minimum amounts of capital to
total "risk weighted" assets, as defined by the banking regulators.
At December 31, 1994, the subsidiary is required to have minimum Tier
1 and total capital ratios of 4.00% and 8.00%, respectively. The
actual ratios are as follows:

<CAPTION>
TIER 1 TOTAL CAPITAL LEVERAGE
------ ------------- --------
<S> <C> <C> <C>
Southwest Bank 13.86% 14.82% 9.01%
Southwest Bancshares, Inc. 12.80 13.76 8.22
</TABLE>

F - 16
<PAGE> 93

SOUTHWEST BANCSHARES, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 1994 1993 AND 1992

(13) SHORT-TERM BORROWINGS
---------------------

Securities sold under agreements to repurchase will mature during
1995. Other borrowed funds consist of treasury tax and loan deposits
which generally mature within 1 to 120 days from the transaction date.

(14) ACQUISITION
-----------

On September 18, 1992, the Company issued 667 shares of common stock
in exchange for 6,049 shares of common stock of Southwest Bank of
Hickory County. This transaction made Southwest Bank of Hickory
County a wholly-owned subsidiary of the Company. The book value of
the subsidiary's stock acquired by the Company was $193,354.

(15) CONDENSED FINANCIAL INFORMATION - PARENT COMPANY ONLY
-----------------------------------------------------

<TABLE>
Following is condensed financial information of the Company as of
December 31, 1994 and 1993, and for the years ended December 31, 1994,
1993 and 1992:

CONDENSED BALANCE SHEETS
PARENT COMPANY ONLY

DECEMBER 31, 1994 AND 1993

<CAPTION>
1994 1993
------------ ------------
<S> <C> <C>
ASSETS
------
Cash and cash equivalents $ 98,985 $ 216,722
Due from subsidiary 135,860 21,709
Investment in subsidiary 15,306,116 13,870,510
Property and equipment 63,444 74,939
Other assets 576,348 431,548
------------ ------------

Total assets $ 16,180,753 $ 14,615,428
============ ============

LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Notes payable $ 1,500,000 $ 2,000,000
Other liabilities 243,100 89,430
------------ ------------
Total liabilities 1,743,100 2,089,430

Stockholders' equity 14,437,653 12,525,998
------------ ------------

Total liabilities and stockholders' equity $ 16,180,753 $ 14,615,428
============ ============
</TABLE>

F - 17
<PAGE> 94

SOUTHWEST BANCSHARES, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 1994 1993 AND 1992

(15) CONDENSED FINANCIAL INFORMATION - PARENT COMPANY ONLY (CONTINUED)
-----------------------------------------------------------------

<TABLE>
CONDENSED STATEMENTS OF INCOME
PARENT COMPANY ONLY

YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
<CAPTION>

1994 1993 1992
----------- ----------- ------------
<S> <C> <C> <C>
INCOME:
Commissions and premiums
(net of refunds) $ 101,586 $ 107,366 $ 101,662
Other 56,351 56,476 62,382
----------- ----------- ------------
Total income 157,937 163,842 164,044
----------- ----------- ------------

EXPENSES:
Salaries and employee benefits 243,755 231,706 202,117
Net occupancy and
equipment expense 21,118 19,310 45,684
Interest 109,176 123,461 151,423
Premiums 54,281 64,847 64,027
Professional fees -- 36,285 55,340
Commissions 19,364 34,339 7,464
Other 60,860 60,301 48,177
----------- ----------- ------------
Total expenses 508,554 570,249 574,232
----------- ----------- ------------

EQUITY IN EARNINGS OF SUBSIDIARY 2,495,708 1,793,857 1,510,073
----------- ----------- ------------

Net income before income taxes 2,145,091 1,387,450 1,099,885
Income tax benefits 128,465 151,375 137,512
----------- ----------- ------------

NET INCOME $ 2,273,556 $ 1,538,825 $ 1,237,397
=========== =========== ============
</TABLE>

F - 18
<PAGE> 95

SOUTHWEST BANCSHARES, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 1994 1993 AND 1992

(15) CONDENSED FINANCIAL INFORMATION - PARENT COMPANY ONLY (CONTINUED)
-----------------------------------------------------------------

<TABLE>
CONDENSED STATEMENTS OF CASH FLOWS
PARENT COMPANY ONLY

YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992

<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income 2,273,556 1,538,825 1,237,397
Adjustments to reconcile net income to
net cash used in operating activities:
Depreciation and amortization 20,671 20,648 12,717
Equity in earnings of subsidiary (2,495,708) (1,793,857) (1,510,073)
Due from/to subsidiary (114,151) (31,843) 57,717
Other 97,895 38,096 (15,696)
----------- ----------- -----------
Net cash used for operating activities (217,737) (228,131) (217,938)
----------- ----------- -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment -- (3,885) (76,279)
Dividends received from subsidiary 600,000 400,000 476,620
Purchase of subsidiary stock -- -- (371)
----------- ----------- -----------
Net cash provided from
investing activities 600,000 396,115 399,970

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock - 100,000 282,604
Repayment of long-term debt (500,000) (400,000) (277,000)
Repurchase of directors' stock -- -- (1,600)
----------- ----------- -----------
Net cash provided from (used for)
financing activities (500,000) (300,000) 4,004
----------- ----------- -----------

NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS (117,737) (132,016) 186,036
Cash and cash equivalents - beginning of year 216,722 348,738 162,702
----------- ----------- -----------

CASH AND CASH EQUIVALENTS - END OF YEAR $ 98,985 $ 216,722 $ 348,738
=========== =========== ===========
</TABLE>

(16) AGREEMENT AND PLAN OF REORGANIZATION
------------------------------------

On January 27, 1995, the Company signed a definitive agreement to
merge with Ameribanc, Inc., a wholly owned subsidiary of Mercantile
Bancorporation Inc. Terms of the agreement call for the exchange of
18.7599 shares of Mercantile Bancorporation Inc. common stock for each
share of the Company's common stock. The transaction is expected to
be accounted for as a pooling of interests. The merger is subject to
approval of the appropriate regulatory authorities and the
stockholders of the Company.

F - 19
<PAGE> 96
ANNEX A
-------

Following is the text of the statutory appraisal right as set
forth at Section 351.455 of The General and Business Corporation Law of
Missouri:

351.455 SHAREHOLDER WHO OBJECTS TO MERGER MAY DEMAND VALUE OF
SHARES, WHEN.--1. If a shareholder of a corporation which is a party to
a merger or consolidation shall file with such corporation, prior to or at
the meeting of shareholders at which the plan of merger or consolidation
is submitted to a vote, a written objection to such plan of merger or
consolidation, and shall not vote in favor thereof, and such shareholder,
within twenty days after the merger or consolidation is effected, shall
make written demand on the surviving or new corporation for payment of the
fair value of his shares as of the day prior to the date on which the vote
was taken approving the merger or consolidation, the surviving or new
corporation shall pay to such shareholder, upon surrender of his
certificate or certificates representing said shares, the fair value
thereof. Such demand shall state the number and class of the shares owned
by such dissenting shareholder. Any shareholder failing to make demand
within the twenty day period shall be conclusively presumed to have
consented to the merger or consolidation and shall be bound by the terms
thereof.

2. If within thirty days after the date on which such merger
or consolidation was effected the value of such shares is agreed upon
between the dissenting shareholder and the surviving or new corporation,
payment therefor shall be made within ninety days after the date on which
such merger or consolidation was effected, upon the surrender of his
certificate or certificates representing said shares. Upon payment of the
agreed value the dissenting shareholder shall cease to have any interest
in such shares or in the corporation.

3. If within such period of thirty days the shareholder and the
surviving or new corporation do not so agree, then the dissenting
shareholder may, within sixty days after the expiration of the thirty day
period, file a petition in any court of competent jurisdiction within the
county in which the registered office of the surviving or new corporation
is situated, asking for a finding and determination of the fair value of
such shares, and shall be entitled to judgment against the surviving or new
corporation for the amount of such fair value as of the day prior to the
date on which such vote was taken approving such merger or consolidation,
together with interest thereon to the date of such judgment. The judgment
shall be payable only upon and simultaneously with the surrender to the
surviving or new corporation of the certificate or certificates
representing said shares. Upon the payment of the judgment, the dissenting
shareholder shall cease to have any interest in such shares, or in the
surviving or new corporation. Such shares may be held and disposed of by
the surviving or new corporation as it may see fit. Unless the dissenting
shareholder shall file such petition within the time herein limited, such
shareholder and all persons claiming under him shall be conclusively
presumed to have approved and ratified the merger or consolidation, and
shall be bound by the terms thereof.

4. The right of a dissenting shareholder to be paid the fair
value of his shares as herein provided shall cease if and when the
corporation shall abandon the merger or consolidation.

A - 1
<PAGE> 97
PROXY SOUTHWEST BANCSHARES, INC.
102 SOUTH SPRINGFIELD STREET
BOLIVAR, MISSOURI 65613

FOR THE SPECIAL MEETING OF SHAREHOLDERS TO BE HELD -----------------, 1995

THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS

The undersigned shareholder(s) of SOUTHWEST BANCSHARES, INC.
("Southwest"), does hereby nominate, constitute and appoint
- ----------------------- and -----------------------, or each of them (with
full power to act alone), true and lawful attorney(s), with full power of
substitution, for the undersigned and in the name, place and stead of the
undersigned to vote all of the shares of Common Stock, $10.00 par value,
of Southwest standing in the name of the undersigned on its books at the
close of business on ------------------, 1995 at the Special Meeting of
Shareholders to be held at ------------------------,
- ---------------------------, Bolivar, Missouri, on -----------------, 1995,
at --:00 -.m. Central Time, and at any adjournments or postponements
thereof, with all the powers the undersigned would possess if personally
present, as follows:

1. To consider and vote upon the adoption and approval of the
Agreement and Plan of Merger dated January 27, 1995 (the "Merger
Agreement"), pursuant to which Southwest will be merged with and into a
wholly owned subsidiary of Mercantile Bancorporation Inc. ("MBI") and
whereby, upon consummation of the merger, all shares of Southwest Common
Stock will be converted into an aggregate of up to 675,000 shares of MBI
Common Stock, as set forth in detail in the Merger Agreement.

/ / for / / against / / abstain

2. To transact such other business as may properly come before the
Special Meeting or any adjournments or postponements thereof.

(Continued on Reverse Side)

THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER
DIRECTED HEREIN BY THE UNDERSIGNED SHAREHOLDER(S). IF NO DIRECTION IS
GIVEN HEREIN, THIS PROXY WILL BE VOTED "FOR" THE PROPOSAL LISTED ABOVE.

Dated: ---------------

--------------------------------------------
Signature of Shareholder

When signing as an attorney, executor, administrator, trustee or
guardian, please give full title. If more than one person holds
the power to vote the same shares, all must sign. All joint
owners must sign.

PLEASE MARK, DATE, SIGN AND RETURN THIS PROXY PROMPTLY USING THE ENCLOSED
ENVELOPE.

<PAGE> 98
PART II

INFORMATION NOT REQUIRED IN THE PROSPECTUS
------------------------------------------

Item 20. Indemnification of Officers and Directors
- ---------------------------------------------------

Sections 351.355(1) and (2) of The General and Business
Corporation Law of the State of Missouri provide that a corporation may
indemnify any person who was or is a party or is threatened to be made a
party to any threatened, pending or completed action, suit or proceeding
by reason of the fact that he is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, against
expenses, judgments, fines and amounts paid in settlement actually and
reasonably incurred by him in connection with such action, suit or
proceeding if he acted in good faith and in a manner he reasonably believed
to be in or not opposed to the best interests of the corporation and, with
respect to any criminal action or proceeding, had no reasonable cause to
believe his conduct was unlawful, except that, in the case of an action or
suit by or in the right of the corporation, the corporation may not
indemnify such persons against judgments and fines and no person shall be
indemnified as to any claim, issue or matter as to which such person shall
have been adjudged to be liable for negligence or misconduct in the
performance of his duty to the corporation, unless and only to the extent
that the court in which the action or suit was brought determines upon
application that such person is fairly and reasonably entitled to indemnity
for proper expenses. Section 351.355(3) provides that, to the extent that
a director, officer, employee or agent of the corporation has been
successful in the defense of any such action, suit or proceeding or any
claim, issue or matter therein, he shall be indemnified against expenses,
including attorneys' fees, actually and reasonably incurred in connection
with such action, suit or proceeding. Section 351.355(7) provides that a
corporation may provide additional indemnification to any person
indemnifiable under subsection (1) or (2), provided such additional
indemnification is authorized by the corporation's articles of
incorporation or an amendment thereto or by a shareholder-approved bylaw
or agreement, and provided further that no person shall thereby be
indemnified against conduct which was finally adjudged to have been
knowingly fraudulent, deliberately dishonest or willful misconduct or which
involved an accounting for profits pursuant to Section 16(b) of the
Securities Exchange Act of 1934.

Article 12 of the Restated Articles of Incorporation of MBI
provides that MBI shall extend to its directors and executive officers the
indemnification specified in subsections (1) and (2) and the additional
indemnification authorized in subsection (7) and that it may extend to
other officers, employees and agents such indemnification and additional
indemnification.

Pursuant to directors' and officers' liability insurance
policies, with total annual limits of $30,000,000, MBI's directors and
officers are insured, subject to the limits, retention, exceptions and
other terms and conditions of such policy, against liability for any actual
or alleged error, misstatement, misleading statement, act or omission, or
neglect or breach of duty by the directors or officers of MBI, individually
or collectively, or any matter claimed against them solely by reason of
their being directors or officers of MBI.

II-1
<PAGE> 99
Item 21. Exhibits and Financial Statement Schedules
- ----------------------------------------------------

A. Exhibits. See Exhibit Index.
---------

B. Financial Statement Schedules. Not Applicable.
------------------------------

Item 22. Undertakings
- ----------------------

(1) Insofar as indemnification for liabilities arising under
the Securities Act of 1933 may be permitted to directors, officers and
controlling persons of MBI pursuant to the foregoing provisions, or
otherwise, MBI has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment
by MBI of expenses incurred or paid by a director, officer or controlling
person of MBI in the successful defense of any action, suit or proceeding)
is asserted by such director, officer or controlling person in connection
with the securities being registered, MBI will, unless in the opinion of
its counsel the matter has been settled by controlling precedent, submit to
a court of appropriate jurisdiction the question of whether such
indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.

(2) MBI hereby undertakes that, for purposes of determining any
liability under the Securities Act of 1933, each filing of MBI's annual
report pursuant to Section 13(a) or Section 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee
benefit plan's annual report pursuant to Section 15(d) of the Securities
Exchange Act of 1934) that is incorporated by reference in the Registration
Statement shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.

(3) MBI hereby undertakes as follows: that prior to any public
reoffering of the securities registered hereunder through use of a
prospectus which is a part of this Registration Statement, by any person or
party who is deemed to be an underwriter within the meaning of Rule 145(c),
the issuer undertakes that such reoffering prospectus will contain the
information called for by the applicable registration form with respect to
reofferings by persons who may be deemed underwriters, in addition to the
information called for by the other Items of the applicable form.

(4) MBI undertakes that every prospectus (i) that is filed
pursuant to paragraph (3) immediately preceding, or (ii) that purports to
meet the requirements of section 10(a)(3) of the Act and is used in
connection with an offering of securities subject to Rule 415 (Section
230.415 of this chapter), will be filed as a part of an amendment to the
Registration Statement and will not be used until such amendment is
effective, and that, for purposes of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offering
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.

(5) MBI hereby undertakes to respond to requests for information
that is incorporated by reference into the prospectus pursuant to Item 4,
10(b), 11 or 13 of this Form, within one business day of receipt of such
request and to send the incorporated documents by first class mail or other
equally prompt means. This includes information contained in the documents
filed subsequent to the effective date of the Registration Statement
through the date of responding to the request.

II-2
<PAGE> 100

(6) MBI hereby undertakes to supply by means of a post-effective
amendment all information concerning a transaction, and the company being
acquired involved therein, that was not the subject of and included in the
Registration Statement when it became effective.

(7) MBI hereby undertakes:

(a) To file during any period in which offers and sales
are being made, a post-effective amendment to this
Registration Statement:

(i) To include any prospectus required by Section
10(a)(3) of the Securities Act of 1933;

(ii) To reflect in the prospectus any facts or
events arising after the effective date of the
Registration Statement (or the most recent
post-effective amendment thereof), which
individually or in the aggregate, represent a
fundamental change in the information set forth in
the Registration Statement;

(iii) To include any material information with
respect to the plan of distribution not previously
disclosed in the Registration Statement or any
material change to such information in the
Registration Statement.

(b) That for the purpose of determining any liability
under the Securities Act of 1933, each such
post-effective amendment shall be deemed to be a new
registration statement relating to the securities
offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide
offering thereof.

(c) To remove from registration by means of a
post-effective amendment any of the securities being
registered which remain unsold at the termination of the
offering.

II-3
<PAGE> 101
SIGNATURES

Pursuant to the requirements of the Securities Act of 1933,
MBI has duly caused this Registration Statement to be signed on its behalf
by the undersigned, thereunto duly authorized, in the City of St. Louis,
State of Missouri, on June 8, 1995.

MERCANTILE BANCORPORATION INC.

/s/ Thomas H. Jacobsen
By --------------------------------------------
Thomas H. Jacobsen
Chairman of the Board, President and
Chief Executive Officer

POWER OF ATTORNEY

We, the undersigned officers and directors of Mercantile
Bancorporation Inc., hereby severally and individually constitute and
appoint Thomas H. Jacobsen and W. Randolph Adams, and each of them, the
true and lawful attorneys and agents of each of us to execute in the
name, place and stead of each of us (individually and in any capacity
stated below) any and all amendments to this Registration Statement on
Form S-4 and all instruments necessary or advisable in connection
therewith and to file the same with the Securities and Exchange
Commission, each of said attorneys and agents to have the power to act
with or without the others and to have full power and authority to do
and perform in the name and on behalf of each of the undersigned every
act whatsoever necessary or advisable to be done in the premises as
fully and to all intents and purposes as any of the undersigned might
or could do in person, and we hereby ratify and confirm our signatures
as they may be signed by our said attorneys and agents or each of them
to any and all such amendments and instruments.

Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the date indicated.

<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----

/s/ Thomas H. Jacobsen
- ------------------------------ Chairman of the Board, June 8, 1995
Thomas H. Jacobsen President, Chief Executive
Principal Executive Officer Officer and Director

/s/ W. Randolph Adams
- ----------------------------- Senior Executive Vice President June 8, 1995
W. Randolph Adams and Chief Financial Officer
Principal Financial Officer

/s/ Michael T. Normile
- ------------------------------ Senior Vice President - Finance June 8, 1995
Michael T. Normile and Control
Principal Accounting Officer

II-4
<PAGE> 102

<CAPTION>
Signature Title Date
--------- ----- ----

/s/ Richard P. Conerly
- ------------------------------ Director June 8, 1995
Richard P. Conerly

- ------------------------------ Director June __, 1995
Harry M. Cornell, Jr.

/s/ Earl K. Dille
- ------------------------------ Director June 1, 1995
Earl K. Dille

/s/ J. Cliff Eason
- ------------------------------ Director June 8, 1995
J. Cliff Eason

/s/ Bernard A. Edison
- ------------------------------ Director June 5, 1995
Bernard A. Edison

/s/ William A. Hall
- ------------------------------ Director June 8, 1995
William A. Hall

/s/ Thomas A. Hays
- ------------------------------ Director June 1, 1995
Thomas A. Hays

/s/ William G. Heckman
- ------------------------------ Director June 8, 1995
William G. Heckman

- ------------------------------ Director June __, 1995
Frank Lyon, Jr.

/s/ Charles H. Price II
- ------------------------------ Director June 8, 1995
Charles H. Price II

II-5
<PAGE> 103

<CAPTION>
Signature Title Date
--------- ----- ----

/s/ Harvey Saligman
- ------------------------------ Director June 6, 1995
Harvey Saligman

/s/ Craig D. Schnuck
- ------------------------------ Director June 5, 1995
Craig D. Schnuck

- ------------------------------ Director June __, 1995
Robert L. Stark

/s/ Patrick T. Stokes
- ------------------------------ Director June 2, 1995
Patrick T. Stokes

/s/ Francis A. Stroble
- ------------------------------ Director June 8, 1995
Francis A. Stroble

/s/ John A. Wright
- ------------------------------ Director June 2, 1995
John A. Wright

II-6
<PAGE> 104

</TABLE>
<TABLE>
EXHIBIT INDEX

<CAPTION>
Exhibit
Number Description Page
- ------- ----------- ----

<C> <S> <C>
2.1 Agreement and Plan of Merger dated as of January 27, 1995 by
and among MBI, Ameribanc, Inc. and Southwest.

2.2 Form of Voting Agreement dated as of January 27, 1995 by and
between MBI and each of the directors of Southwest.

3.1 MBI's Restated Articles of Incorporation, as amended and
currently in effect, filed as Exhibit 3.1 to MBI's
Registration Statement No. 33-63196, are incorporated herein
by reference.

3.2 MBI's By-Laws, as amended and currently in effect, filed as
Exhibit 3.2 to MBI's Registration Statement No. 33-57489, are
incorporated herein by reference.

4.1 Form of Indenture Regarding Subordinated Securities between
MBI and The First National Bank of Chicago, Trustee, filed as
Exhibit 4.1 to MBI's Report on Form 8-K dated September 24,
1992, is incorporated herein by reference.

4.2 Rights Agreement dated as of May 23, 1988 between MBI and
Mercantile Bank, as Rights Agent (including as exhibits
thereto the form of Certificate of Designation, Preferences
and Rights of Series A Junior Participating Preferred Stock
and the form of Right Certificate), filed as Exhibits 1 and
2 to MBI's Registration Statement No. 0-6045 on Form 8-A,
dated May 24, 1988, is incorporated herein by reference.

4.3 Certificate of Designation, Preferences, and Relative Rights,
Qualifications, Limitations and Restrictions of the Series
B-1 Preferred Stock of MBI, filed as Exhibit 4-1 to MBI's
Report on Form 10-Q for the quarter ended March 31, 1995
(File No. 1-11792), is incorporated herein by reference.

4.4 Certificate of Designation, Preferences, and Relative Rights,
Qualifications, Limitations and Restrictions of the Series
B-2 Preferred Stock of MBI, filed as Exhibit 4-2 to MBI's
Report on Form 10-Q for the quarter ended March 31, 1995
(File No. 1-11792), is incorporated herein by reference.

5.1 Opinion of Thompson & Mitchell as to the legality of the
securities being registered.

8.1 Opinion of Thompson & Mitchell regarding certain tax matters
in the Merger.

10.1 The Mercantile Bancorporation Inc. 1987 Stock Option Plan, as
amended, filed as Exhibit 10-3 to MBI's Report on Form 10-K
for the year ended December 31, 1989 (File No. 1-11792), is
incorporated herein by reference.

II-7
<PAGE> 105

<CAPTION>
Exhibit
Number Description Page
- ------- ----------- ----

<C> <S> <C>
10.2 Mercantile Bancorporation Inc. Amended and Restated
Retirement Plan for Directors filed as Exhibit 10 to MBI's
Report on Form 10-Q for the quarter ended March 31, 1995
(File No. 1-11792), is incorporated herein by reference.

10.3 The Mercantile Bancorporation Inc. Executive Incentive
Compensation Plan, filed as Appendix C to MBI's definitive
Proxy Statement for the 1994 Annual Meeting of Shareholders
is incorporated herein by reference.

10.4 The Mercantile Bancorporation Inc. Employee Stock Purchase
Plan, filed as Exhibit 10-7 to MBI's Report on Form 10-K for
the year ended December 31, 1989 (File No. 1-11792), is
incorporated herein by reference.

10.5 The Mercantile Bancorporation Inc. 1991 Employee Incentive
Plan, filed as Exhibit 10-7 to MBI's Report on Form 10-K for
the year ended December 31, 1990 (File No. 1-11792), is
incorporated herein by reference.

10.6 Amendment Number One to the Mercantile Bancorporation Inc.
1991 Employee Incentive Plan, filed as Exhibit 10-6 to MBI's
Report on Form 10-K for the year ended December 31, 1994, is
incorporated herein by reference.

10.7 The Mercantile Bancorporation Inc. 1994 Stock Incentive Plan,
filed as Appendix B to MBI's definitive Proxy Statement for
the 1994 Annual Meeting of Shareholders, is incorporated
herein by reference.

10.8 The Mercantile Bancorporation Inc. 1994 Stock Incentive Plan
for Non-Employee Directors, filed as Appendix E to MBI's
definitive Proxy Statement for the 1994 Annual Meeting of
Shareholders, is incorporated herein by reference.

10.9 The Mercantile Bancorporation Inc. Voluntary Deferred
Compensation Plan, filed as Appendix D to MBI's definitive
Proxy Statement for the 1994 Annual Meeting of Shareholders,
is incorporated herein by reference.

10.10 Form of Employment Agreement for Thomas H. Jacobsen, as
amended, filed as Exhibit 10-8 to MBI's Report on Form 10-K
for the year ended December 31, 1989 (File No. 1-11792), is
incorporated herein by reference.

10.11 Form of Employment Agreement for John W. McClure, W. Randolph
Adams, John Q. Arnold and Certain Other Executive Officers, as
amended, filed as Exhibit 10-9 to MBI's Report on Form 10-K for
the year ended December 31, 1989 (File No. 1-11792), is
incorporated herein by reference.

10.12 Form of Change of Control Employment Agreement for John W.
McClure, W. Randolph Adams, John Q. Arnold and Certain Other
Executive Officers, filed as Exhibit 10-10 to MBI's Report on
Form 10-K for the year ended December 31, 1989 (File No.
1-11792), is incorporated herein by reference.

II-8
<PAGE> 106

<CAPTION>
Exhibit
Number Description Page
- ------- ----------- ----

<C> <S> <C>
10.13 Agreement and Plan of Reorganization dated August 17, 1993,
by and among MBI and United Postal Bancorp, Inc., filed as
Exhibit 2.1 to MBI's Registration Statement No. 33-50981, is
incorporated herein by reference.

10.14 Amended and Restated Agreement and Plan of Reorganization
dated as of December 2, 1994 by and among MBI and
TCBankshares, Inc., filed as Exhibit 2.1 to MBI's Report on
Form 8-K dated December 21, 1994, is incorporated herein by
reference.

10.15 The Mercantile Bancorporation Inc. Supplemental Retirement
Plan, filed as Exhibit 10-12 to MBI's Report on Form 10-K for
the year ended December 31, 1992 (File No. 1-11792), is
incorporated herein by reference.

23.1 Consent of KPMG Peat Marwick LLP with regard to use of its
reports on MBI's financial statements.

23.2 Consent of Kirkpatrick, Phillips & Miller with regard to the
use of its report on Southwest's financial statements.

23.3 Consent of Thompson & Mitchell (included in Exhibit 5.1).

24.1 Power of Attorney (included on signature page hereto).
</TABLE>

II-9

<PAGE> 1
Exhibit 2.1

======================================================================

AGREEMENT AND PLAN OF MERGER

between

MERCANTILE BANCORPORATION INC. and

AMERIBANC, INC.

as Buyers,

and

SOUTHWEST BANCSHARES, INC.

as Seller

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

Dated January 27, 1995

======================================================================

<PAGE> 2
<TABLE>
<CAPTION>
TABLE OF CONTENTS Page
<S> <C>
ARTICLE I THE MERGER . . . . . . . . . . . . . . . . . . . . 2

1.01. The Merger . . . . . . . . . . . . . . . . . . . . 2
1.02. Closing. . . . . . . . . . . . . . . . . . . . . . 2
1.03. Effective Time . . . . . . . . . . . . . . . . . . 2
1.04. Additional Actions . . . . . . . . . . . . . . . . 3
1.05. Articles of Incorporation and Bylaws . . . . . . . 3
1.06. Boards of Directors and Officers . . . . . . . . . 3
1.07. Conversion of Securities . . . . . . . . . . . . . 4
1.08. Exchange Procedures. . . . . . . . . . . . . . . . 5
1.09. Dissenting Shares. . . . . . . . . . . . . . . . . 7
1.10. No Fractional Shares . . . . . . . . . . . . . . . 8
1.11. Closing of Stock Transfer Books. . . . . . . . . . 8
1.12. Anti-Dilution Adjustments. . . . . . . . . . . . . 8
1.13. Reservation of Right to Revise Transaction . . . . 9

ARTICLE II REPRESENTATIONS, WARRANTIES AND COVENANTS OF
SELLER . . . . . . . . . . . . . . . . . . . . . . 10

2.01. Organization and Authority . . . . . . . . . . . . 10
2.02. Subsidiaries . . . . . . . . . . . . . . . . . . . 10
2.03. Capitalization . . . . . . . . . . . . . . . . . . 12
2.04. Authorization. . . . . . . . . . . . . . . . . . . 13
2.05. Seller Financial Statements. . . . . . . . . . . . 15
2.06. Seller Reports . . . . . . . . . . . . . . . . . . 16
2.07. Title to and Condition of Assets . . . . . . . . . 17
2.08. Real Property. . . . . . . . . . . . . . . . . . . 18
2.09. Taxes. . . . . . . . . . . . . . . . . . . . . . . 20
2.10. Material Adverse Change. . . . . . . . . . . . . . 21
2.11. Loans, Commitments and Contracts . . . . . . . . . 21
2.12. Absence of Defaults. . . . . . . . . . . . . . . . 27
2.13. Litigation and Other Proceedings . . . . . . . . . 27
2.14. Directors' and Officers' Insurance . . . . . . . . 28
2.15. Compliance with Laws . . . . . . . . . . . . . . . 28
2.16. Labor. . . . . . . . . . . . . . . . . . . . . . . 32
2.17. Material Interests of Certain Persons. . . . . . . 33
2.18. Allowance for Loan and Lease Losses; Non-
Performing Assets. . . . . . . . . . . . . . . . . 33
2.19. Employee Benefit Plans . . . . . . . . . . . . . . 34
2.20. Conduct of Seller to Date. . . . . . . . . . . . . 37
2.21. Absence of Undisclosed Liabilities . . . . . . . . 39
2.22. Proxy Statement, etc.. . . . . . . . . . . . . . . 40
2.23. Registration Obligations . . . . . . . . . . . . . 41
2.24. Tax and Regulatory Matters . . . . . . . . . . . . 41
2.25. Brokers and Finders. . . . . . . . . . . . . . . . 41
2.26. Interest Rate Risk Management Instruments. . . . . 42
2.27. Accuracy of Information. . . . . . . . . . . . . . 42

<PAGE> 3
<CAPTION>
Page
----
<S> <C>
ARTICLE III REPRESENTATIONS, WARRANTIES AND COVENANTS OF
BUYERS . . . . . . . . . . . . . . . . . . . . . . 42

3.01. Organization and Authority . . . . . . . . . . . . 42
3.02. Capitalization of Mercantile . . . . . . . . . . . 43
3.03. Authorization. . . . . . . . . . . . . . . . . . . 46
3.04. Mercantile Financial Statements. . . . . . . . . . 47
3.05. Mercantile Reports . . . . . . . . . . . . . . . . 48
3.06. Material Adverse Change. . . . . . . . . . . . . . 49
3.07. Legal Proceedings or Other Adverse Facts . . . . . 49
3.08. Registration Statement, etc. . . . . . . . . . . . 50
3.09. Brokers and Finders. . . . . . . . . . . . . . . . 50
3.10. Accuracy of Information. . . . . . . . . . . . . . 51

ARTICLE IV CONDUCT OF BUSINESSES PRIOR TO THE EFFECTIVE
TIME . . . . . . . . . . . . . . . . . . . . . . . 51

4.01. Conduct of Businesses Prior to the Effective
Time . . . . . . . . . . . . . . . . . . . . . . . 51
4.02. Forbearances of Seller . . . . . . . . . . . . . . 51
4.03. Forbearances of Buyers . . . . . . . . . . . . . . 56

ARTICLE V ADDITIONAL AGREEMENTS. . . . . . . . . . . . . . . 57

5.01. Access and Information . . . . . . . . . . . . . . 57
5.02. Registration Statement; Regulatory Matters . . . . 59
5.03. Shareholder Approval . . . . . . . . . . . . . . . 60
5.04. Current Information. . . . . . . . . . . . . . . . 61
5.05. Agreements of Affiliates . . . . . . . . . . . . . 61
5.06. Expenses . . . . . . . . . . . . . . . . . . . . . 62
5.07. Miscellaneous Agreements and Consents. . . . . . . 62
5.08. Employee Agreements and Benefits . . . . . . . . . 63
5.09. Press Releases . . . . . . . . . . . . . . . . . . 64
5.10. State Takeover Statutes. . . . . . . . . . . . . . 64
5.11. Directors' and Officers' Indemnification . . . . . 64
5.12. Tax Opinion Certificates . . . . . . . . . . . . . 65
5.13. Best Efforts to Insure Pooling . . . . . . . . . . 65

ARTICLE VI CONDITIONS . . . . . . . . . . . . . . . . . . . . 66

6.01. Conditions to Each Party's Obligation To Effect
the Merger . . . . . . . . . . . . . . . . . . . . 66
6.02. Conditions to Obligations of Seller To Effect
the Merger . . . . . . . . . . . . . . . . . . . . 67
6.03. Conditions to Obligations of Buyers To Effect
the Merger . . . . . . . . . . . . . . . . . . . . 69

- ii -
<PAGE> 4
<CAPTION>
Page
----
<S> <C>
ARTICLE VII TERMINATION, AMENDMENT AND WAIVER. . . . . . . . . 71

7.01. Termination. . . . . . . . . . . . . . . . . . . . 71
7.02. Effect of Termination. . . . . . . . . . . . . . . 72
7.03. Amendment. . . . . . . . . . . . . . . . . . . . . 73
7.04. Waiver . . . . . . . . . . . . . . . . . . . . . . 73

ARTICLE VIII GENERAL PROVISIONS . . . . . . . . . . . . . . . . 74

8.01. Non-Survival of Representations, Warranties and
Agreements . . . . . . . . . . . . . . . . . . . . 74
8.02. Indemnification. . . . . . . . . . . . . . . . . . 74
8.03. No Assignment; Successors and Assigns. . . . . . . 75
8.04. No Implied Waiver. . . . . . . . . . . . . . . . . 76
8.05. Headings . . . . . . . . . . . . . . . . . . . . . 76
8.06. Entire Agreement . . . . . . . . . . . . . . . . . 76
8.07. Counterparts . . . . . . . . . . . . . . . . . . . 76
8.08. Notices. . . . . . . . . . . . . . . . . . . . . . 77
8.09. Severability . . . . . . . . . . . . . . . . . . . 78
8.10. Governing Law. . . . . . . . . . . . . . . . . . . 78

Exhibit A Form of Affiliate Agreement
Exhibit B Officer/Director Tax Certificate
Exhibit C Shareholder Tax Certificate
Exhibit D Form of Opinion of Counsel at Mercantile
Exhibit E Form of Opinion of Counsel of Seller
</TABLE>

- iii -
<PAGE> 5
AGREEMENT AND PLAN OF MERGER
----------------------------

This AGREEMENT AND PLAN OF MERGER (this "Agreement") is
made and entered into on January 27, 1995 by and among MERCANTILE
BANCORPORATION INC., a Missouri corporation ("Mercantile"),
AMERIBANC, INC., a Missouri corporation ("Merger Sub" and,
collectively with Mercantile, the "Buyers") and SOUTHWEST
BANCSHARES, INC., a Missouri corporation ("Seller").

W I T N E S S E T H:
- - - - - - - - - -

WHEREAS, Merger Sub is a wholly owned subsidiary of
Mercantile, and each of Mercantile and Merger Sub is a registered
bank holding company under the Bank Holding Company Act of 1956, as
amended (the "BHCA"); and

WHEREAS, Seller is registered as a bank holding company
under the BHCA; and

WHEREAS, the respective Boards of Directors of Seller and
Merger Sub and the Executive Committee of the Board of Directors of
Mercantile have approved the merger (the "Merger") of Seller with
and into Merger Sub pursuant to the terms and subject to the
conditions of this Agreement; and

WHEREAS, the parties desire to provide for certain
undertakings, conditions, representations, warranties and covenants
in connection with the transactions contemplated by this Agreement.

NOW THEREFORE, in consideration of the premises and the
representations, warranties and agreements herein contained, the
parties agree as follows:

<PAGE> 6
ARTICLE I
---------

THE MERGER

1.01. The Merger. (a) Subject to the terms and
----------
conditions of this Agreement, Seller shall be merged with and into
Merger Sub in accordance with Chapter 351 of the Missouri Revised
Statutes (the "Missouri Statute"), and the separate corporate
existence of Seller shall cease. Merger Sub shall be the surviving
corporation of the Merger (sometimes referred to herein as the
"Surviving Corporation") and shall continue to be governed by the
laws of the State of Missouri.

1.02. Closing. The closing (the "Closing") of the
-------
Merger shall take place at 10:00 a.m., local time, on the date that
the Effective Time (as defined in Section 1.03) occurs (the
"Closing Date"), or at such other time, and at such place, as
Buyers and Seller shall agree.

1.03. Effective Time. The Merger shall become
--------------
effective (the "Effective Time") upon the issuance of the certifi-
cate of merger by the Secretary of State of the State of Missouri.
Unless otherwise mutually agreed in writing by Buyers and Seller,
subject to the terms and conditions of this Agreement, the
Effective Time shall occur on such date as Buyers shall notify
Seller in writing (such notice to be at least five business days in
advance of the Effective Time) but (i) not earlier than the
satisfaction of all conditions set forth in Section 6.01(a) and
6.01(b) (the "Approval Date") and (ii) not later than the first
business day of the first full calendar month commencing at least
five business days after the Approval Date.

- 2 -
<PAGE> 7
1.04. Additional Actions. If, at any time after the
------------------
Effective Time, Buyers or the Surviving Corporation shall consider
or be advised that any further deeds, assignments or assurances or
any other acts are necessary or desirable to (a) vest, perfect or
confirm, of record or otherwise, in the Surviving Corporation its
right, title or interest in, to or under any of the rights,
properties or assets of Seller or Merger Sub or (b) otherwise carry
out the purposes of this Agreement, Seller and Merger Sub and each
of their respective officers and directors, shall be deemed to have
granted to the Surviving Corporation an irrevocable power of
attorney to execute and deliver all such deeds, assignments or
assurances and to do all acts necessary or desirable to vest,
perfect or confirm title and possession to such rights, properties
or assets in the Surviving Corporation and otherwise to carry out
the purposes of this Agreement, and the officers and directors of
the Surviving Corporation are authorized in the name of Seller or
otherwise to take any and all such action.

1.05. Articles of Incorporation and Bylaws. The
------------------------------------
Articles of Incorporation and Bylaws of Merger Sub in effect
immediately prior to the Effective Time shall be the Articles of
Incorporation and Bylaws of the Surviving Corporation following the
Merger until otherwise amended or repealed.

1.06. Boards of Directors and Officers. At the
--------------------------------
Effective Time, the directors and officers of Merger Sub
immediately prior to the Effective Time shall be directors and
officers, respectively, of the Surviving Corporation following the
Merger and such directors and officers shall hold office in

- 3 -
<PAGE> 8
accordance with the Surviving Corporation's Bylaws and applicable
law.

1.07. Conversion of Securities. At the Effective Time,
------------------------
by virtue of the Merger and without any action on the part of
Buyers, Seller or the holder of any of the following securities:

(a) Each share of the common stock, $1.00 par
value, of Merger Sub that is issued and outstanding immediately
prior to the Effective Time shall remain outstanding and shall be
unchanged after the Merger and shall thereafter constitute all of
the issued and outstanding capital stock of the Surviving Corpora-
tion; and

(b) Each share of common stock, $10.00 par
value, of Seller ("Seller Common Stock") issued and outstanding at
the Effective Time (other than any shares held by Seller,
Mercantile or any of their respective wholly owned subsidiaries (in
each case other than in a fiduciary capacity or as a result of
debts previously contracted), which shall be cancelled, and other
than any Dissenting Shares (as defined in Section 1.09)), shall
cease to be outstanding and shall be converted into and become the
right to receive 18.7599 shares (the "Exchange Ratio") of common
stock, $5.00 par value, of Mercantile and the associated "Rights"
under the "Rights Agreement", as those terms are defined in Section
3.03 hereof ("Mercantile Common Stock"); provided, however, in no
-------- -------
event shall the aggregate number of shares of Mercantile Common
Stock issued in the Merger exceed 675,000. The Exchange Ratio was
computed by aggregating the total number of shares of Seller Common
Stock that were issued and outstanding on the date of this

- 4 -
<PAGE> 9
Agreement with the total number of shares of Seller Common Stock
that are reserved for issuance pursuant to options, warrants,
scrip, rights to subscribe to, calls or commitments relating to, or
securities or rights convertible into, Seller Common Stock.

1.08. Exchange Procedures.
-------------------
(a) At the Effective Time, holders of record
of certificates formerly representing shares of Seller Common Stock
(the "Certificates") shall be instructed to tender such
Certificates to Buyers pursuant to a letter of transmittal that
Mercantile shall deliver or cause to be delivered to such holders.
Such letters of transmittal shall specify that risk of loss and
title to Certificates shall pass only upon delivery of such
Certificates to Buyers.

(b) Subject to Section 1.11, after the
Effective Time, each previous holder of a Certificate that
surrenders such Certificate to the Buyers will, upon acceptance
thereof by Buyers, be entitled to a certificate or certificates
representing the number of full shares of Mercantile Common Stock,
into which the Certificate so surrendered shall have been converted
pursuant to this Agreement and any distribution theretofore
declared and not yet paid with respect to such shares of Mercantile
Common Stock, without interest.

(c) Buyers shall accept Certificates upon
compliance with such reasonable terms and conditions as Buyers may
impose to effect an orderly exchange thereof in accordance with
customary exchange practices. Certificates shall be appropriately
endorsed or accompanied by such instruments of transfer as Buyers
may require.

- 5 -
<PAGE> 10

(d) Each outstanding Certificate shall until
duly surrendered to Buyers be deemed to evidence ownership of the
consideration into which the stock previously represented by such
Certificate shall have been converted pursuant to this Agreement.

(e) After the Effective Time, holders of
Certificates shall cease to have rights with respect to the stock
previously represented by such Certificates, and their sole rights
shall be to exchange such Certificates for the consideration
provided for in this Agreement. After the Effective Time, there
shall be no further transfer on the records of Seller of
Certificates, and if such Certificates are presented to Seller for
transfer, they shall be cancelled against delivery of the
consideration provided therefor in this Agreement. Buyers shall
not be obligated to deliver the consideration to which any former
holder of Seller Common Stock is entitled as a result of the Merger
until such holder surrenders the Certificates as provided herein.
No dividends declared will be remitted to any person entitled to
receive Mercantile Common Stock under this Agreement until such
person surrenders the Certificate representing the right to receive
such Mercantile Common Stock, at which time such dividends shall be
remitted to such person, without interest and less any taxes that
may have been imposed thereon. Certificates surrendered for
exchange by an affiliate shall not be exchanged until Buyers have
received a written agreement from such affiliate in the form
attached as Exhibit A. No party to this Agreement nor any
---------
affiliate thereof shall be liable to any holder of stock
represented by any Certificate for any consideration paid to a

- 6 -
<PAGE> 11
public official pursuant to applicable abandoned property, escheat
or similar laws. Buyers shall be entitled to rely upon the stock
transfer books of Seller to establish the identity of those persons
entitled to receive consideration specified in this Agreement,
which books shall be conclusive with respect thereto. In the event
of a dispute with respect to ownership of stock represented by any
Certificate, Buyers shall be entitled to deposit any consideration
represented thereby in escrow with an independent third party and
thereafter be relieved with respect to any claims thereto.

1.09. Dissenting Shares.
-----------------
(a) "Dissenting Shares" means any shares held
by any holder who becomes entitled to payment of the fair value of
such shares under Section 351.455 of the Missouri Statute. Any
holders of Dissenting Shares shall be entitled to payment for such
shares only to the extent permitted by and in accordance with the
provisions of such law and Mercantile shall cause the Surviving
Corporation to pay such consideration with funds provided by
Mercantile.

(b) Each party hereto shall give the other
prompt notice of any written demands for the payment of the fair
value of any shares, withdrawals of such demands, and any other
instruments, served pursuant to the Missouri Statute received by
such party and Seller shall give Mercantile the opportunity to
participate in all negotiations and proceedings with respect to
such demands. Seller shall not voluntarily make any payment with
respect to any demands for payment of fair value and shall not,
except with the prior written consent of Mercantile, which consent

- 7 -
<PAGE> 12
shall not be unreasonably withheld, settle or offer to settle any
such demands.

1.10. No Fractional Shares. Notwithstanding any other
--------------------
provision of this Agreement, neither certificates nor scrip for
fractional shares of Mercantile Common Stock shall be issued in the
Merger. Each holder who otherwise would have been entitled to a
fraction of a share of Mercantile Common Stock shall receive in
lieu thereof cash (without interest) in an amount determined by
multiplying the fractional share interest to which such holder
would otherwise be entitled by the closing stock price of
Mercantile Common Stock on the NYSE Composite Tape as reported in
The Wall Street Journal on the Closing Date. No such holder shall
- -----------------------
be entitled to dividends, voting rights or any other rights in
respect of any fractional share.

1.11. Closing of Stock Transfer Books. The stock
-------------------------------
transfer books of Seller shall be closed at the end of business on
the Business Day immediately preceding the Closing Date. In the
event of a transfer of ownership of Seller Common Stock which is
not registered in the transfer records prior to the closing of such
record books, the shares of Mercantile Common Stock issuable with
respect to such stock may be delivered to the transferee, if the
Certificate or Certificates representing such stock is presented to
the Exchange Agent accompanied by all documents required to
evidence and effect such transfer and all applicable stock transfer
taxes are paid.

1.12. Anti-Dilution Adjustments. If between the date
-------------------------
of this Agreement and the Effective Time a share of Mercantile

- 8 -
<PAGE> 13
Common Stock shall be changed into a different number of shares of
Mercantile Common Stock or a different class of shares by reason of
reclassification, recapitalization, split-up, exchange of shares or
readjustment, or if a stock dividend thereon shall be declared with
a record date within such period, then appropriate and proportion-
ate adjustment or adjustments will be made to the Exchange Ratio
such that each shareholder of Seller shall be entitled to receive
such number of shares of Mercantile Common Stock or other securi-
ties as such shareholder would have received pursuant to such
reclassification, recapitalization, split-up, exchange of shares or
readjustment or as a result of such stock dividend had the record
date therefor been immediately following the Effective Time.

1.13. Reservation of Right to Revise Transaction.
------------------------------------------
Buyers may at any time change the method of effecting the
acquisition of Seller by Buyers (including without limitation the
provisions of this Article I) if and to the extent Buyers deem such
change to be desirable, including without limitation to provide for
(i) a merger of Merger Sub with and into Seller, in which Seller is
the surviving corporation or (ii) a merger of Seller directly into
Mercantile, in which Mercantile is the surviving corporation,
provided, however, that no such change shall (A) alter or change
- -------- -------
the amount or kind of the consideration to be received by the
shareholders of Seller in the Merger, (B) adversely affect the tax
treatment to Seller shareholders as a result of receiving the
Mercantile Common Stock in the Merger or (C) materially impede or
delay receipt of any approvals, referred to in Section 6.01(b) or

- 9 -
<PAGE> 14
the consummation of the transactions contemplated by this
Agreement.

ARTICLE II
----------

REPRESENTATIONS, WARRANTIES AND COVENANTS OF SELLER

As an inducement to Buyers to enter into and perform
their respective obligations under this Agreement, and notwith-
standing any examination, inspection, audit or any other investiga-
tion made by Buyers, Seller represents and warrants to and
covenants with Buyers as follows:

2.01. Organization and Authority. Seller is a
--------------------------
corporation duly organized, validly existing and in good standing
under the laws of the State of Missouri, is duly qualified to do
business and is in good standing in all jurisdictions where its
ownership or leasing of property or the conduct of its business
requires it to be so qualified and has corporate power and
authority to own its properties and assets and to carry on its
business as it is now being conducted. Seller is registered as a
bank holding company with the Board of Governors of the Federal
Reserve System (the "Federal Reserve Board") under the BHCA. True
and complete copies of the Articles of Incorporation and Bylaws of
Seller and of the Articles of Agreement and Bylaws of Southwest
Bank ("Bank"), its wholly owned (except for directors' qualifying
shares), Missouri-chartered bank, each as in effect on the date of
this Agreement, have been provided to Buyers.

2.02. Subsidiaries.
------------

(a) Schedule 2.02 sets forth, a complete and
-------------
correct list of all of Seller's "Subsidiaries" (as defined in Rule

- 10 -
<PAGE> 15
1-02 of Regulation S-X promulgated by the Securities and Exchange
Commission (the "SEC"); each a "Seller Subsidiary" and collectively
the "Seller Subsidiaries"), all outstanding Equity Securities (as
defined in Section 2.03) of each of which are owned directly or
indirectly by Seller. Except as set forth on Schedule 2.02(a), all
----------------
of the outstanding shares of capital stock of the Seller Subsidiar-
ies owned directly or indirectly by Seller are validly issued,
fully paid and nonassessable and are owned free and clear of any
lien, claim, charge, option, encumbrance, agreement, mortgage,
pledge, security interest or restriction (a "Lien") with respect
thereto. Each of the Seller Subsidiaries is a corporation or bank
duly incorporated or organized and validly existing under the laws
of its jurisdiction of incorporation or organization, and has
corporate power and authority to own or lease its properties and
assets and to carry on its business as it is now being conducted.
Each of the Seller Subsidiaries is duly qualified to do business in
each jurisdiction where its ownership or leasing of property or the
conduct of its business requires it so to be qualified, except
where the failure to so qualify would not have a material adverse
effect on the financial condition, results of operations or
business (collectively, the "Condition") of Seller and the Seller
Subsidiaries, taken as a whole. Except as set forth on Schedule
--------
2.02(a), neither Seller nor any Seller Subsidiary owns
- -------
beneficially, directly or indirectly, any shares of any class of
Equity Securities or similar interests of any corporation, bank,
business trust, association or organization or any interest in a
partnership or joint venture of any kind.

- 11 -
<PAGE> 16

(b) Bank is a commercial bank duly organized,
validly existing and in good standing under the laws of the State
of Missouri. The deposits of Bank are insured by the Federal
Deposit Insurance Corporation (the "FDIC") under the Federal
Deposit Insurance Act of 1950, as amended (the "FDI Act").

2.03. Capitalization. The authorized capital stock of
--------------
Seller consists of 100,000 shares of Seller Common Stock, of which,
as of December 31, 1994, 35,981 shares were issued and outstanding.
Since December 31, 1994, no Equity Securities of Seller have been
issued. "Equity Securities" of an issuer means capital stock or
other equity securities of such issuer, options, warrants, scrip,
rights to subscribe to, calls or commitments of any character
whatsoever relating to, or securities or rights convertible into,
shares of any capital stock or other Equity Securities of such
issuer, or contracts, commitments, understandings or arrangements
by which such issuer is or may become bound to issue additional
shares of its capital stock or other Equity Securities of such
issuer, or options, warrants, scrip or rights to purchase, acquire,
subscribe to, calls on or commitments for any shares of its capital
stock or other Equity Securities. Except as set forth above, there
are no other Equity Securities of Seller outstanding. All of the
issued and outstanding shares of Seller Common Stock are validly
issued, fully paid, and nonassessable, and have not been issued in
violation of any preemptive right of any shareholder of Seller.
Seller has previously delivered a valid list of shareholders dated
not earlier than the fifth business day prior to the date of this
Agreement.

- 12 -
<PAGE> 17

2.04. Authorization.
-------------
(a) Seller has the corporate power and
authority to enter into this Agreement and, subject to the approval
of this Agreement by the shareholders of Seller and Regulatory
Authorities (as defined in Section 2.06), to carry out its
obligations hereunder. The only shareholder vote required for
Seller to approve this Agreement is the affirmative vote of the
holders of at least two-thirds of the outstanding shares of Seller
Common Stock entitled to vote at a meeting called for such purpose.
The execution, delivery and performance of this Agreement by Seller
and the consummation by Seller of the transactions contemplated
hereby in accordance with and subject to the terms of this
Agreement have been duly authorized by the Board of Directors of
Seller. Subject to the approval of Seller's shareholders and
subject to the receipt of such approvals of the Regulatory
Authorities as may be required by statute or regulation, this
Agreement is a valid and binding obligation of Seller enforceable
against Seller in accordance with its terms.

(b) Except as set forth in Schedule 2.04(b),
----------------
neither the execution nor delivery nor performance by Seller of
this Agreement, nor the consummation by Seller of the transactions
contemplated hereby, nor compliance by Seller with any of the
provisions hereof, will (i) violate, conflict with, or result in a
breach of any provisions of, or constitute a default (or an event
which, with notice or lapse of time or both, would constitute a
default) under, or result in the termination of, or accelerate the
performance required by, or result in a right of termination or

- 13 -
<PAGE> 18
acceleration of, or result in the creation of, any Lien upon any of
the properties or assets of Seller or any of the Seller
Subsidiaries under any of the terms, conditions or provisions of
(x) its articles of incorporation or articles of agreement, as the
case may be, or bylaws or (y) any note, bond, mortgage, indenture,
deed of trust, license, lease, agreement or other instrument or
obligation to which Seller or any of the Seller Subsidiaries is a
party or by which it may be bound, or to which Seller or any of the
Seller Subsidiaries or any of the properties or assets of Seller or
any of the Seller Subsidiaries may be subject, or (ii) subject to
compliance with the statutes and regulations referred to in
subsection (c) of this Section 2.04 violate any judgment, ruling,
order, writ, injunction, decree, statute, rule or regulation
applicable to Seller or any of the Seller Subsidiaries or any of
their respective properties or assets; other than violations,
conflicts, breaches, defaults, terminations, accelerations or Liens
which would not have a material adverse effect on the Condition of
Seller and the Seller Subsidiaries, taken as a whole.

(c) Other than in connection or in compliance
with the provisions of the Missouri Statute, the Securities Act of
1933 and the rules and regulations thereunder (the "Securities
Act"), the Securities Exchange Act of 1934 and the rules and
regulations thereunder (the "Exchange Act"), the securities or blue
sky laws of the various states or filings, consents, reviews,
authorizations, approvals or exemptions required under the BHCA, or
any required approvals of the Federal Reserve Board and the
Division of Finance or other governmental agencies or governing

- 14 -
<PAGE> 19
boards having regulatory authority over Seller or any Seller
Subsidiary, no notice to, filing with, exemption or review by, or
authorization, consent or approval of, any public body or authority
is necessary for the consummation by Seller of the transactions
contemplated by this Agreement.

2.05. Seller Financial Statements.
---------------------------
(a) Attached hereto as Schedule 2.05(a) are
----------------
copies of the following financial statements:

(i) Audited, consolidated balance sheets
of Seller as of December 31, 1993 and 1992, related
consolidated statements of income, changes in
shareholders' equity and cash flows for the three (3)
years ended December 31, 1993, together with the notes
thereto certified by Seller's independent auditors;

(ii) Unaudited consolidated balance
sheets of Seller as of September 30, 1994 and 1993 and
related consolidated statements of income, changes in
shareholders' equity and cash flows for the nine-month
period ended September 30, 1994; and

(iii) The Consolidated Reports of
Condition and Income of Bank as of and for the years
ended December 31, 1993, 1992 and 1991, and as of and for
the nine-month period ended September 30, 1994, as filed
by Bank with the FDIC.

(b) The financial statements document
referenced in Schedule 2.05(a) are referred to collectively as the
----------------
"Seller Financial Statements." The Seller Financial Statements

- 15 -
<PAGE> 20
have been prepared in accordance with generally accepted accounting
principles ("GAAP") or, as to the financial statements referenced
in subsection (a) (iii) above, regulatory accounting principles,
consistently applied during the periods involved, and present
fairly the consolidated financial positions of Seller, Bank and
their respective Subsidiaries, as the case may be, at the dates
thereof and the consolidated results of operations and cash flows
of Seller, Bank and their respective Subsidiaries, as the case may
be, for the periods stated therein.

(c) Seller Subsidiaries have each prepared,
kept and maintained through the date hereof true, correct and
complete financial and other books and records of their affairs
which fairly reflect their respective financial conditions, results
of operations, assets and operations.

2.06. Seller Reports. Since January 1, 1991, each of
--------------
Seller and the Seller Subsidiaries has filed all material reports,
registrations and statements, together with any required amendments
thereto, that it was required to file with any federal, state,
municipal, local or foreign government, securities, banking,
savings and loan, insurance and other governmental or regulatory
authority, and the agencies and staffs thereof (such entities being
referred to herein collectively as the "Regulatory Authorities" and
individually as a "Regulatory Authority"), having jurisdiction over
the affairs of it. All such reports and statements filed with any
such Regulatory Authority are collectively referred to herein as
the "Seller Reports." As of each of their respective dates, the
Seller Reports complied in all material respects with all the rules

- 16 -
<PAGE> 21
and regulations promulgated by the applicable Regulatory Authority.
With respect to Seller Reports filed with the Regulatory
Authorities, there is no unresolved violation, criticism or
exception by any Regulatory Authority with respect to any report or
statement filed by, or any examinations of, Seller or Bank.

2.07. Title to and Condition of Assets.
--------------------------------
(a) Except as may be reflected in the Seller
Financial Statements and with the exception of all "Real Property"
(which is the subject of Section 2.08 hereof), Seller or the Seller
Subsidiaries has, and at the Closing Date will have, good and
marketable title to its owned properties and assets, including,
without limitation, those reflected in the Seller Financial
Statements (except those disposed of since the date thereof), free
and clear of any Lien, except for Liens for (i) taxes, assessments
or other governmental charges not yet delinquent and (ii) as set
forth or described in the Seller Financial Statements or any
subsequent Seller financial statements delivered to Buyers prior to
the Effective Time.

(b) No material properties or assets that are
reflected as owned by Seller or the Seller Subsidiaries in the
Seller Financial Statements as of September 30, 1994 have been
sold, leased, transferred, assigned or otherwise disposed of since
September 30, 1994, except in the ordinary course of business.

(c) All furniture, fixtures, vehicles,
machinery and equipment and computer software owned or used by
Seller or the Seller Subsidiaries, including any such items leased
as a lessee, (taken as a whole as to each of the foregoing with no

- 17 -
<PAGE> 22
single item deemed to be of material importance) are in good
working order and free of known defects, subject only to normal
wear and tear. The operation by Seller or the Seller Subsidiaries
of such properties and assets is in compliance in all material
respects with all applicable laws, ordinances and rules and
regulations of any governmental authority having jurisdiction over
such use.

2.08. Real Property.
-------------
(a) The legal description of each parcel of
real property owned by Seller or any of the Seller Subsidiaries
(other than real property acquired in foreclosure or in lieu of
foreclosure in the course of the collection of loans and being held
by Seller or a Seller Subsidiary for disposition as required by
law) is set forth in Schedule 2.08(a) under the heading "Owned Real
----------------
Property" (such real property being herein referred to as the
"Owned Real Property"). The legal description of each parcel of
real property leased by Seller or any of the Seller Subsidiaries is
also set forth in Schedule 2.08(a) under the heading "Leased Real
----------------
Property" (such real property being herein referred to as the
"Leased Real Property"). Collectively, the Owned Real Property and
the Leased Real Property is herein referred to as the "Real
Property."

(b) There is no pending dispute involving
Seller or any of the Seller Subsidiaries as to the title of or the
right to use any of the Real Property.

- 18 -
<PAGE> 23
interests as a mortgagee, and except for any real property acquired
in foreclosure or in lieu of foreclosure and being held for
disposition as required by law.

(d) None of the buildings, structures or other
improvements located on the Real Property encroaches upon or over
any adjoining parcel of real estate or any easement or right-of-way
or "setback" line in any material respect and all such buildings,
structures and improvements are in all material respects located
and constructed in conformity with all applicable zoning ordinances
and building codes.

(e) None of the buildings, structures or
improvements located on the Owned Real Property are the subject of
any official complaint or notice by any governmental authority of
violation of any applicable zoning ordinance or building code and
there is no zoning ordinance, building code, use or occupancy
restriction or condemnation action or proceeding pending, or, to
the best knowledge of Seller, threatened, with respect to any such
building, structure or improvement. The Owned Real Property is in
generally good condition, ordinary wear and tear excepted, and has
been maintained in accordance with reasonable and prudent business
practices applicable to like facilities.

(f) Except as may be reflected in the Seller
Financial Statements or with respect to such easements, Liens,
defects or encumbrances as do not individually or in the aggregate
materially adversely affect the use or value of the parcel of Owned
Real Property, Seller and the Seller Subsidiaries have, and at the

- 19 -
<PAGE> 24
Closing Date will have, good and marketable title to their
respective Owned Real Properties.

2.09. Taxes. Seller and each Seller Subsidiary have
-----
timely filed or will timely (including extensions) file all
material tax returns required to be filed at or prior to the
Closing Date ("Seller Returns"). Each of Seller and the Seller
Subsidiaries has paid, or set up adequate reserves on the Seller
Financial Statements for the payment of, all taxes required to be
paid in respect of the periods covered by such returns and has set
up adequate reserves on the most recent Seller Financial Statements
for the payment of all taxes anticipated to be payable in respect
of all periods up to and including the latest period covered by
such Seller Financial Statements. To the best knowledge of Seller,
neither Seller nor any Seller Subsidiary has any liability material
to the Condition of Seller and the Seller Subsidiaries, taken as a
whole, for any such taxes in excess of the amounts so paid or
reserves so established and no material deficiencies for any tax,
assessment or governmental charge have been proposed, asserted or
assessed (tentatively or definitely) against any of Seller or any
of the Seller Subsidiaries which would not be covered by existing
reserves. Neither Seller nor any of the Seller Subsidiaries is
delinquent in the payment of any tax, assessment or governmental
charge, nor has it requested any extension of time within which to
file any tax returns in respect of any fiscal year which have not
since been filed and no requests for waivers of the time to assess
any tax are pending. The federal and state income tax returns of
Seller and the Seller Subsidiaries have not been audited by the

- 20 -
<PAGE> 25
Internal Revenue Service (the "IRS") or the appropriate state tax
authorities for any period beginning on or after January 1, 1984.
There is no deficiency or refund litigation or, to the best of
Seller's knowledge, matter in controversy with respect to Seller
Returns. Neither Seller nor any of the Seller Subsidiaries has
extended or waived any statute of limitations on the assessment of
any tax due that is currently in effect.

2.10. Material Adverse Change. Since September 30,
-----------------------
1994, there has been no material adverse change in the Condition of
Seller and the Seller Subsidiaries, taken as a whole, except as may
have resulted or may result from changes to laws and regulations,
GAAP or regulatory accounting principles, or interpretations
thereof.

2.11. Loans, Commitments and Contracts.
--------------------------------
(a) Schedule 2.11(a) contains a complete and
----------------
accurate listing as of the date hereof of all contracts entered
into with respect to deposits of $250,000 or more, by account, and
all loan agreements and commitments, notes, security agreements,
repurchase agreements, bankers' acceptances, outstanding letters of
credit and commitments to issue letters of credit, participation
agreements, and other documents relating to or involving extensions
of credit and other commitments to extend credit by Seller or any
of the Seller Subsidiaries with respect to any one entity or
related group of entities in excess of $250,000 to which any of the
foregoing is a party or by which it is bound, by account, and,
where applicable, such other information as shall be necessary to
identify any related group of entities.

- 21 -
<PAGE> 26
(b) Except for the contracts and agreements
required to be listed on Schedule 2.11(a) and the loans required to
----------------
be listed on Schedule 2.11(f), as of the date hereof neither Seller
----------------
nor any of the Seller Subsidiaries is a party to or is bound by
any:

(i) agreement, contract, arrangement,
understanding or commitment with any labor union;

(ii) franchise or license agreement;

(iii) written employment, severance or
termination pay, agency, consulting or similar agreement
or commitment in respect of personal services;

(iv) any material agreement, arrangement
or commitment (A) not made in the ordinary course of
business, or (B) pursuant to which Seller or any of the
Seller Subsidiaries is or may become obligated to invest
in or contribute to any Seller Subsidiary other than
pursuant to Seller Employee Plans (as that term is
defined in Section 2.19 hereof) and agreements relating
to joint ventures or partnerships set forth in Schedule
--------
2.02, true and complete copies of which have been
----
furnished to Buyers;

(v) any agreement, indenture or other
instrument not disclosed in the Seller Financial
Statements relating to the borrowing of money by Seller
or any of the Seller Subsidiaries or the guarantee by
Seller or any of the Seller Subsidiaries of any such
obligation (other than trade payables or instruments

- 22 -
<PAGE> 27
related to transactions entered into in the ordinary
course of business by Seller or any of the Seller
Subsidiaries, such as deposits, Fed Funds borrowings and
repurchase and reverse repurchase agreements), other than
such agreements, indentures or instruments providing for
annual payments of less than $50,000;

(vi) any contract containing covenants
which limit the ability of Seller or any of the Seller
Subsidiaries to compete in any line of business or with
any person or which involves any restrictions on the
geographical area in which, or method by which, Seller or
any of the Seller Subsidiaries may carry on their
respective businesses (other that as may be required by
law or any applicable Regulatory Authority);

(vii) any other contract or agreement
which is a "material contract" within the meaning of Item
601(b)(10) of Regulation S-K as promulgated by the SEC to
be performed after the date of this Agreement that has
not been filed or incorporated by reference in the Seller
Reports;

(viii) any lease with annual rental
payments aggregating $50,000 or more;

(ix) loans or other obligations payable
or owing to any officer, director or employee except (A)
salaries, wages and directors' fees incurred and accrued
in the ordinary course of business and (B) obligations
due in respect of any depository accounts maintained by

- 23 -
<PAGE> 28
any of the foregoing at the Seller Subsidiaries in the
ordinary course of business;

(x) loans or debts payable or owing by
any executive officer or director of Seller or any of the
Seller Subsidiaries or any other person or entity deemed
an "executive officer" or a "related interest" of any of
the foregoing, as such terms are defined in Regulation O
of the Federal Reserve Board, except as set forth in
Schedule 2.11(b)(x);
-------------------

(xi) other agreement, contract, arrange-
ment, understanding or commitment involving an obligation
by Seller or any of the Seller Subsidiaries of more than
$50,000 and extending beyond six months from the date
hereof that cannot be cancelled without cost or penalty
upon notice of 30 days or less, other than contracts
entered into in respect of deposits, loan agreements, and
commitments, notes, security agreements, repurchase and
reverse repurchase agreements, bankers' acceptances,
outstanding letters of credit and commitments to issue
letters of credit, participation agreements and other
documents relating to transactions entered into by Seller
or any of the Seller Subsidiaries in the ordinary course
of business and not involving extensions of credit with
respect to any one entity or related group of entities in
excess of $250,000.

- 24 -
<PAGE> 29
coverage as set forth in Schedule 2.11(c) under the heading
"Insurance." ----------------

(d) True, correct and complete copies of the
agreements, contracts, leases, insurance policies and other
documents referred to in Schedules 2.11 (a), (b) and (c) have been
-------------------------------
or shall be furnished or made available to Buyers.

(e) To the best knowledge of Seller, each of
the agreements, contracts, leases, insurance policies and other
documents referred to in Schedules 2.11 (a), (b) and (c) is a
-------------------------------
valid, binding and enforceable obligation of the parties sought to
be bound thereby, except as the enforceability thereof against the
parties thereto (other than Seller or any of the Seller Subsidi-
aries) may be limited by bankruptcy, insolvency, reorganization,
moratorium and other laws now or hereafter in effect relating to
the enforcement of creditors' rights generally, and except that
equitable principles may limit the right to obtain specific
performance or other equitable remedies.

(f) Schedule 2.11(f) under the heading "Loans"
----------------
contains a true, correct and complete listing, as of the date of
this Agreement, by account, of (i) all loans in excess of $100,000
of the Seller or any of the Seller Subsidiaries which have been
accelerated during the past twelve months; (ii) all loan
commitments or lines of credit of Seller and any of the Seller
Subsidiaries in excess of $100,000 which have been terminated by
Seller or any of the Seller Subsidiaries during the past twelve
months by reason of default or adverse developments in the
condition of the borrower or other events or circumstances

- 25 -
<PAGE> 30
affecting the credit of the borrower; (iii) all loans, lines of
credit and loan commitments in excess of $100,000 as to which
Seller or any of the Seller Subsidiaries has given written notice
of its intent to terminate during the past twelve months; (iv) with
respect to all loans in excess of $100,000 all notification letters
and other written communications from Seller or any of the Seller
Subsidiaries to any of their respective borrowers, customers or
other parties during the past twelve months wherein Seller or any
of the Seller Subsidiaries has requested or demanded that actions
be taken to correct existing defaults or facts or circumstances
which may become defaults; (v) each borrower, customer, or other
party which has notified Seller or any of the Seller Subsidiaries
during the past twelve months of, or has asserted against Seller or
any of the Seller Subsidiaries, in writing, any "lender liability"
or similar claim, and, to the best knowledge of Seller, each
borrower, customer or other party which has given Seller or any of
the Seller Subsidiaries any oral notification of, or orally
asserted against Seller or any of the Seller Subsidiaries, any such
claim; (vi) all loans in excess of $100,000 (A) that are
contractually past due 90 days or more in the payment of principal
and/or interest, (B) that are on non-accrual status, (C) where a
reasonable doubt exists as to the timely future collectibility of
principal and/or interest, whether or not interest is still
accruing or the loan is less than 90 days past due, (D) the
interest rate terms have been reduced and/or the maturity dates
have been extended subsequent to the agreement under which the loan
was originally created due to concerns regarding the borrower's

- 26 -
<PAGE> 31
ability to pay in accordance with such initial terms, or (E) where
a specific reserve allocation exists in connection therewith; and
(vii) all loans or debts payable or owing by any executive officer
or director of Seller or any of the Seller Subsidiaries or any
other person or entity deemed an "executive officer" or a "related
interest" of any of the foregoing, as such terms are defined in
Regulation O of the Federal Reserve Board.

2.12. Absence of Defaults. Neither Seller nor any of
-------------------
the Seller Subsidiaries is in violation of its charter documents or
bylaws or in default under any material agreement, commitment,
arrangement, lease, insurance policy, or other instrument, whether
entered into in the ordinary course of business or otherwise and
whether written or oral, and there has not occurred any event that,
with the lapse of time or giving of notice or both, would consti-
tute such a default, except, in all cases, where such default would
not have a material adverse effect on the Condition of Seller and
the Seller Subsidiaries, taken as a whole.

2.13. Litigation and Other Proceedings. Neither Seller
--------------------------------
nor any of the Seller Subsidiaries is a party to any pending or, to
the best knowledge of Seller, threatened claim, action, suit,
investigation or proceeding, or is subject to any order, judgment
or decree, except for matters which, in the aggregate, will not
have, or reasonably could not be expected to have, a material
adverse effect on the Condition of Seller and the Seller
Subsidiaries, taken as a whole, or which purports or seeks to
enjoin or restrain the transactions contemplated by this Agreement.
Without limiting the generality of the foregoing, there are no

- 27 -
<PAGE> 32
actions, suits or proceedings pending or, to the best knowledge of
Seller, threatened against Seller or any of the Seller Subsidiaries
or any of their respective officers or directors by any shareholder
of Seller or any of the Seller Subsidiaries (or any former
shareholder of Seller or any of the Seller Subsidiaries) or
involving claims under the Community Reinvestment Act of 1977, as
amended, the Bank Secrecy Act, the fair lending laws or any other
applicable laws.

2.14. Directors' and Officers' Insurance. Each of
----------------------------------
Seller and the Seller Subsidiaries has taken or will take all
requisite action (including without limitation the making of claims
and the giving of notices) pursuant to its directors' and officers'
liability insurance policy or policies in order to preserve all
rights thereunder with respect to all matters (other than matters
arising in connection with this Agreement and the transactions
contemplated hereby) occurring prior to the Effective Time that are
known to Seller, except for such matters which, individually or in
the aggregate, will not have and reasonably could not be expected
to have a material adverse effect on the Condition of Seller and
the Seller Subsidiaries, taken as a whole. Set forth on Schedule
--------
2.14 is a list of all insurance policies maintained by or for the
- ----
benefit of Seller or its Subsidiaries as of the date hereof for
their directors, officers, employees or agents.

2.15. Compliance with Laws.
--------------------
(a) To the best knowledge of Seller, Seller and
each of the Seller Subsidiaries have all permits, licenses,
authorizations, orders and approvals of, and have made all filings,

- 28 -
<PAGE> 33
applications and registrations with, all Regulatory Authorities
that are required in order to permit them to own or lease their
respective properties and assets and to carry on their respective
businesses as presently conducted; all such permits, licenses,
certificates of authority, orders and approvals are in full force
and effect and no suspension or cancellation of any of them is
threatened; and all such filings, applications and registrations
are current; in each case except for permits, licenses, authoriza-
tions, orders, approvals, filings, applications and registrations
the failure to have (or have made) would not have a material
adverse effect on the Condition of Seller and the Seller Subsidi-
aries, taken as a whole.

(b) (i) To the best knowledge of Seller, each
of Seller and the Seller Subsidiaries has complied with all laws,
regulations and orders (including without limitation zoning
ordinances, building codes, the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"), and securities, tax, environ-
mental, civil rights, and occupational health and safety laws and
regulations and including without limitation in the case of any
Seller Subsidiary that is a bank or savings association, banking
organization, banking corporation or trust company, all statutes,
rules, regulations and policy statements pertaining to the conduct
of a banking, deposit-taking, lending or related business, or to
the exercise of trust powers) and governing instruments applicable
to it and to the conduct of its business, except where such failure
to comply would not have a material adverse effect on the Condition
of Seller and the Seller Subsidiaries, taken as a whole, and (ii)

- 29 -
<PAGE> 34
neither Seller nor any of the Seller Subsidiaries is in default
under, and no event has occurred which, with the lapse of time or
notice or both, could result in the default under, the terms of any
judgment, order, writ, decree, permit, or license of any Regulatory
Authority or court, whether federal, state, municipal or local, and
whether at law or in equity, except where such default would not
have a material adverse effect on the Condition of Seller and the
Seller Subsidiaries, taken as a whole. To the best knowledge of
Seller, neither Seller nor any of the Seller Subsidiaries is
subject to or reasonably likely to incur a liability as a result of
its ownership, operation, or use of any Property (as defined below)
of Seller (whether directly or, to the best knowledge of Seller, as
a consequence of such Property being part of the investment
portfolio of Seller or any of the Seller Subsidiaries) (A) that is
contaminated by or contains any hazardous waste, toxic substance,
or related materials, including without limitation asbestos, PCBs,
pesticides, herbicides, and any other substance or waste that is
hazardous to human health or the environment (collectively, a
"Toxic Substance"), or (B) on which any Toxic Substance has been
stored, disposed of, placed, or used in the construction thereof;
and which, in each case, reasonably could be expected to have a
material adverse effect on the Condition of Seller and the Seller
Subsidiaries, taken as a whole. "Property" shall include all
property (real or personal, tangible or intangible) owned or
controlled by Seller or any of the Seller Subsidiaries, including
without limitation property under foreclosure, property held by
Seller or any of the Seller Subsidiaries in its capacity as a

- 30 -
<PAGE> 35
trustee and property in which any venture capital or similar unit
of Seller or any of the Seller Subsidiaries has an interest. No
claim, action, suit or proceeding is pending against Seller or any
of the Seller Subsidiaries relating to Property of Seller or any of
the Seller Subsidiaries before any court or other Regulatory
Authority or arbitration tribunal relating to Toxic Substances,
pollution or the environment, and there is no outstanding judgment,
order, writ, injunction, decree or award against or affecting
Seller or any of the Seller Subsidiaries with respect to the same.
Except for statutory or regulatory restrictions of general
application, no Regulatory Authority has placed any restriction on
the business of Seller or any of the Seller Subsidiaries which
reasonably could be expected to have a material adverse effect on
the Condition of Seller and the Seller Subsidiaries, taken as a
whole.

(c) Since December 31, 1991, neither Seller
nor any of the Seller Subsidiaries has received any notification or
communication which has not been resolved from any Regulatory
Authority (i) asserting that any Seller or any of the Seller
Subsidiaries is not in substantial compliance with any of the
statutes, regulations or ordinances that such Regulatory Authority
enforces, except with respect to matters which reasonably could not
be expected to have a material adverse effect on the Condition of
Seller and the Seller Subsidiaries, taken as a whole, (ii)
threatening to revoke any license, franchise, permit or
governmental authorization that is material to the Condition of
Seller and the Seller Subsidiaries, taken as a whole, including

- 31 -
<PAGE> 36
without limitation such company's status as an insured depository
institution under the FDI Act, (iii) requiring or threatening to
require Seller or any of the Seller Subsidiaries, or indicating
that Seller or any of the Seller Subsidiaries may be required, to
enter into a cease and desist order, agreement or memorandum of
understanding or any other agreement restricting or limiting or
purporting to direct, restrict or limit in any manner the
operations of Seller or any of the Seller Subsidiaries, including
without limitation any restriction on the payment of dividends. No
such cease and desist order, agreement or memorandum of
understanding or other agreement is currently in effect.

(d) Neither Seller nor any of the Seller
Subsidiaries is required by Section 32 of the FDI Act to give prior
notice to any federal banking agency of the proposed addition of an
individual to its board of directors or the employment of an
individual as a senior executive officer.

2.16. Labor. No work stoppage involving Seller or any
-----
of the Seller Subsidiaries is pending or, to the best knowledge of
Seller, threatened. Neither Seller nor any of the Seller Subsid-
iaries is involved in, or, to the best knowledge of Seller,
threatened with or affected by, any labor dispute, arbitration,
lawsuit or administrative proceeding which reasonably could be
expected to have a material adverse affect on the Condition of
Seller and the Seller Subsidiaries, taken as a whole. None of the
employees of Seller or the Seller Subsidiaries are represented by
any labor union or any collective bargaining organization.

- 32 -
<PAGE> 37
2.17. Material Interests of Certain Persons. Except as
-------------------------------------
set forth on Schedule 2.17, no officer or director of Seller or any
-------------
Subsidiary of Seller, or any "associate" (as such term is defined
in Rule 14a-1 under the Exchange Act) of any such officer or
director, has any interest in any contract or property (real or
personal, tangible or intangible), used in, or pertaining to the
business of, Seller or any of the Seller Subsidiaries, which in the
case of Seller and each of the Seller Subsidiaries would be
required to be disclosed by Item 404 of Regulation S-K promulgated
by the SEC if such entity had a class of securities registered
under Section 12 of the Exchange Act.

2.18. Allowance for Loan and Lease Losses; Non-
-----------------------------------------
Performing Assets.
- -----------------
(a) All of the accounts, notes, and other
receivables which are reflected in the Seller Financial Statements
as of September 30, 1994 were acquired in the ordinary course of
business and, to the best knowledge of Seller, as of September 30,
1994, were collectible in full in the ordinary course of business,
except for possible loan and lease losses which are adequately
provided for in the allowance for loan and lease losses in such
Seller Financial Statements and the collection experience of Seller
and the Seller Subsidiaries since September 30, 1994 to the date
hereof has not been materially adverse to the credit and collection
experience of the Seller and the Seller Subsidiaries, taken as a
whole, in the nine months ended September 30, 1994.

(b) The allowances for loan losses contained
in the Seller Financial Statements were established in accordance

- 33 -
<PAGE> 38
with the past practices and experiences of Seller and the Seller
Subsidiaries, and the allowance for loan and lease losses shown on
the consolidated condensed balance sheet of Seller and the Seller
Subsidiaries as of September 30, 1994 were adequate in all material
respects under the requirements of GAAP to provide for possible
losses on loans and leases (including without limitation accrued
interest receivable) and credit commitments (including without
limitation stand-by letters of credit) as of the date of such
balance sheet.

(c) Schedule 2.18(c) sets forth as of the date
----------------
of this Agreement all assets classified as real estate acquired
through foreclosure, including in-substance foreclosed real estate
("Non-Performing Assets").

(d) The aggregate amount of all loans and
leases described in Section 2.11(f)(vi) (regardless of dollar
amount limitations contained in such Section) and all Non-
Performing Assets pursuant to Section 2.18(c) do not exceed one
percent (1%) of (i) the gross amounts of all loans and leases on
the books of Seller and the Seller Subsidiaries, taken as a whole,
plus (ii) the aggregate book value of all Non-Performing Assets.

2.19. Employee Benefit Plans.
----------------------
(a) Schedule 2.19(a) lists all pension,
----------------
retirement, supplemental retirement, stock option, stock purchase,
stock ownership, savings, stock appreciation right, profit sharing,
deferred compensation, consulting, bonus, medical, disability,
workers' compensation, vacation, group insurance, severance and
other employee benefit, incentive and welfare policies, contracts,

- 34 -
<PAGE> 39
plans and arrangements, and all trust agreements related thereto,
maintained by or contributed to by Seller or any of the Seller
Subsidiaries in respect of any of the present or former directors,
officers, or other employees of and/or consultants to Seller or any
of the Seller Subsidiaries (collectively, "Seller Employee Plans").
Seller has furnished Buyers with the following documents with
respect to each Seller Employee Plan: (i) a true and complete copy
of all written documents comprising such Seller Employee Plan
(including amendments and individual agreements relating thereto)
or, if there is no such written document, an accurate and complete
description of the Seller Employee Plan; (ii) the most recently
filed Form 5500 or Form 5500-C (including all schedules thereto),
if applicable; (iii) the most recent financial statements and
actuarial reports, if any; (iv) the summary plan description
currently in effect and all material modifications thereof, if any;
and (v) the most recent IRS determination letter, if any.

(b) To the best knowledge of Seller, all
Seller Employee Plans have been maintained and operated in all
material respects in accordance with their terms and the require-
ments of all applicable statutes, orders, rules and final
regulations, including without limitation, to the extent applica-
ble, ERISA and the Internal Revenue Code of 1986, as amended (the
"Code"). All contributions required to be made to Seller Employee
Plans have been made.

(c) With respect to each of the Seller
Employee Plans which is a pension plan (as defined in Section 3(2)
of ERISA) (the "Pension Plans"): (i) each Pension Plan which is

- 35 -
<PAGE> 40
intended to be "qualified" within the meaning of Section 401(a) of
the Code has been determined to be so qualified by the IRS and, to
the knowledge of Seller, such determination letter may still be
relied upon, and each related trust is exempt from taxation under
Section 501(a) of the Code; (ii) the present value of all benefits
vested and all benefits accrued under each Pension Plan which is
subject to Title IV of ERISA did not, in each case, as of the last
applicable annual valuation date (as indicated on Schedule
--------
2.19(a)), exceed the value of the assets of the Pension Plan
- -------
allocable to such vested or accrued benefits; (iii) there has been
no "prohibited transaction," as such term is defined in Section
4975 of the Code or Section 406 of ERISA, which could subject any
Pension Plan or associated trust, or, to the best knowledge of
Seller, the Seller or any of the Seller Subsidiaries, to any tax or
penalty; (iv) no Pension Plan or any trust created thereunder has
been terminated, nor to the best knowledge of Seller have there
been any "reportable events" with respect to any Pension Plan, as
that term is defined in Section 4043 of ERISA since January 1,
1987; and (v) no Pension Plan or any trust created thereunder has
incurred any "accumulated funding deficiency", as such term is
defined in Section 302 of ERISA (whether or not waived). No
Pension Plan is a "multiemployer plan" as that term is defined in
Section 3(37) of ERISA.

(d) Neither Seller nor any of the Seller
Subsidiaries has any liability for any post-retirement health,
medical or similar benefit of any kind whatsoever, except as
required by statute or regulation.

- 36 -
<PAGE> 41
(e) Neither Seller nor any of the Seller
Subsidiaries has any material liability under ERISA or the Code as
a result of its being a member of a group described in Sections
414(b), (c), (m) or (o) of the Code.

(f) Neither the execution nor delivery of this
Agreement, nor the consummation of any of the transactions
contemplated hereby, will (i) result in any payment (including
without limitation severance, unemployment compensation or golden
parachute payment) becoming due to any director or employee of
Seller or any of the Seller Subsidiaries from any of such entities,
(ii) increase any benefit otherwise payable under any of the Seller
Employee Plans or (iii) result in the acceleration of the time of
payment of any such benefit. Seller shall use its best efforts to
insure that no amounts paid or payable by Seller, the Seller
Subsidiaries or Buyers to or with respect to any employee or former
employee of Seller or any of the Seller Subsidiaries will fail to
be deductible for federal income tax purposes by reason of Section
280G of the Code.

2.20. Conduct of Seller to Date. From and after
-------------------------
September 30, 1994 through the date of this Agreement, except as
set forth in the Seller Financial Statements: (i) Seller and the
Seller Subsidiaries have conducted their respective businesses in
the ordinary and usual course consistent with past practices; (ii)
neither Seller nor any of the Seller Subsidiaries has issued, sold,
granted, conferred or awarded any of its Equity Securities, or any
corporate debt securities which would be classified under GAAP as
long-term debt on the balance sheets of Seller or the Seller

- 37 -
<PAGE> 42
Subsidiaries; (iii) Seller has not effected any stock split or
adjusted, combined, reclassified or otherwise changed its
capitalization; (iv) Seller has not declared, set aside or paid any
dividend or other distribution in respect of its capital stock, or
purchased, redeemed, retired, repurchased, or exchanged, or
otherwise acquired or disposed of, directly or indirectly, any of
its Equity Securities, whether pursuant to the terms of such Equity
Securities or otherwise; (v) neither Seller nor any of the Seller
Subsidiaries has incurred any obligation or liability (absolute or
contingent), except liabilities incurred in the ordinary course of
business, or subjected to Lien any of its assets or properties
other than in the ordinary course of business consistent with past
practice; (vi) neither Seller nor any of the Seller Subsidiaries
has discharged or satisfied any Lien or paid any obligation or
liability (absolute or contingent), other than in the ordinary
course of business; (vii) neither Seller nor any of the Seller
Subsidiaries has sold, assigned, transferred, leased, exchanged, or
otherwise disposed of any of its properties or assets other than
for a fair consideration in the ordinary course of business; (viii)
except as required by contract or law, neither Seller nor any of
the Seller Subsidiaries has (A) increased the rate of compensation
of, or paid any bonus to, any of its directors, officers, or other
employees, except in accordance with existing policy, (B) entered
into any new, or amended or supplemented any existing, employment,
management, consulting, deferred compensation, severance, or other
similar contract, (C) entered into, terminated, or substantially
modified any of the Seller Employee Plans or (D) agreed to do any

- 38 -
<PAGE> 43
of the foregoing; (ix) neither Seller nor any Seller Subsidiary has
suffered any material damage, destruction, or loss, whether as the
result of fire, explosion, earthquake, accident, casualty, labor
trouble, requisition, or taking of property by any Regulatory
Authority, flood, windstorm, embargo, riot, act of God or the
enemy, or other casualty or event, and whether or not covered by
insurance; (x) neither Seller nor any of the Seller Subsidiaries
has cancelled or compromised any debt, except for debts charged off
or compromised in accordance with the past practice of Seller and
the Seller Subsidiaries, and (xi) neither Seller nor any of the
Seller Subsidiaries has entered into any material transaction,
contract or commitment outside the ordinary course of its business.

2.21. Absence of Undisclosed Liabilities.
----------------------------------
(a) As of the date of this Agreement, neither
Seller nor any of the Seller Subsidiaries has any debts, liabili-
ties or obligations equal to or exceeding $10,000, individually or
$25,000 in the aggregate, whether accrued, absolute, contingent or
otherwise and whether due or to become due, which are required to
be reflected in Seller's Financial Statements or the notes thereto
in accordance with GAAP except:

(i) liabilities and obligations
reflected on the Seller Financial Statements;

(ii) operating leases reflected on
Schedule 2.11; and
-------------

(iii) debts, liabilities or obligations
incurred since September 30, 1994 in the ordinary and
usual course of their respective businesses, none of

- 39 -
<PAGE> 44
which are for breach of contract, breach of warranty,
torts, infringements or lawsuits and none of which have
a material adverse effect on the Condition of the Seller
and the Seller Subsidiaries, taken as a whole.

(b) Neither Seller nor any of the Seller
Subsidiaries was as of September 30, 1994 and since such date to
the date hereof has become a party to, any contract or agreement
which affected, affects or may reasonably be expected to affect,
materially and adversely, the Condition of the Seller and the
Seller Subsidiaries, taken as a whole.

2.22. Proxy Statement, etc. None of the information
---------------------
regarding Seller or any of the Seller Subsidiaries to be supplied
by Seller for inclusion or included in (i) the Registration
Statement on Form S-4 to be filed with the SEC by Mercantile for
the purpose of registering the shares of Mercantile Common Stock to
be exchanged for shares of Seller Common Stock pursuant to the
provisions of this Agreement (the "Registration Statement"), (ii)
the Proxy Statement to be mailed to Seller's shareholders in
connection with the meeting to be called to consider the Merger
(the "Proxy Statement") or (iii) any other documents to be filed
with any Regulatory Authority in connection with the transactions
contemplated hereby will, at the respective times such documents
are filed with any Regulatory Authority and, in the case of the
Registration Statement, when it becomes effective and, with respect
to the Proxy Statement, when mailed, be false or misleading with
respect to any material fact, or omit to state any material fact
necessary in order to make the statements therein not misleading

- 40 -
<PAGE> 45
or, in the case of the Proxy Statement or any amendment thereof or
supplement thereto, at the time of the meeting of Seller's
shareholders referred to in Section 5.03, be false or misleading
with respect to any material fact, or omit to state any material
fact necessary to correct any statement in any earlier communica-
tion with respect to the solicitation of any proxy for such
meeting. All documents which Seller or any of the Seller Subsid-
iaries is responsible for filing with any Regulatory Authority in
connection with the Merger will comply as to form in all material
respects with the provisions of applicable law.

2.23. Registration Obligations. Neither Seller nor any
------------------------
of the Seller Subsidiaries is under any obligation, contingent or
otherwise, which will survive the Effective Time by reason of any
agreement to register any transaction involving any of its
securities under the Securities Act.

2.24. Tax and Regulatory Matters. Neither Seller nor
--------------------------
any of the Seller Subsidiaries has taken or agreed to take any
action or has any knowledge of any fact or circumstance that would
(i) prevent the transactions contemplated hereby from qualifying as
a reorganization within the meaning of Section 368 of the Code or
(ii) materially impede or delay receipt of any approval referred to
in Section 6.01(b) or the consummation of the transactions
contemplated by this Agreement.

2.25. Brokers and Finders. Neither Seller nor any of
-------------------
the Seller Subsidiaries nor any of their respective officers,
directors or employees has employed any broker or finder or
incurred any liability for any financial advisory fees, brokerage

- 41 -
<PAGE> 46
fees, commissions or finder's fees, and no broker or finder has
acted directly or indirectly for Seller or any of the Seller
Subsidiaries in connection with this Agreement or the transactions
contemplated hereby.

2.26. Interest Rate Risk Management Instruments.
-----------------------------------------
Neither Seller nor any of the Seller Subsidiaries are parties to,
nor are any of their properties or assets bound by, interest rate
swaps, caps, floors and option agreements and other interest rate
risk management arrangements.

2.27. Accuracy of Information. The statements
-----------------------
contained in this Agreement, the Schedules and any other written
document executed and delivered by or on behalf of Seller pursuant
to the terms of this Agreement are true and correct as of the date
hereof or as of the date delivered in all material respects, and
such statements and documents do not omit any material fact
necessary to make the statements contained therein not misleading.

ARTICLE III
-----------

REPRESENTATIONS, WARRANTIES AND COVENANTS OF BUYERS

As an inducement to Seller to enter into and perform its
obligations under this Agreement, and notwithstanding any examina-
tion, inspection, audit or other investigation made by Seller,
Buyers jointly and severally represent and warrant to and covenant
with Seller as follows:

3.01. Organization and Authority. Buyer and Merger Sub
--------------------------
are each corporations duly organized, validly existing and in good
standing under the laws of the State of Missouri, are each
qualified to do business and are each in good standing in all

- 42 -
<PAGE> 47
jurisdictions where its ownership or leasing of property or the
conduct of its business requires it to be so qualified and has
corporate power and authority to own its properties and assets and
to carry on its business as it is now being conducted, except where
the failure to be so qualified would not have a material adverse
effect on the Condition of Mercantile and its Subsidiaries, taken
as a whole. Each of Mercantile and Merger Sub is registered as a
bank holding company with the Federal Reserve Board under the BHCA.
True and complete copies of the Articles of Incorporation and
Bylaws of Mercantile and Merger Sub, each in effect on the date of
this Agreement, have been provided to Seller.

3.02. Capitalization of Mercantile. The authorized
----------------------------
capital stock of Mercantile consists of (i) 100,000,000 shares of
Mercantile Common Stock, of which, as of December 31, 1994,
43,207,524 shares were issued and outstanding and (ii) 5,000,000
shares of preferred stock, no par value ("Mercantile Preferred
Stock"), issuable in series, of which none are issued or
outstanding. Mercantile has designated 1,000,000 shares of
Mercantile Preferred Stock as "Series A Junior Participating
Preferred Stock" and has reserved such shares under a Rights
Agreement dated May 23, 1988 (the "Mercantile Rights Agreement"),
between Mercantile and Mercantile Bank of St. Louis National
Association, as Rights Agent. As of January 3, 1995, Mercantile
issued (less any fractional shares) (i) 970,000 shares of
Mercantile Common Stock pursuant to the consummation of the
acquisition of Wedge Bank pursuant to the Agreement and Plan of
Reorganization dated as of July 6, 1994 between Mercantile,

- 43 -
<PAGE> 48
Mercantile Bancorporation of Illinois Inc., Wedge Bank and The
Wedge Holding Company and (ii) 1,731,142 shares of Mercantile
Common Stock pursuant to the consummation of the acquisition of
UNSL Financial Corp. ("UNSL") pursuant to the Agreement and Plan of
Reorganization dated July 12, 1994 between Mercantile, Ameribanc,
Inc. ("Ameribanc") and UNSL. As of December 31, 1994, Mercantile
had reserved (i) 4,721,246 shares of Mercantile Common Stock for
issuance under the Mercantile stock option and incentive plans;
(ii) 2,625,533 shares of Mercantile Common Stock for issuance upon
the acquisition of Central Mortgage Bancshares, Inc. ("CMB")
pursuant to the Amended and Restated Agreement and Plan of
Reorganization dated November 1, 1994 by and between Mercantile,
Ameribanc and CMB; (iii) 4,750,000 shares of Mercantile Common
Stock for issuance upon the acquisition of TCBankshares, Inc.
("TCB") pursuant to the Agreement and Plan of Reorganization dated
December 2, 1994 by and between Mercantile and TCB; (iv) 1,400,000
shares of Mercantile Common Stock for issuance upon the acquisition
of Plains Spirit Financial Corporation ("Plains Spirit") pursuant
to the Agreement and Plan of Merger dated December 23, 1994 by and
between Mercantile, Mercantile Bancorporation Inc. of Iowa and
Plains Spirit; and (v) 351,101 shares of Mercantile Common Stock
for issuance upon conversion of Mercantile's 8% Subordinated
Capital Convertible Notes due 1995 (the "Convertible Notes"). In
connection with the TCB transaction, Mercantile authorized the
issuance of 5,306 shares of Preferred Stock, Series B-1, no par
value, and 9,500 shares of Preferred Stock, Series B-2, no par
value, in addition to the Mercantile Common Stock as aforesaid.

- 44 -
<PAGE> 49
From December 31, 1994 through the date of this Agreement, no
Equity Securities of Mercantile have been issued excluding the
number of shares disclosed in this Section 3.02 pursuant to the
consummation of the Wedge Bank and UNSL acquisitions on January 3,
1995 and any shares of Mercantile Common Stock which may have been
issued under the Mercantile stock option and incentive plans or
upon conversion of the Convertible Notes.

Mercantile continually evaluates possible
acquisitions and may prior to the Effective Time enter into one or
more agreements providing for, and may consummate, the acquisition
by it of another bank, association, bank holding company, savings
and loan holding company or other company (or the assets thereof)
for consideration that may include Equity Securities. In addition,
prior to the Effective Time, Mercantile may, depending on market
conditions and other factors, otherwise determine to issue equity,
equity-linked or other securities for financing purposes.
Notwithstanding the foregoing, Mercantile will not take any action
that would (i) prevent the transactions contemplated hereby from
qualifying as a reorganization within the meaning of Section 368 of
the Code or (ii) materially impede or delay receipt of any approval
referred to in Section 6.01(b) or the consummation of the trans-
actions contemplated by this Agreement. Except as set forth above,
there are no other Equity Securities of Mercantile outstanding.
All of the issued and outstanding shares of Mercantile Common Stock
are validly issued, fully paid, and nonassessable, and have not
been issued in violation of any preemptive right of any shareholder
of Mercantile. At the Effective Time, the Mercantile Common Stock

- 45 -
<PAGE> 50
to be issued in the Merger will be duly authorized, validly issued,
fully paid and nonassessable, and will not be issued in violation
of any preemptive right of any shareholder of Mercantile.

3.03. Authorization.
-------------

(a) Mercantile and Merger Sub each have the
corporate power and authority to enter into this Agreement and to
carry out their respective obligations hereunder. The execution,
delivery and performance of this Agreement by Mercantile and Merger
Sub and the consummation by Mercantile and Merger Sub of the
transactions contemplated hereby have been duly authorized by all
requisite corporate action of Mercantile and Merger Sub. Subject
to the receipt of such approvals of the Regulatory Authorities as
may be required by statute or regulation, this Agreement is a valid
and binding obligation of Mercantile and Merger Sub enforceable
against each in accordance with its terms.

(b) Neither the execution, delivery and
performance by Mercantile and Merger Sub of this Agreement, nor the
consummation by Mercantile and Merger Sub of the transactions
contemplated hereby, nor compliance by Mercantile and Merger Sub
with any of the provisions hereof, will (i) violate, conflict with
or result in a breach of any provisions of, or constitute a default
(or an event which, with notice or lapse of time or both, would
constitute a default) or result in the termination of, or
accelerate the performance required by, or result in a right of
termination or acceleration of, or result in the creation of, any
Lien upon any of the properties or assets of Mercantile or Merger
Sub under any of the terms, conditions or provisions of (x) their

- 46 -
<PAGE> 51
respective Articles of Incorporation or Bylaws, or (y) any material
note, bond, mortgage, indenture, deed of trust, license, lease,
agreement or other instrument or obligation to which Mercantile or
Merger Sub is a party or by which they may be bound, or to which
Mercantile or Merger Sub or any of their respective properties or
assets may be subject, or (ii) subject to compliance with the
statutes and regulations referred to in subsection (c) of this
Section 3.03, violate any judgment, ruling, order, writ,
injunction, decree, statute, rule or regulation applicable to
Mercantile or Merger Sub or any of their respective properties or
assets; other than violations, conflicts, breaches, defaults,
terminations, accelerations or Liens which would not have a
material adverse effect on the Condition of Mercantile and its
Subsidiaries, taken as a whole.

(c) Other than in connection with or in
compliance with the provisions of the Missouri Statute, the
Securities Act, the Exchange Act, the securities or blue sky laws
of the various states or filings, consents, reviews, authoriza-
tions, approvals or exemptions required under the BHCA, the FDI Act
or any required approvals of any other Regulatory Authority, no
notice to, filing with, exemption or review by, or authorization,
consent or approval of, any public body or authority is necessary
for the consummation by Mercantile and Merger Sub of the transac-
tions contemplated by this Agreement.

3.04. Mercantile Financial Statements. The supple-
-------------------------------
mental consolidated and parent company only balance sheets of
Mercantile and its Subsidiaries as of December 31, 1993, 1992 and

- 47 -
<PAGE> 52
1991 and related supplemental consolidated and parent company only
statements of income, changes in shareholders' equity and cash
flows for each of the three years in the three-year period ended
December 31, 1993, together with the notes thereto, audited by KPMG
Peat Marwick LLP and included in Mercantile's current report on
Form 8-K dated June 17, 1994 as filed with the SEC, and the
unaudited consolidated balance sheets of Mercantile and its
Subsidiaries as of September 30, 1994 and the related unaudited
consolidated statements of income and cash flows for the periods
ended September 30, 1994 and 1993 included in the quarterly report
on Form 10-Q as filed with the SEC (collectively, the "Mercantile
Financial Statements"), have been prepared in accordance with GAAP,
present fairly the consolidated financial position of Mercantile
and its Subsidiaries at the dates and the consolidated results of
operations, changes in shareholders' equity and cash flows of
Mercantile and its Subsidiaries for the periods stated therein and
are derived from the books and records of Mercantile and its
Subsidiaries, which are complete and accurate in all material
respects and have been maintained in accordance with good business
practices. Neither Mercantile nor any of its Subsidiaries has any
material contingent liabilities that are not described in the
Mercantile Financial Statements.

3.05. Mercantile Reports. Since January 1, 1991, each
------------------
of Mercantile and its Subsidiaries has filed all reports, registra-
tions and statements, together with any required amendments
thereto, that it was required to file with any Regulatory
Authority. All such reports and statements filed with any such

- 48 -
<PAGE> 53
Regulatory Authority are collectively referred to herein as the
"Mercantile Reports." As of its respective date, each Mercantile
Report complied in all material respects with all the rules and
regulations promulgated by the applicable Regulatory Authority and
did not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances
under which they were made, not misleading.

3.06. Material Adverse Change. Since September 30,
-----------------------
1994, there has been no material adverse change in the Condition of
Mercantile and its Subsidiaries, taken as a whole, except as may
have resulted or may result from changes to laws and regulations,
or interpretations thereto, or changes in economic conditions,
including interest rates, applicable to depository institutions
generally.

3.07. Legal Proceedings or Other Adverse Facts. There
----------------------------------------
is no legal action or other governmental proceeding or investiga-
tion pending or, to the best knowledge of Buyers, threatened
against Mercantile or any of its Subsidiaries that could prevent or
adversely affect in a material manner or seeks to prohibit the
consummation of the transactions contemplated herein, nor is
Mercantile or any of its Subsidiaries subject to any order of a
court or governmental authority having any such effect. To the
best knowledge of Buyers, there is no other fact that could prevent
or adversely affect the consummation of the transactions contem-
plated herein.

- 49 -
<PAGE> 54

3.08. Registration Statement, etc. None of the
----------------------------
information regarding Mercantile or any of its Subsidiaries to be
supplied by Buyers for inclusion or included in (i) the Registra-
tion Statement, (ii) the Proxy Statement, or (iii) any other
documents to be filed with any Regulatory Authority in connection
with the transactions contemplated hereby will, at the respective
times such documents are filed with any Regulatory Authority and,
in the case of the Registration Statement, when it becomes
effective and, with respect to the Proxy Statement, when mailed, be
false or misleading with respect to any material fact, or omit to
state any material fact necessary in order to make the statements
therein not misleading or, in the case of the Proxy Statement or
any amendment thereof or supplement thereto, at the time of the
meeting of shareholders referred to in Section 5.03, be false or
misleading with respect to any material fact, or omit to state any
material fact necessary to correct any statement in any earlier
communication with respect to the solicitation of any proxy for
such meeting. All documents which Mercantile or Merger Sub are
responsible for filing with any Regulatory Authority in connection
with the Merger will comply as to form in all material respects
with the provisions of applicable law.

3.09. Brokers and Finders. Neither Mercantile, Merger
-------------------
Sub nor any of their respective officers, directors or employees
has employed any broker or finder or incurred any liability for any
financial advisory fees, brokerage fees, commissions or finder's
fees, and no broker or finder has acted directly or indirectly for

- 50 -
<PAGE> 55
Mercantile or Merger Sub in connection with this Agreement or the
transactions contemplated hereby.

3.10. Accuracy of Information. The statements
-----------------------
contained in this Agreement, the Schedules and in any other written
document executed and delivered by or on behalf of Buyers pursuant
to the terms of this Agreement are true and correct in all material
respects, and such statements and documents do not omit any
material fact necessary to make the statements contained herein or
therein not misleading.

ARTICLE IV
----------

CONDUCT OF BUSINESSES PRIOR TO THE EFFECTIVE TIME

4.01. Conduct of Businesses Prior to the Effective
--------------------------------------------
Time. During the period from the date of this Agreement to the
- ----
Effective Time, Seller shall, and shall cause each of the Seller
Subsidiaries to, conduct their respective businesses according to
the ordinary and usual course consistent with past practices and
shall, and shall cause each such Subsidiary to, use its best
efforts to maintain and preserve its business organization,
employees and advantageous business relationships and retain the
services of its officers and key employees.

4.02. Forbearances of Seller. Except as set forth in
----------------------
Schedule 4.02 and except to the extent required by law, regulation
- -------------
or Regulatory Authority, or with the prior written consent of
Buyers, during the period from the date of this Agreement to the
Effective Time, Seller shall not and shall not permit any of the
Seller Subsidiaries to:

- 51 -
<PAGE> 56
(a) declare, set aside or pay any dividends or
other distributions, directly or indirectly, in respect of its
capital stock (other than dividends from any of the Seller
Subsidiaries to Seller or to another of the Seller Subsidiaries);

(b) enter into or amend any employment,
severance or similar agreement or arrangement with any director or
officer or employee, or materially modify any of the Seller
Employee Plans or grant any salary or wage increase or materially
increase any employee benefit (including incentive or bonus
payments), except (i) normal individual increases in compensation
to employees consistent with past practice, (ii) as required by law
or contract and (iii) such increases of which Seller notifies
Buyers in writing and which Buyers do not disapprove within 10 days
of the receipt of such notice;

(c) authorize, recommend, propose or announce
an intention to authorize, so recommend or propose, or enter into
an agreement in principle with respect to, any merger, consolida-
tion or business combination (other than the Merger), any acquisi-
tion of a material amount of assets or securities, any disposition
of a material amount of assets or securities or any release or
relinquishment of any material contract rights;

(d) propose or adopt any amendments to its
articles of incorporation, association or other charter document or
bylaws;

(e) issue, sell, grant, confer or award any of
its Equity Securities or effect any stock split or adjust, combine,

- 52 -
<PAGE> 57
reclassify or otherwise change its capitalization as it existed on
the date of this Agreement;

(f) purchase, redeem, retire, repurchase, or
exchange, or otherwise acquire or dispose of, directly or
indirectly, any of its Equity Securities, whether pursuant to the
terms of such Equity Securities or otherwise;

(g) (i) without first consulting with
Mercantile, enter into, renew or increase any loan or credit
commitment (including stand-by letters of credit) to, or invest or
agree to invest in any person or entity or modify any of the
material provisions or renew or otherwise extend the maturity date
of any existing loan or credit commitment (collectively, "Lend to")
in an amount in excess of $200,000 or in any amount which, when
aggregated with any and all loans or credit commitments of Seller
and its Subsidiaries to such person or entity, would be in excess
of $200,000; (ii) without first obtaining the written consent of
Mercantile, Lend to any person or entity in an amount in excess of
$1,000,000 or in any amount which, or when aggregated with any and
all loans or credit commitments of Seller and its Subsidiaries to
such person or entity, would be in excess of $1,000,000; (iii) Lend
to any person other than in accordance with lending policies as in
effect on the date hereof, provided that in the case of clauses (i)
--------
and (iii) Seller or any of the Seller Subsidiaries may make any
such loan in the event (A) Seller or any Seller Subsidiary has
delivered to Buyers or their designated representative a notice of
its intention to make such loan and such information as Buyers or
their designated representative may reasonably require in respect

- 53 -
<PAGE> 58
thereof and (B) Buyers or their designated representative shall not
have reasonably objected to such loan by giving written or
facsimile notice of such objection within two business days
following the delivery to Buyers or their designated representative
of the notice of intention and information as aforesaid; or (iv)
Lend to any person or entity any of the loans or other extensions
of credit to which or investments in which are on a "watch list" or
similar internal report of Seller or any of the Seller Subsidiaries
(except those denoted "pass" thereon), in an amount in excess of
$50,000; provided, however, that nothing in this paragraph shall
-------- -------
prohibit Seller or any Seller Subsidiary from honoring any
contractual obligation in existence on the date of this Agreement
or, with respect to loans described in clause (i) above, making
such loans after consulting with Buyers. Notwithstanding clause
(i) and clause (ii) of this Section 4.02(g), Seller shall be
authorized, without first consulting with Buyers or obtaining
Buyers' prior written consent, to increase the aggregate amount of
the credit facilities theretofore established in favor of any
person or entity (the "Pre-Existing Facilities"), provided that the
aggregate amount of any and all such increases shall not be in
excess of five percent (5%) of such Pre-Existing Facilities or
$25,000, whichever is greater;

(h) directly or indirectly (including through
its officers, directors, employees or other representatives)
(i) initiate, solicit or encourage any discussions, inquiries or
proposals with any third party (other than Buyers) relating to the
disposition of any significant portion of the business or assets of

- 54 -
<PAGE> 59
Seller or any of the Seller Subsidiaries or the acquisition of
Equity Securities of Seller or any of the Seller Subsidiaries or
the merger of Seller or any of the Seller Subsidiaries with any
person (other than Buyers) or any similar transaction (each such
transaction being referred to herein as an "Acquisition
Transaction"), or (ii) provide any such person with information or
assistance or negotiate with any such person with respect to an
Acquisition Transaction, and Seller shall promptly notify Buyers
orally of all the relevant details relating to all inquiries,
indications of interest and proposals which it may receive with
respect to any Acquisition Transaction;

(i) take any action that would (A) materially
impede or delay the consummation of the transactions contemplated
by this Agreement or the ability of Buyers or Seller to obtain any
approval of any Regulatory Authority required for the transactions
contemplated by this Agreement or to perform its covenants and
agreements under this Agreement or (B) prevent or impede the
transactions contemplated hereby from qualifying as a reorganiza-
tion within the meaning of Section 368 of the Code;

(j) other than in the ordinary course of
business consistent with past practice, incur any indebtedness for
borrowed money or assume, guarantee, endorse or otherwise as an
accommodation become responsible or liable for the obligations of
any other individual, corporation or other entity;

(k) materially restructure or change its
investment securities portfolio, through purchases, sales or
otherwise, or the manner in which the portfolio is classified or

- 55 -
<PAGE> 60
reported, or execute individual investment transactions of greater
than $500,000 for U.S. Treasury Securities and $250,000 for all
other investment instruments;

(l) agree in writing or otherwise to take any
of the foregoing actions or engage in any activity, enter into any
transaction or intentionally take or omit to take any other act
which would make any of the representations and warranties in
Article II of this Agreement untrue or incorrect in any material
respect if made anew after engaging in such activity, entering into
such transaction, or taking or omitting such other act; or

(m) enter into, increase or renew any loan or
credit commitment (including standby letters of credit) to any
executive officer or director of Seller or any of the Seller
Subsidiaries, any Seller shareholder, or any entity controlled,
directly or indirectly, by any of the foregoing or engage in any
transaction with any of the foregoing which is of the type or
nature sought to be regulated in 12 U.S.C. 371c and 12 U.S.C. 371c-
1, without first obtaining the prior written consent of Buyers,
which consent shall not be unreasonably withheld. For purposes of
this subsection (m), "control" shall have the meaning associated
with that tern under 12 U.S.C. 371c.

4.03. Forbearances of Buyers. During the period from
----------------------
the date of this Agreement to the Closing Date, Buyers shall not,
and shall not permit any of their respective subsidiaries to,
without the prior written consent of Seller, agree in writing or
otherwise engage in any activity, enter into any transaction or
take or omit to take any other action:

- 56 -
<PAGE> 61
(a) that would (i) materially impede or delay
the consummation of the transactions contemplated by this Agreement
or the ability of Buyers or Seller to obtain any approval of any
Regulatory Authority required for the transactions contemplated by
this Agreement or to perform its covenants and agreements under
this Agreement or (ii) prevent the transactions contemplated hereby
from qualifying as a reorganization within the meaning of Section
368 of the Code; or

(b) which would make any of the representa-
tions and warranties of Article III of this Agreement untrue or
incorrect in any material respect if made anew after engaging in
such activity, entering into such transaction, or taking or
omitting such other action.

ARTICLE V
---------

ADDITIONAL AGREEMENTS

5.01. Access and Information.
----------------------

(a) Buyers and Seller shall each afford to the
other, and to the other's accountants, counsel and other represen-
tatives, full access during normal business hours, during the
period prior to the Effective Time, to all their respective
properties, books, contracts, commitments and records and, during
such period, each shall furnish promptly to the other (i) a copy of
each report, schedule and other document filed or received by it
during such period pursuant to the requirements of federal and
state securities laws and (ii) all other information concerning its
business, properties and personnel as the other may reasonably
request. Each party shall, and shall cause its advisors and

- 57 -
<PAGE> 62
representatives to, (A) hold confidential all information obtained
in connection with any transaction contemplated hereby with respect
to the other party and its Subsidiaries which is not otherwise
public knowledge, (B) in the event of a termination of this
Agreement, return all documents (including copies thereof) obtained
hereunder from the other party or any of its Subsidiaries to them
and (C) use their respective best efforts to cause all of such
party's confidential information obtained pursuant to this
Agreement or in connection with the negotiation of this Agreement
to be treated as confidential and not use, or knowingly permit
others to use, any such information unless such information becomes
generally available to the public.

(b) Buyers shall promptly following the date
of this Agreement, commence its review of Seller and the Seller
Subsidiaries and their respective operations, business affairs,
prospects and financial condition, including, without limitation,
those matters which are the subject of the Seller's representations
and warranties (the "Due Diligence Review"). Buyers shall conclude
such review by no later than twenty (20) business days after the
date of this Agreement (the "Due Diligence Review Period"), but the
pendency of such Due Diligence Review shall not delay Mercantile's
obligation pursuant to Section 5.02 of this Agreement to file a
Registration Statement with the SEC and all other necessary
applications and filings with the appropriate Regulatory
Authorities. Buyers shall advise Seller of any situation, event,
circumstance or other matter which first comes to the attention of
Buyers during the Due Diligence Review which could potentially

- 58 -
<PAGE> 63
result in the termination of this Agreement by Buyer pursuant to
Section 7.01(d) hereof, or, if applicable, of notice to Seller as
promptly as possible of the absence of any perceived impediment to
the consummation of the Merger. Notwithstanding anything herein-
above contained or implied to the contrary, the Due Diligence
Review shall not limit, restrict or preclude Buyers, at any time or
from time to time thereafter, from conducting further such reviews
or from exercising any rights available to it hereunder as a result
of the existence or occurrence prior to the Due Diligence Period of
any event or condition which was not detected in the Due Diligence
Review by Buyers and which constitutes a breach of any representa-
tion, warranty or agreement of Seller under this Agreement.

5.02. Registration Statement; Regulatory Matters.
------------------------------------------

(a) Mercantile shall prepare and, subject to
the review and consent of Seller with respect to matters relating
to Seller, file with the SEC as soon as is reasonably practicable
the Registration Statement (or the equivalent in the form of
preliminary proxy materials) with respect to the shares of
Mercantile Common Stock to be issued in the Merger. Mercantile
shall prepare and, subject to the review and consent of Seller with
respect to matters relating to Seller, use its best efforts to file
as soon as is reasonably practicable an application for approval of
the Merger with the Federal Reserve Board and shall use its best
efforts to cause the Registration Statement to become effective.
Mercantile shall also take any action required to be taken under
any applicable state blue sky or securities laws in connection with
the issuance of such shares, and Seller and the Seller Subsidiaries

- 59 -
<PAGE> 64
shall furnish Mercantile all information concerning Seller and the
Seller Subsidiaries and the shareholders thereof as Mercantile may
reasonably request in connection with any such action.

(b) Seller and Buyers shall cooperate and use
their respective best efforts to prepare all documentation, to
effect all filings and to obtain all permits, consents, approvals
and authorizations of all third parties and Regulatory Authorities
necessary to consummate the transactions contemplated by this
Agreement and, as and if directed by Mercantile, to consummate such
other transactions by and among Mercantile's Subsidiaries and the
Seller Subsidiaries concurrently with or following the Effective
Time, provided that such actions do not (i) materially impede or
--------
delay the receipt of any approval referred to in Section 6.01(b) or
(ii) the consummation of the transactions contemplated by this
Agreement.

5.03. Shareholder Approval. Seller shall call a
--------------------
meeting of its shareholders to be held as soon as practicable for
the purpose of voting upon the Merger. In connection with such
meetings, Mercantile shall prepare, subject to the review and
consent of Seller, the Proxy Statement (which shall be part of the
Registration Statement to be filed with the SEC by Mercantile) and
mail the same to the shareholders of Seller. The Board of
Directors of Seller shall submit for approval of Seller's share-
holders the matters to be voted upon at such meeting. The Board of
Directors of Seller hereby does and will recommend this Agreement
and the transactions contemplated hereby to shareholders of Seller
and use its reasonable best efforts to obtain any vote of Seller's

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<PAGE> 65
shareholders necessary for the approval and adoption of this
Agreement.

5.04. Current Information. During the period from the
-------------------
date of this Agreement to the Effective Time, each party shall
promptly furnish the other with copies of all interim financial
statements as the same become available and shall cause one or more
of its designated representatives to confer on a regular and
frequent basis with representatives of the other party. Each party
shall promptly notify the other party of the following events
immediately upon learning of the occurrence thereof, describing the
same and, if applicable, the steps being taken by the affected
party with respect thereto: (a) an event which would cause any
representation or warranty of such party or any Schedule,
statement, report, notice, certificate or other writing furnished
by such party to be untrue or misleading in any material respect,
(b) any material adverse change in its business, financial
condition or results of operations, (c) the issuance or commence-
ment of any governmental complaint, investigation or hearing (or
any communication indicating that the same may be contemplated), or
(d) the institution or threat of material litigation involving such
party, and shall keep the other party fully informed of such
events.

5.05. Agreements of Affiliates. Set forth as Schedule
------------------------ --------
5.05 is a list (which includes individual and beneficial ownership)
- ----
of all persons whom Seller believes to be "affiliates" of Seller
for purposes of Rule 145 under the Securities Act. Seller shall
use its best efforts to cause each person who is identified as an

- 61 -
<PAGE> 66
"affiliate" to deliver to Mercantile, as of the date hereof, or as
soon as practicable hereafter, a written agreement in substantially
the form set forth as Exhibit A to this Agreement providing that
---------
each such person will agree not to sell, pledge, transfer or
otherwise dispose of any shares of Mercantile Common Stock to be
received by such person in the Merger except in compliance with the
applicable provisions of the Securities Act and until such time as
financial results covering at least thirty (30) days of combined
operations or Mercantile and Seller shall have been published.
Prior to the Effective Time, and via letter, Seller shall amend and
supplement Schedule 5.05 and use its best efforts to cause each
-------------
additional person who is identified as an "affiliate" to execute a
written agreement as set forth in this Section 5.05.

5.06. Expenses. Each party hereto shall bear its own
--------
expenses incident to preparing, entering into and carrying out this
Agreement and to consummating the Merger, provided, however, that
-------- -------
Buyers shall pay all printing and mailing expenses and filing fees
associated with the Registration Statement, the Proxy Statement and
regulatory applications.

5.07. Miscellaneous Agreements and Consents. Subject
-------------------------------------
to the terms and conditions herein provided, each of the parties
hereto agrees to use its respective best efforts to take, or cause
to be taken, all action, and to do, or cause to be done, all things
necessary, proper or advisable under applicable laws and regula-
tions to consummate and make effective the transactions contem-
plated by this Agreement as expeditiously as possible, including
without limitation using its respective best efforts to lift or

- 62 -
<PAGE> 67
rescind any injunction or restraining order or other order
adversely affecting the ability of the parties to consummate the
transactions contemplated hereby. Each party shall, and shall
cause each of its respective subsidiaries to, use its best efforts
to obtain consents of all third parties and Regulatory Authorities
necessary or, in the opinion of Buyers, desirable for the consum-
mation of the transactions contemplated by this Agreement.

5.08. Employee Agreements and Benefits.
--------------------------------

(a) Following the Effective Time, Buyers shall
cause the Surviving Corporation to honor in accordance with their
terms all employment, severance and other compensation contracts
set forth on Schedule 5.08 between Seller, any of the Seller
-------------
Subsidiaries, and any current or former director, officer, employee
or agent thereof, and all provisions for vested benefits or other
vested amounts earned or accrued through the Effective Time under
the Seller Employee Plans.

(b) The provisions of any plan, program or
arrangement providing for the issuance or grant of any other
interest in respect of the capital stock of Seller or any of the
Seller Subsidiaries shall be deleted and terminated as of the
Effective Time.

(c) Except as set forth in Section 5.08(b)
hereof, the Seller Employee Plans shall not be terminated by reason
of the Merger but shall continue thereafter as plans of the
Surviving Corporation until such time as the employees of the
Seller and the Seller Subsidiaries are integrated into Mercantile's
employee benefit plans that are available to other employees of

- 63 -
<PAGE> 68
Mercantile and its Subsidiaries, subject to the terms and condi-
tions specified in such plans and to such changes therein as may be
necessary to reflect the consummation of the Merger. Mercantile
shall take such steps as are necessary or required to integrate the
employees of Seller and the Seller Subsidiaries in Mercantile's
employee benefit plans available to other employees of Mercantile
and its Subsidiaries as soon as practicable after the Effective
Time, with (i) full credit for prior service with Seller or any of
the Seller Subsidiaries for purposes of vesting and eligibility for
participation (but not benefit accruals under any defined benefit
plan), and co-payments and deductibles, and (ii) waiver of all
waiting periods and pre-existing condition exclusions or penalties.

5.09. Press Releases. Except as may be required by
--------------
law, Seller and Mercantile shall consult and agree with each other
as to the form and substance of any proposed press release relating
to this Agreement or any of the transactions contemplated hereby.

5.10. State Takeover Statutes. Seller will take all
-----------------------
steps necessary to exempt the transactions contemplated by this
Agreement and any agreement contemplated hereby from, and if
necessary challenge the validity of, any applicable state takeover
law.

5.11. Directors' and Officers' Indemnification.
----------------------------------------
Mercantile agrees that the Merger shall not affect or diminish any
of the duties and obligations of indemnification of the Seller or
any of the Seller Subsidiaries existing as of the Effective Time in
favor of employees, agents, directors or officers of Seller or any
of the Seller Subsidiaries arising by virtue of its Articles of

- 64 -
<PAGE> 69
Incorporation, Charter or Bylaws in the form in effect at the date
of this Agreement or arising by operation of law or arising by
virtue of any contract, resolution or other agreement or document
existing at the date of this Agreement, and such duties and
obligations shall continue in full force and effect for so long as
they would (but for the Merger) otherwise survive and continue in
full force and effect. To the extent that Seller's existing
directors' and officers' liability insurance policy would provide
coverage for any action or omission occurring prior to the
Effective Time, Seller agrees to give proper notice to the
insurance carrier and to Mercantile of a potential claim thereunder
so as to preserve Seller's rights to such insurance coverage.
Mercantile represents that the directors' and officers' liability
insurance policy maintained by it provides for coverage of "prior
acts" for directors and officers of entities acquired by Mercantile
including Seller and the Seller Subsidiaries on and after the
Effective Time.

5.12. Tax Opinion Certificates. Seller shall cause
------------------------
such of its executive officers, directors and/or holders of one
percent (1%) or more of the Seller Common Stock (including shares
beneficially held) as may requested by Thompson & Mitchell to
timely execute and deliver to Thompson & Mitchell certificates
substantially in the form of Exhibit B or Exhibit C hereto, as the
--------- ---------
case may be.

5.13. Best Efforts to Insure Pooling. Each of Buyers
------------------------------
and Seller undertakes and agrees to use its best efforts to cause

- 65 -
<PAGE> 70
the Merger to qualify for pooling-of-interests accounting treat-
ment.

ARTICLE VI
----------

CONDITIONS

6.01. Conditions to Each Party's Obligation To Effect
-----------------------------------------------
the Merger. The respective obligations of each party to effect the
- ----------
Merger shall be subject to the fulfillment or waiver at or prior to
the Effective Time of the following conditions:

(a) This Agreement shall have received the
requisite approval of shareholders of Seller at the meeting of
shareholders called pursuant to Section 5.03 of this Agreement.

(b) All requisite approvals of this Agreement
and the transactions contemplated hereby shall have been received
from the Regulatory Authorities, and all waiting periods after such
approvals required by law or regulation have been satisfied.

(c) The Registration Statement shall have been
declared effective and shall not be subject to a stop order or any
threatened stop order.

(d) Neither Seller nor Buyers shall be subject
to any order, decree or injunction of a court or agency of
competent jurisdiction which enjoins or prohibits the consummation
of the Merger.

(e) Seller shall have received from Thompson
& Mitchell an opinion (which opinion shall not have been withdrawn
at or prior to the Effective Time) reasonably satisfactory in form
and substance to it to the effect that the Merger will constitute
a reorganization within the meaning of Section 368 of the Code and

- 66 -
<PAGE> 71
to the effect that, as a result of the merger, except with respect
to fractional share interests, holders of Seller Common Stock who
receive Mercantile Common Stock in the Merger will not recognize
gain or loss for federal income tax purposes, the basis of such
Mercantile Common Stock will equal the basis of the Seller Common
Stock for which it is exchanged and the holding period of such
Mercantile Common Stock will include the holding period of the
Seller Common Stock for which it is exchanged, assuming that such
Seller Common Stock is a capital asset in the hands of the holder
thereof at the Effective Time.

6.02. Conditions to Obligations of Seller To Effect the
-------------------------------------------------
Merger. The obligations of Seller to effect the Merger shall be
- ------
subject to the fulfillment or waiver at or prior to the Effective
Time of the following additional conditions:

(a) Representations and Warranties. The
------------------------------
representations and warranties of Buyers set forth in Article III
of this Agreement shall be true and correct in all material
respects as of the date of this Agreement and as of the Effective
Time (as though made on and as of the Effective Time except (i) to
the extent such representations and warranties are by their express
provisions made as of a specified date, (ii) where the facts which
caused the failure of any representation or warranty to be so true
and correct have not resulted, and are not likely to result, in a
material adverse effect on the Condition of Mercantile and its
Subsidiaries taken as a whole (for purposes hereof changes to laws
and regulations, generally accepted or regulatory accounting
principles, or interpretations thereof, or changes in economic

- 67 -
<PAGE> 72
conditions, including interest rates applicable to commercial
banking institutions generally shall not be taken into account) and
(iii) for the effect of transactions contemplated by this
Agreement) and Seller shall have received a certificate of the Vice
Chairman of Mercantile, signing solely in his capacity as an
officer of Mercantile, to that effect.

(b) Performance of Obligations. Buyers shall
--------------------------
have performed in all material respects all obligations required to
be performed by it under this Agreement prior to the Effective
Time, and Seller shall have received a certificate of the Vice
Chairman of Mercantile, signing solely in his capacity as an
officer of Mercantile, to that effect.

(c) Permits, Authorizations, etc. Buyers
----------------------------
shall have obtained any and all material permits, authorizations,
consents, waivers and approvals required for the lawful consum-
mation of the Merger.

(d) No Material Adverse Change. Since the
--------------------------
date of this Agreement, there shall have been no material adverse
change to the Condition of Mercantile and its Subsidiaries, taken
as a whole, except as may have resulted from changes to laws and
regulations, generally accepted or regulatory accounting
principles, or interpretations thereof, or changes in economic
conditions, including interest rates, applicable to commercial
banking institutions generally.

(e) Opinion of Counsel. Mercantile shall have
------------------
delivered to Seller an opinion of Mercantile's counsel dated as of

- 68 -
<PAGE> 73
the Closing Date or a mutually agreeable earlier date in substan-
tially the form set forth as Exhibit D to this Agreement.
---------

6.03. Conditions to Obligations of Buyers To Effect the
-------------------------------------------------
Merger. The obligations of Buyers to effect the Merger shall be
- ------
subject to the fulfillment or waiver at or prior to the Effective
Time of the following additional conditions:

(a) Representations and Warranties. The
------------------------------
representations and warranties of Seller set forth in Article II of
this Agreement shall be true and correct in all material respects
as of the date of this Agreement and as of the Effective Time (as
though made on and as of the Effective Time except (i) to the
extent such representations and warranties are by their express
provisions made as of a specific date, (ii) where the facts which
caused the failure of any representation or warranty to be so true
and correct have not resulted, and are not likely to result, in a
material adverse effect on the Condition of Seller and its
Subsidiaries taken as a whole (for purposes hereof changes to laws
and regulations, generally accepted or regulatory accounting
principles, or interpretations thereof, or changes in economic
conditions, including interest rates applicable to thrift institu-
tions generally shall not be taken into account) and (iii) for the
effect of transactions contemplated by this Agreement) and Buyers
shall have received a certificate of the President and the Chief
Financial Officer of Seller, acting solely in their capacities as
officers of Seller, to that effect.

(b) Performance of Obligations. Seller shall
--------------------------
have performed in all material respects all obligations required to

- 69 -
<PAGE> 74
be performed by it under this Agreement prior to the Effective
Time, and Buyers shall have received a certificate of the President
and the Chief Financial Officer of Seller acting solely in their
capacities as officers of Seller, to that effect.

(c) Permits, Authorizations, etc. Seller
-----------------------------
shall have obtained any and all material permits, authorizations,
consents, waivers and approvals required for the lawful consum-
mation by it of the Merger.

(d) No Material Adverse Change. Since the
--------------------------
date of this Agreement, there shall have been no material adverse
change to the Condition of Seller and the Seller Subsidiaries,
taken as a whole, except as may have resulted from changes to laws
and regulations, generally accepted or regulatory accounting
principles, or interpretations thereof, or changes in economic
conditions, including interest rates, applicable to thrift
institutions generally.

(e) Opinion of Counsel. Seller shall have
------------------
delivered to Buyers an opinion of Seller's counsel dated as of the
Closing Date or a mutually agreeable earlier date in substantially
the form set forth as Exhibit E to this Agreement.
---------

(f) Opinion of KPMG Peat Marwick. Buyer shall
----------------------------
have received an opinion of KPMG Peat Marwick, satisfactory in form
and substance to Mercantile, that the Merger will qualify for
pooling-of-interests accounting treatment, which opinion shall not
have been withdrawn at or prior to the Effective Time.

- 70 -
<PAGE> 75

ARTICLE VII
-----------

TERMINATION, AMENDMENT AND WAIVER

7.01. Termination. This Agreement may be terminated at
-----------
any time prior to the Effective Time, whether before or after
approval by Seller shareholders:

(a) by mutual consent by the Executive
Committee of the Board of Directors of Mercantile and by the
respective Boards of Directors of Seller and Merger Sub;

(b) by the Executive Committee of the Board of
Directors of Mercantile or the respective Boards of Directors of
either Seller or Merger Sub at any time after January 27, 1996 if
the Merger shall not theretofore have been consummated (provided
that the terminating party is not then in material breach of any
representation, warranty, covenant or other agreement contained
herein);

(c) by the Executive Committee of the Board of
Directors of Mercantile or the respective Boards of Directors of
either Seller or Merger Sub if (i) the Federal Reserve Board or any
other federal and/or state regulatory agency whose approval is
required for the consummation of the transactions contemplated
hereby has denied approval of the Merger and such denial has become
final and nonappealable or (ii) the shareholders of Seller shall
not have approved this Agreement at the meeting referred to in
Section 5.03;

(d) by the Executive Committee of the Board of
Directors of Mercantile or the Board of Directors of Merger Sub in
the event (i) any situation, event, circumstance or other matter

- 71 -
<PAGE> 76
shall come to the attention of Mercantile or Merger Sub during the
course of the Due Diligence Review conducted pursuant to Section
5.01(b) hereof which Mercantile or Merger Sub shall, in a good
faith exercise of its reasonable discretion, believe either (A) to
be inconsistent in any material and adverse respect with any of the
representations or warranties of Seller, (B) to be of such
significance as to materially and adversely affect the Condition of
Seller and the Seller Subsidiaries, taken as a whole, or (C) to
deviate materially and adversely from Seller's financial statements
for the nine months ended September 30, 1994, and (ii) Mercantile
or Merger Sub notifies Seller of such matters within five (5)
business days after the end of the Due Diligence Review Period and
such matters are not capable of being cured or have not been cured
within thirty (30) days after written notice thereof to Seller; or

(e) by the Executive Committee of the Board of
Directors of Mercantile or the Board of Directors of Merger Sub, on
the one hand, or by the Board of Directors of Seller, on the other
hand, in the event of a breach by the other party to this Agreement
of any representation, warranty or agreement contained herein,
which breach is not cured within 30 days after written notice
thereof is given to the breaching party by the non-breaching party
or is not waived by the non-breaching party during such period.

7.02. Effect of Termination. In the event of termin-
---------------------
ation of this Agreement as provided in Section 7.01 hereof, this
Agreement shall forthwith become void and there shall be no
liability on the part of Buyers or Seller or their respective
officers or directors except as set forth in the second sentence of

- 72 -
<PAGE> 77
Section 5.01(a) and in Sections 5.06 and 8.02, and except that no
termination of this Agreement pursuant to Section 7.01(e) shall
relieve the breaching party of any liability to the non-breaching
party hereto arising from the intentional, deliberate and willful
non-performance of any covenant contained herein, after giving
notice to such breaching party and an opportunity to cure as set
forth in Section 7.01(e).

7.03. Amendment. This Agreement and the Schedules
---------
hereto may be amended by the parties hereto, by action taken by or
on behalf of the Executive Committee of the Board of Directors of
Mercantile and the respective Boards of Directors of Merger Sub or
Seller, at any time before or after approval of this Agreement by
the shareholders of Seller; provided, however, that after any such
-------- -------
approval by the shareholders of Seller no such modification shall
(a) alter or change the amount or kind of consideration to be
received by holders of Seller Common Stock as provided in this
Agreement or (b) adversely affect the tax treatment to Seller
shareholders as a result of receiving the shares of Mercantile
Common Stock in the Merger. This Agreement may not be amended
except by an instrument in writing signed on behalf of each of
Buyers and Seller.

7.04. Waiver. Any term, condition or provision of this
------
Agreement may be waived in writing at any time by the party which
is, or whose shareholders are, entitled to the benefits thereof.

- 73 -
<PAGE> 78

ARTICLE VIII
------------

GENERAL PROVISIONS

8.01. Non-Survival of Representations, Warranties and
-----------------------------------------------
Agreements. No investigation by the parties hereto made heretofore
- ----------
or hereafter shall affect the representations and warranties of the
parties which are contained herein and each such representation and
warranty shall survive such investigation. Except as set forth
below in this Section 8.01, all representations, warranties and
agreements in this Agreement of Buyers and Seller or in any
instrument delivered by Buyers or Seller pursuant to or in
connection with this Agreement shall expire at the Effective Time
or upon termination of this Agreement in accordance with its terms.
In the event of consummation of the Merger, the agreements
contained in or referred to in Sections 5.02(b), 5.07, 5.08 and
5.11 shall survive the Effective Time. In the event of termination
of this Agreement in accordance with its terms, the agreements
contained in or referred to in the second sentence of Section 5.01,
Section 5.06, Section 7.02 and Section 8.02 shall survive such
termination.

8.02. Indemnification. Buyers and Seller (hereinafter,
---------------
in such capacity being referred to as the "Indemnifying Party")
agree to indemnify and hold harmless each other and their officers,
directors and controlling persons (each such other party being
hereinafter referred to, individually and/or collectively, as the
"Indemnified Party") against any and all losses, claims, damages or
liabilities, joint or several, to which the Indemnified Party may
become subject under the Securities Act, the Exchange Act or other

- 74 -
<PAGE> 79
federal or state law or regulation, at common law or otherwise,
insofar as such losses, claims, damages or liabilities (or actions
in respect thereof): (a) arise primarily out of any information
furnished to the Indemnified Party by the Indemnifying Party or are
based primarily upon any untrue statement or alleged untrue
statement of a material fact contained in the Registration
Statement as originally filed or in any amendment thereof, or in
the Proxy Statement, or in any amendment thereof or supplement
thereto, and provided for inclusion thereof by the Indemnifying
Party or (b) arise primarily out of or are based primarily upon the
omission or alleged omission by the Indemnifying Party to state
therein a material fact required to be stated therein or necessary
to make the statements made therein not misleading, and agrees to
reimburse each such Indemnified Party, as incurred, for any legal
or other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability
or action.

8.03. No Assignment; Successors and Assigns. This
-------------------------------------
Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns, but
neither this Agreement nor any right or obligation set forth in any
provision hereof may be transferred or assigned by any party hereto
without the prior written consent of the other party, and any
purported transfer or assignment in violation of this Section 8.03
shall be void and of no effect. There shall not be any third party
beneficiaries of any provisions hereof except for Sections 1.08,

- 75 -
<PAGE> 80
5.08, 5.11 and 8.02, which may be enforced against Buyers or Seller
by the parties therein identified.

8.04. No Implied Waiver. No failure or delay on the
-----------------
part of either party hereto to exercise any right, power or
privilege hereunder or under any instrument executed pursuant
hereto shall operate as a waiver nor shall any single or partial
exercise of any right, power or privilege preclude any other or
further exercise thereof or the exercise of any other right, power
or privilege.

8.05. Headings. Article, section, subsection and
--------
paragraph titles, captions and headings herein are inserted only as
a matter of convenience and for reference, and in no way define,
limit, extend or describe the scope of this Agreement or the intent
or meaning of any provision hereof.

8.06. Entire Agreement. This Agreement and the
----------------
Exhibits, Appendices and Schedules hereto constitute the entire
agreement between the parties with respect to the subject matter
hereof, supersede all prior negotiations, representations,
warranties, commitments, offers, letters of interest or intent,
proposal letters, contracts, writings or other agreements or
understandings with respect thereto. No waiver, and no modifi-
cation or amendment of any provision of this Agreement shall be
effective unless specifically made in writing and duly signed by
all parties thereto.

8.07. Counterparts. This Agreement may be executed in
------------
one or more counterparts, and any party to this Agreement may
executed and deliver this Agreement by executing and delivering any

- 76 -
<PAGE> 81
of such counterparts, each of which when executed and delivered
shall be deemed to be an original and all of which taken together
shall constitute one and the same instrument.

8.08. Notices. All notices and other communications
-------
hereunder shall be in writing and shall be deemed to be duly
received (i) on the date given if delivered personally or (ii) upon
confirmation of receipt, if by facsimile transmission or (iii) on
the date received if mailed by registered or certified mail (return
receipt requested), to the parties at the following addresses (or
at such other address for a party as shall be specified by like
notice):

(i) if to Buyers:
Mercantile Bancorporation Inc.
Mercantile Tower
P.O. Box 524
St. Louis, Missouri 63166-0524
Attention: Ralph W. Babb, Jr.
Vice Chairman
Telecopy: (314) 425-8108

Copies to:
Mercantile Bancorporation Inc.
Mercantile Tower
P.O. Box 524
St. Louis, Missouri 63166-0524
Attention: Jon W. Bilstrom, Esq.
General Counsel and Secretary
Telecopy: (314) 425-1386

and
Thompson & Mitchell
One Mercantile Center
St. Louis, Missouri 63101
Attention: Robert M. LaRose, Esq.
Telecopy: (314) 342-1717

- 77 -
<PAGE> 82
(ii) if to Seller:
Southwest Bancshares, Inc.
102 South Springfield Street
Bolivar, Missouri 65613
Attention: Joe F. Rayl
Chairman
Telecopy: (417) 326-2150

Copies to:
Taylor, Stafford, Woody, Clithero & Fitzgerald
Tenth Floor - Plaza Towers
Glenstone at Sunshine
Springfield, Missouri 65804
Attention: O.J. Taylor, Esq.
Telecopy: (417) 887-8431

8.09. Severability. Any term, provision, covenant or
------------
restriction contained in this Agreement held by a court or a
Regulatory Authority of competent jurisdiction to be invalid, void
or unenforceable, shall be ineffective to the extent of such
invalidity, voidness or unenforceability, but neither the remaining
terms, provisions, covenants or restrictions contained in this
Agreement nor the validity or enforceability thereof in any other
jurisdiction shall be affected or impaired thereby. Any term,
provision, covenant or restriction contained in this Agreement that
is so found to be so broad as to be unenforceable shall be
interpreted to be as broad as is enforceable.

8.10. Governing Law. This Agreement shall be governed
-------------
by and controlled as to validity, enforcement, interpretation,
effect and in all other respects by the internal laws of the State
of Missouri.

- 78 -
<PAGE> 83
IN WITNESS WHEREOF, Buyer and Seller have caused this
Agreement to be signed and, by such signature, acknowledged by
their respective officers thereunto duly authorized, and such
signatures to be attested to by their respective officers thereunto
duly authorized, all as of the date first

"BUYERS"

MERCANTILE BANCORPORATION INC.

By: /s/ Ralph W. Babb, Jr.
---------------------------
Ralph W. Babb, Jr.
Vice Chairman

AMERIBANC, INC.

By: /s/ Ralph W. Babb, Jr.
---------------------------
Ralph W. Babb, Jr.
Chairman

"SELLER"

SOUTHWEST BANCSHARES, INC.

By: /s/ Joe F. Rayl
---------------------------
Joe F. Rayl
Chairman, President and
Chief Executive Officer

- 79 -
<PAGE> 84

EXHIBIT A

[Form of Southwest Affiliate's Undertaking]

----------------, 1995

Mercantile Bancorporation Inc.
Mercantile Tower
P.O. Box 524
St. Louis, Missouri 63166-0524

Gentlemen:

I have been advised that as of the date hereof I may be
deemed an "affiliate" ("Affiliate") of Southwest Bancshares, Inc.,
a Missouri corporation ("Southwest"), as that term is defined for
purposes of paragraphs (c) and (d) of Rule 145 of the rules and
regulations (the "Rules and Regulations") under the Securities Act
of 1933, as amended (the "Act"). Pursuant to the terms of the
Agreement and Plan of Merger among Mercantile Bancorporation Inc.,
a Missouri corporation ("Mercantile"), Ameribanc, Inc., a Missouri
corporation ("ABNK"), and Southwest (the "Merger Agreement"),
Southwest will be merged with and into ABNK (the "Merger"), and as
a result of the Merger, I will receive shares of common stock of
Mercantile, $5.00 par value ("Mercantile Common Stock").

In connection with the above transactions, I represent
and warrant to Mercantile and agree that:

A. I will not make any sale, transfer or other
disposition of the shares of Mercantile Common Stock in violation
of the Act or the Rules and Regulations.

B. I have been advised that the offering, sale and
delivery of the shares of Mercantile Common Stock to me pursuant to
the Merger will be registered under the Act on a Registration

A - 1
<PAGE> 85
Statement on Form S-4. I have also been advised, however, that,
since I may be deemed to be an Affiliate of Southwest at the time
the Merger Agreement is submitted for a vote of the shareholders of
Southwest, such shares of Mercantile Common Stock may be sold,
transferred or otherwise disposed of by me only if (i) such shares
of Mercantile Common Stock have been registered for distribution
under the Act, (ii) a sale of the shares of Mercantile Common Stock
is made in conformity with the volume and other limitations of Rule
145 or (iii) another exemption from registration under the Act is
available with respect to any such proposed sale, transfer or other
disposition of such shares of Mercantile Common Stock.

C. I have carefully read this letter and the Merger
Agreement and have discussed their requirements and other
applicable limitations upon my ability to sell, transfer or
otherwise dispose of the shares of Mercantile Common Stock, to the
extent I felt necessary, with my counsel or counsel for Southwest.

D. I understand that Mercantile is under no obligation
to register the sale, transfer or other disposition of the shares
of Mercantile Common Stock for sale, transfer or other disposition
by me to make compliance with an exemption from registration
available.

E. Notwithstanding the other provisions hereof, I agree
not to sell, pledge, transfer or otherwise dispose (other than by
bona fide gift) of the shares of Mercantile Common Stock, or reduce
my risk relative to the Mercantile Common Stock in any other way,
from the date hereof until such time as financial results covering
at least thirty (30) days of combined operations of the parties to

A - 2
<PAGE> 86
the Merger have been published within the meaning of Section 201.01
of the Codification of Financial Reporting Policies of the
Securities and Exchange Commission ("SEC"). I have not reduced my
risk relative to the Mercantile Common Stock or the Southwest
Common Stock from the date I became aware of the negotiation
between Mercantile and Southwest with regard to the acquisition to
date.

F. I understand that stop transfer instructions will be
given to the registrar of the certificates for the shares of
Mercantile Common Stock and that there will be placed on the
certificates for the shares of Mercantile Common Stock, or any
substitutions therefore, a legend stating in substance:

"The shares represented by this certificate were
issued in a transaction (the acquisition of
Southwest Bancshares, Inc.) to which Rule 145
promulgated under the Securities Act of 1933, as
amended (the "Act"), applies and may be sold or
otherwise transferred only in compliance with the
limitations of such Rule 145, or an exemption from
registration under the Act is available, or
pursuant to a registration statement under the Act.
The shares represented by this certificate may not
be sold or otherwise transferred prior to the
publication by Mercantile Bancorporation Inc. of an
earnings statement covering at least thirty (30)
days of operations subsequent to [the effective
date of the Merger]."

A - 3
<PAGE> 87
G. I hereby agree that, for a period of two (2) years
following the effective date of the Merger, I will obtain an
agreement similar to this agreement from each transferee of the
shares of Mercantile Common Stock sold or otherwise transferred by
me, but only if such transfer is effected other than in a trans-
action involving a registered public offering or as a sale pursuant
to Rule 145.

It is understood and agreed that this Agreement will
terminate and be of no further force and effect and the legend set
forth in Paragraph F above will be removed by delivery of substi-
tute certificates without such legend, and the related transfer
restrictions shall be lifted forthwith, if the period of time
specified in Paragraph E of this Agreement has passed and (i) my
shares of Mercantile Common Stock shall have been registered under
the Act for sale, transfer or other disposition by me or on my
behalf, (ii) I am not at the time an Affiliate of Mercantile and
have held the shares of Mercantile Common Stock for at least two
(2) years (or such other period as may be prescribed by the Act and
the Rules and Regulations) and Mercantile has filed with the SEC
all of the reports it is required to file under the Securities
Exchange Act of 1934, as amended, during the preceding twelve (12)
months, (iii) I am not and have not been for at least three (3)
months an Affiliate of Mercantile and I have held the shares of
Mercantile Common Stock for at least three (3) years, or (iv)
Mercantile shall have received a letter from the staff of the SEC,
or an opinion of Mercantile's General Counsel or other counsel

A - 4
<PAGE> 88
acceptable to Mercantile, to the effect that the stock transfer
restrictions and the legend are not required.

By its acceptance hereof, Mercantile agrees, for a period
of two years after the Merger, that it will file on a timely basis
all reports required to be filed by it pursuant to Section 13 of
the Securities Exchange Act of 1934, as amended, so that the public
information provisions of Rule 144(c) under the Act are satisfied
and the resale provisions of paragraphs (d)(1) and (2) are
therefore available to me in the event I desire to transfer shares
of Mercantile Common Stock issued to me in the Merger.

This Agreement shall be binding on my heirs, legal
representatives and successors.

Very truly yours,

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

Accepted as of the ------ day of ----------------, 1995.

MERCANTILE BANCORPORATION INC.

By:-------------------------------------

A - 5
<PAGE> 89

EXHIBIT B

OFFICER/DIRECTOR CERTIFICATE
----------------------------

The undersigned, [Name] , [Title] of
------------------- ---------------
Southwest Bancshares, Inc., a Missouri corporation ("Southwest"),
HEREBY CERTIFIES that (a) I am familiar with the terms and
conditions of the Agreement and Plan of Merger by and among
Mercantile Bancorporation Inc., a Missouri corporation ("MBI"),
Ameribanc, Inc., a Missouri corporation ("Ameribanc"), and
Southwest dated * , 1995, including the schedules and
-----------
exhibits thereto (the "Agreement"), and (b) I am aware that (i)
this Certificate will be relied on by Thompson & Mitchell, counsel
for MBI, in rendering its opinion to Southwest that the merger of
Southwest with and into Ameribanc (the "Merger") will constitute a
reorganization within the meaning of section 368(a)(1)(A) of the
Internal Revenue Code of 1986, as amended (the "Code"), and (ii)
the representations and undertaking recited herein will survive the
Merger.

The undersigned HEREBY FURTHER CERTIFIES, ON BEHALF OF
Southwest, that:

(1) The fair market value of the MBI common stock,
par value $5.00 per share ("MBI Common Stock"), to be received by
each Southwest shareholder in the Merger (including cash to be
received in lieu of fractional shares of MBI Common Stock, if any)
will be approximately equal to the fair market value of the

B - 1
<PAGE> 90
Southwest common stock, par value $10.00 per share ("Southwest
Common Stock"), surrendered in the Merger by each such shareholder.

(2) [To be modified with a knowledge qualifier if
sufficient shareholders execute Exhibit C.] There is no plan,
intention or other arrangement (including any option or pledge) on
the part of the holders of 1% or more of the Southwest Common Stock
and, to the best knowledge of the undersigned, there is no plan,
intention or other arrangement (including any option or pledge) on
the part of the other holders of Southwest Common Stock to sell,
exchange or otherwise dispose of a number of shares of MBI Common
Stock received by such holders in the Merger that would reduce such
holders' ownership of MBI Common Stock to a number of shares having
a value, as of the date on which the Merger is consummated (the
"Effective Date"), of less than 50 percent of the value of all of
the formerly outstanding Southwest Common Stock as of the Effective
Date. For purposes of this representation, shares of Southwest
Common Stock exchanged for cash or other property or exchanged for
cash in lieu of fractional shares of MBI Common Stock will be
treated as outstanding on the Effective Date. Moreover, all shares
of Southwest Common Stock and/or shares of MBI Common Stock held by
Southwest shareholders and otherwise sold, redeemed or disposed of
before or after the Effective Date will be taken into account in
making this representation.

B - 2
<PAGE> 91
Southwest immediately prior to the Merger. For purposes of this
representation, Southwest assets used to pay dissenters or to pay
shareholders who receive cash, and Southwest assets used to pay
expenses of the Merger or to fund any redemption or distribution
within 24 months before the Merger (except for regular, normal
dividends) shall be included as assets of Southwest held
immediately prior to the Merger. For purposes of this
representation, any asset of Southwest or any other member of
Southwest's "affiliated group" (as the quoted term is defined in
Code section 1504) (the "Southwest Affiliated Group") that is
disposed of within 24 months before the Merger other than in the
ordinary course of business also shall be included as an asset of
Southwest held immediately prior to the Merger.

(4) Before the Merger, Southwest will not have
outstanding any warrants, options, convertible securities or any
other type of right (including any preemptive right) pursuant to
which any person could acquire stock in Southwest that, if
exercised or converted after the Merger, would affect MBI's
retention of control of Ameribanc (within the meaning of section
368(c) of the Code).

B - 3
<PAGE> 92
directly or indirectly, have paid (or loaned) any amount or
incurred any liability to or for the benefit of, or assumed or
cancelled any liability of, any Southwest shareholder in connection
with the Merger. For purposes of this representation, (a) the term
"Southwest" shall be deemed also to refer to each other member of
the Southwest Affiliated Group, (b) the term "liability" shall
include any undertaking to pay or to cause the reduction, release
or extinguishment of, any obligation, without regard to whether any
such undertaking or obligation is contingent or legally enforceable
(for example and without limitation, the term "liability" includes
an unenforceable agreement to cause the repayment of an obligation
guaranteed by a Southwest shareholder or to cause by other means
the release of such guaranty), and (c) the term "Transaction Costs"
shall mean amounts paid or liabilities incurred in connection with
the Merger (i) to dissenters, if any, (ii) for legal, accounting
and investment banking and/or advisor services rendered to
Southwest or any other member of the Southwest Affiliated Group, if
any, and (iii) as compensation to any employee of Southwest or any
other member of the Southwest Affiliated Group for services
rendered in the ordinary course of his or her employment.

(6) Expenses, if any, that are incurred in
connection with the Merger and are properly attributable to
Southwest's shareholders will be paid by those shareholders and not
by Southwest. Southwest will pay its own expenses that are
incurred in connection with the Merger, except for those printing,
mailing and filing expenses described in Section 5.06 of the
Agreement.

B - 4
<PAGE> 93
(7) No indebtedness between Southwest or any other
member of the Southwest Affiliated Group, on the one hand, and
Ameribanc or MBI or any other member of MBI's "affiliated group"
(defined as above), on the other hand, exists or will exist prior
to the Merger that (a) was issued or acquired at a discount, or (b)
will be settled, as a result of the Merger, at a discount. No
"installment obligation" (as the quoted term is defined for
purposes of Code section 453B), between Southwest, on the one hand,
and Ameribanc, on the other hand, exists or will exist prior to the
Merger that will be extinguished as a result of the Merger.

(8) The fair market value of the assets of
Southwest to be transferred to Ameribanc will exceed the sum of the
amount of liabilities to be assumed by Ameribanc, plus the amount
of liabilities, if any, to which the assets to be transferred are
subject.

(9) The payment of cash in lieu of fractional
shares of MBI Common Stock will be solely for the purpose of
avoiding the expense and inconvenience to MBI of issuing fractional
shares and will not represent separately bargained-for
consideration. The total cash consideration that will be paid in
the Merger to the Southwest shareholders in lieu of fractional
shares of MBI Common Stock will not exceed one percent of the total
consideration that will be issued in the transaction to the
Southwest shareholders in exchange for their shares of Southwest
Common Stock. The fractional share interests of each Southwest
shareholder will be aggregated, and no Southwest shareholder will
receive cash in lieu of fractional share interests in an amount

B - 5
<PAGE> 94
equal to or greater than the value of one full share of MBI Common
Stock.

(10) None of the compensation paid or accrued before
the Merger to or for the benefit of any Southwest shareholder-
employee will be separate consideration for, or allocable to, any
of their shares of Southwest Common Stock; none of the shares of
MBI Common Stock received in the Merger by any Southwest
shareholder-employee will be separate consideration for, or
allocable to, any employment agreement; and all compensation paid
or accrued before the Merger to or for the benefit of any Southwest
shareholder-employee will be for services actually rendered in the
ordinary course of his or her employment and will be commensurate
with amounts paid to third parties bargaining at arm's length for
similar services.

(11) Except for dispositions to be made in the
ordinary course of business, Southwest is aware of no plan or
intention to sell or otherwise dispose (whether by dividend
distribution or otherwise) of (a) any assets of Southwest acquired
in the Merger, or (b) any assets of any other member of the
Southwest Affiliated Group.

(12) All payments made to dissenters and all cash
payments made in lieu of fractional shares of MBI Common Stock will
be funded with assets of MBI. No such payments will be funded with
Southwest assets.

The undersigned HEREBY AGREES to immediately communicate
in writing to Thompson & Mitchell at One Mercantile Center, St.
Louis, Missouri 63101, to the attention of Charles H. Binger, any

B - 6
<PAGE> 95
information that could indicate (i) any of the foregoing
representations was inaccurate when made, or (ii) any of the
foregoing representations would be inaccurate if it were made
immediately before the Merger.

IN WITNESS WHEREOF, I have hereunto signed my name and
affixed the seal of Southwest this ----- day of ---------------,
1995.

SOUTHWEST BANCSHARES, INC.

By-------------------------------

B - 7
<PAGE> 96

EXHIBIT C

SHAREHOLDER CERTIFICATE
-----------------------

The undersigned shareholder of Southwest Bancshares,
Inc., a Missouri corporation ("Southwest"), [SHAREHOLDER'S NAME],
---------------------
a holder of * shares of Southwest common stock, par value
-------
$10.00 per share ("Southwest Common Stock"), HEREBY CERTIFIES that
(a) I am familiar with the terms and conditions of the Agreement
and Plan of Merger by and among Mercantile Bancorporation Inc., a
Missouri corporation ("MBI"), Ameribanc, Inc., a Missouri
corporation ("Ameribanc"), and Southwest dated * , 1995, and
---------
(b) I am aware that (i) this Certificate will be relied on by
Thompson & Mitchell, counsel for MBI, in rendering its opinion to
Southwest that the merger of Southwest with and into Ameribanc (the
"Merger") will constitute a reorganization within the meaning of
section 368(a)(1) of the Internal Revenue Code of 1986, as amended,
and (ii) the representations and undertaking recited herein will
survive the Merger.

The undersigned HEREBY FURTHER CERTIFIES that (a) the
undersigned has no plan, intention or arrangement (including any
option or pledge) to sell, exchange or otherwise dispose of any of
the MBI common stock, par value $5.00 per share ("MBI Common
Stock"), to be received in the Merger, with the exception of any
fractional share of MBI Common Stock to be exchanged for cash
pursuant to the Merger, and (b) except as otherwise set forth by
the undersigned on an attachment hereto, the undersigned is not
aware that any other holder of Southwest Common Stock has any plan,
intention or arrangement (including any option or pledge) to sell,

C - 1
<PAGE> 97
exchange or otherwise dispose of any of the MBI Common Stock to be
received in the Merger, with the exception of fractional shares of
MBI Common Stock to be exchanged for cash pursuant to the Merger.

The undersigned HEREBY AGREES to immediately communicate
in writing to Thompson & Mitchell at One Mercantile Center, St.
Louis, Missouri 63101, to the attention of Charles H. Binger, any
information that could indicate (i) any of the foregoing
representations was inaccurate when made, or (ii) any of the
foregoing representations would be inaccurate if it were made
immediately before the Merger.

IN WITNESS WHEREOF, the undersigned has executed this
certificate, or caused this certificate to be executed by its duly
authorized representative, this ----- day of ---------------, 1995.

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

C - 2
<PAGE> 98

EXHIBIT D

[Letterhead of counsel of Mercantile Bancorporation Inc.]

(a) Mercantile and each of its subsidiaries is a corporation
duly organized, validly existing and in good standing under the
laws of its jurisdiction of incorporation, is duly qualified to do
business and is in good standing in all jurisdictions where the
ownership or leasing of its respective properties or the conduct of
its business requires it to be so qualified, except, with respect
to subsidiaries of Mercantile other than ABNK, where the failure to
be so qualified would not have a material adverse effect on the
Condition of Mercantile and its Subsidiaries, taken as a whole.
Mercantile and ABNK are each registered as bank holding companies
with the Board of Governors of the Federal Reserve System under the
Bank Holding Company Act of 1956, as amended.

(b) Mercantile and each of its subsidiaries possesses all
corporate power to own and operate its respective properties and to
carry out its respective business as and where the same is now
being conducted.

(c) Mercantile and ABNK each have the corporate power and
authority to enter into and deliver the Merger Agreement and to
carry out its obligations thereunder.

(d) The Merger Agreement has been duly authorized by all
necessary corporate action of Mercantile and ABNK, respectively,
and such Merger Agreement constitutes a valid and binding obliga-
tion of Mercantile and ABNK that is enforceable against Mercantile
and ABNK, as the case may be, in accordance with its terms, except
as may be limited by bankruptcy, insolvency, moratorium, reorgani-

D - 1
<PAGE> 99
zation or similar laws affecting the rights of creditors generally,
or the exercise of judicial discretion in accordance with general
principles applicable to equitable and similar remedies.

(e) The execution, delivery and performance by Mercantile or
ABNK of the Merger Agreement or the consummation of the Merger, or
compliance by Mercantile or ABNK with any of the provisions of the
Merger Agreement, will not: (i) violate, conflict with or result
in a breach of any of the provisions of, or constitute a default
(or event which, with notice or the lapse of time, or both, would
constitute a default) under, or result in the termination of, or
result in the right to termination or acceleration of, or result in
the creation of, any lien, security interest, charge or encumbrance
upon any of the respective properties of Mercantile or ABNK under
any of the terms, conditions or provisions of: (A) the respective
Articles of Incorporation or By-laws of Mercantile or ABNK or (B)
any note, bond, mortgage, indenture, deed of trust, license, lease,
agreement or other instrument or obligation to which Mercantile or
ABNK or any of their respective properties or assets may be subject
and which is material to Mercantile and its subsidiaries taken as
a whole, or (ii) to the best of our knowledge, violate any
judgment, ruling, order, writ, injunction, decree, statute, rule or
regulation applicable to Mercantile or ABNK, or any of their
respective properties or assets and which is material to Mercantile
and its subsidiaries taken as a whole.

(f) Except as received prior to the date hereof, no notice
to, filing with, exemption or review by or authorization, consent
or approval of, any public body or authority is necessary for the

D - 2
<PAGE> 100
consummation by Mercantile or ABNK of the Merger as contemplated by
the Merger Agreement other than articles and certificates of
merger.

(g) To the best of our knowledge, the authorized and issued
capital of Mercantile conforms to the description thereof contained
in Section 3.03 of the Merger Agreement. To the best of our
knowledge, except as set forth in the Merger Agreement or in the
schedules thereto, there are no options, warrants, scrip, rights to
subscribe to, calls or commitments of any character whatsoever
relating to, or securities or rights convertible into, shares of
any capital stock of Mercantile, or contracts, commitments,
understandings or arrangements by which Mercantile is or may become
bound to issue additional shares of capital stock, or options,
warrants or rights to purchase or acquire any additional shares of
capital stock of Mercantile. To the best of our knowledge, all of
the issued and outstanding shares of Mercantile Common Stock are
validly issued, fully paid and nonassessable by Mercantile and none
of such shares have been issued in violation of any preemptive or
similar right of any shareholder of Mercantile. The shares of
Mercantile Common Stock to be issued pursuant to the Merger
Agreement will be, when issued, duly authorized, validly issued,
fully paid and nonassessable by Mercantile, and none of such shares
will be subject to preemptive or other similar rights.

(h) To the best of our knowledge, neither Mercantile nor ABNK
is the subject of any order, decree or injunction of a court or
agency of competent jurisdiction which enjoins or prohibits the
consummation of the Merger.

D - 3
<PAGE> 101
(i) To the best of our knowledge, there is no litigation,
proceeding or controversy before any court or governmental agency
whether federal, state or local, pending or threatened, that is
likely to have a material and adverse effect on the business,
results of operations or financial condition of Mercantile and the
Subsidiaries, taken as a whole.

D - 4
<PAGE> 102

EXHIBIT E

[Letterhead of counsel of Southwest Bancshares, Inc.]

(a) Seller is a corporation duly organized, validly existing
and in good standing under the laws of the State of Missouri, is
duly qualified to do business and is in good standing in all
jurisdictions where the ownership or leasing of its properties or
the conduct of its business require Seller to be so qualified,
except where the failure to be so qualified would not have a
material adverse effect on the Condition of Seller and the Seller
Subsidiaries, taken as a whole. Seller is registered as a bank
holding company under the Bank Holding Company Act of 1956, as
amended.

(b) Bank is a Missouri chartered banking corporation duly
organized, validly existing and in good standings under the laws of
the State of Missouri.

(c) Seller and Bank each possesses all corporate power to own
and operate its respective properties and to carry out its business
as and where the same is now being conducted.

(d) Seller has the corporate power and authority to enter
into and deliver the Merger Agreement and to carry out its
obligations thereunder.

(e) The Merger Agreement has been duly authorized by all
necessary corporate action of Seller, and such Merger Agreement
constitutes a valid and binding obligation of Seller that is
enforceable against Seller in accordance with its terms, except as
may be limited by bankruptcy, insolvency, moratorium, reorgani-
zation or similar laws affecting the rights of creditors generally,

E - 1
<PAGE> 103
or the exercise of judicial discretion in accordance with general
principles applicable to equitable and similar remedies.

(f) The execution, delivery and performance by Seller of the
Merger Agreement or the consummation of the Merger, or compliance
by Seller with any of the provisions of the Merger Agreement will
not (i) violate, conflict with or result in a breach of any of the
provisions of, or constitute a default (or event which, with notice
or the lapse of time, or both, would constitute a default) under,
or result in the termination of, or result in the right to
termination or acceleration of, or result in the creation of, any
lien, security interest, charge or encumbrance upon any of the
respective properties of Seller under any of the terms, conditions
or provisions of: (A) its Certificate of Incorporation or By-laws,
or (B) any note, bond, mortgage, indenture, deed of trust, license,
lease, agreement or other instrument or obligation known to us to
which either Seller or any of the Seller Subsidiaries or their
respective properties or assets may be subject and which is
material to Seller and the Seller Subsidiaries taken as a whole, or
(ii) violate any judgment, ruling, order, writ, injunction, decree,
statute, rule or regulation known to us which is applicable to
Seller or any of the Seller Subsidiaries, or any of their respec-
tive properties or assets and which is material to Seller and the
Seller Subsidiaries taken as a whole.

(g) Except as made or received prior to the date hereof, no
notice to, filing with, exemption or review by or authorization,
consent or approval of, any public body or authority is necessary

E - 2
<PAGE> 104
for the consummation by Seller of the Merger as contemplated by the
Merger Agreement other than articles and certificates of merger.

(h) The authorized capital stock of Seller consists of
100,000 shares of Seller common stock, $10.00 par value ("Seller
Common Stock"), of which, as of the date hereof, 35,981 shares were
issued and outstanding. To the best of our knowledge, except as
set forth in the schedules to the Merger Agreement, there are no
options, warrants, scrip, rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities
or rights convertible into, shares of any capital stock of Seller,
or contracts, commitments, understandings or arrangements by which
Seller is or may become bound to issue additional shares of capital
stock, or options, warrants or rights to purchase or acquire any
additional shares of capital stock of Seller. To the best of our
knowledge, all of the issued and outstanding shares of Seller
Common Stock are validly issued, fully paid and nonassessable by
Seller and none of such shares have been issued in violation of any
preemptive or similar right of any shareholder of Seller.

(i) Seller is the owner of record of all of the issued and
outstanding shares of Common Stock of the Seller Subsidiaries,
except for directors' qualifying shares. To the best of our
knowledge, there are no options, warrants, scrip, rights to
subscribe to, calls or commitments of any character whatsoever
relating to, or securities or rights convertible into, shares of
any capital stock of any of the Seller Subsidiaries, or contracts,
commitments, understandings or arrangements by which any of the
Seller Subsidiaries is or may become bound to issue additional

E - 3
<PAGE> 105
shares of capital stock, or options, warrants or rights to purchase
or acquire any additional shares of capital stock of such entity.
To the best of our knowledge, all of the issued and outstanding
shares of common stock of each of the Seller Subsidiaries is
validly issued, fully paid and nonassessable by each such subsid-
iary and none of such shares have been issued in violation of any
preemptive or similar right of any shareholder of such entity.

(j) To the best of our knowledge, neither Seller nor any of
the Seller Subsidiaries is the subject of any order, decree or
injunction of a court or agency of competent jurisdiction which
enjoins or prohibits the consummation of the Merger.

(k) To the best of our knowledge, there is no litigation,
proceeding or controversy before any court or governmental agency
whether federal, state or local, pending or threatened, that is
likely to have a material and adverse effect on the business,
results of operations or financial condition of Seller and the
Seller Subsidiaries taken as a whole.

E - 4

<PAGE> 1
Exhibit 2.2

VOTING AGREEMENT

This Voting Agreement dated as of January 27, 1995, is
entered into between Mercantile Bancorporation Inc. ("Mercantile"),
and the undersigned director and shareholder ("Shareholder") of
Southwest Bancshares, Inc. ("Southwest").

WHEREAS, Southwest and Mercantile have proposed to enter
into an Agreement and Plan of Merger (the "Agreement"), dated as of
today, which contemplates the acquisition by Mercantile of 100% of
the common stock of Southwest (the "Southwest Stock") by means of
a merger between Southwest and Mercantile's subsidiary, Ameribanc,
Inc. (the "Merger"); and

WHEREAS, Mercantile is willing to expend the substantial
time, effort and expense necessary to implement the Merger, only if
Shareholder enters into this Voting Agreement; and

WHEREAS, the Shareholder believes that the Merger is in
his best interest and the best interest of Southwest;

NOW, THEREFORE, in consideration of the premises,
Shareholder hereby agrees as follows:

1. Voting Agreement - Shareholder shall vote, or
----------------
cause to be voted, all of the shares of Southwest Stock he now or
hereafter owns and over which he now has, or prior to the record
date for voting at the Meeting (as hereinafter defined) acquires,
voting control in favor of the Merger at the meeting of
stockholders of Southwest to be called for the purpose of approving
the Merger (the "Meeting").

<PAGE> 2
2. No Competing Transaction - Shareholder shall
------------------------
not vote any of his shares of Southwest Stock in favor of any other
merger or sale of all or substantially all the assets of Southwest
to any person other than Mercantile or its affiliates until closing
of the Merger, termination of the Agreement or abandonment of the
Merger by the mutual agreement of Southwest and Mercantile,
whichever comes first.

3. Transfers Subject to Agreement - Shareholder
------------------------------
shall not transfer his shares of Southwest Stock unless the
transferee, prior to such transfer, executes a voting agreement
with respect to the transferred shares substantially to the effect
of this Voting Agreement and reasonably satisfactory to Mercantile.

4. No Ownership Interest. Nothing contained in
---------------------
this Voting Agreement shall be deemed to vest in Mercantile any
direct or indirect ownership or incidence of ownership of or with
respect to any shares of Southwest Stock. All rights, ownership
and economic benefits of and relating to the shares of Southwest
Stock shall remain and belong to Shareholder and Mercantile shall
have no authority to manage, direct, superintend, restrict,
regulate, govern or administer any of the policies or operations of
Southwest or exercise any power or authority to direct Shareholder
in the voting of any of his shares of Southwest Stock, except as
otherwise expressly provided herein, or the performance of his
duties or responsibilities as a director of Southwest.

2
<PAGE> 3
5. Evaluation of Investment. Shareholder, by
------------------------
reason of his knowledge and experience in financial and business
matters and in his capacity as a director of a financial
institution, believes himself capable of evaluating the merits and
risks of the potential investment in common stock of Mercantile,
$5.00 par value ("Mercantile Common Stock"), contemplated by the
Agreement.

6. Documents Delivered. Shareholder acknowledges
-------------------
having reviewed the Agreement and its attachments and that reports,
proxy statements and other information with respect to Mercantile
filed with the Securities and Exchange Commission (the
"Commission") were, prior to his execution of this Voting
Agreement, available for inspection and copying at the Offices of
the Commission and that Mercantile delivered the following such
documents to Southwest:

(a) Mercantile's Annual Report on
Form 10-K for the year ended
December 31, 1993;

(b) Mercantile's Annual Report to
Shareholders for the year ended
December 31, 1993;

(c) Mercantile's Current Report on
Form 8-K dated February 11,
1994, June 17, 1994, October 3,
1994 and December 21, 1994; and

3
<PAGE> 4
(d) Mercantile's Quarterly Report
on Form 10-Q for the quarter
ended September 30, 1994.

7. Amendment and Modification. This Voting
--------------------------
Agreement may be amended, modified or supplemented at any time by
the written approval of such amendment, modification or supplement
by Shareholder and Mercantile.

8. Entire Agreement. This Voting Agreement
----------------
evidences the entire agreement among the parties hereto with
respect to the matters provided for herein and there are no
agreements, representations or warranties with respect to the
matters provided for herein other than those set forth herein and
in the Agreement. This Voting Agreement supersedes any agreements
among Southwest and the Shareholder concerning the Merger,
disposition or control of the stock of Southwest.

9. Severability. The parties agree that if any
------------
provision of this Voting Agreement shall under any circumstances be
deemed invalid or inoperative, this Voting Agreement shall be
construed with the invalid or inoperative provisions deleted and
the rights and obligations of the parties shall be construed and
enforced accordingly.

10. Counterparts. This Voting Agreement may be
------------
executed in two counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the
same instrument.

11. Governing Law. The validity, construction,
-------------

4
<PAGE> 5
enforcement and effect of this Voting Agreement shall be governed
by the internal laws of the State of Missouri.

12. Headings. The headings for the paragraphs of
--------
this Voting Agreement are inserted for convenience only and shall
not constitute a part hereof or affect the meaning or
interpretation of this Voting Agreement.

13. Termination. This Voting Agreement shall
-----------
terminate upon the consummation of the Merger, termination of the
Agreement or abandonment of the Merger by the mutual agreement of
Southwest and Mercantile, whichever comes first.

14. Successors. This Voting Agreement shall be
----------
binding upon and inure to the benefit of Mercantile and its
successors, and Shareholder, such Shareholder's respective
executors, personal representatives, administrators, heirs,
legatees, guardians and other legal representatives. This Voting
Agreement shall survive the death or incapacity of Shareholder.
This Voting Agreement may be assigned by Mercantile only to an
affiliate of Mercantile.

MERCANTILE BANCORPORATION INC.

By:----------------------------
Ralph W. Babb, Jr.
Vice Chairman

SHAREHOLDERS

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

<PAGE> 1

Exhibit 5.1
[Letterhead of Thompson & Mitchell

June 12, 1995

Mercantile Bancorporation Inc.
P.O. Box 524
St. Louis, Missouri 63166-0524

Re: Registration Statement on Form S-4
----------------------------------

Gentlemen:

We refer you to the Registration Statement on Form S-4
filed by Mercantile Bancorporation Inc. (the "Company") on June 12,
1995 (the "Registration Statement") with the Securities and
Exchange Commission (the "SEC") under the Securities Act of 1933,
as amended, pertaining to the proposed issuance by the Company of
up to 675,000 shares of the Company's common stock, $5.00 par value
(the "Shares"), in connection with the acquisition by merger of
Southwest Bancshares, Inc. ("Southwest") pursuant to the Agreement
and Plan of Merger dated January 27, 1995 (the "Merger Agreement"),
by and among the Company, Southwest and Ameribanc, Inc., all as
provided in the Registration Statement. In rendering the opinions
set forth herein, we have examined such corporate records of the
Company, such laws and such other information as we have deemed
relevant, including the Company's Restated Articles of
Incorporation and Bylaws, as amended and currently in effect, the
resolutions adopted by the Executive Committee of the Company's
Board of Directors relating to the merger transaction, certificates
received from state officials and statements we have received from
officers and representatives of the Company. In delivering this
opinion, the undersigned assumed the genuineness of all signatures;
the authenticity of all documents submitted to us as originals; the
conformity to the originals of all documents submitted to us as
certified, photostatic or conformed copies; the authenticity of the
originals of all such latter documents; and the correctness of
statements submitted to us by officers and representatives of the
Company.

Based only on the foregoing, the undersigned is of the
opinion that:

1. The Company has been duly incorporated and is
validly existing under the laws of the State of Missouri; and

2. The Shares to be sold by the Company, when issued as
provided in the Merger Agreement, will be duly authorized, duly and
validly issued and fully paid and nonassessable.

We consent to the filing of this opinion as an exhibit to
the Registration Statement and to the reference to this firm in the
section of the Proxy Statement/Prospectus entitled "Legal Matters."

Very truly yours,

/s/ Thompson & Mitchell

<PAGE> 1
Exhibit 8.1

[Letterhead of Thompson & Mitchell]

June 12, 1995

Board of Directors
Southwest Bancshares, Inc.
102 South Springfield Street
Bolivar, Missouri 65613

Gentlemen:

You have requested our opinion with regard to certain
federal income tax consequences of the proposed merger (the "Merger")
of Southwest Bancshares, Inc. ("Southwest") with and into Ameribanc,
Inc. ("Ameribanc"), a wholly owned subsidiary of Mercantile
Bancorporation Inc. ("MBI").

In connection with the preparation of our opinion, we have
examined and have relied upon the following:

(i) The Agreement and Plan of Merger by and among MBI,
Ameribanc, and Southwest, dated January 27, 1995 ,
including the schedules and exhibits thereto (the "Plan");

(ii) MBI's Registration Statement on Form S-4, including
the Proxy Statement and Prospectus contained therein, filed
with the Securities and Exchange Commission on June 12, 1995
(the "Registration Statement");

(iii) The representations and undertaking of MBI
substantially in the form of Exhibit A hereto;

(iv) The representations and undertakings of Southwest and
certain holders of Southwest common stock, par value $10.00
per share ("Southwest Common Stock"), substantially in the
form of Exhibits B and C hereto; and

(v) The Rights Agreement between MBI and Mercantile Bank
of St. Louis National Association (formerly Mercantile Bank
National Association) as rights agent, dated May 23, 1988.

Our opinion is based solely upon applicable law and the
factual information and undertakings contained in the above-mentioned
documents. In rendering our opinion, we have assumed the accuracy of
all information and the performance of all undertakings contained in
each of such documents. We also have assumed the authenticity of all
original documents, the conformity of all copies to the original
documents, and the genuineness of all signatures. We have not
attempted to verify independently the accuracy of any information in
any such document, and we have assumed that such documents accurately
and completely set forth all material facts relevant to this opinion.
All of our assumptions were made with your consent. If any fact or
assumption described herein or below is incorrect, any or all of the
federal income tax consequences described herein may be inapplicable.

<PAGE> 2

Southwest Bancshares, Inc.
June 12, 1995
Page 2

OPINION

Subject to the foregoing, to the conditions and
limitations expressed elsewhere herein, and assuming that the
Merger is consummated in accordance with the Plan, we are of the
opinion that for federal income tax purposes:

1. The Merger will constitute a reorganization within
the meaning of sections 368(a)(1)(A) and 368(a)(2)(D) of the
Internal Revenue Code of 1986, as amended to the date hereof (the
"Code").

2. Each shareholder of Southwest who exchanges, in
the Merger, shares of Southwest Common Stock solely for shares of
MBI common stock, par value $5.00 per share ("MBI Common Stock"):

a) will recognize no gain or loss, except with
regard to cash received in lieu of a fractional share,
as discussed below (Code section 354(a)(1));

b) will have an aggregate basis for the shares
of MBI Common Stock received (including any fractional
share of MBI Common Stock deemed to be received, as
described in paragraph 3, below) equal to the aggregate
basis of the shares of Southwest Common Stock
surrendered (Code section 358(a)(1)); and

c) will have a holding period for the shares of
MBI Common Stock received (including any fractional
share of MBI Common Stock deemed to be received, as
described in paragraph 3, below) which includes the
period during which the shares of Southwest Common
Stock surrendered were held, provided that the shares
of Southwest Common Stock surrendered were capital
assets in the hands of such holder at the time of the
Merger (Code section 1223(1)).

3. Each shareholder of Southwest who receives, in the
Merger, cash in lieu of a fractional share of MBI Common Stock
will be treated as if the fractional share had been received in
the Merger and then redeemed by MBI. Provided that the shares of
Southwest Common Stock surrendered were capital assets in the
hands of such holder at the time of the Merger, the receipt of
such cash will cause the recipient to recognize capital gain or
loss, equal to the difference between the amount of cash received
and the portion of such holder's aggregate adjusted tax basis in
the shares of MBI Common Stock allocable to the fractional share
(Code sections 1001 and 1222; Rev. Rul. 66-365, 1966-2 C.B. 116;
Rev. Proc. 77-41, 1977-2 C.B. 574).

4. Each shareholder of Southwest who receives solely
cash as a result of the exercise of dissenters' rights will
recognize gain or loss (determined separately as to each block
of Southwest Common Stock exchanged) in an amount equal to the
difference between (x) the amount of cash received by such
shareholder and (y) such shareholder's basis for the shares of
Southwest Common Stock surrendered, provided that the cash
payment does not have the effect of the distribution of a
dividend (Code sections 1001 and 302(a)). Such gain or
loss will be capital gain or

<PAGE> 3

Southwest Bancshares, Inc.
June 12, 1995
Page 3

loss if the shares of Southwest Common Stock surrendered were
capital assets in the hands of the holder, and long-term or
short-term depending on the holder's holding period for each
block of Southwest Common Stock surrendered (Code section 1222).
However, if the cash payment does have the effect of the
distribution of a dividend, such shareholder will recognize
income in the amount of the cash received (without regard
to such shareholder's basis in the Southwest Common Stock
surrendered), which generally will be taxable as a dividend
(Code sections 302(d) and 301).

The determination of whether a cash payment has the
effect of the distribution of a dividend will be made pursuant to
the provisions and limitations of section 302 of the Code, taking
into account the stock ownership attribution rules of section 318
of the Code. Because such determination generally will depend on
the facts and circumstances of each Southwest shareholder, we
express no opinion as to whether the cash payments discussed in
this paragraph 4 will be treated as having the effect of the
distribution of a dividend.

A cash payment will be considered not to have the
effect of the distribution of a dividend under section 302 of the
Code only if the cash payment (i) results in a "complete
redemption" of such shareholder's actual and constructive stock
interest, (ii) qualifies as a "substantially disproportionate"
reduction in such shareholder's actual and constructive stock
interest, or (iii) is not "essentially equivalent to a dividend"
(Code section 302(b)(1), (2), (3)).

A cash payment will result in a "complete redemption"
of a shareholder's stock interest if such shareholder does not
actually or constructively own any stock after the Merger. A
reduction in a shareholder's stock interest will be
"substantially disproportionate" if (i) the percentage of
outstanding shares actually and constructively owned by such
shareholder after the receipt of the cash payment is less than
four-fifths (i.e., 80%) of the percentage of outstanding shares
----
actually and constructively owned by such shareholder immediately
prior to the receipt of the cash payment, and (ii) such
shareholder actually and constructively owns less than 50 percent
of the number of shares outstanding after the receipt of the cash
payment (Code section 302(b)(2)). The cash payment will not be
"essentially equivalent to a dividend" if there has been a
"meaningful reduction" (as the quoted term has been interpreted
by judicial authorities and by rulings of the Internal Revenue
Service (the "Service")) of the shareholder's actual and
constructive ownership interest (Code section 302(b)(1);
United States v. Davis, 397 U.S. 301 (1970); see, e.g., Rev.
- ---------------------- --- ----
Rul. 76-385, 1976-2 C.B. 92; Rev. Rul. 76-364, 1976-2 C.B. 91).

Under the traditional analysis (which apparently
continues to be used by the Service), section 302 of the Code
will apply as though the distribution of cash were made by
Southwest in a hypothetical redemption of Southwest Common Stock
immediately prior to, and in a transaction separate from, the
Merger (a "deemed Southwest redemption"). Thus, under the
traditional analysis, the determination of whether a cash payment
results in a complete redemption of interest, qualifies as a
substantially disproportionate reduction of interest, or is not
essentially equivalent to a dividend will be made by comparing
(x) the shareholder's actual and constructive stock interest in
Southwest before the deemed Southwest redemption, with (y) such
shareholder's actual and constructive stock interest in Southwest
after the deemed Southwest redemption (but before the Merger).
Nevertheless, in view of Commissioner v. Clark, 489 U.S. 726
---------------------
(1989), many tax practitioners believe that the continuing

<PAGE> 4

Southwest Bancshares, Inc.
June 12, 1995
Page 4

validity of the traditional analysis is open to question and
that, in a transaction such as the Merger, the receipt of solely
cash in exchange for stock actually owned should be treated in
accordance with the principles of Commissioner v. Clark, supra,
--------------------- -----
as if the Southwest Common Stock exchanged for cash in the Merger
had instead been exchanged in the Merger for shares of MBI Common
Stock followed immediately by a redemption of such shares by MBI
for the cash payment (a "deemed MBI redemption"). Under this
analysis, the determination of whether a cash payment satisfies
any of the foregoing tests would be made by comparing (i) the
shareholder's actual and constructive stock interest in MBI
before the deemed MBI redemption (determined as if such
shareholder had received solely MBI Common Stock in the Merger),
with (ii) such shareholder's actual and constructive stock
interest in MBI after the deemed MBI redemption. Because this
analysis may be more likely to result in capital gain treatment
than the traditional analysis, each Southwest shareholder who
receives solely cash in exchange for all of the Southwest Common
Stock he or she actually owns should consult his or her own tax
advisor with regard to the proper treatment of such cash.

The determination of ownership for purposes of the
foregoing tests will be made by taking into account both shares
actually owned by such shareholder and shares constructively
owned by such shareholder pursuant to section 318 of the Code
(Code section 302(c)). Under section 318 of the Code, a
shareholder will be deemed to own stock that is owned or deemed
to be owned by certain members of his or her family (spouse,
children, grandchildren, and parents) and other related parties
including, for example, certain entities in which such
shareholder has a direct or indirect interest (including
partnerships, estates, trusts and corporations), as well as
shares of stock that such shareholder (or a related person) has
the right to acquire upon exercise of an option or conversion
right. Section 302(c)(2) of the Code provides certain exceptions
to the family attribution rules for the purpose of determining
whether a complete redemption of a shareholder's interest has
occurred for purposes of Code section 302.

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

We express no opinion with regard to (1) the federal
income tax consequences of the Merger not addressed expressly by
this opinion, including without limitation, (i) the tax
consequences, if any, to those shareholders of Southwest who
acquired shares of Southwest Common Stock pursuant to the
exercise of employee stock options or otherwise as compensation,
and (ii) the tax consequences to special classes of shareholders,
if any, including without limitation, foreign persons, insurance
companies, tax-exempt entities, retirement plans, and dealers in
securities; and (2) federal, state, local, or foreign taxes (or
any other federal, state, local, or foreign laws) not
specifically referred to and discussed herein. Further, our
opinion is based upon the Code, Treasury Regulations proposed or
promulgated thereunder, and administrative interpretations and
judicial precedents relating thereto, all of which are subject to
change at any time, possibly with retroactive effect, and we
assume no obligation to advise you of any subsequent change
thereto. If there is any change in the applicable law or
regulations, or if there is any new administrative or judicial
interpretation of the applicable law or regulations, any or all
of the federal income tax consequences herein may become
inapplicable.

<PAGE> 5

Southwest Bancshares, Inc.
June 12, 1995
Page 5

The foregoing opinion reflects our legal judgment
solely on the issues presented and discussed herein. This
opinion has no official status or binding effect of any kind.
Accordingly, we cannot assure you that the Service or any court
of competent jurisdiction will agree with this opinion.

We hereby consent to the filing of this letter as an
exhibit to the Registration Statement and to all references made
to this letter in the Registration Statement.

Very truly yours,

/s/ Thompson & Mitchell

<PAGE> 6
Exhibit A

CERTIFICATE
-----------

The undersigned, Mercantile Bancorporation Inc., a
Missouri corporation ("MBI"), through ------------------, its
- ----------, HEREBY CERTIFIES that (a) it is familiar with the
terms and conditions of the Agreement and Plan of Merger by and
among MBI, Ameribanc, Inc., a Missouri corporation ("Ameribanc"),
and Southwest Bancshares, Inc., a Missouri corporation
("Southwest"), dated January 27, 1995, including the schedules
and exhibits thereto (the "Agreement"), and (b) it is aware that
(i) this Certificate will be relied on by Thompson & Mitchell,
counsel for MBI, in rendering its opinion to Southwest that the
merger of Southwest with and into Ameribanc (the "Merger") will
constitute a reorganization within the meaning of section
368(a)(1)(A) of the Internal Revenue Code of 1986, as amended
(the "Code"), and (ii) the representations and undertaking
recited herein will survive the Merger.

The undersigned HEREBY FURTHER CERTIFIES that:

(1) The fair market value of the MBI common
stock, par value $5.00 per share ("MBI Common Stock"), to be
received by each Southwest shareholder in the Merger (including
cash to be received in lieu of fractional shares of MBI Common
Stock, if any) will be approximately equal to the fair market
value of the Southwest common stock, par value $10.00 per share
("Southwest Common Stock"), surrendered in the Merger by each
such shareholder.

(2) Except as otherwise set forth by the
undersigned on an attachment hereto, MBI is aware of no plan,
intention or arrangement (including any option or pledge) on the
part of any holder of Southwest Common Stock to sell, exchange or
otherwise dispose of any of the MBI Common Stock to be received
in the Merger, with the exception of fractional shares of MBI
Common Stock to be exchanged for cash pursuant to the Merger.

(3) Before the Merger, MBI will be in control of
Ameribanc within the meaning of section 368(c) of the Code.

<PAGE> 7

(4) After the Merger, (a) Ameribanc will not
issue additional shares of its stock that would result in MBI
losing control of Ameribanc within the meaning of section 368(c)
of the Code, and (b) Ameribanc will not have outstanding any
warrants, options, convertible securities, or any other type of
right (including any preemptive right) pursuant to which any
person could acquire stock in Ameribanc that, if exercised or
converted, would affect MBI's retention of control of Ameribanc
(as defined above). No stock of Southwest will be issued in
connection with the Merger.

(5) In the Merger, MBI and Ameribanc will tender
no consideration for Southwest Common Stock other than MBI Common
Stock and cash in lieu of fractional shares of MBI Common Stock.

(6) Neither MBI nor any other member of MBI's
"affiliated group" (as the quoted term is defined in Code section
1504) (the "MBI Affiliated Group") has any plan or intention to
redeem or otherwise reacquire any of the MBI Common Stock issued
to the shareholders of Southwest in the Merger. MBI may,
however, and solely for business purposes unrelated to the
Merger, acquire MBI Common Stock from time to time through
anonymous purchases on an established securities market at prices
then prevailing in such market.

(7) Neither MBI nor any other member of the MBI
Affiliated Group has any plan or intention (a) to liquidate
Ameribanc, (b) to merge Ameribanc with and into another
corporation, (c) to sell or otherwise dispose (whether by
dividend distribution or otherwise) of the stock of Ameribanc, or
(d) except for transfers described in section 368(a)(2)(C) of the
Code, dispositions made in the ordinary course of business or
dispositions approved by Thompson & Mitchell, to cause, suffer,
or permit Ameribanc to sell or otherwise dispose (whether by
dividend distribution or otherwise) of (i) any assets of
Southwest acquired in the Merger, or (ii) any assets of any other
member of Southwest's "affiliated group" (as defined above) (the
"Southwest Affiliated Group").

(8) After the Merger, Ameribanc will continue the
historic businesses of Southwest and the other members of the
Southwest Affiliated Group, or will use a significant portion of
the historic business assets of the members of the Southwest
Affiliated Group in a business (no stock of any member of the
Southwest Affiliated Group shall be treated as a business asset
for purposes of this representation).

<PAGE> 8

(9) MBI, Ameribanc, Southwest, and the
shareholders of Southwest will each pay their respective
expenses, if any, incurred in connection with the Merger;
provided, however, that MBI or Ameribanc may pay and assume those
expenses of Southwest that are solely and directly related to
the Merger in accordance with the guidelines established in Rev.
Rul. 73-54, 1973-1 C.B. 187, including those printing and filing
fees described in Section 5.06 of the Agreement.

(10) Except with regard to Transaction Costs (as
defined below), neither MBI nor any other member of the MBI
Affiliated Group will pay any amount or incur any liability to or
for the benefit of, or assume or cancel any liability of, any
shareholder of Southwest in connection with the Merger, and no
liability to which Southwest Common Stock is subject will be
extinguished as a result of the Merger. For purposes of this
representation, (a) the term "liability" shall include any
undertaking to pay or to cause the reduction, release, or
extinguishment of, any obligation, without regard to whether any
such undertaking or obligation is contingent or legally
enforceable (for example and without limitation, the term
"liability" includes an unenforceable agreement to cause the
repayment of an obligation guaranteed by a Southwest shareholder
or to cause by other means the release of such guaranty), and (b)
the term "Transaction Costs" shall mean amounts paid or
liabilities incurred in connection with the Merger (i) to
dissenters, if any, (ii) to Southwest shareholders with respect
to the MBI Common Stock (including cash in lieu of fractional
shares thereof) to be delivered in the Merger, (iii) for legal,
accounting, and investment banking and/or advisor services
rendered to MBI or Ameribanc, if any, (iv) for those expenses
payable or assumable by MBI or Ameribanc in accordance with
representation (9) above, and (v) as compensation to any employee
of any member of the MBI Affiliated Group or the Southwest
Affiliated Group for services rendered in the ordinary course of
his or her employment.

(11) No indebtedness between Southwest or any
other member of the Southwest Affiliated Group, on the one hand,
and Ameribanc or MBI or any other member of the MBI Affiliated
Group, on the other hand, exists or will exist prior to the
Merger that (a) was issued or acquired at a discount, or (b) will
be settled, as a result of the Merger, at a discount. No
"installment obligation" (as the quoted term is defined for
purposes of Code section 453B), between Southwest, on the one
hand, and Ameribanc, on the other hand, exists or will exist
prior to the Merger that will be extinguished as a result of the
Merger.

<PAGE> 9

(12) The payment of cash in lieu of fractional
shares of MBI Common Stock in the Merger will be solely for the
purpose of avoiding the expense and inconvenience to MBI of
issuing fractional shares and will not represent separately
bargained-for consideration. The total cash consideration that
will be paid in the Merger to the Southwest shareholders in lieu
of fractional shares of MBI Common Stock will not exceed one
percent of the total consideration that will be issued in the
transaction to the Southwest shareholders in exchange for their
shares of Southwest Common Stock. The fractional share interests
of each Southwest shareholder will be aggregated, and no
Southwest shareholder will receive cash in lieu of fractional
share interests in an amount equal to or greater than the value
of one full share of MBI Common Stock.

(13) All payments made to dissenters, if any, and
all cash payments made in lieu of fractional shares of MBI Common
Stock will be funded with assets of MBI. No such payments will
be funded with Southwest assets.

(14) None of the compensation to be paid or
accrued after the Merger to or for the benefit of any
shareholder-employee of Southwest will be separate consideration
for, or allocable to, any of their shares of Southwest Common
Stock; none of the shares of MBI Common Stock received in the
Merger by any Southwest shareholder-employee will be separate
consideration for, or allocable to, any employment agreement; and
all compensation to be paid or accrued after the Merger to or for
the benefit of any Southwest shareholder-employee will be for
services actually rendered in the ordinary course of his or her
employment and will be commensurate with amounts paid to third
parties bargaining at arm's length for similar services.

(15) With regard to the Rights Agreement by and
between MBI and Mercantile Bank of St. Louis National Association
(as successor in interest to Mercantile Bank National
Association) as rights agent, dated May 23, 1988, (the "Rights
Agreement"), no "Distribution Date" (as the quoted term is
defined in the Rights Agreement) has occurred, and the Merger
will not cause the occurrence of a Distribution Date.

(16) Neither MBI nor any other member of
the MBI Affiliated Group owns, directly or indirectly, any
stock of Southwest, other than in a fiduciary capacity; and
neither MBI nor any other member of the MBI Affiliated
Group has owned, directly or indirectly, any stock

<PAGE> 10
of Southwest within the last five years, other than in a
fiduciary capacity or as a result of foreclosure of previously
contracted debts.

The undersigned HEREBY AGREES to immediately
communicate in writing to Thompson & Mitchell at One Mercantile
Center, St. Louis, Missouri 63101, to the attention of Charles H.
Binger, any information that could indicate (i) any of the
foregoing representations was inaccurate when made, or (ii) any
of the foregoing representations would be inaccurate if it were
made immediately before the Merger.

IN WITNESS WHEREOF, I have hereunto signed my name and
affixed the seal of MBI this ----- day of ------------, 1995.

MERCANTILE BANCORPORATION INC.

By------------------------------------

<PAGE> 11
Exhibit B

CERTIFICATE

The undersigned, [Name] , [Title] of
------------------ ---------------
Southwest Bancshares, Inc., a Missouri corporation ("Southwest"),
HEREBY CERTIFIES that (a) I am familiar with the terms and
conditions of the Agreement and Plan of Merger by and among
Mercantile Bancorporation Inc., a Missouri corporation ("MBI"),
Ameribanc Corporation], a Missouri corporation ("Ameribanc"), and
Southwest dated January 27, 1995, including the schedules and
exhibits thereto (the "Agreement"), and (b) I am aware that (i)
this Certificate will be relied on by Thompson & Mitchell,
counsel for MBI, in rendering its opinion to Southwest that the
merger of Southwest with and into Ameribanc (the "Merger") will
constitute a reorganization within the meaning of section
368(a)(1)(A) of the Internal Revenue Code of 1986, as amended
(the "Code"), and (ii) the representations and undertaking
recited herein will survive the Merger.

The undersigned HEREBY FURTHER CERTIFIES, ON BEHALF OF
Southwest, that:

(1) The fair market value of the MBI common
stock, par value $5.00 per share ("MBI Common Stock"), to be
received by each Southwest shareholder in the Merger (including
cash to be received in lieu of fractional shares of MBI Common
Stock, if any) will be approximately equal to the fair market
value of the Southwest common stock, par value $10.00 per share
("Southwest Common Stock"), surrendered in the Merger by each
such shareholder.

(2) There is no plan, intention or other
arrangement (including any option or pledge) on the part of the
holders of 1% or more of the Southwest Common Stock and, to the
best knowledge of the undersigned, there is no plan, intention or
other arrangement (including any option or pledge) on the part of
the other holders of Southwest Common Stock to sell, exchange or
otherwise dispose of a number of shares of MBI Common Stock
received by such holders in the Merger that would reduce such
holders' ownership of MBI Common Stock to a number of shares
having a value, as of the date on which the Merger is consummated
(the "Effective Date"), of less than 50 percent of the value of
all of the formerly outstanding Southwest Common Stock as of the
Effective Date. For purposes of this representation, shares
of Southwest Common Stock exchanged for cash or other

<PAGE> 12
property or exchanged for cash in lieu of fractional shares of
MBI Common Stock will be treated as outstanding on the Effective
Date. Moreover, all shares of Southwest Common Stock and/or
shares of MBI Common Stock held by Southwest shareholders and
otherwise sold, redeemed, or disposed of before or after the
Effective Date will be taken into account in making this
representation.

(3) Southwest will transfer to Ameribanc in the
Merger assets representing at least 90 percent of the fair market
value of the net assets and at least 70 percent of the fair
market value of the gross assets, in each case, that were held by
Southwest immediately prior to the Merger. For purposes of this
representation, Southwest assets used to pay dissenters or to pay
shareholders who receive cash, and Southwest assets used to pay
expenses of the Merger or to fund any redemption or distribution
within 24 months before the Merger (except for regular, normal
dividends) shall be included as assets of Southwest held
immediately prior to the Merger. For purposes of this
representation, any asset of Southwest or any other member of
Southwest's "affiliated group" (as the quoted term is defined in
Code section 1504) (the "Southwest Affiliated Group") that is
disposed of within 24 months before the Merger other than in the
ordinary course of business also shall be included as an asset of
Southwest held immediately prior to the Merger.

(4) Before the Merger, Southwest will not have
outstanding any warrants, options, convertible securities, or any
other type of right (including any preemptive right) pursuant to
which any person could acquire stock in Southwest that, if
exercised or converted after the Merger, would affect MBI's
retention of control of Ameribanc (within the meaning of section
368(c) of the Code).

(5) At the time of the Merger and except with
regard to Transaction Costs (as defined below), each liability of
Southwest and each liability to which an asset of Southwest is
subject will have been incurred by Southwest in the ordinary
course of business and no such liability will have been incurred
in anticipation of the Merger. In addition, at the time of the
Merger and except with regard to Transaction Costs, Southwest
will not, directly or indirectly, have paid (or loaned) any
amount or incurred any liability to or for the benefit of, or
assumed or cancelled any liability of, any Southwest shareholder
in connection with the Merger. For purposes of this
representation, (a) the term "Southwest" shall be deemed also to
refer to each other member of the Southwest Affiliated Group,
(b) the term "liability" shall include any undertaking to pay
or to cause the reduction, release, or extinguishment
of, any obligation, without regard to whether any such

<PAGE> 13
undertaking or obligation is contingent or legally enforceable
(for example and without limitation, the term "liability"
includes an unenforceable agreement to cause the repayment of an
obligation guaranteed by a Southwest shareholder or to cause by
other means the release of such guaranty), and (c) the term
"Transaction Costs" shall mean amounts paid or liabilities
incurred in connection with the Merger (i) to dissenters, if any,
(ii) for legal, accounting, and investment banking and/or advisor
services rendered to Southwest or any other member of the
Southwest Affiliated Group, if any, and (iii) as compensation to
any employee of Southwest or any other member of the Southwest
Affiliated Group for services rendered in the ordinary course of
his or her employment.

(6) Expenses, if any, that are incurred in
connection with the Merger and are properly attributable to
Southwest's shareholders will be paid by those shareholders and
not by Southwest. Southwest will pay its own expenses that are
incurred in connection with the Merger, except for those
printing, mailing and filing expenses described in Section 5.06
of the Agreement.

(7) No indebtedness between Southwest or any
other member of the Southwest Affiliated Group, on the one hand,
and Ameribanc or MBI or any other member of MBI's "affiliated
group" (defined as above), on the other hand, exists or will
exist prior to the Merger that (a) was issued or acquired at a
discount, or (b) will be settled, as a result of the Merger, at a
discount. No "installment obligation" (as the quoted term is
defined for purposes of Code section 453B), between Southwest, on
the one hand, and Ameribanc, on the other hand, exists or will
exist prior to the Merger that will be extinguished as a result
of the Merger.

(8) The fair market value of the assets of
Southwest to be transferred to Ameribanc will exceed the sum of
the amount of liabilities to be assumed by Ameribanc, plus the
amount of liabilities, if any, to which the assets to be
transferred are subject.

(9) The payment of cash in lieu of fractional
shares of MBI Common Stock will be solely for the purpose of
avoiding the expense and inconvenience to MBI of issuing
fractional shares and will not represent separately bargained-for
consideration. The total cash consideration that will be paid in
the Merger to the Southwest shareholders in lieu of fractional
shares of MBI Common Stock will not exceed one percent of the
total consideration that will be issued in the transaction
to the Southwest shareholders in exchange for their shares of
Southwest Common Stock. The fractional share interests of each
Southwest shareholder will be aggregated, and no Southwest

<PAGE> 14
shareholder will receive cash in lieu of fractional share
interests in an amount equal to or greater than the value of
one full share of MBI Common Stock.

(10) None of the compensation paid or accrued
before the Merger to or for the benefit of any Southwest
shareholder-employee will be separate consideration for, or
allocable to, any of their shares of Southwest Common Stock; none
of the shares of MBI Common Stock received in the Merger by any
Southwest shareholder-employee will be separate consideration
for, or allocable to, any employment agreement; and all
compensation paid or accrued before the Merger to or for the
benefit of any Southwest shareholder-employee will be for
services actually rendered in the ordinary course of his or her
employment and will be commensurate with amounts paid to third
parties bargaining at arm's length for similar services.

(11) Except for dispositions to be made in the
ordinary course of business, Southwest is aware of no plan or
intention to sell or otherwise dispose (whether by dividend
distribution or otherwise) of (a) any assets of Southwest
acquired in the Merger, or (b) any assets of any other member of
the Southwest Affiliated Group.

(12) All payments made to dissenters and all cash
payments made in lieu of fractional shares of MBI Common Stock
will be funded with assets of MBI. No such payments will be
funded with Southwest assets.

The undersigned HEREBY AGREES to immediately
communicate in writing to Thompson & Mitchell at One Mercantile
Center, St. Louis, Missouri 63101, to the attention of Charles H.
Binger, any information that could indicate (i) any of the
foregoing representations was inaccurate when made, or (ii) any
of the foregoing representations would be inaccurate if it were
made immediately before the Merger.

IN WITNESS WHEREOF, I have hereunto signed my name and
affixed the seal of Southwest this ----- day of ---------------,
1995.

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

<PAGE> 15
Exhibit C

SHAREHOLDER CERTIFICATE
-----------------------

The undersigned shareholder of Southwest Bancshares,
Inc., a Missouri corporation ("Southwest"), [SHAREHOLDER'S NAME],
--------------------
a holder of * shares of Southwest common stock, par value
------
$10.00 per share ("Southwest Common Stock"), HEREBY CERTIFIES
that (a) I am familiar with the terms and conditions of the
Agreement and Plan of Merger by and among Mercantile
Bancorporation Inc., a Missouri corporation ("MBI"), Ameribanc,
Inc., a Missouri corporation ("Ameribanc"), and Southwest dated
January 27, 1995, and (b) I am aware that (i) this Certificate
will be relied on by Thompson & Mitchell, counsel for MBI, in
rendering its opinion to Southwest that the merger of Southwest
with and into Ameribanc (the "Merger") will constitute a
reorganization within the meaning of section 368(a)(1) of the
Internal Revenue Code of 1986, as amended, and (ii) the
representations and undertaking recited herein will survive the
Merger.
The undersigned HEREBY FURTHER CERTIFIES that the
undersigned has no plan, intention or arrangement (including any
option or pledge) to sell, exchange or otherwise dispose of any
of the MBI common stock, par value $5.00 per share ("MBI Common
Stock"), to be received in the Merger, with the exception of any
fractional share of MBI Common Stock to be exchanged for cash
pursuant to the Merger.
The undersigned HEREBY AGREES to immediately
communicate in writing to Thompson & Mitchell at One Mercantile
Center, St. Louis, Missouri 63101, to the attention of Charles H.
Binger, any information that could indicate (i) any of the
foregoing representations was inaccurate when made, or (ii) any
of the foregoing representations would be inaccurate if it were
made immediately before the Merger.
IN WITNESS WHEREOF, the undersigned has executed this
certificate, or caused this certificate to be executed by its
duly authorized representative, this ----- day of
- ---------------, 1995.

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

<PAGE> 1

Exhibit 23.1

Independent Auditors' Consent
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The Board of Directors and Stockholders
Mercantile Bancorporation Inc.:

We consent to the use of our reports incorporated herein by
reference and to the reference to our firm under the heading
"Experts" in the prospectus.

/s/ KPMG Peat Marwick LLP

St. Louis, Missouri
June 9, 1995

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Exhibit 23.2

Independent Auditors' Consent
-----------------------------

The Board of Directors and Stockholders
Southwest Bancshares, Inc.:

We consent to the use of our report incorporated herein by
reference and to the reference to our firm under the heading
"Experts" in the prospectus.

/s/ Kirkpatrick, Phillips & Miller

Springfield, Missouri
June 8, 1995