<PAGE> 1
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FORM 10-Q
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR QUARTER ENDED MARCH 31, 1997 COMMISSION FILE NUMBER 1-11792
MERCANTILE BANCORPORATION INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
MISSOURI 43-0951744
(STATE OF INCORPORATION) (IRS EMPLOYER IDENTIFICATION NO.)
P.O. BOX 524 ST. LOUIS, MISSOURI 63166-0524
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (314) 425-2525
INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS
REQUIRED TO BE FILED BY SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934 DURING THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE
REGISTRANT WAS REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH
FILING REQUIREMENTS FOR THE PAST 90 DAYS.
X
----- -----
YES NO
INDICATE THE NUMBER OF SHARES OUTSTANDING OF EACH OF THE ISSUER'S CLASSES OF
COMMON STOCK, AS OF THE LATEST PRACTICABLE DATE.
COMMON STOCK, $.01 PAR VALUE, 74,366,211 SHARES OUTSTANDING AS OF THE CLOSE OF
BUSINESS ON APRIL 30, 1997.
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<PAGE> 2
INDEX
PART I--FINANCIAL INFORMATION
<TABLE>
<CAPTION>
PAGE NO.
--------
<S> <C>
Item 1-- Financial Statements
Consolidated Statement of Income
Three months ended March 31, 1997 and 1996 4
Consolidated Balance Sheet
March 31, 1997 and 1996, and December 31, 1996 5
Consolidated Statement of Changes in Shareholders' Equity
Three months ended March 31, 1997 and 1996 6
Consolidated Statement of Cash Flows
Three months ended March 31, 1997 and 1996 7
Notes to Consolidated Financial Statements 8
Item 2-- Management's Discussion and Analysis of Financial Condition and Results of Operations 9
PART II--OTHER INFORMATION
Item 4--Submission of Matters to a Vote of Security Holders
Item 6--Exhibits and Reports on Form 8-K 20
Signature 21
Exhibit Index 22
</TABLE>
3
<PAGE> 3
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
<TABLE>
MERCANTILE BANCORPORATION INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
(THOUSANDS EXCEPT PER COMMON SHARE DATA)
<CAPTION>
THREE MONTHS ENDED
MARCH 31
1997 1996
---------- ----------
<S> <C> <C>
INTEREST INCOME
Interest and fees on loans and leases $274,754 $257,044
Investments in debt and equity securities
Trading 11 95
Taxable 56,254 57,598
Tax-exempt 5,274 5,888
-------- --------
Total 61,539 63,581
Due from banks--interest bearing 1,178 830
Federal funds sold and repurchase agreements 2,468 3,785
-------- --------
Total Interest Income 339,939 325,240
INTEREST EXPENSE
Interest bearing deposits 125,579 128,885
Foreign deposits 4,717 2,501
Short-term borrowings 20,299 14,114
Bank notes 2,540 3,972
Long-term debt 7,289 6,032
-------- --------
Total Interest Expense 160,424 155,504
-------- --------
NET INTEREST INCOME 179,515 169,736
PROVISION FOR POSSIBLE LOAN LOSSES<F1> 18,198 33,168
-------- --------
NET INTEREST INCOME AFTER PROVISION
FOR POSSIBLE LOAN LOSSES 161,317 136,568
OTHER INCOME
Trust 20,991 19,354
Service charges 20,446 19,272
Credit card fees 5,345 1,449
Securitization revenue 7,292 4,502
Mortgage banking 2,728 3,120
Investment banking and brokerage 3,410 3,143
Securities gains (losses)<F1> 1,049 (2,956)
Other 14,254 11,400
-------- --------
Total Other Income 75,515 59,284
OTHER EXPENSE
Salaries 66,641 62,732
Employee benefits 17,390 16,524
Net occupancy 10,419 9,742
Equipment 12,883 11,574
Intangible asset amortization 4,117 2,646
Other<F1> 32,236 79,552
-------- --------
Total Other Expense 143,686 182,770
-------- --------
INCOME BEFORE INCOME TAXES 93,146 13,082
INCOME TAXES<F1> 32,810 8,517
-------- --------
NET INCOME $ 60,336 $ 4,565
======== ========
PER COMMON SHARE DATA
Average shares outstanding 60,582,101 63,052,401
Net income<F2> $1.00 $.07
Dividends declared .43 .41
<FN>
<F1> Includes the following nonrecurring acquisition
charges:
Provision for possible loan losses $ -- $ 10,851
Other income (securities losses) -- (3,082)
Other expense -- 41,678
Income tax benefit -- (15,599)
-------- --------
Impact on Net Income $ -- $(40,012)
======== ========
<F2> Earnings per common share is calculated by dividing net income, less dividends
on preferred stock, by weighted average common shares outstanding.
</TABLE>
4
<PAGE> 4
<TABLE>
MERCANTILE BANCORPORATION INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(THOUSANDS)
<CAPTION>
MARCH 31 DEC. 31 MARCH 31
1997 1996 1996
----------- ----------- -----------
<S> <C> <C> <C>
ASSETS
Cash and due from banks $ 883,304 $ 1,223,911 $ 888,924
Due from banks--interest bearing 109,614 91,616 77,206
Federal funds sold and repurchase agreements 196,325 234,212 245,037
Investments in debt and equity securities
Trading 753 500 13,245
Available-for-sale (Amortized cost of $3,784,394,
$3,678,496, and $4,294,437, respectively) 3,784,185 3,691,509 4,307,504
Held-to-maturity (Estimated fair value
of $327,070 at March 31, 1997 and $349,738 at
December 31, 1996) 325,145 346,566 --
----------- ----------- -----------
Total Investments in Debt and Equity Securities 4,110,083 4,038,575 4,320,749
Loans held-for-sale 62,857 66,373 88,416
Loans and leases, net of unearned income 12,952,617 12,706,547 11,751,826
----------- ----------- -----------
Total Loans and Leases 13,015,474 12,772,920 11,840,242
Reserve for possible loan losses (198,061) (196,627) (211,608)
----------- ----------- -----------
Net Loans and Leases 12,817,413 12,576,293 11,628,634
Bank premises and equipment 346,417 341,060 311,894
Due from customers on acceptances 2,807 4,946 6,458
Intangible assets 187,416 175,226 117,328
Other assets 294,189 301,120 306,096
----------- ----------- -----------
Total Assets $18,947,568 $18,986,959 $17,902,326
=========== =========== ===========
LIABILITIES
Deposits
Non-interest bearing $ 2,525,481 $ 2,584,340 $ 2,040,285
Interest bearing 12,108,768 11,983,660 11,801,245
Foreign 277,560 251,887 160,478
----------- ----------- -----------
Total Deposits 14,911,809 14,819,887 14,002,008
Federal funds purchased and repurchase agreements 1,448,011 1,589,261 1,220,321
Other short-term borrowings 165,569 198,412 220,891
Bank notes 175,000 175,000 275,000
Long-term debt 449,993 302,795 323,915
Bank acceptances outstanding 2,807 4,946 6,458
Other liabilities 232,896 262,631 245,846
----------- ----------- -----------
Total Liabilities 17,386,085 17,352,932 16,294,439
Commitments and contingent liabilities -- -- --
<CAPTION>
MARCH 31 DEC. 31 MARCH 31
1997 1996 1996
-------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
SHAREHOLDERS' EQUITY
Preferred stock--no par value
Shares authorized 5,000 5,000 5,000
Shares issued and outstanding -- -- -- -- -- --
Common stock--$5.00 par value
Shares authorized 100,000 100,000 100,000
Shares issued 63,372 63,332 63,211 316,863 316,663 316,058
Capital surplus 226,297 228,151 234,689
Retained earnings 1,197,503 1,163,069 1,052,064
Valuation on available-for-sale securities 2,071 10,345 8,478
Treasury stock, at cost 3,377 1,728 87 (181,251) (84,201) (3,402)
----------- ----------- -----------
Total Shareholders' Equity 1,561,483 1,634,027 1,607,887
----------- ----------- -----------
Total Liabilities and Shareholders' Equity $18,947,568 $18,986,959 $17,902,326
=========== =========== ===========
</TABLE>
5
<PAGE> 5
<TABLE>
MERCANTILE BANCORPORATION INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
($ IN THOUSANDS)
<CAPTION>
COMMON STOCK
---------------------- TOTAL
OUTSTANDING PREFERRED CAPITAL RETAINED TREASURY SHAREHOLDERS'
SHARES DOLLARS STOCK SURPLUS EARNINGS<F*> STOCK EQUITY
----------- -------- --------- -------- ------------ --------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE AT DECEMBER 31, 1995 62,506,536 $319,434 $ 12,153 $283,288 $1,085,269 $ (60,557) $1,639,587
Net income 4,565 4,565
Common dividends declared--$.41 per
share (25,885) (25,885)
Preferred dividends declared (408) (408)
Redemption of preferred stock (12,153) (531) (12,684)
Issuance of common stock in acquisitions
of:
Metro Savings Bank, F.S.B. 197,902 57 14 8,983 9,054
Security Bank of Conway, F.S.B. 321,964 75 14,614 14,689
First Sterling Bancorp, Inc. 521,417 2,607 1,876 13,772 18,255
Issuance of common stock for employee
incentive plans 103,533 486 (302) 276 460
Net fair value adjustment on
available-for-sale securities (16,254) (16,254)
Purchase of treasury stock (525,000) (23,825) (23,825)
Reissuance and retirement of treasury
stock (6,458) (50,708) 57,166 --
Other (2,299) (11) 403 (59) 333
---------- -------- -------- -------- ---------- --------- ----------
BALANCE AT MARCH 31, 1996 63,124,053 $316,058 $ -- $234,689 $1,060,542 $ (3,402) $1,607,887
========== ======== ======== ======== ========== ========= ==========
BALANCE AT DECEMBER 31, 1996 61,604,723 $316,663 $ -- $228,151 $1,173,414 $ (84,201) $1,634,027
Net income 60,336 60,336
Common dividends declared--$.43 per
share (25,892) (25,892)
Issuance of common stock in acquisition
of Regional Bancshares, Inc. 600,417 (474) 361 28,813 28,700
Issuance of common stock for employee
incentive plans 99,247 200 (532) 2,596 2,264
Net fair value adjustment on
available-for-sale securities (8,923) (8,923)
Purchase of treasury stock (2,309,033) (129,029) (129,029)
Other (848) 278 570 --
---------- -------- -------- -------- ---------- --------- ----------
BALANCE AT MARCH 31, 1997 59,995,354 $316,863 $ -- $226,297 $1,199,574 $(181,251) $1,561,483
========== ======== ======== ======== ========== ========= ==========
<FN>
<F*>Includes valuation on available-for-sale securities.
</TABLE>
6
<PAGE> 6
<TABLE>
MERCANTILE BANCORPORATION INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(THOUSANDS)
<CAPTION>
THREE MONTHS ENDED
MARCH 31
1997 1996
---------- ----------
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 60,336 $ 4,565
Adjustments to reconcile net income to net cash provided by operating activities
Provision for possible loan losses 18,198 33,168
Depreciation and amortization 11,247 10,301
Provision for deferred income taxes 719 8,905
Net change in loans held-for-sale 3,516 6,461
Net change in accrued interest receivable 3,709 3,354
Net change in accrued interest payable 1,374 (10,998)
Other, net (3,485) 42,194
---------- ----------
Net Cash Provided by Operating Activities 102,584 97,950
INVESTING ACTIVITIES
Investments in debt and equity securities, other than trading securities
Purchases (572,631) (387,386)
Proceeds from maturities 435,753 291,716
Proceeds from sales of available-for-sale securities 167,779 59,435
Net change in loans and leases (238,128) 10,943
Purchases of loans and leases (33,686) (16)
Proceeds from sales of loans and leases 39,806 43,779
Purchases of premises and equipment (13,260) (13,748)
Proceeds from sales of premises and equipment 1,444 2,714
Proceeds from sales of foreclosed property 7,018 7,393
Cash and cash equivalents from acquisitions, net of cash paid (8,132) 42,907
Other, net (4,181) 145
---------- ----------
Net Cash Provided (Used) by Investing Activities (218,218) 57,882
FINANCING ACTIVITIES
Net change in non-interest bearing, savings, interest bearing demand and
money market deposit accounts (46,624) 78,400
Net change in time certificates of deposit under $100,000 (74,575) (96,712)
Net change in time certificates of deposit $100,000 and over 120,523 63,089
Net change in other time deposits (69,029) 4,589
Net change in foreign deposits 25,673 (48,692)
Net change in short-term borrowings (183,548) (342,320)
Issuance of bank notes -- 25,000
Issuance of long-term debt 150,000 1,500
Principal payments on long-term debt (2,802) (1,706)
Cash dividends paid (25,892) (26,293)
Proceeds from issuance of common stock 2,215 411
Purchase of treasury stock (140,804) (23,825)
Redemption of preferred stock -- (12,684)
Other, net 1 336
---------- ----------
Net Cash Used by Financing Activities (244,862) (378,907)
---------- ----------
DECREASE IN CASH AND CASH EQUIVALENTS (360,496) (223,075)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 1,549,739 1,434,242
---------- ----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $1,189,243 $1,211,167
========== ==========
</TABLE>
7
<PAGE> 7
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1
The Consolidated Financial Statements include all adjustments which are, in the
opinion of management, necessary for the fair statement of the results of these
periods and are of a normal recurring nature, with the exception of the
nonrecurring acquisition charges totaled on Note 1 of the Consolidated
Statement of Income on Page 4.
NOTE 2
Effective April 25, 1997, the Registrant acquired Mark Twain Bancshares, Inc.,
a $3.2 billion-asset bank holding company headquartered in St. Louis, Missouri.
This acquisition was accounted for as a pooling-of-interests.
8
<PAGE> 8
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
<TABLE>
- -----------------------------------------------------------------------------------------------------------------------------------
EXHIBIT 1
HIGHLIGHTS
<CAPTION>
FIRST QUARTER
($ IN THOUSANDS EXCEPT PER COMMON SHARE DATA) 1997 1996 CHANGE
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
PER COMMON SHARE DATA
Net income $ 1.00 $ .07 --%
Dividends declared .43 .41 4.9
Book value at March 31 26.03 25.47 2.2
Market price at March 31 53 45 3/4 15.8
- -----------------------------------------------------------------------------------------------------------------------------------
OPERATING RESULTS AND SELECTED RATIOS
EXCLUDING NONRECURRING EXPENSE<F1>
Net income $60,336 $44,577 35.4%
Net income per common share 1.00 .70 42.9
Return on assets 1.29% 1.00%
Return on equity 15.06 10.65
Efficiency ratio 55.57 59.78
Other expense to average assets 3.07 3.16
- -----------------------------------------------------------------------------------------------------------------------------------
OPERATING RESULTS<F2>
Taxable-equivalent net interest income $183,030 $173,657 5.4%
Tax-equivalent adjustment 3,515 3,921 (10.4)
Net interest income 179,515 169,736 5.8
Provision for possible loan losses 18,198 33,168 (45.1)
Other income 75,515 59,284 27.4
Other expense 143,686 182,770 (21.4)
Income taxes 32,810 8,517 --
Net income 60,336 4,565 --
- -----------------------------------------------------------------------------------------------------------------------------------
SELECTED RATIOS AND DATA<F2>
Return on assets 1.29% .10%
Return on equity 15.06 1.09
Efficiency ratio 55.57 78.46
Other expense to average assets 3.07 4.09
Net interest rate margin 4.27 4.23
Equity to assets 8.24 8.98
Tier I capital to risk-adjusted assets 11.21 11.90
Total capital to risk-adjusted assets 14.09 14.99
Leverage 8.31 8.28
Reserve for possible loan losses to
outstanding loans 1.52 1.79
Reserve for possible loan losses to
non-performing loans 269.13 259.41
Non-performing assets to outstanding loans and
foreclosed assets .68 .77
Banks 29 72
Banking offices 467 441
Full-time equivalent employees 7,975 7,798
- -----------------------------------------------------------------------------------------------------------------------------------
AVERAGE BALANCES
Total assets $18,711,937 $17,865,247 4.7%
Earning assets 17,149,567 16,410,663 4.5
Loans and leases 12,828,738 11,798,364 8.7
Deposits 14,690,966 13,921,394 5.5
Shareholders' equity 1,603,073 1,674,780 (4.3)
- -----------------------------------------------------------------------------------------------------------------------------------
<FN>
<F1> Nonrecurring acquisition charges reduced net income and net income per
common share by $40,012,000 and $.63, respectively, in the first quarter
of 1996.
<F2> Includes nonrecurring acquisition charges noted in (1) above.
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
9
<PAGE> 9
PERFORMANCE SUMMARY
Net income for Mercantile Bancorporation Inc. ("Corporation" or
"Mercantile") in the first quarter of 1997 was $60,336,000 compared with
the $4,565,000 earned in the same period a year ago and earnings per common
share was $1.00 compared with $.07 in the first quarter of 1996. To allow
comparison of the fundamental financial performance of Mercantile for 1997
with 1996, it is helpful to exclude $40,012,000 of nonrecurring acquisition
costs from the first quarter 1996 results of operations. Exhibit 2 presents
those 1996 results adjusted for such nonrecurring expense and as shown, net
income for 1997 was $15,759,000 or 35.4% higher than 1996 adjusted earnings.
On a per common share basis, net income was $1.00 compared with the adjusted
$.70 earned in last year's first quarter. Return on average assets increased
to 1.29% in 1997 compared with 1.00% in 1996, while return on average equity
improved to 15.06% from 10.65% last year.
<TABLE>
- -------------------------------------------------------------------------------
EXHIBIT 2
1996 ADJUSTED RESULTS
<CAPTION>
EARNINGS
NET INCOME PER COMMON RETURN ON
(THOUSANDS) SHARE ASSETS
----------- ---------- ---------
<S> <C> <C> <C>
Reported $ 4,565 $.07 .10%
Nonrecurring acquisition
expenses 40,012 .63 .90
------- ---- ----
Adjusted $44,577 $.70 1.00%
======= ==== ====
- -------------------------------------------------------------------------------
</TABLE>
Financial Accounting Standard ("FAS") 128, "Earnings per Share," was
issued in February 1997. This statement is effective in the fourth quarter
of 1997 and requires additional reporting of earnings per share which gives
effect to dilutive common shares such as stock options or convertible notes.
The Corporation does not anticipate a significant impact when reporting
diluted earnings per share.
Exhibit 3 details acquisitions completed during 1996 and 1997 as well as two
pending acquisitions. On March 5, 1997, the Corporation acquired Regional
Bancshares, Inc., ("Regional"), a $172 million-asset bank holding company
headquartered in Alton, Illinois. Two significant St. Louis-based mergers
were announced in late 1996. On October 27, 1996, a definitive merger
agreement was executed with Mark Twain Bancshares, Inc. ("Mark Twain"), a
$3.2 billion-asset commercial banking organization with 41 offices in
Missouri, Kansas and Illinois. The Mark Twain transaction closed on April
25, 1997 and was accounted for as a pooling-of-interests, with resulting
restatement of pre-acquisition accounts and results of operations. The
estimated restated earnings per common share for the first quarter of 1997
is $.98 compared with the $1.00 originally reported. During the second
quarter of 1997, Mercantile expects to record nonrecurring acquisition
charges related to the Regional and Mark Twain acquisitions which will
reduce pre-tax income by $44,000,000 to $54,000,000.
<TABLE>
----------------------------------------------------------------------------
EXHIBIT 3
ACQUISITIONS
($ IN THOUSANDS)
<CAPTION>
CONSIDERATION
--------------------
GROSS ACCOUNTING
DATE ASSETS DEPOSITS CASH SHARES METHOD
---- ------ -------- ---- ------ ----------
<S> <C> <C> <C> <C> <C> <C>
ACQUISITIONS COMPLETED
Regional Bancshares, Inc. Mar. 5, 1997 $ 171,979 $ 135,954 $12,300 600,417 Purchase
Today's Bancorp, Inc. Nov. 7, 1996 501,418 432,104 34,912 1,127,058 Purchase
First Financial Corporation of America Nov. 1, 1996 87,649 76,791 3,253 258,742 Purchase
Peoples State Bank Aug. 22, 1996 95,657 75,149 -- 325,837 Purchase
Metro Savings Bank, F.S.B. Mar. 7, 1996 80,857 73,843 5 197,902 Purchase
Security Bank of Conway, F.S.B. Feb. 9, 1996 102,502 89,697 1 321,964 Purchase
Hawkeye Bancorporation Jan. 2, 1996 1,978,540 1,739,811 80 7,892,196 Pooling
First Sterling Bancorp, Inc. Jan. 2, 1996 167,610 147,588 1 521,417 Pooling<F1>
ACQUISITIONS PENDING AT MARCH 31, 1997
Mark Twain Bancshares, Inc. Apr. 25, 1997 3,227,972 2,519,474 -- 17,200,000<F2> Pooling
Roosevelt Financial Group, Inc. 3rd Qtr. 1997 7,508,309 5,306,723 <F3> <F3> Purchase
<FN>
<F1> The historical financial statements of the Corporation were not
restated for the acquisition due to the immateriality of the acquiree's
financial condition and results of operations to those of Mercantile.
<F2> Estimated shares to be issued in acquisition, including shares which
can be issued with stock options and convertible notes.
<F3> The Corporation will deliver up to 13,000,000 shares of its common
stock at an exchange ratio of .4211 shares of Mercantile common stock,
or $22.00 in cash, for each share of Roosevelt Financial Group, Inc.
common stock.
---------------------------------------------------------------------------
</TABLE>
10
<PAGE> 10
On December 23, 1996, the Corporation announced that a merger agreement had
been signed with Roosevelt Financial Group, Inc. ("Roosevelt"),
headquartered in St. Louis, Missouri. Roosevelt is a $7.5 billion-asset
savings and loan holding company with 81 locations in Missouri, Kansas and
Illinois. The merger with Roosevelt, which will be accounted for as a
purchase, is expected to be completed in mid-1997 with branch consolidation
of the combined entities to occur the following year. Pre-tax nonrecurring
acquisition charges associated with the Roosevelt transaction of $38,000,000
to $45,000,000 will be recorded at closing.
Net interest income for the first quarter of 1997 was $179,515,000 compared
with $169,736,000 in the year-earlier period, an increase of 5.8%. The net
interest rate margin was 4.27% compared with 4.34% in the fourth quarter of
1996 and 4.23% last year. Average earning assets of $17.1 billion grew 4.5%
from $16.4 billion in the first quarter of 1996, as average loan volume
increased 8.7%. This loan growth was funded through an increase in average
core deposits and a decline in investment securities.
Other income was $75,515,000 in the first quarter of 1997, an increase of
27.4% from a year ago. Included in 1996's first quarter was $3,082,000 in
nonrecurring securities losses which resulted from portfolio restructurings
of recently acquired banks. Excluding these securities losses, other income
increased by 21.1% over 1996. Growth in core fee businesses, such as the
trust and investment areas, deposit service charges, credit card related
revenues and fees earned in the electronic funds transfer processing
business accounted for the strong growth.
Non-interest expenses in 1997 were $143,686,000, 21.4% lower than in 1996.
Excluding $41,678,000 in nonrecurring merger-related costs, total other
expense in 1997 was $2,594,000 or 1.8% higher than a year ago. The
efficiency ratio improved to 55.57% compared with the adjusted 59.78% of
last year, and the other expense to average assets ratio was 3.07% compared
with 3.16% in the first quarter of 1996. On April 3, 1996, the Corporation
announced plans to reduce its bank charters by approximately 80% through
consolidations during the next year in order to achieve greater operational
efficiencies. In total, the Corporation's number of chartered banks dropped
from 74 early in 1996 to 29 at March 31, 1997, and further consolidations
are scheduled for 1997.
The provision for possible loan losses for the quarter was $18,198,000
compared with $33,168,000 in 1996. The first quarter of 1996 included
$10,851,000 in nonrecurring merger-related provision and $10,000,000 which
was recorded to offset a charge-off on a specialty retailer credit. Net
charge-offs for 1997 and 1996 were $18,379,000 and $25,478,000,
respectively, and on an annualized basis were .57% of average loans this
quarter compared with .86% last year. At March 31, 1997, the reserve for
possible loan losses was $198,061,000, and provided coverage of 269.13% of
non-performing loans compared with 313.02% at year-end 1996 and 259.41% last
March 31.
Non-performing loans (i.e., non-accrual and renegotiated loans) as of March
31, 1997 were $73,592,000 or .57% of total loans compared with the year-end
1996 figures of $62,816,000 or .49% and $81,573,000 or .69% at March 31,
1996. Foreclosed assets were $14,962,000 at March 31, 1997 and did not
change substantially from year-end 1996.
Consolidated assets of $18.9 billion were up 5.8% from last March 31. Core
deposits increased by 5.6% to $13.5 billion, loans were up 9.9% to $13.0
billion, and shareholders' equity of $1.6 billion was 2.9% lower than at
March 31, 1996, reflecting the impact of treasury share purchases. All
measures of capital adequacy remained strong. Tier I capital to risk-
adjusted assets was 11.21% while Total capital to risk-adjusted assets at
March 31, 1997 was 14.09%. On a pro forma basis after all announced
acquisitions are closed, consolidated assets of Mercantile will approximate
$30 billion.
The following financial commentary presents a more thorough discussion and
analysis of the results of operations and financial condition of the
Corporation for the first quarter of 1997.
11
<PAGE> 11
NET INTEREST INCOME
Net interest income for the first quarter of 1997 was $179,515,000, a 5.8%
increase from the $169,736,000 earned last year. The net interest rate
margin was 4.27% compared with 4.23% in 1996. Continued competitive pricing
for both loans and deposits was prevalent in both quarters and impacted the
margin. Average earning asset growth in 1997 was 4.5%, led by loan growth of
8.7% and a contraction in the size of the investment portfolio and
short-term investments.
Investment securities averaged $4.1 billion in the first
quarter of 1997, and declined by 5.6% from 1996 due to both
maturities and sales. The held-to-maturity and available-for-
sale portfolio at March 31, 1997 consisted of 82.93% in U.S. and other
Government agency securities, including 26.40% in mortgage-related
issues, 12.12% in state and municipal securities, and 4.95% of other
miscellaneous securities. The comparable distribution at March 31, 1996
was 83.79%, 13.02% and 3.19%, respectively. Included in other miscellaneous
securities as of March 31, 1997 was $55,700,000 transferred from the credit
card loan portfolio in accordance with FAS 125, "Accounting for Transfers
and Servicing of Financial Assets and Extinguishments of Liabilities."
<TABLE>
- -------------------------------------------------------------------------------
EXHIBIT 4
LOANS AND LEASES
($ IN THOUSANDS)
<CAPTION>
MARCH 31
1997 1996 CHANGE
---- ---- ------
<S> <C> <C> <C>
Commercial $ 3,551,920 $ 3,028,211 17.3%
Real estate--commercial 2,106,074 2,144,374 (1.8)
Real estate--construction 400,115 293,380 36.4
Real estate--residential 4,388,308 3,856,530 13.8
Consumer 1,829,417 1,688,650 8.3
Credit card loans issued 1,139,640 1,229,097 (7.3)
Securitized credit card loans (400,000) (400,000) --
----------- -----------
Total Loans and Leases $13,015,474 $11,840,242 9.9
=========== ===========
- -------------------------------------------------------------------------------
</TABLE>
Loans on average grew by $1.0 billion or 8.7%. Affecting loan growth figures
from 1996 to 1997 is the amount of loans added from acquisitions accounted
for as purchases. Loans grew by approximately 5% excluding those from
acquired companies. Including acquired balances, average commercial loans
grew by $406,073,000 or 13.5%. Commercial loan growth occurred on a
system-wide basis. Average commercial real estate mortgage loans increased
by only $38,960,000 or 1.6%. Residential real estate mortgage loans averaged
$4.3 billion in the first quarter of 1997, an increase of $493,563,000 or
12.9% from the first quarter of 1996. Residential mortgage loans added from
acquisitions, as well as continued customer preference for adjustable-rate
mortgages which Mercantile generally retained on the balance sheet,
accounted for the increase. Average credit card loans were at the same level
as in the first quarter of 1996 while other consumer loans increased on
average by $104,812,000 or 6.2%, due primarily to growth in indirect auto
loans.
Average core deposits increased by $572,303,000 or 4.5% over the first
quarter of 1996; Mercantile was substantially core funded at 90.47% of total
deposits and 77.50% of earning assets. Changes in average core deposits for
the past five quarters are shown in the Consolidated Quarterly Average
Balance Sheet on Page 19 of this report.
Average non-interest bearing deposits grew by $346,558,000 or 17.0%. The
United States Government is a significant cash management customer of
Mercantile Bank N.A. and pays for services rendered via compensating
balances. In the first quarter of 1996, approximately $400,000,000 of such
compensating balances were withdrawn by the government to help finance its
funding requests due to the lack of an approved 1996 fiscal budget at that
time. Accruals were made in 1996 to record the benefit of those missing
deposits to better match revenue with services delivered. These balances
were redeposited the second quarter of 1996.
Average short-term borrowings increased by $154,162,000 or 10.7% in the
first quarter of 1997, to replace the decline in bank notes outstanding.
Average long-term debt increased by $70,897,000 due to the issuance of
$150,000,000 of floating-rate capital trust securities in February 1997 net
of a reduction in FHLB advances.
The factors discussed previously are consistent with Mercantile's overall
corporate policy relative to rate sensitivity and liquidity, which is to
produce the optimal yield and maturity mix consistent with interest rate
expectations and projected liquidity needs. The Consolidated Quarterly
Average Balance Sheet, with rates earned and paid, is summarized by quarter
on Page 19.
12
<PAGE> 12
OTHER INCOME
Non-interest income increased by 27.4% during the first quarter of 1997 to
$75,515,000. Trust fees, service charges, investment banking and brokerage
fees, credit card related revenue and cash management revenues were at
higher levels than last year, while mortgage banking and letters of credit
revenues declined. The first quarter of 1996 included $3,082,000 in
nonrecurring merger-related securities losses compared with gains of
$1,049,000 realized in 1997. Excluding non-interest income from companies
acquired in purchase transactions and nonrecurring securities losses, other
income grew by 19.0% from the first quarter of 1996. Service charges grew by
6.1%, due largely to selective fee increases and enhanced pricing of low
balance, high transaction accounts.
Trust fees were the largest source of non-interest income in 1997, and were
$20,991,000 compared with $19,354,000 during the first quarter of 1996, an
increase of 8.5%. Personal trust fees earned by Mercantile Trust Company
N.A. were the largest source of trust revenue and increased 15.1% from last
year. Trust income from Mississippi Valley Advisors Inc., the investment
management subsidiary of Mercantile, rose by 15.4%. Mississippi Valley
Advisors Inc. manages the 15 Mercantile proprietary mutual funds--the ARCH
funds. These funds had assets of $2.9 billion at March 31, 1997. Increases
in the value of assets managed and successful new business development
efforts largely accounted for the growth in trust fees, partially offset by
the absence of fees from the indenture trust and agency business which was
sold in the fourth quarter of 1996.
Investment banking and brokerage fees were $3,410,000 compared with
$3,143,000 last year, an increase of 8.5%. This income is largely
volume-driven and is derived from transaction fees for services performed
for both individual and corporate customers, including sales of annuities
and mutual funds, profits earned on limited trading positions and foreign
exchange revenue. Mark Twain will add significantly to this source of
revenue in 1997.
Credit card fee income was $5,345,000 for the first quarter of
1997, compared with $1,449,000 last year. Credit card income
primarily represents interchange fees received on transactions of
Mercantile cardholders and cardholders' miscellaneous fees. This
source of income in 1996 included $1,169,000 in fees charged to merchants
for processing credit card transactions. The merchant processing business
was sold late in the second quarter of 1996. Transaction-based rebates paid
to SBC and MercRewards VISA cardholders are netted against credit card fee
income; these rebates totaled $1,403,000 in the first quarter of 1997
versus $6,6121,000 in 1996. The decrease in these rebates were the primary
reason for the large growth in credit card fees over 1996.
<TABLE>
- -----------------------------------------------------------------------------------------
EXHIBIT 5
OTHER INCOME
($ IN THOUSANDS)
<CAPTION>
FIRST QUARTER
1997 1996 CHANGE
---- ---- ------
<S> <C> <C> <C>
Trust $20,991 $19,354 8.5%
Service charges 20,446 19,272 6.1
Credit card fees 5,345 1,449 --
Securitization revenue 7,292 4,502 62.0
Mortgage banking 2,728 3,120 (12.6)
Investment banking and brokerage 3,410 3,143 8.5
Letters of credit fees 1,179 2,015 (41.5)
Securities gains 1,049 126 --
Nonrecurring merger-related
securities losses -- (3,082) --
Other 13,075 9,385 39.3
------- ------- -----
Total Other Income $75,515 $59,284 27.4
======= =======
- -----------------------------------------------------------------------------------------
</TABLE>
Securitization revenue was $7,292,000 in the first quarter of 1997 versus
$4,502,000 in 1996, and represents amounts accruing to Mercantile on the
$400,000,000 in credit card loans securitized in the Mercantile Credit Card
Master Trust during May 1995, as well as $2,200,000 recognized under FAS
125 for investor certificate loans that were sold and reclassified to the
investment portfolio. For securitized loans, amounts that would previously
have been reported as interest income, interest expense, credit card fees
and provision for loan losses are instead netted in non-interest income as
securitization revenue. Because credit losses are absorbed against credit
card servicing income over the life of these transactions, such income may
vary depending upon the credit performance of the securitized loans. Higher
levels of net charge-offs continued to adversely impact securitization
revenue declined from 4Q96. Mercantile acts as servicing agent and receives
loan servicing fees equal to two percent per annum of the securitized
receivables. As servicing agent,
13
<PAGE> 13
Mercantile continues to provide customer service to collect past due
accounts and to provide other services typically performed for its
customers. Accordingly, Mercantile's relationship with its credit card
customers is not affected by the securitization.
Mortgage banking income decreased by $392,000 or 12.6% from the first
quarter of 1996, largely due to a decline in gains recognized on the sale of
loans. Mortgages serviced totaled $5.9 billion at March 31, 1997 compared
with $5.4 billion at March 31, 1996. The Roosevelt transaction will add
approximately $8.4 billion to servicing volume, and should increase
servicing fees significantly in the last half of 1997.
Miscellaneous income of $14,254,000 was 25.0% higher than in 1996, due
primarily to a $2,900,000 improvement in cash management fees and $500,000
recorded for loan syndication fees in the current quarter, partially offset
by a decline in letters of credit fees.
OTHER EXPENSE
Expenses other than interest expense and the provision for possible loan
losses for the first quarter of 1997 totaled $143,686,000, a decrease of
$39,084,000 or 21.4% from 1996. Included in other expense in the first
quarter of 1996 was $41,678,000 in expenses associated with mergers, largely
for investment banking and other professional services, change in control
and severance payments, transition and duplicative costs related to system
standardization and signage, and obsolete equipment write-offs. Excluding
nonrecurring merger costs, total operating expenses increased by 1.8% over
1996, and were 3.07% of average assets compared with 3.16% last year. The
efficiency ratio, defined as operating expenses as a percentage of
taxable-equivalent net interest income and other income, was 55.57% versus
59.78% last year.
Other expense from acquisitions accounted for as purchases increased the
Corporation's expenses by more than $4,000,000. If expense from acquired
banks in 1997 and nonrecurring acquisition expense in 1996 are excluded,
1997 non-interest expense was 1.3% lower than in 1996.
Salary expenses increased by 6.2% during the first quarter,
largely reflecting the costs of merit increases and compensation
for employees added in acquisitions. Benefit costs were up by 5.2%
due to higher costs of employee benefit programs, a larger salary base
and more employees. Occupancy and equipment costs increased by 9.3%
in the first quarter, reflecting the costs of maintaining additional
offices, costs associated with modifying computer application systems
for the year 2000, and an ongoing program of upgrading systems and
equipment to further enhance productivity.
Exhibit 6 details the composition of all other operating expenses. Credit
card fees declined by $1,379,000 or 36.0% due primarily to the costs
associated with the merchant processing business which was sold in the
second quarter of 1996. Other expense declined largely due to cash
recovered on transactions recognized as expenses in prior accounting
periods. Intangible asset amortization was $4,117,000 in the first quarter
of 1997, 55.6% higher than in 1996. The increase was caused by additional
amortization on goodwill recorded in 1996 purchase acquisitions.
<TABLE>
- ------------------------------------------------------------------------------------
EXHIBIT 6
OTHER EXPENSE
($ IN THOUSANDS)
<CAPTION>
FIRST QUARTER
1997 1996 CHANGE
---- ---- ------
<S> <C> <C> <C>
Salaries $ 66,641 $ 62,732 6.2%
Employee benefits 17,390 16,524 5.2
-------- --------
Total Personnel Expense 84,031 79,256 6.0
Net occupancy 10,419 9,742 6.9
Equipment 12,883 11,574 11.3
Marketing/business development 2,982 2,319 28.6
Postage and freight 5,608 5,439 3.1
Office supplies 3,114 3,330 (6.5)
Communications 2,808 2,699 4.0
Legal and professional 2,544 2,785 (8.7)
Credit card 2,451 3,830 (36.0)
FDIC insurance 693 1,256 (44.8)
Foreclosed property expense 72 193 (62.7)
Intangible asset amortization 4,117 2,646 55.6
Nonrecurring acquisition expense -- 41,678 --
Other 11,964 16,023 (25.3)
-------- --------
Total Other Expense $143,686 $182,770 (21.4)
======== ========
- ------------------------------------------------------------------------------------
</TABLE>
14
<PAGE> 14
RESERVE FOR POSSIBLE LOAN LOSSES
The reserve for possible loan losses was $198,061,000 or 1.52% of loans
outstanding at March 31, 1997. This compared with $196,627,000 or 1.54% at
year's end and $211,608,000 or 1.79% at March 31, 1996. The reserve coverage
of non-performing loans was 269.13% compared with 313.02% at year-end and
259.41% last year. One-third of the Corporation's total loan portfolio is
invested in residential real estate loans for which the loan loss experience
averaged only .06% for the past five years. If those loans are excluded from
total loans, the reserve for possible loan losses represented 2.30% of loans
outstanding at March 31, 1997.
The provision for possible loan losses for the first quarter of
1997 was $18,198,000 compared with $33,168,000 last year.
The first quarter of 1996 included a nonrecurring merger-
related provision of $10,851,000, which was recorded largely
to conform the credit policies of recently acquired entities to
those of Mercantile. An additional $10,000,000 in provision
was recorded in the first quarter of 1996 to offset an
$11,000,000 charge-off of a credit to a St. Louis-based spe-
cialty retailer that declared bankruptcy in late 1995. The
annualized ratio of net charge-offs to average loans for the
first quarter was .57% compared with .86% last year, while
the corresponding net charge-off figures were $18,379,000 and
$25,478,000, respectively.
Excluding securitized credit cards, net credit card charge-
offs were $16,886,000 in 1997 versus $13,447,000 last year,
which represented 8.24% of average credit card loans for this
quarter compared with 6.46% in 1996. On the managed portfolio,
the ratio of net charge-offs to average loans was 8.42%
versus 7.36% in the first quarter of 1996. By credit policy,
losses are taken on credit card loans after six cycles of
nonpayment, or within 15 days of receipt of personal bank-
ruptcy notice, if earlier. Approximately 37% of the 1997
year-to-date losses were a result of bankruptcy claims. Ex-
cluding credit card net charge-offs, net charge-offs were only
$1,493,000 or .05% of average loans for the first quarter of 1997.
<TABLE>
- ------------------------------------------------------------------------------------
EXHIBIT 7
RESERVE FOR POSSIBLE LOAN LOSSES
($ IN THOUSANDS)
<CAPTION>
THREE MONTHS ENDED
MARCH 31
1997 1996
---- ----
<S> <C> <C>
BEGINNING BALANCE $196,627 $201,780
PROVISION<F*> 18,198 33,168
Charge-offs (23,995) (31,721)
Recoveries 5,616 6,243
-------- --------
NET CHARGE-OFFS (18,379) (25,478)
Acquired reserves 1,615 2,138
-------- --------
ENDING BALANCE $198,061 $211,608
======== ========
LOANS AND LEASES
March 31 balance $13,015,474 $11,840,242
=========== ===========
Average balance $12,828,738 $11,798,364
=========== ===========
RATIOS
Reserve balance to outstanding
loans 1.52% 1.79%
Reserve balance to non-
performing loans 269.13 259.41
Net charge-offs to average loans .57 .86
Earnings coverage of net
charge-offs 6.06X 1.82x
<FN>
<F*> Includes nonrecurring merger-related provision for possible loan
losses of $10,851,000 in 1996.
- ------------------------------------------------------------------------------------
</TABLE>
Mercantile evaluates the reserve for loan losses on a quarterly basis to
ensure the timely charge-off of loans and to determine the adequacy of the
reserve. Management believes the consolidated reserve of 1.52% of loans and
269.13% of non-performing loans as of March 31, 1997 was adequate based on
the risks identified at such date in the portfolio.
15
<PAGE> 15
NON-PERFORMING ASSETS
Non-performing loans (non-accrual and renegotiated loans)
were $73,592,000 or .57% of total loans at March 31, 1997,
compared with $62,816,000 or .49% at December 31, 1996
and $81,573,000 or .69% at March 31, 1996. By the Corpora-
tion's definition, all non-accrual and renegotiated commer-
cial-related loans are considered impaired as defined by FAS
114, "Accounting by Creditors for Impairment of a Loans,"
as amended by FAS 118. Impaired loans totaled $41,190,000
at March 31, 1997 and averaged $34,869,000 for the quarter.
Foreclosed assets were $14,962,000 at March 31, 1997 com-
pared with $13,345,000 at year's end and $10,102,000 last
year. The ratio of non-performing assets to outstanding
loans and foreclosed assets was .68% at March 31, 1997
compared with .60% at December 31, 1996 and .77% last
year.
Non-accrual loans, while declining $7,697,000 or 9.8% from
March 31, 1996, increased $10,840,000 from December 31,
1996. The increase was largely the result of the reclassifica-
tion in two asset-based performing loans to non-accrual
status and $1,962,000 added from the Regional acquisition.
As of March 31, 1997, Mercantile had only seven non-
accrual loans with balances in excess of $1,000,000. The
largest non-accrual loan had a balance of less than
$5,500,000. As significant, the Corporation held only two
foreclosed assets with a book value in excess of $1,000,000,
the largest being less than $3,500,000.
All loans classified as renegotiated were paying in accor-
dance with their modified terms at March 31, 1997. Loans
past due 90 days and still accruing interest consisted largely
of credit card loans, consumer loans and residential real
estate mortgage loans.
<TABLE>
- ------------------------------------------------------------------------------------
EXHIBIT 8
NON-PERFORMING ASSETS
($ IN THOUSANDS)
<CAPTION>
MARCH 31 DEC. 31 MARCH 31
1997 1996 1996
-------- ------- --------
<S> <C> <C> <C>
NON-ACCRUAL LOANS
Commercial $21,950 $17,303 $30,929
Real estate--commercial 17,157 14,845 21,584
Real estate--construction 1,340 977 617
Real estate--residential 23,033 22,237 20,581
Consumer 7,159 4,437 4,625
------- ------- -------
TOTAL NON-ACCRUAL LOANS 70,639 59,799 78,336
RENEGOTIATED LOANS 2,953 3,017 3,237
------- ------- -------
TOTAL NON-PERFORMING LOANS $73,592 $62,816 $81,573
======= ======= =======
FORECLOSED ASSETS
Foreclosed real estate $12,763 $10,519 $ 7,640
Other foreclosed assets 2,199 2,826 2,462
------- ------- -------
TOTAL FORECLOSED ASSETS $14,962 $13,345 $10,102
======= ======= =======
TOTAL NON-PERFORMING ASSETS $88,554 $76,161 $91,675
======= ======= =======
PAST-DUE LOANS
(90 DAYS OR MORE)<F*>
Commercial $ 2,971 $ 2,396 $ 1,407
Real estate--commercial 1,149 643 3,233
Real estate--construction 59 147 1,462
Real estate--residential 2,853 3,370 3,706
Consumer 2,425 5,474 3,604
Credit card 21,346 21,608 17,696
------- ------- -------
TOTAL PAST-DUE LOANS $30,803 $33,638 $31,108
======= ======= =======
RATIOS<F*>
Non-performing loans to
outstanding loans .57% .49% .69%
Non-performing assets to
outstanding loans and
foreclosed assets .68 .60 .77
Non-performing assets to
total assets .47 .40 .51
<FN>
<F*> Past-due loans 90 days or more are not included in non-performing asset
totals or ratios.
- ------------------------------------------------------------------------------------
</TABLE>
CAPITAL RESOURCES
Mercantile maintains a strong capital base, which provides a solid
foundation for anticipated future asset growth and promotes depositor and
investor confidence. Capital management is a continuous process at
Mercantile and is focused on ensuring that adequate capital is provided for
both current needs and anticipated growth. This strategy has enabled
Mercantile to profitably expand its balance sheet, while maintaining capital
ratios which exceed minimum capital requirements.
At March 31, 1997, shareholders' equity was $1.6 billion, a managed decline
of 2.9% from March 31, 1996. Since December 31, 1996, the Corporation
repurchased 2,309,033 shares of its common stock via designated
broker-dealers at an average cost of $55.88 per share. A small portion of
that stock was held for reissuance in conjunction with the 1994 Stock
Incentive Plan, while the remainder was held for future reissuance in the
Roosevelt transaction. The net fair value adjustment on available-for-sale
securities reduced shareholders' equity by $8,923,000 in the first quarter
of 1997, and $28,700,000 was added to equity with the Regional
acquisition. Exhibit 9 details all significant capital ratios.
16
<PAGE> 16
On July 11, 1996, the Board of Directors authorized the repurchase
of up to 6,000,000 shares of the Corporation's common stock. This
authorization was inclusive of shares to be repurchased in connection
with previously announced pending acquisitions. In conjunction with
the Mark Twain pooling transaction, the Board rescinded this program.
Mercantile currently has authorization to repurchase up to 7,000,000 shares
for reissuance in the Roosevelt transaction. To partially fund the announced
treasury share repurchase, the Corporation formed Mercantile Capital
Trust I on January 29, 1997. Through this trust, Mercantile obtained
$150,000,000 of floating-rate debt which, for regulatory purposes, is
part of Tier I capital. Up to $500 million in senior and/or subordinated
debt securities will likely be raised in the first half of 1997,
primarily to finance the Roosevelt acquisition.
<TABLE>
- ------------------------------------------------------------------------------------
EXHIBIT 9
RISK-BASED CAPITAL
($ IN THOUSANDS)
<CAPTION>
MARCH 31 DEC. 31 MARCH 31
1997 1996 1996
-------- ------- --------
<S> <C> <C> <C>
Capital
Tier I $ 1,544,019 $ 1,437,815 $ 1,471,081
Total 1,941,550 1,827,916 1,852,681
Risk-adjusted assets 13,776,916 13,176,540 12,360,988
Tier I capital to risk-
adjusted assets 11.21% 10.91% 11.90%
Total capital to risk-
adjusted assets 14.09 13.87 14.99
Leverage 8.31 7.82 8.28
Double leverage 112.09 104.81 109.25
Long-term debt to total
capitalization 22.37 15.63 16.77
- ------------------------------------------------------------------------------------
</TABLE>
On February 19, 1997, the Board of Directors declared a quarterly cash
dividend of $.43 per common share which was paid April 1, 1997. This
represented an increase of 4.9% over the prior quarterly rate of $.41 per
common share. Book value per common share was $26.03 at March 31, 1997
compared with $25.47 a year earlier, an increase of 2.2%. Public debt
ratings of the Corporation and Mercantile Bank N.A. are shown in Exhibit 10.
<TABLE>
- ----------------------------------------------------------------------------------------------------------------------------
EXHIBIT 10
DEBT RATINGS
<CAPTION>
THOMSON STANDARD
MOODY'S FITCH BANKWATCH & POOR'S
------- ----- --------- --------
<S> <C> <C> <C> <C>
MERCANTILE BANCORPORATION INC.
Issuer Rating B
Commercial Paper F1 TBW-1
7.625% Subordinated Notes, due 2002 Baa1 BBB+ BBB
Floating Rate Capital Trust Pass-Through
Securities(SM) a3 BBB-
MERCANTILE BANK N.A.
Bank Notes A1/P-1 A
6.375% Subordinated Notes, due 2004 A3 A A- BBB+
9.000% Mortgage-backed Notes, due 1999 AAA
Certificates of Deposit TBW-1 A1/A-2
Letters of Credit TBW-1 A1/A-2
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
17
<PAGE> 17
<TABLE>
MERCANTILE BANCORPORATION INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED QUARTERLY STATEMENT OF INCOME
($ IN THOUSANDS EXCEPT PER COMMON SHARE DATA)
<CAPTION>
1996 1997
1ST QTR. 2ND QTR. 3RD QTR. 4TH QTR. 1ST QTR.
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
INTEREST INCOME
Interest and fees on loans and
leases $257,044 $259,105 $262,310 $270,980 $274,754
Investments in debt and equity
securities 63,581 66,811 66,219 63,023 61,539
Short-term investments 4,615 4,416 3,600 3,677 3,646
-------- -------- -------- -------- --------
Total Interest Income 325,240 330,332 332,129 337,680 339,939
Tax-equivalent adjustment 3,921 3,768 3,701 3,752 3,515
-------- -------- -------- -------- --------
TAXABLE-EQUIVALENT INTEREST
INCOME 329,161 334,100 335,830 341,432 343,454
INTEREST EXPENSE
Deposits 131,386 127,931 126,453 128,994 130,296
Borrowed funds 24,118 25,679 30,254 28,177 30,128
-------- -------- -------- -------- --------
Total Interest Expense 155,504 153,610 156,707 157,171 160,424
-------- -------- -------- -------- --------
TAXABLE-EQUIVALENT NET
INTEREST INCOME 173,657 180,490 179,123 184,261 183,030
PROVISION FOR POSSIBLE LOAN LOSSES 33,168 10,638 12,109 15,099 18,198
OTHER INCOME
Trust 19,354 20,749 19,388 19,922 20,991
Service charges 19,272 19,905 20,315 21,168 20,446
Credit card fees 1,449 8,130 8,936 8,492 5,345
Securitization revenue 4,502 3,325 4,198 3,983 7,292
Mortgage banking 3,120 2,252 2,421 2,528 2,728
Investment banking and brokerage 3,143 3,216 3,311 3,351 3,410
Securities gains (losses) (2,956) 98 15 2,526 1,049
Other 11,400 20,482 15,904 22,069 14,254
-------- -------- -------- -------- --------
Total Other Income 59,284 78,157 74,488 84,039 75,515
OTHER EXPENSE
Personnel expense 79,256 78,736 79,455 78,173 84,031
Net occupancy and equipment 21,316 21,757 22,996 25,010 23,302
Other 82,198 42,831 53,625 51,954 36,353
-------- -------- -------- -------- --------
Total Other Expense 182,770 143,324 156,076 155,137 143,686
-------- -------- -------- -------- --------
TAXABLE-EQUIVALENT INCOME BEFORE
INCOME TAXES 17,003 104,685 85,426 98,064 96,661
INCOME TAXES
Income taxes 8,517 35,841 26,049 27,682 32,810
Tax-equivalent adjustment 3,921 3,768 3,701 3,752 3,515
-------- -------- -------- -------- --------
Adjusted Income Taxes 12,438 39,609 29,750 31,434 36,325
-------- -------- -------- -------- --------
NET INCOME $ 4,565 $ 65,076 $ 55,676 $ 66,630 $ 60,336
======== ======== ======== ======== ========
NET INCOME PER COMMON SHARE $.07 $1.04 $.92 $1.09 $1.00
SIGNIFICANT RATIOS
Return on assets .10% 1.43% 1.23% 1.45% 1.29%
Return on equity 1.09 16.15 14.28 16.61 15.06
</TABLE>
18
<PAGE> 18
<TABLE>
MERCANTILE BANCORPORATION INC. AND SUBSIDIARIES
CONSOLIDATED QUARTERLY AVERAGE BALANCE SHEET
($ IN THOUSANDS)
<CAPTION>
1996 1997
1ST QTR. 2ND QTR. 3RD QTR. 4TH QTR. 1ST QTR.
------------------ ------------------ ------------------ ------------------ ------------------
VOLUME RATE<F*> VOLUME RATE<F*> VOLUME RATE<F*> VOLUME RATE<F*> VOLUME RATE<F*>
------ -------- ------ -------- ------ -------- ------ -------- ------ --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Earning Assets
Loans and leases,
net of unearned
income
Commercial $ 3,006,310 8.38% $ 3,064,431 8.29% $ 3,101,229 8.35% $ 3,247,705 8.32% $ 3,412,383 8.21%
Real estate--
commercial 2,133,882 8.69 2,119,736 8.60 2,045,926 8.70 2,025,335 8.57 2,074,626 8.59
Real estate--
construction 300,847 8.99 289,408 9.48 336,511 9.14 394,701 9.24 399,063 8.71
Real estate--
residential 3,833,423 8.14 3,857,914 8.21 3,993,186 8.18 4,214,732 8.13 4,326,986 7.97
Consumer 1,691,444 8.84 1,695,275 8.84 1,698,142 8.89 1,763,503 8.79 1,796,256 8.67
Credit card 832,458 12.77 828,395 13.30 852,335 12.69 872,470 12.69 819,424 13.31
----------- ----------- ----------- ----------- -----------
Total Loans and
Leases 11,798,364 8.75 11,855,159 8.78 12,027,329 8.76 12,518,446 8.70 12,828,738 8.60
Investments in debt
and equity
securities
Trading 7,610 4.99 3,475 5.29 1,473 5.43 892 5.38 659 6.68
Taxable 3,854,326 5.98 4,057,430 6.04 3,974,950 6.11 3,786,944 6.09 3,662,341 6.15
Tax-exempt 434,268 8.02 414,396 7.94 403,208 8.03 404,403 7.85 391,568 7.95
----------- ----------- ----------- ----------- -----------
Total
Investments
in Debt and
Equity
Securities 4,296,204 6.19 4,475,301 6.21 4,379,631 6.29 4,192,239 6.26 4,054,568 6.32
Short-term
investments 316,095 5.84 309,687 5.70 248,944 5.78 252,867 5.82 266,261 5.48
----------- ----------- ----------- ----------- -----------
Total Earning
Assets 16,410,663 8.02 16,640,147 8.03 16,655,904 8.07 16,963,552 8.05 17,149,567 8.01
Non-earning Assets 1,454,584 1,561,982 1,383,069 1,402,487 1,562,370
----------- ----------- ----------- ----------- -----------
Total Assets $17,865,247 $18,202,129 $18,038,973 $18,366,039 $18,711,937
=========== =========== =========== =========== ===========
LIABILITIES
Acquired Funds
Deposits
Non-interest
bearing $ 2,037,439 $ 2,721,330 $ 2,639,046 $ 2,399,686 $ 2,383,997
Interest bearing
demand 2,238,451 2.19 2,231,716 2.12 2,186,130 2.13 2,264,033 2.15 2,315,063 2.13
Money market
accounts 1,971,778 3.89 2,030,992 3.81 2,061,211 3.90 2,108,011 3.90 2,130,369 3.88
Savings 1,073,847 2.29 1,077,854 2.25 1,051,874 2.26 1,029,581 2.26 1,021,710 2.20
Consumer time
certificates
under $100,000 5,358,411 5.59 5,303,994 5.50 5,192,639 5.49 5,275,918 5.45 5,289,858 5.36
Other time 39,256 19.88 234,904 3.33 234,143 3.32 228,004 3.25 150,488 4.63
----------- ----------- ----------- ----------- -----------
Total Core
Deposits 12,719,182 4.28 13,600,790 4.12 13,365,043 4.13 13,305,233 4.12 13,291,485 4.08
Time certificates
$100,000 and
over 1,027,545 5.63 993,405 5.51 928,385 5.56 966,956 5.57 1,055,093 5.44
Foreign 174,667 5.73 152,075 5.58 189,295 5.65 220,239 5.82 344,388 5.48
----------- ----------- ----------- ----------- -----------
Total Purchased
Deposits 1,202,212 5.65 1,145,480 5.52 1,117,680 5.58 1,187,195 5.61 1,399,481 5.45
----------- ----------- ----------- ----------- -----------
Total Deposits 13,921,394 4.42 14,746,270 4.26 14,482,723 4.27 14,492,428 4.27 14,690,966 4.23
Short-term
borrowings 1,434,235 3.94 1,030,693 6.12 1,165,000 6.98 1,463,101 5.22 1,588,397 5.11
Bank notes 265,385 5.99 275,000 5.73 275,000 5.92 227,174 5.91 175,000 5.81
Long-term debt 325,149 7.42 321,894 7.44 309,799 7.58 302,887 7.58 396,046 7.36
----------- ----------- ----------- ----------- -----------
Total Acquired
Funds 15,946,163 4.47 16,373,857 4.50 16,232,522 4.61 16,485,590 4.46 16,850,409 4.44
Other liabilities 244,304 216,388 247,329 276,234 258,455
SHAREHOLDERS' EQUITY 1,674,780 1,611,884 1,559,122 1,604,215 1,603,073
----------- ----------- ----------- ----------- -----------
Total
Liabilities
and
Shareholders'
Equity $17,865,247 $18,202,129 $18,038,973 $18,366,039 $18,711,937
=========== =========== =========== =========== ===========
SIGNIFICANT RATIOS
Net interest rate
spread 3.55% 3.53% 3.46% 3.59% 3.57%
Net interest rate
margin 4.23 4.34 4.30 4.34 4.27
<FN>
<F*>Taxable-equivalent basis.
</TABLE>
19
<PAGE> 19
PART II--OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
The annual meeting of shareholders of Registrant was held on April 24,
1997. Of 60,209,008 shares issued, outstanding and eligible to be
voted at the meeting, 47,544,778 shares, constituting a quorum, were
represented in person or by proxy at the meeting. Six (6) matters were
submitted to a vote of the security-holders at the meeting.
1. ELECTION OF CLASS III DIRECTORS. The first matter submitted
was the election of three Class III director nominees to the Board of
Directors, each to continue in office until the year 2000. The
Restated Articles of Incorporation of the Registrant allow cumulative
voting in all director elections and all shareholders were accordingly
allowed to cumulate their votes for directors if they so desired. Upon
tabulation of the votes cast, it was determined that all three director
nominees had been elected. The voting results are set forth below:
<TABLE>
<CAPTION>
NAME FOR WITHHELD
---- --- --------
<S> <C> <C>
Harry M. Cornell, Jr. 47,161,089 311,112
Thomas H. Jacobsen 47,411,719 310,720
Patrick T. Stokes 47,165,135 310,920
</TABLE>
2. ELECTION OF CLASS II DIRECTOR. The second matter submitted to
the shareholders was the election of one director nominee, Craig D.
Schnuck, to the Board of Directors in Class II, to continue in office
until 1999. Mr Schnuck was previously elected and served as a Class
III director. His term as a Class III director expired as of the 1997
annual meeting. Mr. Schnuck stood for election at the 1997 annual
meeting in Class II. Because only one director stood for election in
Class II, cumulative voting was not applicable. Upon tabulation of the
votes cast it was determined that Mr. Schnuck had been elected. The
voting results are set forth below:
<TABLE>
<CAPTION>
NAME FOR WITHHELD
---- --- --------
<S> <C> <C>
Craig D. Schnuck 47,198,176 310,238
</TABLE>
Because Registrant has a staggered Board, the term of office of the
following named Class I and Class II directors, who were not up for
election at the 1997 annual meeting, continued after the meeting:
Class I (to continue in office until 1998)
Thomas A. Hays Harvey Saligman John A. Wright
Frank Lyon, Jr. Robert L. Stark
Class II (to continue in office until 1999)
William A. Hall Robert W. Murray
Edward A. Mueller
20
<PAGE> 20
3. PROPOSAL TO APPROVE AND ADOPT AGREEMENT AND PLAN OF
REORGANIZATION. The third matter, a proposal to adopt and approve
the Agreement and Plan of Reorganization dated October 27, 1996, by and
among Mercantile Bancorporation Inc., Ameribanc, Inc., and Mark Twain
Bancshares, Inc., was approved by a majority of the votes cast on the
proposal at the Annual Meeting, as follows:
42,139,806 For
255,030 Against
304,057 Abstain
4,845,884 Broker Non-Votes
4. PROPOSAL TO ADOPT AMENDMENT TO THE RESTATED ARTICLES OF
INCORPORATION TO INCREASE THE AUTHORIZED NUMBER OF SHARES AND TO
CHANGE THE PAR VALUE OF COMMON STOCK. The fourth matter, a proposal to
Amend the Articles of Incorporation of the Registrant to increase the
number of authorized shares of common stock of the Registrant from
100,000,000 shares to 200,000,000 shares, and to change the par value of
said common stock from $5.00 per share to $0.01 per share, was approved
by a majority of the 60,209,008 shares of the Registrant's Common Stock
which were issued, outstanding and eligible to vote. The voting results
on this matter were as follows:
45,409,612 For
790,448 Against
264,677 Abstain
1,080,041 Broker Non-Votes
5. PROPOSAL TO ADOPT MERCANTILE BANCORPORATION AMENDED AND
RESTATED STOCK INCENTIVE PLAN. The fifth matter, a proposal to
adopt the Mercantile Bancorporation Inc. Amended and Restated Stock
Incentive Plan, a plan which provides for the granting of stock options
and other stock based awards to employees, and which was amended to (i)
increase the aggregate number of shares of stock available for issuance
under the plan to 6,000,000 shares, (ii) increase the number of shares
available for issuance pursuant to Stock Grants under the plan to
860,000 shares, and (iii) increase the maximum number of shares which
may be awarded to any one individual in the form of stock options or
SARs to 1,200,000 shares, was approved by a vote of a majority of the
shares of the Registrant's Common Stock present and voting at the
Annual Meeting, as follows:
38,039,369 For
2,794,621 Against
1,864,902 Abstain
4,845,886 Broker Non-Votes
21
<PAGE> 21
6. PROPOSAL TO ADOPT MERCANTILE BANCORPORATION INC. AMENDED AND
RESTATED EXECUTIVE INCENTIVE COMPENSATION PLAN. The sixth matter, a
proposal to adopt the Mercantile Bancorporation Inc. Amended and
Restated Executive Incentive Compensation Plan, a plan which provides
senior Mercantile Officers with annual bonus opportunities based upon
preestablished performance objectives, and which was amended to conform
to new regulatory requirements, to extend the term of the Plan, and to
add additional financial measures upon which performance could be
measured, was approved by a vote of a majority of the shares of the
Registrant's Common Stock present and voting at the Annual Meeting, as
follows:
41,854,548 For
2,761,021 Against
1,849,168 Abstain
1,080,041 Broker Non-Votes
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
3 Restated Articles of Incorporation of the Registrant,
as amended and currently in effect.
10.1 The Mercantile Bancorporation Inc. Amended and
Restated Stock Incentive Plan, filed as Annex G to
Registrant's definitive Proxy Statement for the
1997 Annual Meeting of Shareholders, is
incorporated herein by reference.
10.2 The Mercantile Bancorporation Inc. Amended and
Restated Executive Incentive Compensation Plan,
filed as Annex H to Registrant's definitive Proxy
Statement for the 1997 Annual Meeting of
Shareholders, is incorporated herein by reference.
10.3 Employment Agreement for Alvin J. Siteman dated
November 18, 1996.
10.4 Employment Agreement for John P. Dubinsky, dated
October 27, 1996.
27. Financial Data Schedule
(b) Reports on Form 8-K:
Registrant filed one (1) Current Report on Form 8-K. In
that report, dated May 2, 1997, under Item 2, Registrant
disclosed that it had, effective April 25, 1997,
consummated its acquisition of Mark Twain Bancshares, Inc.
("Bancshares") through merger of Bancshares with and into a
wholly-owned subsidiary of Registrant, with the
shareholders of Bancshares to receive an aggregate of
approximately 17,213,114 shares of Registrant's common
stock in exchange for their Bancshares shares.
22
<PAGE> 22
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
MERCANTILE BANCORPORATION INC.
(Registrant)
Date May 8, 1997 /s/ JOHN Q. ARNOLD
------------------------ ----------------------------------------
John Q. Arnold
Chief Financial Officer
23
<PAGE> 23
<TABLE>
EXHIBIT INDEX
<CAPTION>
EXHIBIT NO. DESCRIPTION LOCATION
- ----------- ----------- --------
<S> <C> <C>
3 Restated Articles of Incorporation of the Registrant, Included herein
as amended and currently in effect.
10.1 The Mercantile Bancorporation Inc. Amended and Incorporated herein by
Restated Stock Incentive Plan, filed as Annex G to reference
Registrant's definitive Proxy Statement for the 1997
Annual Meeting of Shareholders.
10.2 The Mercantile Bancorporation Inc. Amended and Incorporated herein by
Restated Executive Incentive Compensation Plan, reference
filed as Annex H to Registrant's definitive Proxy
Statement for the 1997 Annual Meeting of
Shareholders.
10.3 Employment Agreement for Alvin J. Siteman dated Included herein
November 18, 1996.
10.4 Employment Agreement for John P. Dubinsky, dated Included herein
October 27, 1996
27 Financial Data Schedule. Included herein
</TABLE>
24
<PAGE> 1
EXHIBIT 3
<PAGE> 2
MERCANTILE BANCORPORATION INC.
ARTICLES OF INCORPORATION
AS OF APRIL 24, 1997
<PAGE> 3
MERCANTILE BANCORPORATION INC.
ARTICLES OF INCORPORATION
AS OF APRIL 24, 1997
ARTICLE 1
---------
The name of the Corporation is MERCANTILE BANCORPORATION
INC.
ARTICLE 2
---------
The address, including street and number of the
Corporation's registered office in this state is Mercantile
Tower, P.O. Box 524, St. Louis, Missouri 63166, and the name of
its registered agent at such address is Ralph W. Babb, Jr.
ARTICLE 3
---------
The Corporation shall have authority to issue the following
shares:
A. Common Stock
200,000,000 shares of voting Common Stock with a par
value of $0.01 per share.
B. Preferred Stock
5,000,000 shares of Preferred Stock with no par value
which shall have (i) those voting rights required by
law and (ii) voting rights equal to those of the shares
of Common Stock except to the extent the voting rights
of any series of Preferred Stock shall be denied or
limited by the Board of Directors in an authorizing
resolution as hereinafter provided.
(a) The Board of Directors, by adoption of an
authorizing resolution may cause Preferred Stock
to be issued from time to time in one or more
series.
(b) The Board of Directors, by adoption of an
authorizing resolution, may with regard to the
shares of any series of Preferred Stock:
(1) Fix the distinctive serial designation of the
shares;
(2) Fix the dividend rate, if any;
(3) Fix the date from which dividends on shares
issued before the date for payment of the
first dividend shall be cumulative, if any;
(4) Fix the redemption price and terms of
redemption, if any;
<PAGE> 4
(5) Fix the amounts payable per share in the
event of dissolution or liquidation of the
corporation if any;
(6) Fix the terms and amounts of any sinking fund
to be used for the purchase or redemption of
shares, if any;
(7) Fix the terms and conditions under which the
shares may be converted, if any;
(8) Deny or limit the voting rights of such
Preferred Stock not required by law; and
(9) Fix such other preferences, qualifications,
limitations, restrictions and special or
relative rights not required by law.
ARTICLE 4
---------
The number and class of shares that were issued before the
Corporation commenced business, the consideration that was paid
therefor and the capital with which the Corporation commenced
business were as follows:
<TABLE>
<CAPTION>
Consideration
Number of Shares Class To Be Paid Par Value
- ---------------- ----- ------------- ---------
<S> <C> <C> <C>
100 Common $500 $5
</TABLE>
The Corporation did not commence business until consideration of
the value of at least $500 had been received for the issuance of
shares.
ARTICLE 5
---------
The name and place or residence of the incorporator was as
follows:
<TABLE>
<CAPTION>
Name Street City
- ---- ------ ----
<S> <C> <C>
Donald E. Lasater 17 Southmoor Clayton, MO 63105
</TABLE>
ARTICLE 6
---------
A. Board of Directors. The number of Directors to
-------------------
constitute the Board of Directors shall be eighteen (18);
provided, however, that such number may be fixed, from time to
time, at not less than twelve (12) nor more than twenty-four
(24), by, or in the manner provided in, the By-laws of the
Corporation, and any such change shall be reported to the
Secretary of State of the State of Missouri within thirty (30)
calendar days of such change. The Directors shall be divided
into three classes: Class I, Class II and Class III; and the
number of Directors in such classes shall be as nearly equal as
possible. The term of office of the initial Class I Directors
shall expire at the annual meeting of shareholders of the
Corporation in 1986; the term of office of the initial Class II
Directors shall expire at the annual meeting of shareholders of
the Corporation in 1987; and the term of office of the
-2-
<PAGE> 5
initial Class III Directors shall expire at the annual meeting of
shareholders of the Corporation in 1988; or in each case until
their respective successors are duly elected and qualified. At
each annual election held after 1985 the Directors chosen to
succeed those whose terms then expire shall be identified as
being of the same class as the Directors they succeed and shall
be elected for a term of three (3) years expiring at the third
succeeding annual meeting or thereafter until their respective
successors are duly elected and qualified. If the number of
Directors is changed, any increase or decrease in the number of
Directors shall be apportioned among the classes so as to
maintain the number of Directors in each class as nearly equal as
possible. Any Director elected to fill a vacancy in any class
(whether such vacancy is caused by death, resignation, or
removal, or by an increase in the number of Directors in such
class) shall hold office for a term which shall expire with the
term of the Directors in such class. At a meeting called
expressly for that purpose, the entire Board of Directors, or any
individual Director or Directors, may be removed without cause,
only upon the affirmative vote of the holders of at least
seventy-five percent (75%) of the total votes to which all of the
shares then entitled to vote at a meeting of shareholders called
for an election of Directors are entitled; provided, however,
that, if less than the entire Board of Directors is to be so
removed without cause, no individual Director may be so removed
if the votes cast against such Director's removal would be
sufficient to elect such Director if then cumulatively voted at
an election of the class of Directors of which such Director is a
part. At a meeting called expressly for that purpose, any
Director may be removed by the shareholders for cause by the
affirmative vote of the holders of a majority of the shares
entitled to vote upon his election.
B. Vote Required for Amendment. In addition to any
----------------------------
affirmative vote required by law or otherwise, any amendment,
alteration, change or repeal of the provisions of this Article 6
shall require the affirmative vote of the holders of at least
seventy-five percent (75%) of the total votes to which all of the
shares then entitled to vote at a meeting of shareholders called
for an election of Directors are entitled, unless such amendment,
alteration, change or repeal has previously been expressly
approved by the Board of Directors of the Corporation by the
affirmative, vote or consent of at least sixty-six and two-thirds
percent (66 2/3%) of the number of Directors then authorized by,
or in the manner provided in, the By-laws, in which case the
shareholder vote required by this Section B of Article 6 shall
not apply.
ARTICLE 7
---------
The duration of the Corporation is perpetual.
ARTICLE 8
---------
The Corporation is formed for the following purposes:
(1) To undertake, conduct, manage, assist, promote, operate
and to engage or participate in every kind of commercial,
industrial, electronic, manufacturing, agricultural,
-3-
<PAGE> 6
scientific or other enterprise, business, undertaking, venture, corporation,
co-partnership, association or operation of every kind and description;
(2) To acquire by purchase, exchange, lease, devise or
otherwise and to hold, maintain, manage, improve, develop and
operate and to sell, transfer, convey, lease, mortgage, exchange
or otherwise dispose of or deal in or with real property
wheresoever situated, either within or without the State of
Missouri, and any and all rights, interests or privileges
therein; and to erect, construct, make, improve and operate or
aid or subscribe toward the erection, construction, making
improvement and operation of offices, warehouses, plants, mills,
stores, laboratories, studios, workshops, buildings and other
establishments and installations or improvements on any real
estate or any right, interest or privilege therein;
(3) To acquire by purchase, exchange, lease, bequest or
otherwise, to import, export, manufacture, produce, hold, own,
use, manage, improve, alter, develop and to mortgage, pledge,
sell, assign, transfer, lease, exchange or otherwise dispose of
or deal in or with goods, commodities, wares, automobiles,
aircraft, machinery, equipment, supplies, merchandise and all
other personal property of every kind, nature and description,
tangible or intangible, wheresoever situated, either within or
without the State of Missouri and any and all other rights,
interests or privileges therein;
(4) To adopt, apply for, obtain, register, purchase, lease,
take assignment or licenses of or otherwise acquire or obtain the
use of, to hold, protect, own, use, develop and introduce, and to
sell, assign, lease, grant licenses or other rights in respect
to, make contracts concerning or otherwise deal with, dispose of
or turn to account any copyrights, trademarks, trade names,
brands, labels, patent rights, letters patent and patent
applications of the United States of America or of any other
country, government or authority, and any inventions,
improvements, processes, formulae, mechanical and other
combinations, licenses and privileges, whether in connection with
or secured under letters patent or otherwise; and to carry on any
business, whether manufacturing or otherwise, which is or shall
be necessary, convenient, advisable or adaptable for the
utilization by this corporation in any way, directly or
indirectly, of such copyrights, trademarks, trade names, brands,
labels, patent rights, letters patent, patent applications,
inventions, improvements, processes, formulae, mechanical and
other combinations, licenses and privileges;
(5) To acquire by purchase, exchange, gift, bequest,
subscription, or by acting as an original incorporator or
otherwise, and to own, hold, invest in, sell, assign, transfer,
exchange, pledge, hypothecate, deal in and otherwise dispose of
stocks (preferred as well as common), bonds, notes, debentures,
mortgages or other evidences of indebtedness and obligations and
securities of, and shares of other interests in or created or
issued by any corporation, trust companies or banks (whether
incorporated under the laws of Missouri, or other states or under
the laws of the United States or any other country), company or
joint stock association, persons, firms, associations,
copartnerships, domestic or foreign, or of any domestic or
foreign state, government, or governmental authority or of any
political or administrative subdivision or department thereof,
and certificates or receipts of any kind
-4-
<PAGE> 7
representing or evidencing any interest in any such stocks, bonds, shares of
stock, notes, debentures, mortgages or other evidences of
indebtedness, obligations or securities including, but not
limited to, electronic, commercial, manufacturing, agricultural,
industrial, scientific and insurance companies, corporations or
agencies, trust companies or banks, whether incorporated under
the laws of Missouri or of the United States or of foreign states
or countries; to issue its own shares of stock, bonds, notes,
debentures, or other evidences of indebtedness and obligations
and securities for the acquisition of any such stocks, bonds,
notes, debentures, mortgages or other evidences of indebtedness,
obligations, securities, certificates or receipts purchased or
otherwise acquired by it; and, while the owner or holder of any
such stocks, bonds, notes, debentures, mortgages, evidences of
indebtedness, obligations, securities, certificates or receipts
to exercise all the rights, powers and privileges of ownership in
respect thereof, including the right to vote thereon for any and
all purposes;
(6) To make loans or advances, to guarantee the obligations
of, or purchase or acquire shares of stock of, or make
contributions to capital or surplus, and to aid in any other
manner by providing financial assistance to any corporation,
association or copartnership, including, but not by way of
limitation, any corporation all or substantially all of the
shares of voting stock of which is owned by this Corporation and
any affiliate or subsidiary of any such Corporation. Any such
loan, advance or other assistance to be with or without interest,
unsecured, or secured in any manner, and upon such other terms
and conditions as the Board of Directors of this Corporation
shall approve;
(7) To form general or limited partnerships for any lawful
purpose, irrespective of whether any such partnership is to
engage in a business in which this Corporation would otherwise be
authorized to engage under these Articles of Incorporation, such
partnerships to be formed under any present or future laws of the
State of Missouri or any other state, and to enter into and
execute general or limited partnership agreements and
certificates in reference to any such partnerships as either a
general or limited partner or as both a general and limited
partner, and otherwise to acquire the interests of a general or a
limited partner in any such general or limited partnerships, and
to act as a general or limited partner in any such general or
limited partnerships, and, as such, to perform all obligations
thereby imposed upon it by law or by contract including, but not
by way of limitation, the use and delivery of the funds and other
property of this Corporation to any such partnership as payment
of this Corporation's contribution to such partnership or
otherwise, all for such purposes and in such amount and subject
to such terms and conditions as the Board of Directors of this
Corporation deems to be in the best interests of the stockholders
of this Corporation;
(8) To borrow or raise moneys for any of the purposes of
the Corporation, from time to time, without limit as to amount,
with or without security, all as determined by the Board of
Directors; to issue and sell or exchange its own securities,
Common or Preference or other Stock or debt obligations,
including but without limitation debentures, either
nonconvertible or convertible into any class of stock authorized
by the Articles, in such amounts, on such terms and conditions,
for such purposes and at such prices as the Board of Directors
may determine; to a like extent when deemed desirable, to secure
such debt
-5-
<PAGE> 8
obligations by liens upon, or the pledge of, or the conveyance or assignment
in trust of, the whole or any part of the properties, assets, business, and
good will of the Corporation, whether at the time owned or thereafter
acquired; and, to a like extent, to purchase, acquire, hold, own, cancel,
re-issue, sell, assign, transfer, exchange, or otherwise dispose
of or deal in or with, its own securities (including shares of
its stock, common or preferred) in any manner whatsoever;
(9) To enter into, make and perform contracts of every sort
and description with any person, firm, copartnership,
association, corporation, public or private;
(10) To carry out all or any part of the foregoing objects
and purposes as principal, agent, partner, either limited or
general, contractor, or otherwise, either alone or in conjunction
with any other persons, firms, copartnerships, associations or
corporations and in any part of the world, and in carrying on any
of its business and for the attainment or furtherance of any of
its objects and purposes to make and perform such agreements and
contracts of any kind and description, and to do such acts and
things and to exercise any and all such powers as a natural
person could lawfully make, perform, do or exercise and, as
aforesaid, to do anything and everything which is or may appear
necessary, useful, convenient or appropriate for the attainment,
furtherance or exercise of any of its purposes, objects or
powers.
The foregoing provisions of this Article shall be construed
both as purposes and powers and each as an independent purpose
and power in furtherance of, and not in limitation of, the powers
which the Corporation may have under present or future laws of
the State of Missouri, and the purposes and powers hereinbefore
specified shall, except when otherwise provided in this Article 8
be in no wise limited, or restricted by reference to, or
inference from the terms or any provisions of this or any other
Article of these Articles of Incorporation; but such provisions
shall not be construed to permit the Corporation to carry on any
business, or to exercise any power, or to do any act which a
corporation now or hereafter organized under The General and
Business Corporation Law of Missouri may not at the time lawfully
carry on, exercise, or do; and provided further that the
Corporation shall not carry on any business or exercise any power
in any state, territory, or country which under the laws thereof
the Corporation may not lawfully carry on or exercise.
ARTICLE 9
---------
The power to make, alter, amend or repeal the By-laws of the
Corporation shall be vested in the Board of Directors.
In addition to the powers which it has pursuant to law, the
Board of Directors shall have all the powers herein contained
which shall include the power:
(i) from time to time to fix the compensation of its
members for attending meetings of the Board of Directors,
-6-
<PAGE> 9
(ii) to adopt, amend, change and readjust any type of
pension, retirement, profit sharing or bonus plan, contributing
or non-contributing, covering any or all of the officers and
employees of said Corporation.
ARTICLE 10
----------
Any person, upon becoming the owner or holder of any shares
of stock or other securities issued by this Corporation, does
thereby consent and agree that all rights, powers, privileges,
obligations or restrictions pertaining to such person or such
securities in any way may be altered, amended, restricted,
enlarged or repealed by legislative enactments of the State of
Missouri or of the United States hereinafter adopted which have
reference to or affect corporations, such securities, or such
persons in any way; and that the Corporation reserves the right
to transact any business of the Corporation, to alter, amend or
repeal these Articles of Incorporation, or to do any other act or
things as authorized, permitted or allowed by such legislative
enactments.
ARTICLE 11
----------
No holder of any share or shares of stock of any kind,
series or class now or hereafter authorized shall be entitled as
such as a matter of right to subscribe for or purchase any stock
of any kind, series or class, whether now or hereafter authorized
or outstanding, which may hereafter be issued or sold by this
Corporation, or any securities including, but without limitation,
debentures convertible into stock of any class, and whether
issued or sold for cash, property, services or otherwise.
ARTICLE 12
----------
(1) This Corporation shall and does hereby indemnify any
person who is or was a director or officer of the Corporation or
any Subsidiary against any and all expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement incurred
by such person in connection with any civil, criminal,
administrative or investigative action, suit, proceeding or claim
(including an action by or in the right of the Corporation or a
Subsidiary) by reason of the fact that such person is or was
serving in such capacity; provided however, that no such person
-----------------
shall be entitled to any indemnification pursuant to this
subsection (l) on account of: (i) conduct which is finally
adjudged to have been knowingly fraudulent, deliberately
dishonest or willful misconduct; or (ii) an accounting for
profits pursuant to Section 16(b) of the Securities Exchange Act
of 1934, as amended from time to time, or pursuant to a successor
statute or regulation.
(2) This Corporation may, to the extent that the Board of
Directors deems appropriate and as set forth in a bylaw or
resolution, indemnify any person who is or was an employee or
agent of this Corporation or any Subsidiary or who is or was
serving at the request of the Corporation as a director, officer,
employee or agent of another corporation, banking association,
partnership, joint venture, trust or other enterprise (including an
-7-
<PAGE> 10
employee benefit plan) against any and all expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement
incurred by such person in connection with any civil, criminal,
administrative or investigative action, suit, proceeding or claim
(including an action by or in the right of the Corporation or a
Subsidiary) by reason of the fact that such person is or was
serving in such capacity; provided however, that no such person
-----------------
shall be entitled to any indemnification pursuant to this
subsection (2) on account of: (i) conduct which is finally
adjudged to have been knowingly fraudulent, deliberately
dishonest or willful misconduct; or (ii) an accounting for
profits pursuant to Section 16(b) of the Securities Exchange Act
of 1934, as amended from time to time, or pursuant to a successor
statute or regulation.
(3) This Corporation may, to the extent that the Board of
Directors deems appropriate, make advances of expenses, including
attorneys' fees, incurred prior to the final disposition of a
civil, criminal, administrative or investigative action, suit,
proceeding or claim (including an action by or in the right of
the Corporation or a Subsidiary) to any person to whom
indemnification is or may be available under this Article 12;
provided however, that prior to making any advances, the
- -----------------
Corporation shall receive a written undertaking by or on behalf
of such person to repay such amounts advanced in the event that
it shall be ultimately determined that such person is not
entitled to such indemnification.
(4) The indemnification and other rights provided by this
Article 12 shall not be deemed exclusive of any other rights' to
which a person to whom indemnification is or may be otherwise
available under these Articles of Incorporation, the By-laws or
any agreement, vote of shareholders or disinterested directors or
otherwise. This Corporation is authorized to purchase and
maintain insurance on behalf of the Corporation or any person to
whom indemnification is or may be available against any liability
asserted against such person in, or arising out of, such person's
status as director, officer, employee or agent of this
Corporation, any of its Subsidiaries or another corporation,
banking association, partnership, joint venture, trust or other
enterprise (including an employee benefit plan) which such person
is serving at the request of the Corporation.
(5) Each person to whom indemnification is granted under
subsection (1) of this Article 12 is entitled to rely upon the
indemnification and other rights granted hereby as a contract
with this Corporation and such person and such person's heirs,
executors, administrator and estate shall be entitled to enforce
against this Corporation all indemnification and other rights
granted to such person by subsections (1) and (3) and this
subsection (5) of this Article 12. The indemnification and other
rights granted by subsections (1) and (3) and this subsection (5)
of this Article 12 shall survive amendment, modification or
repeal of this Article, and no such amendment, modification or
repeal shall act to reduce, terminate or otherwise adversely
affect the rights to indemnification granted hereby, with respect
to any expenses, judgments, fines and amounts paid in settlement
incurred by a person to whom indemnification is granted under
subsection (1) of this Article 12 with respect to an action,
suit, proceeding or claim that arises out of acts or omissions of
such person that occurred prior to the effective date of such
amendment, modification or repeal.
-8-
<PAGE> 11
Any indemnification granted by the Board of Directors
pursuant to subsection (2) of this Article 12, shall inure to the
person to whom the indemnification is granted, and such person's
heirs, executors, administrator and estate; provided however,
----------------
that such indemnification may be changed, modified or repealed,
at any time or from time to time, at the discretion of the Board
of Directors and the survival of such indemnification shall be in
accordance with terms determined by the Board of Directors.
(6) For the purposes of this Article 12, "Subsidiary" shall
mean any corporation, banking association, partnership, joint
venture, trust, or other enterprise of which a majority of the
equity or ownership interest is directly or indirectly owned by
this Corporation.
ARTICLE 13
----------
A. Vote Required for Business Combinations. In addition
----------------------------------------
to any affirmative vote required by law, and except as otherwise
expressly provided in Section B of this Article 13, a Business
Combination (as hereinafter defined) may not be consummated or
effected unless such transaction shall first have received the
affirmative vote of the holders of at least seventy-five percent
(75%) of the total votes to which all of the then outstanding
shares of capital stock of the Corporation are entitled, voting
together as a Single class (it being understood that for the
purposes of this Article 13, each share of the voting stock shall
be entitled to the number of votes granted to it by law or
pursuant to Article 3 of these Articles of Incorporation)
("Voting Stock"). Such affirmative vote shall be required
notwithstanding the fact that no vote may be required, or that a
lesser percentage may be specified, by or pursuant to law, these
Articles of Incorporation, or any agreement.
B. Exception. Section A of this Article 13 shall not be
----------
applicable to a Business Combination, and such Business
Combination shall require only the affirmative vote (if any) as
required by law or otherwise, if the Business Combination shall
have been expressly approved by the Board of Directors of the
Corporation by the affirmative vote or consent of at least
sixty-six and two-thirds percent (66 2/3%) of the number of
directors of the Corporation as then authorized by, or in the
manner provided in, the By-laws. In determining whether or not
to approve any such Business Combination, the Board of Directors
shall give due consideration to all factors the Board may
consider relevant, including without limitation:
(1) the legal and economic effects on the depositors
and customers of the Corporation and its subsidiaries,
on the communities and geographic areas in which the
Corporation and its subsidiaries operate or are
located, and on any of she businesses and properties of
the Corporation and its subsidiaries, and
(2) the adequacy of the consideration offered in
relation not only to the current market price of the
outstanding securities of the Corporation but also to
the current value of the Corporation in a freely
negotiated transaction and the Board
-9-
<PAGE> 12
of Directors' estimate of the future value of the Corporation
(including the unrealized value of its properties and
assets) as an independent going concern.
C. Definitions. For the purposes of Article 13 of the
------------
Articles of Incorporation:
(1) A "Business Combination" shall mean:
(a) any merger, consolidation or exchange of
shares of capital stock of the Corporation or any
Subsidiary (as hereinafter defined) with or into
any Interested Person (as hereinafter defined) or
any other corporation or entity (whether or not it
is an Interested Person) which is, or after such
merger, consolidation or exchange of shares would
be, an Interested Person or an Affiliate (as
hereinafter defined) of an Interested Person,
regardless of the surviving entity; or
(b) any sale, lease, exchange, mortgage, pledge,
transfer or other disposition to or with an
Interested Person or any Affiliate of any
Interested Person (in a single transaction or a
series of related transactions) other than in the
ordinary course of business, of all or a
substantial part of the assets of the Corporation
or of any Subsidiary, or both; or
(c) any sale, lease, exchange, mortgage, pledge,
transfer or other disposition to or with the
Corporation or any Subsidiary (in a single
transaction or a series of related transactions)
other than in the ordinary course of business, of
all or a substantial part of the assets of an
Interested Person or any Affiliate of an
Interested Person, or both; or
(d) any issuance or transfer by the Corporation
or any Subsidiary of any securities of the
Corporation or any Subsidiary to an Interested
Person or any Affiliate of an Interested Person
(other than an issuance or transfer of securities
which is effected on a pro rata basis to all
shareholders of the Corporation); or
(e) any acquisition by the Corporation or any
Subsidiary, other than in the ordinary course of
business, of: (i) any securities of an Interested
Person or any Affiliate of an Interested Persons,
or (ii) any securities of the Corporation which
are owned by an Interested Person or an Affiliate
of an Interested Person; or
(f) any recapitalization or reclassification of
shares of any class of capital stock of the
Corporation or any Subsidiary, or any merger or
consolidation of the Corporation with any
Subsidiary (whether or not involving an Interested
Person), which transaction would have the effect,
directly or indirectly, of increasing the
proportionate share of the outstanding shares of
-10-
<PAGE> 13
any class of capital stock of the Corporation (or
any securities convertible into any class of such
capital stock) with respect to which an Interested
Person or an Affiliate of an Interested Person is
the "Beneficial Owner" (as hereinafter defined);
or
(g) any merger or consolidation of the
Corporation with any Subsidiary after which the
provisions of this Article 13 shall not be
contained in the articles of incorporation of the
surviving entity; or
(h) any plan or proposal for the liquidation or
dissolution of the Corporation proposed by or on
behalf of an interested Person or an Affiliate of
an Interested Person; or
(i) any agreement, contract, plan, proposal or
other arrangement providing for any of the
foregoing.
(2) An "Interested Person" shall mean any individual,
partnership, firm, corporation or other entity (other than the
Corporation or any subsidiary) who or which, directly or
indirectly, together with any of his or its Affiliates and
Associates (as hereinafter defined), is, or at any time within
the one-year period immediately prior to the date in question
was, the Beneficial Owner of five percent (5%) or more of the
voting power of the outstanding Voting Stock.
(3) A "Subsidiary" shall mean any corporation, of
which a majority of its capital stock is directly or indirectly
owned by the Corporation.
(4) The term "Beneficial Owner" shall have the meaning
ascribed to such term by Rule l3d-3 promulgated by the Securities
and Exchange Commission pursuant to the Securities Exchange Act
of 1934, as in effect on February 1, 1985.
(5) The term "Affiliate" or "Associate" shall have the
respective meanings ascribed to such terms in Rule l2b-2
promulgated by the Securities and Exchange Commission pursuant to
the Securities Exchange Act of 1934, as in effect on February 1,
1985.
D. Vote Required for Amendment. Any amendment,
----------------------------
alteration, change or repeal of the provisions of this Article 13
shall, in addition to any affirmative vote required by law or
otherwise, require the affirmative vote of the holders of at
least seventy-five percent (75%) of the Voting Stock of the
Corporation, unless such amendment, alteration, change or repeal
has previously been expressly approved by the Board of Directors
of the Corporation by the affirmative vote or consent of at least
sixty-six and two-thirds percent (66 2/3%) of the number of
Directors then authorized by, or in the manner provided in, the
By-laws, in which case the shareholder vote required by this
Section D of Article 13 shall not apply.
-11-
<PAGE> 14
<PAGE> 1
EXHIBIT 10.3
<PAGE> 2
EMPLOYMENT AGREEMENT
--------------------
AGREEMENT by and between Mercantile Bancorporation Inc., a
Missouri corporation (the "Company") and Alvin J. Siteman (the
"Executive"), dated as of the 18th day of November, 1996.
The Executive Committee of the Board of Directors of the
Company (the "Company Board") has determined that it is in the
best interests of the Company and its shareholders to assure that
the Company will have the dedication of the Executive pending the
merger of Mark Twain Bancshares, Inc. ("Mark Twain") and the
Company (the "Merger") pursuant to the Agreement and Plan of
Merger dated as of October 27, 1996, and to provide the surviving
corporation after the Merger with continuity of management.
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. Effective Date. The "Effective Date" shall mean the
---------------
date on which the Effective Time of the Merger (as defined in the
Merger Agreement) occurs, provided that the Effective Time occurs
on or before December 31, 1997, or such later date as may be
mutually agreed upon by the Company and Mark Twain.
2. Employment Period. The Company hereby agrees to
------------------
continue the Executive in its employ, and the Executive hereby
agrees to remain in the employ of the Company subject to the
terms and conditions of this Agreement, for the period commencing
on the Effective Date and ending eighteen months after such date
(the "Employment Period"). In addition, the Company hereby
agrees to nominate the Executive for election to the Board of
Directors of the Company for a three-year term expiring in 2000.
3. Terms of Employment. (a) Position and Duties. (i)
-------------------- --------------------
During the Employment Period, (A) the Executive shall serve as
Chairman of the Board of Directors of the Company's St, Louis
banking affiliate ("Bank") and (B) the Executive's services shall
be performed in St. Louis.
(ii) During the Employment Period, and excluding
any periods of vacation and sick leave to which the Executive is
entitled, and recognizing that Executive is involved in other
non-related business activities, the Executive agrees to be
available from time to time to devote reasonable attention to the
business and affairs of the Bank, including governance of its
Board and business development endeavors.
(b) Compensation. (i) Base Salary. During the
------------- ------------
Employment Period, the Executive shall receive an annual base
salary ("Annual Base Salary") of no less than $420,000. Any
increase in Annual Base Salary shall not serve to limit or reduce
any other obligation to the Executive under this Agreement.
Annual Base Salary shall not be reduced after any such increase
and the term Annual Base Salary as utilized in this Agreement
shall refer to Annual Base Salary as so increased. As used in
this Agreement, the term "affiliated
<PAGE> 3
companies" shall include any company controlled by, controlling or under
common control with the Company.
(ii) Annual Bonus. During the Employment Period,
-------------
in addition to Annual Base Salary, the Executive will be eligible
to receive, (I) for each fiscal year during which the Executive
is employed, an annual bonus (the "Annual Bonus") in an amount to
be determined by the Company Board of Directors, but in no event
shall the amount of the Annual Bonus during the first fiscal year
during which the Executive is employed (the "First Fiscal Year")
be less than $231,000 (the "Minimum Bonus") and (II) for that
portion of any fiscal year other than the First Fiscal Year
during which the Executive is employed for less than twelve full
months, an amount equal to the product of (x) the greater of (A)
the Minimum Bonus and (B) any other Annual Bonus paid to the
Executive during the Employment Period, and (y) a fraction, the
numerator of which is the number of days in such fiscal year
during which the Executive is employed by the Company, and the
denominator of which is 365. Each such Annual Bonus shall be
paid in cash in a manner and at a time in accordance with the
Company's customary practices with respect to other peer
executives of the Company. The Annual Bonus with respect to
fiscal year 1997 shall be paid no later than January 31, 1998.
(iii) Incentive Savings and Retirement Plans.
---------------------------------------
During the Employment Period, the Executive shall be entitled to
participate in all incentive, savings and retirement plans,
practices, policies and programs applicable generally to other
peer executives of the Company and its affiliated companies.
(iv) Welfare Benefit Plans. During the
----------------------
Employment Period, the Executive and/or the Executive's family,
as the case may be, shall be eligible for participation in and
shall receive all benefits under welfare benefit plans,
practices, policies and programs provided by the Company and its
affiliated companies (including, without limitation, medical,
prescription, dental, disability, employee life, group life,
accidental death and travel accident insurance plans and
programs) to the extent applicable generally to other peer
executives of the Company and its affiliated companies.
(v) Expenses. During the Employment Period, the
---------
Executive shall be entitled to receive prompt reimbursement for
all reasonable expenses incurred by the Executive in accordance
with the Company's policies.
(vi) Fringe Benefits. During the Employment
----------------
period, the Executive shall be entitled to fringe benefits on a
basis no less favorable than that applicable to other peer
executives of the Company and its affiliated companies, and also,
to the extent that the Executive receives such fringe benefits as
of the date hereof, payment of club dues and use of an automobile
and payment of related expenses.
(vii) Office and Support Staff. During the
-------------------------
Employment Period, the Executive shall be entitled to an office
or offices, one of which shall be located in Clayton,
2
<PAGE> 4
Missouri, of a size and with furnishings and other appointments, and to
personal secretarial and other assistance, as provided generally
to other peer executives of the Company and its affiliated
companies.
(viii) Vacation. During the Employment Period,
---------
the Executive shall be entitled to paid vacation in accordance
with the plans, policies, programs and practices of the Company
and its affiliated companies on the basis no less favorable than
that applicable to other peer executives of the Company and its
affiliated companies.
4. Termination of Employment. (a) Death or Disability.
-------------------------- --------------------
The Executive's employment shall terminate automatically upon the
Executive's death during the Employment Period. If the Company
determines in good faith that the Disability of the Executive has
occurred during the Employment Period (pursuant to the definition
of Disability set forth below), it may give to the Executive
written notice in accordance with Section 12(b) of this Agreement
of its intention to terminate the Executive's employment. In
such event, the Executive's employment with the Company shall
terminate effective on the 30th day after receipt of such notice
by the Executive (the "Disability Effective Date"), provided
that, within the 30 days after such receipt, the Executive shall
not have returned to full-time performance of the Executive's
duties. For purposes of this Agreement, "Disability" shall mean
the absence of the Executive from the Executive's duties with the
Company or Bank on a full-time basis for 180 consecutive business
days as a result of incapacity due to mental or physical illness
which is determined to be total and permanent by a physician
selected by the Company or its insurers and acceptable to the
Executive or the Executive's legal representative.
(b) Cause. The Company or Bank may terminate the
------
Executive's employment during the Employment Period for Cause.
For purposes of this Agreement, "Cause" shall mean:
(i) The Executive's willful and continued failure
to substantially perform his duties (other than as a result of
incapacity due to physical or mental condition), after a written
demand for performance is delivered to the Executive which
specifically identifies the manner in which the Executive has not
substantially performed his duties; or
(ii) The Executive's willful commission or
misconduct which is materially injurious to the Company and/or
Bank, monetarily or otherwise; or
(iii) Conviction of the Executive of a felony; or
(iv) A determination by the Company or Bank that
the Executive has committed fraud, embezzlement, theft, or
misappropriation against or from the Company or Bank; or
3
<PAGE> 5
(v) The Executive's material breach of any
provision of this Agreement, including any breach of Section 10.
For purposes of this Section, no act or failure to act shall be
considered "willful" unless done or omitted to be done without
good faith and without a reasonable belief that the act or
omission was in the best interest of the Company and/or Bank.
(c) Good Reason. The Executive's employment may be
------------
terminated by the Executive for Good Reason. For purposes of
this Agreement, "Good Reason" shall mean a termination by the
Executive following a material breach of this Agreement by the
Company that is not cured after reasonable notice of such breach.
(d) Notice of Termination. Any termination by the
----------------------
Company or Bank for Cause, or by the Executive for Good Reason,
shall be communicated by Notice of Termination to the other party
hereto given in accordance with Section 12(b) of this Agreement.
For purposes of this Agreement, a "Notice of Termination" means a
written notice which (i) indicates the specific termination
provision in this Agreement relied upon, (ii) to the extent
applicable, sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the
Executive's employment under the provision so indicated and (iii)
if the Date of Termination (as defined below) is other than the
date of receipt of such notice, specifies the termination date
(which date shall be not more than thirty days after the giving
of such notice). The failure by the Executive, the Company or
Bank to set forth in the Notice of Termination any fact or
circumstance which contributes to a showing of Good Reason or
Cause shall not waive any right of the Executive, the Company or
Bank, respectively, hereunder or preclude the Executive, the
Company or Bank, respectively, from asserting such fact or
circumstance in enforcing the Executive's, the Company's or
Bank's rights hereunder.
(e) Date of Termination. "Date of Termination" means
--------------------
(i) if the Executive's employment is terminated by the Company or
Bank for Cause, or by the Executive for Good Reason, the date of
receipt of the Notice of Termination or any later date specified
therein, as the case may be, (ii) if the Executive's employment
is terminated by the Company or Bank other than for Cause or
Disability, the Date of Termination shall be the date on which
the Company or Bank notifies the Executive of such termination
and (iii) if the Executive's employment is terminated by reason
of death or Disability, the Date of Termination shall be the date
of death of the Executive or the Disability Effective Date, as
the case may be.
5. Obligations of the Company upon Termination. (a) Good
-------------------------------------------- ----
Reason; Other Than for Cause, Death or Disability. If, during
- --------------------------------------------------
the Employment Period, the Company or Bank shall terminate the
Executive's employment other than for Cause, Death or Disability
or the Executive shall terminate employment for Good Reason,
then, subject to Section 6 of this Agreement:
4
<PAGE> 6
(i) The Company shall pay to the Executive the
aggregate of the following amounts:
A. The sum of (1) the Executive's Annual Base
Salary through the Date of Termination to the extent not
theretofore paid ("Accrued Salary") and (2) the product of (x)
the Annual Bonus paid or payable, including any bonus or portion
thereof which has been earned but deferred (and annualized for
any fiscal year consisting of less than twelve full months or
during which the Executive was employed for less than twelve full
months), for the most recently completed fiscal year during the
Employment Period, if any, or, in the event that a fiscal year
has not been completed during the Employment Period as of the
Date of Termination, the Minimum Bonus, and (y) a fraction, the
numerator of which is the number of days in the current fiscal
year through the Date of Termination and the denominator of which
is 365 (the sum of the amounts described in clauses (1) and (2)
shall be hereinafter referred to as the "Accrued Obligations");
and
B. The greater of (1) the amount equal to the
product of (i) the number of months remaining in the Employment
Period on the Date of Termination (the "Continuation Period"),
divided by twelve and (ii) the sum of (x) the Executive's Annual
Base Salary and (y) the Annual Bonus paid or payable for the most
recently completed fiscal year during the Employment Period (the
"Recent Annual Bonus"), or, in the event that a fiscal year has
not been completed during the Employment Period as of the Date of
Termination, the Minimum Bonus, and (2) the amount equal to the
sum of (x) the Executive's Annual Base Salary and (y) the Recent
Annual Bonus, payable in 24 equal monthly installments (as
appropriate, the "Termination Payment");
(ii) For the greater of (1) one year or (2) the
Continuation Period, or such longer period as may be provided by
the terms of the appropriate plan, program, practice or policy,
the Company shall after the Executive's Date of Termination
continue benefits to the Executive and/or the Executive's family
at least equal to those which would have been provided to them in
accordance with the plans, programs, practices and policies
described in Section 3(b)(iv) of this Agreement if the
Executive's employment had not been terminated or, if more
favorable to the Executive, as in effect generally at any time
thereafter with respect to other peer executives of the Company
and its affiliated companies and their families;
(iii) To the extent not theretofore paid or
provided, the Company shall timely pay or provide to the
Executive any other amounts or benefits required to be paid or
provided or which the Executive is eligible to receive under any
plan, program, policy or practice or contract or agreement of the
Company and its affiliated companies (such other amounts and
benefits shall be hereinafter referred to as the "Other
Benefits").
(b) Death. If the Executive's employment is
------
terminated by reason of the Executive's death during the
Employment Period, this Agreement shall terminate without further
obligations to the Executive's legal representatives under this
Agreement, other than
5
<PAGE> 7
for payment of Accrued Obligations and the Termination Payment and the timely
payment or provision of Other Benefits. Accrued Obligations and the
Termination Payment shall be paid to the Executive's estate or beneficiary, as
applicable, in a lump sum in cash within 30 days of the Date of Termination.
With respect to the provision of Other Benefits, the term Other
Benefits as utilized in this Section 5(b) shall include, without
limitation, and the Executive's estate and/or beneficiaries shall
be entitled to receive, benefits at least equal to the most
favorable benefits provided by the Company and affiliated
companies to the estates and beneficiaries of peer executives of
the Company and such affiliated companies under such plans,
programs, practices and policies relating to death benefits, if
any, as in effect with respect to other peer executives and their
beneficiaries at any time during the 120-day period immediately
preceding the Effective Date or, if more favorable to the
Executive's estate and/or the Executive's beneficiaries, as in
effect on the date of the Executive's death with respect to other
peer executives of the Company and its affiliated companies and
their beneficiaries.
(c) Disability. If the Executive's employment is
-----------
terminated by reason of the Executive's Disability during the
Employment Period, this Agreement shall terminate without further
obligation to the Executive, other than for payment of Accrued
Obligations, the Termination Payment and the timely payment or
provision of Other Benefits. Accrued Obligations and the
Termination Payment shall be paid to the Executive in a lump sum
in cash within 30 days of the Date of Termination. With respect
to the provision of Other Benefits, the term Other Benefits as
utilized in this section 5(c) shall include, and the Executive
shall be entitled after the Disability Effective Date to receive,
disability and other benefits in accordance with such plans,
programs, practices and policies relating to disability, if any,
as in effect generally with respect to other peer executives of
the Company and its affiliated companies and their families.
(d) Cause: Other than for Good Reason. If the
----------------------------------
Executive's employment shall be terminated for Cause or by the
Executive other than for Good Reason during the Employment
Period, this Agreement shall terminate without further
obligations to the Executive other than the obligation to pay to
the Executive his Accrued Salary and Other Benefits, in each case
to the extent theretofore unpaid.
6. Non-exclusivity of Rights. Nothing in this Agreement
--------------------------
shall prevent or limit the Executive's continuing or future
participation in any plan, program, policy or practice provided
by the Company, or any of its affiliated companies and for which
the Executive may qualify, nor shall anything herein limit or
otherwise affect such rights as the Executive may have under any
contract or agreement with the Company or any of its affiliated
companies. Amounts which are vested benefits or which the
Executive is otherwise entitled to receive under any plan,
policy, practice or program of or any contract or agreement with
the Company or any of its affiliated companies at or subsequent
to the Date of Termination shall be payable in accordance with
such plan, policy, practice or program or contract or agreement
except as explicitly modified by this Agreement. In accordance
with the foregoing and not in limitation thereof the Executive
and his spouse shall be entitled to
6
<PAGE> 8
medical coverage in accordance with the letter to the Executive from Keith
Miller attached hereto as Exhibit A and to retirement benefits in an
amount no less than those indicated on Exhibit B attached hereto.
7. Full Settlement. The Company's obligation to make the
----------------
payments provided for in this Agreement and otherwise to perform
its obligations hereunder shall not be affected by any set-off,
counterclaim, recoupment, defense or other claim, right or action
which the Company may have against the Executive or others. In
no event shall the Executive be obligated to seek other
employment or take any other action by way of mitigation of the
amounts payable to the Executive under any of the provisions of
this Agreement and such amounts shall not be reduced whether or
not the Executive obtains other employment. The Company agrees
to pay as incurred, to the full extent permitted by law, all
legal fees and expenses which the Executive may reasonably incur
as a result of any contest (regardless of the outcome thereof) by
the Company, the Executive or others of the validity or
enforceability of, or liability under, any provision of this
Agreement or any guarantee of performance thereof (including as a
result of any contest by the Executive about the amount of any
payment pursuant to this Agreement), plus in each case interest
on any delayed payment at the applicable Federal rate provided
for in Section 7872(f)(2)(A) of the Internal Revenue Code of
1986, as amended (the "Code").
8. Certain Reduction of Payments by the Company. (a) For
---------------------------------------------
purposes of this Section 8, (i) a "Payment" shall mean any
payment or distribution in the nature of compensation to or for
the benefit of the Executive, whether paid or payable pursuant to
this Agreement or otherwise; (ii) "Separation Payment" shall mean
a Payment paid or payable pursuant to this Agreement
(disregarding this Section); (iii) "Net After Tax Receipt" shall
mean the Present Value of a Payment net of all taxes imposed on
the Executive with respect thereto under Sections 1 and 4999 of
the Internal Revenue Code of 1986, as amended (the "Code"),
determined by applying the highest marginal rate under Section 1
of the Code which applied to the Executive's taxable income for
the immediately preceding taxable year; (iv) "Present Value"
shall mean such value determined in accordance with Section
280G(d)(4) of the Code; and (v) "Reduced Amount" shall mean the
greatest aggregate amount of Separation Payments which (a) is
less than the sum of all Separation Payments and (b) results in
aggregate Net After Tax Receipts which are equal to or greater
than the Net After Tax Receipts which would result if the
Executive were paid the sum of all Separation Payments.
(b) Anything in this Agreement to the contrary
notwithstanding, in the event KPMG Peat Marwick LLP or such other
nationally recognized certified public accounting firm designated
by the Executive (the "Accounting Firm") shall determine that
receipt of all payments would subject the Executive to tax under
Section 4999 of the Code, it shall determine whether some amount
of Separation Payments would meet the definition of a "Reduced
Amount." If the Accounting Firm determines that there is a
Reduced Amount, the aggregate Separation Payments shall be
reduced to such Reduced Amount. All fees payable to the
Accounting Firm shall be paid solely by the Company.
7
<PAGE> 9
(c) If the Accounting Firm determines that aggregate
Separation Payments should be reduced to the Reduced Amount, the
Company shall promptly give the Executive notice to that effect
and a copy of the detailed calculation thereof, and the Executive
may then elect, in his sole discretion, which and how much of the
Separation Payments shall be eliminated or reduced (as long as
after such election the present value of the aggregate Separation
Payments equals the Reduced Amount), and shall advise the Company
in writing of his election within ten days of his receipt of
notice. If no such election is made by the Executive within such
ten-day period, the Company may elect which of such Separation
Payments shall be eliminated or reduced (as long as after such
election the present value of the aggregate Separation Payments
equals the Reduced Amount) and shall notify the Executive
promptly of such election. All determinations made by the
Accounting Firm under this Section shall be binding upon the
Company and the Executive and shall be made within 60 days of a
termination of employment of the Executive. As promptly as
practicable following such determination, the Company shall pay
to or distribute for the benefit of the Executive such Separation
Payments as are then due to the Executive under this Agreement
and shall promptly pay to or distribute for the benefit of the
Executive in the future such Separation Payments as become due to
the Executive under this Agreement.
(d) While it is the intention of the Company to reduce
the amounts payable or distributable to the Executive hereunder
only if the aggregate Net After Tax Receipts to an Executive
would thereby be increased, as a result of the uncertainty in the
application of Section 4999 of the Code at the time of the
initial determination by the Accounting Firm hereunder, it is
possible that amounts will have been paid or distributed by the
Company to or for the benefit of the Executive pursuant to this
Agreement which should not have been so paid or distributed
("Overpayment") or that additional amounts which will have not
been paid or distributed by the Company to or for the benefit of
the Executive pursuant to this Agreement could have been so paid
or distributed ("Underpayment"), in each case, consistent with
the calculation of the Reduced Amount hereunder. In the event
that the Accounting Firm, based upon the assertion of a
deficiency by the Internal Revenue Service against the Company or
the Executive which deficiency the Accounting Firm believes has a
high probability of success, determines that an Overpayment has
been made, any such Overpayment paid or distributed by the
Company to or for the benefit of the Executive shall be treated
for all purposes as a loan to the Executive which the Executive
shall repay to the Company together with interest at the
applicable federal rate provided for in Section 7872(f)(2) of the
Code; provided, however, that no such loan shall be deemed to
have been made and no amount shall be payable by the Executive to
the Company if and to the extent such deemed loan and payment
would not either reduce the amount on which the Executive is
subject to tax under Section 1 and Section 4999 of the Code or
generate a refund of such taxes. In the event that the
Accounting Firm, based upon controlling precedent or substantial
authority, determines that an Underpayment has occurred, any such
Underpayment shall be promptly paid by the Company to or for the
benefit of the Executive together with interest at the applicable
federal rate provided for in Section 7872(f)(2) of the Code.
8
<PAGE> 10
9. Confidential Information. The Executive shall hold in a
-------------------------
fiduciary capacity for the benefit of the Company and Bank all
secret or confidential information, knowledge or data relating to
the Company or Bank or any of their affiliated companies, and
their respective businesses, which shall have been obtained by
the Executive during the Executive's employment by the Company or
any of its affiliated companies and which shall not be or become
public knowledge (other than by acts by the Executive or
representatives of the Executive in violation of this Agreement).
After termination of the Executive's employment, the Executive
shall not, without the prior written consent of the Company or as
may otherwise be required by law or legal process, communicate or
divulge any such information, knowledge or data to anyone other
than the Company and those designated by it. In no event shall
an asserted violation of the provisions of this Section 9
constitute a basis for deferring or withholding any amounts
otherwise payable to the Executive under this Agreement.
10. Covenant Not To Engage in Competitive or Other
----------------------------------------------
Detrimental Activities. (a) The Executive covenants that from
- -----------------------
and after the Effective Date he will not compete with the
Company, Bank and/or their affiliates and further covenants that
he will not take any action which is detrimental to the Company,
Bank and/or their affiliates (i) during the Employment Period,
and (ii) if the Executive's employment terminates for any reason
(other than the Executive's death) or no reason during the
Employment Period, for an additional three (3) year period of
time beginning on the Date of Termination.
(b) For purposes of paragraph (a) of this Section 10,
the Executive shall be deemed to be competing with the Company,
Bank and/or their affiliates at any time if the Executive accepts
employment with, or serves as an agent, employee, or director of,
or a consultant to, a competitor of the Company, Bank and/or
their affiliates, or during such time the Executive acquires or
has an interest (direct or indirect) in any firm, corporation or
enterprise engaged in a business which is in competition with the
Company, Bank and/or their affiliates, or at any time, either
during employment or thereafter, the Executive divulges any
information concerning the Company, Bank and/or their affiliates
which is or could be of aid to any such competitor. The mere
ownership of a less than a 3% debt and/or equity interest in a
competing company whose stock is publicly held shall not be
considered as having the prohibited interest in a competitor, and
neither shall the mere ownership of a less than a 10% debt and/or
equity interest in a competing company whose stock is not
publicly held. For purposes of this Agreement, any commercial
bank, savings and loan association, securities broker or dealer,
or other business or financial institution that offers any major
service at the time offered by the Company, Bank and/or their
affiliates, and which conducts business in any location
encompassed within the areas circumscribed by circles, of which
the radii are 50 miles and the mid-points are the geographic
centers of Kansas City, Missouri, and St. Louis, Missouri, shall
be deemed to be a competitor,
(c) Should the Company reasonably believe that the
Executive has violated any of the foregoing provisions, it shall
give the Executive written notice to such effect, stating the
reason(s), for its belief, and pending a final determination as
to whether there has been a violation may, without penalty or
risk of claim for actual or punitive damages,
9
<PAGE> 11
suspend payment of any further amount which might otherwise become payable
hereunder. The Company shall, in an expeditious manner,
determine from all information available to it whether the
Executive violated any of the foregoing covenants, and if the
Company in good faith concludes that the Executive has violated
this Agreement, the Executive shall not be entitled to any
further payment hereunder.
(d) The Executive represents, acknowledges and agrees
(i) that his experience and capabilities are such that he can
obtain employment in activities which do not violate such
agreement and that the enforcement by way of injunction of the
agreement not to compete will not prevent the Executive from
earning a livelihood, (ii) that the Company and Bank do not have
an adequate remedy at law for a breach or threatened breach by
the Executive of the covenants in this Section and may obtain
injunctive and other equitable relief, in addition to receiving
its actual damages and any other remedies that may be available
to it hereunder or at law or by statute, (iii) that the covenants
herein contained are reasonable and necessary for the proper
protection of the Company, and (iv) that if any provision or part
of any such covenant is invalidated, the remainder shall
nevertheless continue to be valid and fully enforceable, and if a
court determines that the term of the covenant is too long or the
area covered thereby too great, so that the covenant as written
is unenforceable, the covenant shall be modified to encompass the
longest duration and largest geographic area that the court deems
enforceable under the law.
11. Successors. (a) This Agreement is personal to the
-----------
Executive and without the prior written consent of the Company
shall not be assignable by the Executive otherwise than by will
or the laws of descent and distribution. This Agreement shall
inure to the benefit of and be enforceable by the Executive's
legal representatives.
(b) This Agreement shall inure to the benefit of and
be binding upon the Company and its successors and assigns.
(c) The Company will require any successor (whether
direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or
assets of the Company to assume expressly and agree to perform
this Agreement in the same manner and to the same extent that the
Company would be required to perform it if no such succession had
taken place. As used in this Agreement, "Company" shall mean the
Company as hereinbefore defined and any successor to its business
and/or assets as aforesaid which assumes and agrees to perform
this Agreement by operation of law, or otherwise.
12. Miscellaneous. (a) This Agreement shall be governed
--------------
by and construed in accordance with the laws of the State of
Missouri, without reference to principles of conflict of laws.
The captions of this Agreement are not part of the provisions
hereof and shall have no force or effect. This Agreement may not
be amended or modified otherwise than by a written agreement
executed by the parties hereto or their respective successors and
legal representatives.
10
<PAGE> 12
(b) All notices and other communications hereunder
shall be in writing and shall be given by hand delivery to the
other party or by registered or certified mail, return receipt
requested, postage prepaid, addressed as follows;
If to the Executive:
--------------------
Alvin J. Siteman
11 Terryhill Lane
St. Louis, Missouri 63131
If to the Company:
------------------
Mercantile Bancorporation Inc.
One Mercantile Center
St. Louis, Missouri 63101
Attention: Chairman and Chief Executive Officer
or to such other address as either party shall have furnished to
the other in writing in accordance herewith. Notice and
communications shall be effective when actually received by the
addressee.
(c) The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement.
(d) The Company may withhold from any amounts payable
under this Agreement such Federal, state, local or foreign taxes
as shall be required to be withheld pursuant to any applicable
law or regulation.
(e) The Executive's or the Company's failure to insist
upon strict compliance with any provision of this Agreement or
the failure to assert any right the Executive or the Company may
have hereunder shall not be deemed to be a waiver of such
provision or right or any other provision or right of this
Agreement.
(f) The Executive and the Company acknowledge that
effective on the Effective Date the agreement between the
Executive and Mark Twain dated as of February 1, 1995, shall be
superseded by this Agreement, and that the terms and conditions
of this Agreement shall be controlling during the Employment
Period. Employment hereunder shall be deemed to be continued
employment with Mark Twain and its successors for purposes of all
option agreements entered into between the Executive and Mark
Twain prior to the Effective Date.
(g) Either party shall have the right to seek judicial
review and determination of any conclusion or action of the other
party concerning the interpretation of the provisions
11
<PAGE> 13
of this Agreement or the determination of one party that the other party
is in violation of a provision of this Agreement or a
determination of existence of Cause or Good Reason.
IN WITNESS WHEREOF, the Company and the Executive have
caused these presents to be executed in their respective names on
their behalf, all as of the day and year first above written.
s/Alvin J. Siteman
------------------------------------------------
Alvin J. Siteman
MERCANTILE BANCORPORATION INC.
s/John H. Beirise
------------------------------------------------
By: John H. Beirise
Group President-Emerging Markets
12
<PAGE> 14
<PAGE> 1
EXHIBIT 10.4
<PAGE> 2
EMPLOYMENT AGREEMENT
--------------------
AGREEMENT by and between Mercantile Bancorporation Inc., a
Missouri corporation (the "Company") and John P. Dubinsky (the
"Executive"), dated as of the 27th day of October, 1996.
The Executive Committee of the Board of Directors of the
Company (the "Company Board") has determined that it is in the
best interests of the Company and its shareholders to assure that
the Company will have the dedication of the Executive pending the
merger of Mark Twain Bancshares, Inc. ("Mark Twain") and the
Company (the "Merger") pursuant to the Agreement and Plan of
Merger dated as of October 27, 1996, and to provide the surviving
corporation after the Merger with continuity of management.
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. Effective Date. The "Effective Date" shall mean the
---------------
date on which the Effective Time of the Merger (as defined in the
Merger Agreement) occurs, provided that the Effective Time occurs
on or before December 31, 1997, or such later date as may be
mutually agreed upon by the Company and Mark Twain.
2. Employment Period. The Company hereby agrees to
------------------
continue the Executive in its employ, and the Executive hereby
agrees to remain in the employ of the Company subject to the
terms and conditions of this Agreement, for the period commencing
on the Effective Date and ending on the second anniversary of
such date (the "Employment Period").
3. Terms of Employment. (a) Position and Duties. (i)
-------------------- --------------------
During the Employment Period, (A) the Executive shall serve as
President and Chief Executive Officer of the Company's St. Louis
banking affiliate ("Bank") and as a member of the Company's
Management Executive Committee and (B) the Executive's services
shall be performed in St. Louis, Missouri.
(ii) During the Employment Period, and excluding
any periods of vacation and sick leave to which the Executive is
entitled, the Executive agrees to devote reasonable attention and
time during normal business hours to the business and affairs of
Bank and to use the Executive's reasonable best efforts to
perform faithfully and efficiently such responsibilities. The
Executive will be the officer responsible for retail and
commercial banking activities in the metropolitan St. Louis
market and shall report directly to the Chairman and Chief
Executive Officer of the Company.
(b) Compensation. (i) Base Salary. During the
------------- ------------
Employment Period, the Executive shall receive an annual base
salary ("Annual Base Salary"), which shall be paid at an annual
rate of 105% of the Executive's annual base salary as of the date
hereof. During the Employment Period, the Annual Base Salary
shall be reviewed annually in accordance with the Company's
customary practice and adjusted in accordance with the base salary
<PAGE> 3
adjustment, if any, of other peer executives of the Company. Any increase in
Annual Base Salary shall not serve to limit or reduce any other obligation to
the Executive under this Agreement. Annual Base Salary shall not be reduced
after any such increase and the term Annual Base Salary as utilized in this
Agreement shall refer to Annual Base Salary as so increased. As
used in this Agreement, the term "affiliated companies" shall
include any company controlled by, controlling or under common
control with the Company.
(ii) Annual Bonus. During the Employment Period,
-------------
in addition to Annual Base Salary, the Executive will be eligible
to receive, (I) for each fiscal year of the Company during which
the Executive is employed, an annual bonus (the "Annual Bonus")
in an amount to be determined by the Company Board of Directors,
but in no event shall the amount of the Annual Bonus during the
first fiscal year during which the Executive is employed (the
"First Fiscal Year") be less than the product of (x) .55 and (y)
the Annual Base Salary (the "Minimum Bonus") and (II) for that
portion of any fiscal year of the Company other than the First
Fiscal Year during which the Executive is employed for less than
twelve full months, an amount equal to the product of (x) the
greater of (A) the Minimum Bonus and (B) any other Annual Bonus
paid to the Executive during the Employment Period, and (y) a
fraction, the numerator of which is the number of days in such
fiscal year during which the Executive is employed by the
Company, and the denominator of which is 365. Each such Annual
Bonus shall be paid in cash in a manner and at a time in
accordance with the Company's customary practices with respect to
other peer executives of the Company, but not later than January
31st of the year following the year to which such Annual Bonus
relates.
(iii) Incentive, Savings and Retirement Plans.
----------------------------------------
During the Employment Period, the Executive shall be entitled to
participate in all incentive, savings and retirement plans,
practices, policies and programs applicable generally to other
peer executives of the Company and its affiliated companies.
(iv) Welfare Benefit Plans. During the
----------------------
Employment Period, the Executive and/or the Executive's family,
as the case may be, shall be eligible for participation in and
shall receive all benefits under welfare benefit plans,
practices, policies and programs provided by the Company and its
affiliated companies (including, without limitation, medical,
prescription, dental, disability, employee life, group life,
accidental death and travel accident insurance plans and
programs) to the extent applicable generally to other peer
executives of the Company and its affiliated companies.
(v) Expenses. During the Employment Period, the
---------
Executive shall be entitled to receive prompt reimbursement for
all reasonable expenses incurred by the Executive in accordance
with the Company's policies.
(vi) Fringe Benefits. During the Employment
----------------
Period, the Executive shall be entitled to fringe benefits on a
basis no less favorable than that applicable to other peer
executives of the Company and its affiliated companies, and also,
to the extent that the
2
<PAGE> 4
Executive receives such fringe benefits as of the date hereof, payment of club
dues and use of an automobile and payment of related expenses.
(vii) Office and Support Staff. During the
-------------------------
Employment Period, the Executive shall be entitled to an office
or offices of a size and with furnishings and other appointments,
and to personal secretarial and other assistance, as provided
generally to other peer executives of the Company and its
affiliated companies.
(viii) Vacation. During the Employment Period,
---------
the Executive shall be entitled to paid vacation in accordance
with the plans, policies, programs and practices of the Company
and its affiliated companies on the basis no less favorable than
that applicable to other peer executives of the Company and its
affiliated companies.
4. Termination of Employment. (a) Death or Disability.
-------------------------- --------------------
The Executive's employment shall terminate automatically upon the
Executive's death during the Employment Period. If the Company
determines in good faith that the Disability of the Executive has
occurred during the Employment Period (pursuant to the definition
of Disability set forth below), it may give to the Executive
written notice in accordance with Section 12(b) of this Agreement
of its intention to terminate the Executive's employment. In
such event, the Executive's employment with the Company shall
terminate effective on the 30th day after receipt of such notice
by the Executive (the "Disability Effective Date"), provided
that, within the 30 days after such receipt, the Executive shall
not have returned to full-time performance of the Executive's
duties. For purposes of this Agreement, "Disability" shall mean
the absence of the Executive from the Executive's duties with the
Company or Bank on a full-time basis for 180 consecutive business
days as a result of incapacity due to mental or physical illness
which is determined to be total and permanent by a physician
selected by the Company or its insurers and acceptable to the
Executive or the Executive's legal representative.
(b) Cause. The Company or Bank may terminate the
------
Executive's employment during the Employment Period for Cause.
For purposes of this Agreement, "Cause" shall mean:
(i) The Executive's willful and continued failure
to substantially perform his duties (other than as a result of
incapacity due to physical or mental condition), after a written
demand for performance is delivered to the Executive which
specifically identifies the manner in which the Executive has not
substantially performed his duties; or
(ii) The Executive's willful commission or
misconduct which is materially injurious to the Company and/or
Bank, monetarily or otherwise; or
(iii) Conviction of the Executive of a felony; or
3
<PAGE> 5
(iv) A determination by the Company or Bank that
the Executive has committed fraud, embezzlement, theft, or
misappropriation against or from the Company or Bank; or
(v) The Executive's material breach of any
provision of this Agreement, including any breach of Section 10.
For purposes of this Section, no act or failure to act shall be
considered "willful" unless done or omitted to be done without
good faith and without a reasonable belief that the act or
omission was in the best interest of the Company and/or Bank.
(c) Good Reason. The Executive's employment may be
------------
terminated by the Executive for Good Reason. For purposes of
this Agreement, "Good Reason" shall mean a termination by the
Executive following a material breach of this Agreement by the
Company that is not cured after reasonable notice of such breach.
Anything in this Agreement to the contrary notwithstanding, a
termination by the Executive of his employment for any reason or
no reason during the 30-day period immediately following the
thirteenth (13th) month anniversary of the Effective Date shall
be deemed to be a termination for Good Reason for all purposes of
this Agreement.
(d) Notice of Termination. Any termination by the
----------------------
Company or Bank for Cause, or by the Executive for Good Reason,
shall be communicated by Notice of Termination to the other party
hereto given in accordance with Section 12(b) of this Agreement.
For purposes of this Agreement, a "Notice of Termination" means a
written notice which (i) indicates the specific termination
provision in this Agreement relied upon, (ii) to the extent
applicable, sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the
Executive's employment under the provision so indicated and (iii)
if the Date of Termination (as defined below) is other than the
date of receipt of such notice, specifies the termination date
(which date shall be not more than thirty days after the giving
of such notice). The failure by the Executive, the Company or
Bank to set forth in the Notice of Termination any fact or
circumstance which contributes to a showing of Good Reason or
Cause shall not waive any right of the Executive, the Company or
Bank, respectively, hereunder or preclude the Executive, the
Company or Bank, respectively, from asserting such fact or
circumstance in enforcing the Executive's, the Company's or
Bank's rights hereunder.
(e) Date of Termination. "Date of Termination" means
--------------------
(i) if the Executive's employment is terminated by the Company or
Bank for Cause, or by the Executive for Good Reason, the date of
receipt of the Notice of Termination or any later date specified
therein, as the case may be, (ii) if the Executive's employment
is terminated by the Company or Bank other than for Cause or
Disability, the Date of Termination shall be the date on which
the Company or Bank notifies the Executive of such termination
and (iii) if the Executive's employment is terminated by reason
of death or Disability, the Date of Termination shall be the date
of death of the Executive or the Disability Effective Date, as
the case may be.
4
<PAGE> 6
5. Obligations of the Company upon Termination. (a) Good
-------------------------------------------- ----
Reason; Other Than for Cause, Death or Disability. If, during
- --------------------------------------------------
the Employment Period, (I) the Company or Bank shall terminate
the Executive's employment other than for Cause, Death or
Disability or (II) the Executive shall terminate employment for
Good Reason:
(i) the Company shall pay to the Executive the
aggregate of the following amounts:
A. The Executive's Annual Base Salary through the
Date of Termination to the extent not theretofore paid ("Accrued
Salary"), provided that if the employment of the Executive is
terminated without Cause or for Good Reason before the fourteenth
(14th) month anniversary date of the Effective Date, the Date of
Termination shall be deemed to be said fourteenth (14th) month
anniversary date and the Accrued Bonus (as defined in paragraph
5(b)) shall be added to and be deemed a part of the Annual Base
Salary; and
B. $1.2 million, payable in 24 equal monthly
installments (the "Termination Payment") (which is approximately
the amount that would be owed to the Executive as a termination
payment under the existing employment arrangements with Mark
Twain).
(ii) For the greater of (1) twelve months or (2)
the number of months remaining in the Employment Period on the
Date of Termination, or such longer period as may be provided by
the terms of the appropriate plan, program, practice or policy
(the "Benefit Continuation Period"), the Company shall after the
Executive's Date of Termination continue benefits to the
Executive and/or the Executive's family at least equal to those
which would have been provided to them in accordance with the
plans, programs, practices and policies described in Section
3(b)(iv) of this Agreement if the Executive's employment had not
been terminated or, if more favorable to the Executive, as in
effect generally at any time thereafter with respect to other
peer executives of the Company and its affiliated companies and
their families, provided, however, that if the Executive becomes
reemployed with another employer and is eligible to receive
medical or other welfare benefits under another employer provided
plan, the medical and other welfare benefits described herein
shall be secondary to those provided under such other plan during
such applicable period of eligibility. For purposes of
determining eligibility (but not the time of commencement of
benefits) of the Executive for retiree benefits pursuant to such
plans, practices, programs and policies, the Executive shall be
considered to have remained employed during the Benefit
Continuation Period and to have retired an the last day of such
period;
(iii) To the extent not theretofore paid or
provided, the Company shall timely pay or provide to the
Executive any other amounts or benefits required to be paid or
provided or which the Executive is eligible to receive under any
plan, program, policy or practice or contract or agreement of the
Company and its affiliated companies (such other amounts and
benefits shall be hereinafter referred to as the "Other
Benefits").
5
<PAGE> 7
(b) Death. If the Executive's employment is
------
terminated by reason of the Executive's death during the
Employment Period, this Agreement shall terminate without further
obligations to the Executive's legal representatives under this
Agreement, other than for payment of Accrued Salary and the
Termination Payment (if not previously paid), an amount equal to
the product of (x) the Annual Bonus paid or payable, including
any bonus or portion thereof which has been earned but deferred
(and annualized for any fiscal year of the Company consisting of
less than twelve full months or during which the Executive was
employed for less than twelve full months), for the most recently
completed fiscal year during the Employment Period, if any, or,
in the event that a fiscal year of the Company has not been
completed during the Employment Period as of the Date of
Termination, the Minimum Bonus, and (y) a fraction, the numerator
of which is the number of days in the current fiscal year of the
Company through the Date of Termination, and the denominator, of
which is 365 (the "Accrued Bonus") and the timely payment or
provision of Other Benefits. The Accrued Salary, the Termination
Payment and Accrued Bonus shall be paid to the Executive's estate
or beneficiary, as applicable, in a lump sum in cash within 30
days of the Date of Termination. With respect to the provision
of Other Benefits, the term Other Benefits as utilized in this
Section 5(b) shall include, without limitation, and the
Executive's estate and/or beneficiaries shall be entitled to
receive, benefits at least equal to the most favorable benefits
provided by the Company and affiliated companies to the estates
and beneficiaries of peer executives of the Company and such
affiliated companies under such plans, programs, practices and
policies relating to death benefits, if any, as in effect with
respect to other peer executives and their beneficiaries at any
time during the 120-day period immediately preceding the
Effective Date or, if more favorable to the Executive's estate
and/or the Executive's beneficiaries, as in effect on the date of
the Executive's death with respect to other peer executives of
the Company and its affiliated companies and their beneficiaries.
(c) Disability. If the Executive's employment is
-----------
terminated by reason of the Executive's Disability during the
Employment Period, this Agreement shall terminate without further
obligations to the Executive, other than for payment of Accrued
Salary, the Termination Payment (if not previously paid), Accrued
Bonus, and the timely payment or provision of Other Benefits. The
Accrued Salary, the Termination Payment and the Accrued Bonus
shall be paid to the Executive in a lump sum in cash within 30
days of the Date of Termination. With respect to the provision of
Other Benefits, the term Other Benefits as utilized in this
Section 5(c) shall include, and the Executive shall be entitled
after the Disability Effective Date to receive, disability and
other benefits in accordance with such plans, programs, practices
and policies relating to disability, if any, as in effect
generally with respect to other peer executives of the Company
and its affiliated companies and their families.
(d) Cause; Other than for Good Reason. If the
----------------------------------
Executive's employment shall be terminated for Cause or by the
Executive other than for Good Reason during the Employment
Period, this Agreement shall terminate without further
obligations to the
6
<PAGE> 8
Executive other than the obligation to pay to the Executive his Accrued Salary
and Other Benefits, in each case to the extent theretofore unpaid.
6. Non-exclusivity of Rights. Nothing in this Agreement
--------------------------
shall prevent or limit the Executive's continuing or future
participation in any plan, program, policy or practice provided
by the Company or any of its affiliated companies and for which
the Executive may qualify, nor shall anything herein limit or
otherwise affect such rights as the Executive may have under any
contract or agreement with the Company or any of its affiliated
companies. Amounts which are vested benefits or which the
Executive is otherwise entitled to receive under any plan,
policy, practice or program of or any contract or agreement with
the Company or any of its affiliated companies at or subsequent
to the Date of Termination shall be payable in accordance with
such plan, policy, practice or program or contract or agreement
except as explicitly modified by this Agreement.
7. Full Settlement. The Company's obligation to make the
----------------
payments provided for in this Agreement and otherwise to perform
its obligations hereunder shall not be affected by any set-off,
counterclaim, recoupment, defense or other claim, right or action
which the Company may have against the Executive or others. In
no event shall the Executive be obligated to seek other
employment or take any other action by way of mitigation of the
amounts payable to the Executive under any of the provisions of
this Agreement and such amounts shall not be reduced whether or
not the Executive obtains other employment. The Company agrees
to pay as incurred, to the full extent permitted by law, all
legal fees and expenses which the Executive may reasonably incur
as a result of any contest (regardless of the outcome thereof) by
the Company, the Executive or others of the validity or
enforceability of, or liability under, any provision of this
Agreement or any guarantee of performance thereof (including as a
result of any contest by the Executive about the amount of any
payment pursuant to this Agreement), plus in each case interest
on any delayed payment at the applicable Federal rate provided
for in Section 7872(f)(2)(A) of the Internal Revenue Code of
1986, as amended (the "Code").
8. Certain Reduction of Payments by the Company. (a) For
---------------------------------------------
purposes of this Section 8, (i) a "Payment" shall mean any
payment or distribution in the nature of compensation to or for
the benefit of the Executive, whether paid or payable pursuant to
this Agreement or otherwise; (ii) "Separation Payment" shall mean
a Payment paid or payable pursuant to this Agreement
(disregarding this Section); (iii) "Net After Tax Receipt" shall
mean the Present Value of a Payment net of all taxes imposed on
the Executive with respect thereto under Sections 1 and 4999 of
the Internal Revenue Code of 1986, as amended (the "Code"),
determined by applying the highest marginal rate under Section 1
of the Code which applied to the Executive's taxable income for
the immediately preceding taxable year; (iv) "Present Value"
shall mean such value determined in accordance with Section
280G(d)(4) of the Code; and (v) "Reduced Amount" shall mean the
greatest aggregate amount of Separation Payments which (a) is
less than the sum of all Separation Payments and (b) results in
aggregate Net After Tax Receipts which are equal to or greater
than the Net After Tax Receipts which would result if the
Executive were paid the sum of all Separation Payments.
7
<PAGE> 9
(b) Anything in this Agreement to the contrary
notwithstanding, in the event KPMG Peat Marwick LLP or such other
nationally recognized certified public accounting firm designated
by the Executive (the "Accounting Firm") shall determine that
receipt of all Payments would subject the Executive to tax under
Section 4999 of the Code, it shall determine whether some amount
of Separation Payments would meet the definition of a "Reduced
Amount." If the Accounting Firm determines that there is a
Reduced Amount, the aggregate Separation Payments shall be
reduced to such Reduced Amount. All fees payable to the
Accounting Firm shall be paid solely by the Company.
(c) If the Accounting Firm determines that aggregate
Separation Payments should be reduced to the Reduced Amount, the
Company shall promptly give the Executive notice to that effect
and a copy of the detailed calculation thereof, and the Executive
may then elect, in his sole discretion, which and how much of the
Separation Payments shall be eliminated or reduced (as long as
after such election the present value of the aggregate Separation
Payments equals the Reduced Amount), and shall advise the Company
in writing of his election within ten days of his receipt of
notice. If no such election is made by the Executive within such
ten-day period, the Company may elect which of such Separation
Payments shall be eliminated or reduced (as long as after such
election the present value of the aggregate Separation Payments
equals the Reduced Amount) and shall notify the Executive
promptly of such election. All determinations made by the
Accounting Firm under this Section shall be binding upon the
Company and the Executive and shall be made within 60 days of a
termination of employment of the Executive. As promptly as
practicable following such determination, the Company shall pay
to or distribute for the benefit of the Executive such Separation
Payments as are then due to the Executive under this Agreement
and shall promptly pay to or distribute for the benefit of the
Executive in the future such Separation Payments as become due to
the Executive under this Agreement.
(d) While it is the intention of the Company to reduce
the amounts payable or distributable to the Executive hereunder
only if the aggregate Net After Tax Receipts to an Executive
would thereby be increased, as a result of the uncertainty in the
application of Section 4999 of the Code at the time of the
initial determination by the Accounting Firm hereunder, it is
possible that amounts will have been paid or distributed by the
Company to or for the benefit of the Executive pursuant to this
Agreement which should not have been so paid or distributed
("Overpayment") or that additional amounts which will have not
been paid or distributed by the Company to or for the benefit of
the Executive pursuant to this Agreement could have been so paid
or distributed ("Underpayment"), in each case, consistent with
the calculation of the Reduced Amount hereunder. In the event
that the Accounting Firm, based upon the assertion of a
deficiency by the Internal Revenue Service against the Company or
the Executive which deficiency the Accounting Firm believes has a
high probability of success, determines that an Overpayment has
been made, any such Overpayment paid or distributed by the
Company to or for the benefit of the Executive shall be treated
for all purposes as a loan to the Executive which the Executive
shall repay to the Company together with interest at the
applicable federal rate provided for in Section 7872(f)(2) of the
Code; provided, however, that no such loan shall be deemed to
have been
8
<PAGE> 10
made and no amount shall be payable by the Executive to the
Company if and to the extent such deemed loan and payment
would not either reduce the amount on which the Executive is
subject to tax under Section 1 and Section 4999 of the Code or
generate a refund of such taxes. In the event that the
Accounting Firm, based upon controlling precedent or substantial
authority, determines that an Underpayment has occurred, any such
Underpayment shall be promptly paid by the Company to or for the
benefit of the Executive together with interest at the applicable
federal rate provided for in Section 7872(f)(2) of the Code.
9. Confidential Information. The Executive shall hold in a
-------------------------
fiduciary capacity for the benefit of the Company and Bank all
secret or confidential information, knowledge or data relating to
the Company or Bank or any of their affiliated companies, and
their respective businesses, which shall have been obtained by
the Executive during the Executive's employment by the Company or
any of its affiliated companies and which shall not be or become
public knowledge (other than by acts by the Executive or
representatives of the Executive in violation of this Agreement).
After termination of the Executive's employment, the Executive
shall not, without the prior written consent of the company or as
may otherwise be required by law or legal process, communicate or
divulge any such information, knowledge or data to anyone other
than the Company and those designated by it. In no event shall
an asserted violation of the provisions of this Section 9
constitute a basis for deferring or withholding any amounts
otherwise payable to the Executive under this Agreement.
10. Covenant Not To Engage in Competitive or Other
----------------------------------------------
Detrimental Activities. (a) The Executive covenants that from
- -----------------------
and after the Effective Date he will not compete with the
Company, Bank and/or their affiliates and further covenants that
he will not take any action which is detrimental to the Company,
Bank and/or their affiliates (i) during the Employment Period,
and (ii) if the Executive's employment terminates for any reason
(other than the Executive's death) or no reason during the
Employment Period, for an additional three (3) year period of
time beginning on the Date of Termination.
(b) For purposes of paragraph (a) of this Section 10,
the Executive shall be deemed to be competing with the Company,
Bank and/or their affiliates at any time if the Executive accepts
employment with, or serves as an agent, employee, or director of,
or a consultant to, a competitor of the Company, Bank and/or
their affiliates, or during such time the Executive acquires or
has an interest (direct or indirect) in any firm, corporation or
enterprise engaged in a business which is in competition with the
Company, Bank and/or their affiliates, or at any time, either
during employment or thereafter, the Executive divulges any
information concerning the Company, Bank and/or their affiliates
which is or could be of aid to any such competitor. The mere
ownership of a less than a 3% debt and/or equity interest in a
competing company whose stock is publicly held shall not be
considered as having the prohibited interest in a competitor, and
neither shall the mere ownership of a less than a 10% debt and/or
equity interest in a competing company whose stock is not
publicly held. For purposes of this Agreement, any commercial
bank, savings and loan association, securities broker or dealer,
or other business or financial institution that is principally
engaged in the business of offering any service at the time
offered by the Company, Bank
9
<PAGE> 11
and/or their affiliates, and which conducts business in any location
encompassed within the areas circumscribed by circles, of which the radii are
50 miles and the mid-points are the geographic centers of Kansas City,
Missouri, and St. Louis, Missouri, shall be deemed to be a competitor.
(c) Should the Company reasonably and in good faith
believe that the Executive has violated any of the foregoing
provisions, it shall give the Executive written notice to such
effect, stating the reason(s) for its belief, and pending a final
determination as to whether there has been a violation may,
without penalty or risk of claim for actual or punitive damages,
suspend payment of any further amount which might otherwise
become payable hereunder after thirty (30) days of giving such
notice. The Company shall, in an expeditious manner, determine
from all information available to it whether the Executive
violated any of the foregoing covenants, and if the Company in
good faith concludes that the Executive has violated this
Agreement, the Executive shall not be entitled to any further
payment hereunder.
(d) The Executive represents, acknowledges and agrees
(i) that his experience and capabilities are such that he can
obtain employment in activities which do not violate such
agreement and that the enforcement by way of injunction of the
agreement not to compete will not prevent the Executive from
earning a livelihood, (ii) that the Company and Bank do not have
an adequate remedy at law for a breach or threatened breach by
the Executive of the covenants in this Section and may obtain
injunctive and other equitable relief, in addition to receiving
its actual damages and any other remedies that may be available
to it hereunder or at law or by statute, (iii) that the covenants
herein contained are reasonable and necessary for the proper
protection of the Company, and (iv) that if any provision or part
of any such covenant is invalidated, the remainder shall
nevertheless continue to be valid and fully enforceable, and if a
court determines that the term of the covenant is too long or the
area covered thereby too great, so that the covenant as written
is unenforceable, the covenant shall be modified to encompass the
longest duration and largest geographic area that the court deems
enforceable under the law.
11. Successors. (a) This Agreement is personal to the
-----------
Executive and without the prior written consent of the Company
shall not be assignable by the Executive otherwise than by will
or the laws of descent and distribution. This Agreement shall
inure to the benefit of and be enforceable by the Executive's
legal representatives.
(b) This Agreement shall inure to the benefit of and
be binding upon the Company and its successors and assigns.
(c) The Company will require any successor (whether
direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or
assets of the Company to assume expressly and agree to perform
this Agreement in the same manner and to the same extent that the
Company would be required to perform it if no such succession had
taken place. As used in this Agreement, "Company" shall mean the
10
<PAGE> 12
Company as hereinbefore defined and any successor to its business
and/or assets as aforesaid which assumes and agrees to perform
this Agreement by operation of law, or otherwise.
12. Miscellaneous. (a) This Agreement shall be governed by
--------------
and construed in accordance with the laws of the State of
Missouri, without reference to principles of conflict of laws.
The captions of this Agreement are not part of the provisions
hereof and shall have no force or effect. This Agreement may not
be amended or modified otherwise than by a written agreement
executed by the parties hereto or their respective successors and
legal representatives.
(b) All notices and other communications hereunder
shall be in writing and shall be given by hand delivery to the
other party or by registered or certified mail, return receipt
requested, postage prepaid, addressed as follows:
If to the Executive:
--------------------
John P. Dubinsky
7370 Westmoreland Drive
St. Louis, Missouri 63130
If to the Company:
------------------
Mercantile Bancorporation Inc.
One Mercantile Center
St. Louis, Missouri 63101
Attention: Chairman and Chief Executive Officer
or to such other address as either party shall have furnished to
the other in writing in accordance herewith. Notice and
communications shall be effective when actually received by the
addressee.
(c) The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement.
(d) The Company may withhold from any amounts payable
under this Agreement such Federal, state, local or foreign taxes
as shall be required to be withheld pursuant to any applicable
law or regulation.
(e) The Executive's or the Company's failure to insist
upon strict compliance with any provision of this Agreement or
the failure to assert any right the Executive or the Company may
have hereunder shall not be deemed to be a waiver of such
provision or right or any other provision or right of this
Agreement.
11
<PAGE> 13
(f) The Executive and the Company acknowledge that
effective on the Effective Date the agreement between the
Executive and Mark Twain dated as of 2/1/95 will be superseded by
this Agreement, and that the terms and conditions of this
Agreement shall be controlling during the Employment Period.
Employment hereunder shall be deemed to be continued employment
with Mark Twain and its successors for purposes of all option
agreements entered into between the Executive and Mark Twain
prior to the Effective Date.
(g) Either party shall have the right to seek a
judicial review and determination of any conclusion or action of
the other party concerning the interpretation of the provisions
of this Agreement or the determination of one party that the
other party is in violation of a provision of this Agreement or a
determination of existence of Cause or Good Reason.
IN WITNESS WHEREOF, the Company and the Executive have
caused these presents to be executed in their respective names on
their behalf, all as of the day and year first above written.
s/John P. Dubinsky
------------------------------------------------
John P. Dubinsky
MERCANTILE BANCORPORATION INC.
s/John H. Beirise
------------------------------------------------
By: John H. Beirise
Group President-Emerging Markets
12
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 883,304
<INT-BEARING-DEPOSITS> 109,614
<FED-FUNDS-SOLD> 196,325
<TRADING-ASSETS> 753
<INVESTMENTS-HELD-FOR-SALE> 3,784,185
<INVESTMENTS-CARRYING> 325,145
<INVESTMENTS-MARKET> 327,070
<LOANS> 13,015,474
<ALLOWANCE> 198,061
<TOTAL-ASSETS> 18,947,568
<DEPOSITS> 14,911,809
<SHORT-TERM> 1,613,580
<LIABILITIES-OTHER> 235,703
<LONG-TERM> 449,993
0
0
<COMMON> 135,612
<OTHER-SE> 1,425,871
<TOTAL-LIABILITIES-AND-EQUITY> 18,947,568
<INTEREST-LOAN> 274,754
<INTEREST-INVEST> 61,539
<INTEREST-OTHER> 3,646
<INTEREST-TOTAL> 339,939
<INTEREST-DEPOSIT> 130,296
<INTEREST-EXPENSE> 160,424
<INTEREST-INCOME-NET> 179,515
<LOAN-LOSSES> 18,198
<SECURITIES-GAINS> 1,049
<EXPENSE-OTHER> 143,686
<INCOME-PRETAX> 93,146
<INCOME-PRE-EXTRAORDINARY> 93,146
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 60,336
<EPS-PRIMARY> 1.00
<EPS-DILUTED> 1.00
<YIELD-ACTUAL> 4.27
<LOANS-NON> 70,639
<LOANS-PAST> 30,803
<LOANS-TROUBLED> 2,953
<LOANS-PROBLEM> 0<F1>
<ALLOWANCE-OPEN> 196,627
<CHARGE-OFFS> 23,995
<RECOVERIES> 5,616
<ALLOWANCE-CLOSE> 198,061
<ALLOWANCE-DOMESTIC> 198,061
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0<F1>
<FN>
<F1>Only reported at year end
</TABLE>
