For immediate release

The Federal Reserve Board today announced its approval of the notice of Union Planters Corporation, Memphis, Tennessee, to acquire Magna Bancorp, Inc., and thereby indirectly acquire Magnolia Federal Bank for Savings and Magna Mortgage Company, all of Hattiesburg, Mississippi. Attached is the Board's Order relating to this action.

Union Planters Corporation Memphis, Tennessee Order Approving Acquisition of a Savings Association

Union Planters Corporation, Memphis, Tennessee ("Union Planters"), a bank holding company within the meaning of the Bank Holding Company Act ("BHC Act") has requested the Board's approval under section 4(c)(8) of the BHC Act (12 U.S.C. § 1843(c)(8)) to acquire Magna Bancorp, Inc. ("Magna"), and thereby acquire Magnolia Federal Bank for Savings ("Savings Bank"), and Magna Mortgage Company ("Magna Mortgage"), all of Hattiesburg, Mississippi.1 Magna Mortgage engages in originating and servicing mortgage loans, pursuant to section 225.28(b)(1) of the Board's Regulation Y (12 C.F.R. 225.28(b)(1)), and in providing real estate appraisal and inspection services, pursuant to section 225.28(b)(2) of Regulation Y (12 C.F.R. 225.28(b)(2)). Notice of the proposal, affording interested persons an opportunity to submit comments, has been published (62 Federal Register 39,243 (1997)). The time for filing comments has expired, and the Board has considered the notice and all comments received in light of the factors set forth in section 4(c)(8) of the BHC Act. Union Planters, with total consolidated assets of approximately $14.9 billion, is the 46th largest commercial banking organization in the United States, controlling less than 1 percent of total banking assets in the United States.2 Union Planters operates subsidiary banks in Alabama, Arkansas, Kentucky, Louisiana, Mississippi, Missouri, and Tennessee. Magna operates offices in Mississippi and Alabama. On consummation, Union Planters would become the third largest depository institution3 in Mississippi, controlling $2.8 billion in deposits, representing approximately 11.5 percent of total deposits in the state.4 Union Planters also would remain the tenth largest depository institution in Alabama, controlling $542.7 million in deposits, representing approximately 1.2 percent of total deposits in depository institutions in the state.5 The Board previously has determined by regulation that the operation of a savings association by a bank holding company and the activities of extending credit, servicing loans, and providing services related to extending credit are closely related to banking for purposes of section 4(c)(8) of the BHC Act.6 The Board requires that savings associations acquired by a bank holding company conform their direct and indirect activities to those permissible for a bank holding company under section 4 of the BHC Act and Regulation Y. Union Planters has committed that it will conduct the proposed activities in accordance with the Board's regulations. Competitive Considerations In order to approve the proposal, the Board also must determine that the performance of the proposed activities is a proper incident to banking, that is, that the proposed transaction "can reasonably be expected to produce benefits to the public . . . that outweigh possible adverse effects, such as undue concentration of resources, decreased or unfair competition, conflicts of interests, or unsound banking practices."7 As part of the Board's evaluation of these factors, the Board has carefully considered the competitive effects of the proposed transaction. Union Planters and Savings Bank compete directly in nine banking markets, all in Mississippi. The Board has carefully reviewed the competitive effects of the proposal in those markets in light of all the facts of record, including the number of competitors that would remain in the markets, the projected increase in the concentration of total deposits in depository institutions in the markets ("market deposits"),8 as measured by the Herfindahl-Hirschman Index ("HHI") under the Department of Justice Merger Guidelines ("DOJ Guidelines"),9 and commitments made by Union Planters to divest branches in certain markets to address potential anticompetitive effects.10 As described in more detail in the Appendix, and considering the effect of proposed divestitures, consummation of the proposal would exceed the DOJ Guidelines in only one banking market. In the Washington County, Mississippi ("Washington County"), banking market,11 the HHI would increase by 280 points to 2053. Union Planters would remain the largest depository institution in the banking market, controlling 31.2 percent of market deposits. In analyzing the competitive effects of the proposal on this market, the Board also has considered that the Washington County banking market is a rural banking market and that seven commercial banking organizations would remain in the market after consummation of the proposal. Four competitors other than Union Planters would have market shares of 9.9 percent or more, including two of the largest bank holding companies in Mississippi, which would have market shares of 22 percent and 19 percent. Based on the number and size of the remaining competitors, the characteristics of the market, and all other facts of record, the Board concludes that consummation of this proposal would not have a significantly adverse effect on competition in the Washington County banking market. Similarly, based on all the facts of record, including the proposed divestitures, the Board concludes that consummation of the proposal would not have a significantly adverse effect on competition or on the concentration of banking resources in any other relevant banking market. Other Considerations As part of its consideration of the public interest factors, the Board has carefully considered, in light of all the facts of record, the financial and managerial resources of Union Planters and Magna and their subsidiaries and the effect the transaction would have on such resources. Information considered included supervisory reports of examination assessing the financial and managerial resources of the organizations and recent pro forma financial information provided by Union Planters. The Board notes that Union Planters, Magna, and each of their insured depository institutions meet or exceed the "well capitalized" thresholds under applicable law, and that Union Planters would continue to meet those thresholds after consummation of the proposal. Based on all the facts of record, the Board has concluded that the financial and managerial resources of the organizations involved in the proposal are consistent with approval. The record also indicates that consummation of the proposal would result in public benefits. The proposal would result in a broader financial network through which Magna's customers would have access to the increased services offered at Union Planters's subsidiary banks. Additionally, there are public benefits from permitting capital markets to operate so that bank holding companies may make potentially profitable investments in nonbanking companies when those investments are consistent, as in this case, with the relevant considerations under the BHC Act, and from permitting banking organizations to allocate their resources in the manner they believe is most efficient. As discussed above, the proposal is not expected to result in any significantly adverse competitive effects, and financial and managerial factors are consistent with approval. Based on all the facts or record, the Board has determined that the Union Planters proposal can reasonably be expected to produce public benefits that outweigh possible adverse effects under the proper incident to banking standard of section 4(c)(8) of the BHC Act. Accordingly, the Board has determined that the balance of public interest factors it must consider under section 4(c)(8) of the BHC Act is favorable and consistent with approval. Conclusion Based on the foregoing and all the facts of record, the Board has determined that the notice should be, and hereby is, approved. The Board's approval of the proposal is specifically conditioned on compliance by Union Planters with the commitments made in connection with this notice, including the divestiture commitments discussed in the order. The Board's determination also is subject to all the conditions set forth in Regulation Y, including those in sections 225.7 and 225.25(c) of Regulation Y (12 C.F.R. 225.7 and 225.25(c)), and to the Board's authority to require such modification or termination of the activities of a bank holding company or any of its subsidiaries as the Board finds necessary to ensure compliance with, and to prevent evasion of, the provisions of the BHC Act and the Board's regulations and orders issued thereunder. The commitments and conditions relied on by the Board in reaching this decision shall be deemed to be conditions imposed in writing by the Board in connection with its findings and decision, and, as such, may be enforced in proceedings under applicable law. This transaction shall not be consummated later than three months after the effective date of this order, unless such period is extended for good cause by the Board or the Federal Reserve Bank of St. Louis, acting pursuant to delegated authority.

By order of the Board of Governors,12 effective September 10, 1997. (signed) Jennifer J. Johnson Jennifer J. Johnson Deputy Secretary of the Board

Appendix A. Banking markets in Mississippi in which consummation of the proposal would not exceed the DOJ Guidelines without divestitures: Biloxi: Approximated by Hancock and Harrison Counties, plus the city of Ocean Springs in Jackson County. Union Planters would control 9.9 percent of the market deposits and would become the third largest depository institution in the market. The HHI would not increase and ten depository institutions would remain in the market after consummation of the proposal. Hattiesburg: Approximated by Forrest and Lamar Counties. Union Planters would control 25 percent of the market deposits and would remain the largest depository institution in the market. The HHI would increase 147 points to 2077. Eight depository institutions would remain in the market after consummation of the proposal. Indianola: Approximated by the southern half of Sunflower County. Union Planters would control 12.7 percent of the market deposits and would remain the third largest depository institution in the market. The HHI would not increase and three depository institutions would remain in the market after consummation of the proposal. Jackson: Approximated by Hinds, Madison and Rankin Counties, plus Copiah County excluding the town of Wesson, and including the town of Mendenhall in Simpson County. Union Planters would control 9.9 percent of the market deposits and would remain the third largest depository institution in the market. The HHI would not increase and 17 depository institutions would remain in the market after consummation of the proposal. Leflore County: Approximated by Leflore County. Union Planters would control 17.9 percent of the market deposits and would remain the fourth largest depository institution in the market. The HHI would increase 26 points to 2338. Five depository institutions would remain in the market after consummation of the proposal. Pascagoula: Approximated by Jackson County, less the town of Ocean Springs, and George County. Union Planters would control 9.4 percent of the market deposits and would become the fourth largest depository institution in the market. The HHI would not increase and eight depository institutions would remain in the market after consummation of the proposal. B. Banking markets in Mississippi in which consummation of the proposal would not exceed the DOJ Guidelines with divestitures: Covington County: Approximated by Covington County. With the proposed divestiture, Union Planters would control 33.2 percent of the market deposits and would remain the largest depository institution in the market. The HHI would not increase and four depository institutions would remain in the market after consummation of the proposal. Grenada County: Approximated by Grenada County. With the proposed divestiture, Union Planters would control 53.6 percent of the market deposits and would remain the largest depository institution in the market. The HHI would not increase and five depository institutions would remain in the market after consummation of the proposal.

Footnotes 1 Union Planters plans to merge Savings Bank with and into one of Union Planters's state-chartered subsidiary banks. The merger is subject to the approval of the Federal Deposit Insurance Corporation under section 18(c) of the Federal Deposit Insurance Act (12 U.S.C. § 1828(c)) (the "Bank Merger Act"). 2 All asset data are as of March 31, 1997. All deposit data are as of June 30, 1996. 3 In this context, depository institutions include commercial banks, savings banks, and savings associations. 4 In Mississippi, Union Planters currently is the fourth largest depository institution, controlling total deposits of $2.1 billion, representing approximately 8.5 percent of total deposits in depository institutions in that state, and Magna is the seventh largest depository institution, controlling total deposits of $739.1 million, representing approximately 3 percent of total deposits in depository institutions in that state. 5 In Alabama, Union Planters currently is the tenth largest depository institution, controlling total deposits of $418.7 million, representing less than 1 percent of total deposits in depository institutions in the state, and Magna is the 34th largest depository institution in Alabama, controlling $124 million in deposits, representing less than 1 percent of total deposits in depository institutions in the state. 6 12 C.F.R. 225.28(b)(4)(ii) (savings association) and 225.28(b)(1) and (2) (extensions of credit and related activities). 7 12 U.S.C. § 1843(c)(8). 8 Market share data before consummation are based on calculations in which the deposits of thrift institutions are included at 50 percent. The Board previously has indicated that thrift institutions have become, or have the potential to become, significant competitors of commercial banks. See WM Bancorp, 76 Federal Reserve Bulletin 788 (1990); National City Corporation, 70 Federal Reserve Bulletin 743 (1984). Thus, the Board has regularly included thrift deposits in the calculation of market share on a 50-percent weighted basis. See, e.g., First Hawaiian, Inc., 77 Federal Reserve Bulletin 52 (1991). Because the deposits of Savings Bank would be controlled by a commercial banking organization after consummation of the proposal, those deposits are included at 100 percent in the calculation of Union Planters' pro forma market share. See Norwest Corporation, 78 Federal Reserve Bulletin 452 (1992); First Banks, Inc., 76 Federal Reserve Bulletin 669 (1990). 9 Under the revised DOJ Guidelines, 49 Federal Register 26,823 (June 29, 1984), a market in which the post-merger HHI is between 1000 and 1800 is considered moderately concentrated, and a market in which the post-merger HHI exceeds 1800 is considered highly concentrated. The Justice Department has informed the Board that a bank merger or acquisition generally will not be challenged (in the absence of other factors indicating anticompetitive effects) unless the post-merger HHI is at least 1800 and the merger increases the HHI by more than 200 points. The Justice Department has stated that the higher than normal HHI thresholds for screening bank mergers for anticompetitive effects implicitly recognize the competitive effect of limited-purpose lenders and other non-depository financial institutions. 10 In each market in which Union Planters has committed to divest offices to mitigate the anticompetitive effects of the proposal, Union Planters has committed to execute sales agreements with a competitively suitable purchaser prior to consummation of the acquisition of Magna and to complete the divestitures within 180 days of consummation of the acquisition. Union Planters also has committed that, in the event it is unsuccessful in completing any divestiture within 180 days of consummation of the proposal, Union Planters will transfer the unsold branch(es) to an independent trustee that is acceptable to the Board and that will be instructed to sell the branches promptly. See BankAmerica Corporation, 78 Federal Reserve Bulletin 338 (1992); United New Mexico Financial Corporation, 77 Federal Reserve Bulletin 484 (1991). Union Planters has further committed to submit to the Board, prior to consummation, an executed trust agreement acceptable to the Board stating the terms of these divestitures. 11 The Washington County banking market consists of Washington County, Mississippi. 12 Voting for this action: Chairman Greenspan and Governors Kelley, Phillips, and Meyer. Absent and not voting: Vice Chair Rivlin.

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1997 Orders on banking applications