Union Planters Corp. has lost about 12% of its St. Louis deposits, most of which it got in the 1998 acquisition of Magna Group Inc., according to company figures.

The Memphis-based company, which established itself as a major player in St. Louis when it bought Magna in July 1998, currently has about $2.7 billion of deposits in the market. At yearend 1998 it had almost $3.1 billion there.

But analysts seem unconcerned by the runoff, though they've frequently dumped on other banks that have suffered such losses after a merger. The difference here seems to be in the reasons for the loss: A third of it is attributable to an accounting change and the rest to efforts to get rid of high-priced certificates of deposit.

And it helps that, unlike other bank companies that failed to retain acquired deposits, Union Planters does not expect this runoff to cut into earnings. In fact, the company's St. Louis operations increased its return on equity by 10 percentage points, to 26%, in 1999, and its return on assets from 1.1% to 1.8%, largely because some of those deposits are gone.

Michael Ross, president and chief executive officer of the bank's 44-branch St. Louis operation, said that most of the attrition came from certificates of deposit that were priced as high as 150 basis points above the market rate, and was expected.

"Our checking and savings balances haven't really changed," he said. "We were expecting a good amount of the erosion in the CDs, but I am glad to see we are keeping the other accounts."

Many of the high-priced accounts were crippling Union Planters' ability to generate strong earnings, he said. Some of the deposit customers lost were local municipalities that were paid high interest rates on their funds even though the bank was restricted to reinvesting the money in low-yielding government securities.

The company did not have to replace the loans, Mr. Ross said, because Union Planters' allowed the division's loans to grow to 78% of deposits, up from Magna's loan to deposit ratio of 55% before the merger.

Another part of the deposit loss can be attributed to the accountants. Magna's $125 million in trust deposits - about one-third of the loss - was simply moved from St. Louis to Union Planters' Memphis-based trust department.

As long as the runoff does not cut into earnings, analysts said they are not concerned.

"Deposits are down, but profits are up," said Joseph A. Stieven, an analyst with Stifel Nicolaus & Co. in St. Louis. "As long as that is the case, I am not alarmed."

Union Planters' situation is in stark contrast to what happened to First Union Corp. when it lost a comparable amount of deposits from one of its 1998 deals. The Charlotte, N.C.-based company's shares plummeted after it announced it had lost 9% of the deposits and 19% of customers acquired when it purchased CoreStates Financial Corp. in Philadelphia.

Christopher T. Kelley, an analyst with Morgan Keegan & Co. in Memphis, said that while he never likes to see banks losing deposit share, it is more acceptable in some cases than others.

"Following any merger, you do expect some runoff," he said. And Union Planters' decline "is not totally unexpected."

Union Planters was not the only large company to lose deposits in the market, according to Federal Deposit Insurance Corp. statistics. Bank of America Corp.'s local deposits fell 3.2% between June 1998 and June 1999, and St. Louis deposits at $7 billion-asset UMB Financial Corp. fell by about 2%.

Market observers say that the lion's share of the deposit money lost is either going into the stock market or into some of the community banks operating in St. Louis. In fact, an official at one large St. Louis competitor, who asked not to be named, said the deposits Union Planters is losing "are not anything we would want either."

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