MERCANTILE EXEC SAYS SALE POSITIVE

A local Mercantile Bank executive sees the planned sale of Mercantile Bancorporation Inc. to Firstar Corp. as positive.

"Firstar Corp. is a good bank," said Lowell C. Peterson, president of Mercantile Bank of Southeast Missouri-Cape Girardeau, which includes three Mercantile branches: two in Cape Girardeau and one at Jackson.

"Firstar does a good job with consumer lending and is a very aggressive organization," said Peterson, who has been in banking for more than 25 years.

Mercantile's sale to Firstar would create the second-largest banking franchise in the Midwest, with more than 5 million customers in approximately 1,180 branches in nine Midwest states.

Local Mercantile banking operations include a dozen branches in Southeast Missouri. Other area banks are at Marble Hill, Perryville, Poplar Bluff, Sikeston, Ste. Genevieve, Dexter and Bloomfield.

Firstar, headquartered in Milwaukee, announced Friday that it had signed a definitive agreement to acquire Mercantile Bancorporation Inc., headquartered in St. Louis, through an exchange of shares valued at approximately $10.6 billion. Under the agreement, Mercantile shareholders would receive a tax-free exchange of 1.091 shares of Firstar common stock for each share of Mercantile common stock owned.

Based on Firstar's closing stock price on April 29 -- the date the exchange rate was finalized -- the price for each Mercantile share would be $66.50, a premium of 29 percent over Mercantile's closing price of $51.25 per share on that date.

The transaction is expected to be completed in the fourth quarter of 1999. The transaction, which has received the approval of boards of both companies, is still subject to normal shareholder and regulatory approvals.

Firstar and Mercantile estimate they would reduce expenses by $169 million next year. The cost-savings opportunities include centralization of corporate activities; consolidation of data processing and operations; and optimization of commercial banking, retail branches and alternative delivery channels for bank products and services.

One banking analyst said Firstar has refrained from wholesale layoffs in previous acquisitions.

Customers of the new combined company would have access to approximately 1,180 branches, the seventh-largest system in the United States, and more than 2,000 ATMs.

The combined company would rank in the top five in share of deposits in Missouri, Iowa, Wisconsin, Kentucky, Minnesota, Arkansas, Ohio, Illinois and Kansas. The company also is in Indiana, Tennessee, Arizona and Florida.

Jerry A. Grundhofer, Firstar's president and chief executive officer, would continue in that position. Thomas H. Jacobsen, Mercantile's chairman, president and chief executive officer, would be based in St. Louis and become chairman of the board of Firstar and co-chair the board's executive committee with Grundhofer. Roger L. Fitzsimonds, Firstar's current chairman, plans to retire and would be named chairman emeritus at that time. The board of directors would be comprised of 14 representatives of Firstar and four representatives of Mercantile.

At a glance

Firstar Corp is a $38 billion bank holding company with 720 full-service banking offices in Ohio, Wisconsin, Kentucky, Illinois, Indiana, Iowa, Minnesota, Tennessee and Arizona.

Mercantile Bancorporation is a $36 billion multibank holding company headquartered in St. Louis with 500 offices in Missouri, Iowa, Kansas, Illinois, Arkansas and Kentucky.