The two St. Louis acquisitions Mercantile Bancorp. aims to complete over the next several months would bring its share of Missouiri deposits to nearly one fourth.

That's a big number, especially since there's a state law that prohibits banks from holding more than 13% of Missouri's deposit base.

But Mercantile is getting around the law because one of its proposed acquisitions - $9 billion-asset Roosevelt Financial Group Inc. - is a thrift, and Missouri law doesn't count thrift acquisitions toward the deposit cap. Mercantile is also buying $3.1 billion-asset Mark Twain Bancshares, a commercial bank.

Some people are angry about the thrift loophole, which Mercantile would be the first bank company to use.

"The law says what it says, but it doesn't have anything to do with the intent," said Jerry Sage, executive director of the Missouri Independent Bankers.

Mr. Sage, who heads a group steadfastly opposed to raising the deposit limit or allowing any company to circumvent it, said the statute was written in 1960, and though it doesn't expressly name savings and loans, it was meant to apply to all depository institutions.

Mr. Sage said he has asked a couple of lawyers to examine the law to determine if his group could challenge Mercantile's purchase of Roosevelt. He may also propose legislation to close the loophole.

Indeed, deposit caps are an issue the industry is going to have to address as consolidation continues. Forty-six states have such caps, which ranging from 10% in Iowa to 40% in New Mexico, according to the Conference of State Bank Supervisors.

The Midwest, one of the least consolidated areas of the country and one of the most active recently for bank mergers, has some of the strictest deposit limits.

Mercantile officials said even they were unsure if they could pull off the acquisition of Roosevelt until they presented the plan to Missouri banking officials.

"It was a subject of debate," said John Beirise, Mercantile's group president of emerging markets. "We couldn't be sure until we had a concrete example and put it before the Missouri Department of Finance."

In the past, Mercantile had lobbied, along with the newly acquired Boatmen's Bancshares, to raise Missouri's deposit limit from 13% to 30%, but state lawmakers rejected the proposal. Mr. Beirise said Mercantile began investigating last year whether it could do a thrift merger within the confines of state law and began talking with Roosevelt late last summer.

"We focused on this throughout the year, did our homework, and it seemed likely we'd get a favorable ruling," Mr. Beirise said.

Missouri Commissioner of Finance Earl Manning said he told Mercantile a week before it announced its deal with Roosevelt that the acquisition would not violate the state's deposit cap law. He also said Mercantile could convert Roosevelt into a bank, which it plans to do in early 1998, within the guidelines of the law.

Still, it took many observers by surprise. "I'm not sure everybody completely understood it," said Max Cook, president of the Missouri Banker's Association. "Mercantile certainly understood it."

"The S&L statutes are full of things like this," said Ellen Lamb, a spokeswoman for the Conference of State Bank Supervisors. S&Ls "were very small institutions" when these laws were being written, she said. "Obviously, the industry has far outgrown its legal structure."

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