CAPITAL PRESIDENT AGREES NOT TO COMPETE

Van H. Puls, president and chief executive of Capital Bancorporation Inc. of Cape Girardeau, may lose his job under the proposed buyout by Union Planters Corp. of Memphis, Tenn.

But, he will receive $375,000 and health insurance for three years and the use of an automobile for two years.

The package is all part of a non-compete agreement signed by Puls.

The agreement bars Puls from competing for three years with Union Planters in any county in Missouri and Arkansas where Capital has a location, or any contiguous county. Puls said that is about half the counties in Missouri.

Union Planters Corp., a bank holding company at Memphis, has filed an application with the Federal Reserve Board for permission to acquire Capital. The two multi-bank holding companies announced an agreement in June for Capital Bancorporation to sell to Union Planters. The non-compete agreement is included with the application.

"Essentially, I'm out of the banking business for three years," Puls told the St. Louis Business Journal last week.

Puls added that he was offered a position with Union Planters, continuing his current job duties while reporting to Memphis.

"But, philosophically, I didn't want to accept that," he told the Journal, adding that he would be doing a lot of traveling the next three years.

Capital Bancorporation operates 35 facilities through seven subsidiary banks in Southeast, central and eastern Missouri and northern Arkansas. Three of the Capital banks are in Southeast Missouri -- Cape Girardeau, Sikeston and Perryville -- one in Columbia; one in the St. Louis suburbs, one In Springfield and one in Jonesboro, Ark. The company has total assets of about $982 million.

Union is a $9.7 billion multi-bank holding company, with 38 subsidiary banks and 375 banking facilities in Tennessee, Mississippi, Arkansas, Louisiana, Alabama and Kentucky.

Under the buyout agreement, announced by Union Planters and Capital Bancorporation, Union will acquire all of Capital's outstanding stock in a transaction valued at about $114 million. Union will exchange 1.185 shares of common stock for each common share of Capital. The acquisition is expected to be completed during the first quarter of 1996. Oilman Tony Novelly is Capital's biggest shareholder.

In the application to the Federal Reserve, Union says it wants to add a total of $5.8 million to the loan loss reserves at Capital's banks, except in Columbia. Union, according to the Sept. 11-17 issue of the St. Louis Business Journal, proposes adding $2.4 million to the allowance for loan losses at Capital Bank & Trust in Clayton. The Clayton bank currently has just over $2 million, or 1.98 percent of approximately $104 million in outstanding loans.

Puls defended Capital's loan quality, but called the purchase "a window of opportunity" for Union Planters to increase its reserve for losses. Capital's overall loan loss reserve in 1994 was 1.53 percent, while Union Planters' was 2.05 percent.

The move is not unusual for Union Planters, according to Bill Andrews, senior vice president and director of corporate marketing. Andrews said the bank is recalculating Capital's portfolio to bring it into line with Union Planters' loan loss reserve.