<PAGE>   1
                UNITED STATES SECURITIES AND EXCHANGE COMMISSION

                              WASHINGTON, DC 20549

                                   FORM 10-Q


[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
                                  ACT OF 1934


               For the quarterly period ended September 30, 1998

                                       OR

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
                                  ACT OF 1934


                 For the transition period ________ to ________



                          Commission File No. 1-10160
                                              -------

                           UNION PLANTERS CORPORATION
             (Exact name of registrant as specified in its charter)


       Tennessee                                          62-0859007      
------------------------                      ---------------------------------
(State of incorporation)                      (IRS Employer Identification No.)


                      Union Planters Administrative Center
                          7130 Goodlett Farms Parkway
                            Memphis, Tennessee 38018

       Registrant's telephone number, including area code: (901) 580-6000


Indicate by check [X] mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months, and (2) has been subject to such filing
requirements for the past 90 days.


                                 Yes [X] No [ ]


Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of the latest practicable date.


          Class                               Outstanding at October 31, 1998
-------------------------                     -------------------------------
Common stock $5 par value                               136,063,035


<PAGE>   2


                  UNION PLANTERS CORPORATION AND SUBSIDIARIES
             FORM 10-Q FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998



                                     INDEX



<TABLE>
<CAPTION>
                                                                                              Page
                                                                                              ----
<S>                                                                                           <C> 
PART I.    FINANCIAL INFORMATION

      Item 1.   Financial Statements (Unaudited)

           a)   Consolidated Balance Sheet - September 30, 1998,
                September 30, 1997, and December 31, 1997...................................     3

           b)   Consolidated Statement of Earnings -
                Three and Nine Months Ended September 30, 1998 and 1997.....................     4

           c)   Consolidated Statement of Changes in Shareholders' Equity -
                Nine Months Ended September 30, 1998........................................     5

           d)   Consolidated Statement of Cash Flows -
                Nine Months Ended September 30, 1998 and 1997...............................     6

           e)   Notes to Unaudited Consolidated Financial Statements........................     7

      Item 2.   Management's Discussion and Analysis of Financial Condition and
                Results of Operations.......................................................    15

      Item 3.   Quantitative and Qualitative Disclosures About Market Risk..................    34


PART II.   OTHER INFORMATION

      Item 1.   Legal Proceedings...........................................................    36

      Item 2.   Changes in Securities.......................................................    36

      Item 3.   Defaults Upon Senior Securities.............................................    36

      Item 4.   Submission of Matters to a Vote of Security Holders.........................    36

      Item 5.   Other Information...........................................................    36

      Item 6.   Exhibits and Reports on Form 8-K............................................    36

      Signatures............................................................................    38
</TABLE>


                                       2
<PAGE>   3


                  UNION PLANTERS CORPORATION AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEET
                                  (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                      SEPTEMBER 30,                  
                                                                             -------------------------------       DECEMBER 31,
                                                                                 1998               1997               1997
                                                                             ------------       ------------       ------------
                                                                                          (DOLLARS IN THOUSANDS)

<S>                                                                          <C>                <C>                <C>
ASSETS
  Cash and due from banks .............................................      $    951,190       $  1,037,543       $  1,182,968
  Interest-bearing deposits at financial institutions .................            25,602            110,588             36,147
  Federal funds sold and securities purchased under agreements to            
      resell...........................................................           149,063            169,875            172,657
  Trading account assets ..............................................           255,583            232,709            187,419
  Loans held for resale ...............................................           202,833            159,669            175,699
  Available for sale investment securities (amortized cost: $7,733,707,
      $5,649,521, and $5,761,070, respectively) .......................         7,867,587          5,709,842          5,840,704
  Loans ...............................................................        19,687,321         18,971,885         19,162,214
    Less:   Unearned income ...........................................           (33,853)           (35,359)           (35,506)
            Allowance for losses on loans .............................          (352,643)          (291,084)          (310,385)
                                                                             ------------       ------------       ------------
          Net loans ...................................................        19,300,825         18,645,442         18,816,323
  Premises and equipment, net .........................................           533,178            503,646            497,267
  Accrued interest receivable .........................................           277,319            287,415            272,874
  FHA/VA claims receivable ............................................           141,580             82,985            134,112
  Mortgage servicing rights ...........................................           104,307             63,795             62,726
  Goodwill and other intangibles ......................................           361,445            195,930            188,363
  Other assets ........................................................           354,970            740,019            426,193
                                                                             ------------       ------------       ------------
          TOTAL ASSETS ................................................      $ 30,525,482       $ 27,939,458       $ 27,993,452
                                                                             ============       ============       ============

LIABILITIES AND SHAREHOLDERS' EQUITY
  Deposits
    Noninterest-bearing ...............................................      $  3,290,654       $  3,248,130       $  3,336,274
    Certificates of deposit of $100,000 and over ......................         2,661,614          2,437,457          2,386,533
    Other interest-bearing ............................................        17,336,631         15,115,303         15,480,340
                                                                             ------------       ------------       ------------
          Total deposits ..............................................        23,288,899         20,800,890         21,203,147
  Short-term borrowings ...............................................         1,829,275          1,777,953          1,784,347
  Short- and medium-term bank notes ...................................           105,000            285,000            135,000
  Federal Home Loan Bank advances .....................................           589,261            996,788            830,252
  Other long-term debt ................................................         1,048,797            730,145            735,945
  Accrued interest, expenses, and taxes ...............................           274,730            253,074            232,490
  Other liabilities ...................................................           456,953            414,767            403,550
                                                                             ------------       ------------       ------------
          TOTAL LIABILITIES ...........................................        27,592,915         25,258,617         25,324,731
                                                                             ------------       ------------       ------------

  Commitments and contingent liabilities ..............................                --                 --                 --
  Shareholders' equity
    Convertible preferred stock .......................................            24,501             57,240             54,709
    Common stock, $5 par value; 300,000,000 shares authorized;
       135,688,161 issued and outstanding (124,183,606 at September
       30, 1997 and 124,887,630 at December 31, 1997) .................           678,441            620,918            624,438
  Additional paid-in capital ..........................................           645,649            531,023            545,520
  Retained earnings ...................................................         1,517,121          1,444,721          1,409,088
  Unearned compensation ...............................................           (15,550)           (10,131)           (14,364)
  Unrealized gain on available for sale securities ....................            82,405             37,070             49,330
                                                                             ------------       ------------       ------------
          TOTAL SHAREHOLDERS' EQUITY ..................................         2,932,567          2,680,841          2,668,721
                                                                             ------------       ------------       ------------
          TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY ..................      $ 30,525,482       $ 27,939,458       $ 27,993,452
                                                                             ============       ============       ============
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.


                                       3
<PAGE>   4
                  UNION PLANTERS CORPORATION AND SUBSIDIARIES
                       CONSOLIDATED STATEMENT OF EARNINGS
                                  (UNAUDITED)

<TABLE>
<CAPTION>
                                                               THREE MONTHS ENDED              NINE MONTHS ENDED
                                                                  SEPTEMBER 30,                 SEPTEMBER 30,
                                                             ----------------------      ----------------------------
                                                               1998          1997            1998             1997
                                                             --------      --------      -----------       ----------
                                                                 (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

<S>                                                          <C>           <C>           <C>               <C>
INTEREST INCOME
  Interest and fees on loans ..........................      $439,486      $433,121      $ 1,310,019       $1,271,863
  Interest on investment securities
    Taxable ...........................................        89,739        80,090          254,760          241,134
    Tax-exempt ........................................        16,168        12,147           42,473           35,555
  Interest on deposits at financial institutions ......           158         1,358            1,113            2,167
  Interest on federal funds sold and securities
    purchased under agreements to resell ..............         2,444         3,707           11,061           11,483
  Interest on trading account assets ..................         3,964         3,593            9,787           11,732
  Interest on loans held for resale ...................         3,975         1,754            9,912            4,954
                                                             --------      --------      -----------       ----------
          Total interest income .......................       555,934       535,770        1,639,125        1,578,888
                                                             --------      --------      -----------       ----------

INTEREST EXPENSE
  Interest on deposits ................................       212,935       202,059          620,645          586,876
  Interest on short-term borrowings ...................        20,083        21,200           56,400           64,144
  Interest on long-term debt ..........................        34,272        31,550          103,574           92,138
                                                             --------      --------      -----------       ----------
          Total interest expense ......................       267,290       254,809          780,619          743,158
                                                             --------      --------      -----------       ----------

          NET INTEREST INCOME .........................       288,644       280,961          858,506          835,730
PROVISION FOR LOSSES ON LOANS .........................        47,151        38,791          122,436          104,440
                                                             --------      --------      -----------       ----------

          NET INTEREST INCOME AFTER PROVISION FOR
             LOSSES ON LOANS ..........................       241,493       242,170          736,070          731,290
                                                             --------      --------      -----------       ----------

NONINTEREST INCOME
  Service charges on deposit accounts .................        37,665        35,376          107,054          104,450
  Mortgage servicing income ...........................        14,906        13,839           44,527           42,457
  Bank card income ....................................        10,696        10,435           31,114           29,322
  Factoring commissions ...............................         8,108         8,115           22,849           21,993
  Trust service income ................................         6,545         5,859           19,238           17,452
  Profits and commissions from trading activities .....         1,222           408            4,653            5,686
  Investment securities gains (losses) ................         1,561         3,508          (15,111)           4,500
  Other income ........................................        41,814        51,920          146,161          111,786
                                                             --------      --------      -----------       ----------
          Total noninterest income ....................       122,517       129,460          360,485          337,646
                                                             --------      --------      -----------       ----------

NONINTEREST EXPENSE
  Salaries and employee benefits ......................       112,578       102,179          328,111          303,994
  Net occupancy expense ...............................        18,715        18,185           52,228           52,248
  Equipment expense ...................................        17,735        15,367           50,332           45,748
  Other expense .......................................       180,395        86,550          364,498          243,989
                                                             --------      --------      -----------       ----------
          Total noninterest expense ...................       329,423       222,281          795,169          645,979
                                                             --------      --------      -----------       ----------

          EARNINGS BEFORE INCOME TAXES ................        34,587       149,349          301,386          422,957
Applicable income taxes ...............................        17,130        51,080          113,321          144,291
                                                             --------      --------      -----------       ----------
          NET EARNINGS ................................      $ 17,457      $ 98,269      $   188,065       $  278,666
                                                             ========      ========      ===========       ==========

          NET EARNINGS APPLICABLE TO COMMON SHARES ....      $ 16,955      $ 97,144      $   186,461       $  274,832
                                                             ========      ========      ===========       ==========

EARNINGS PER COMMON SHARE
  Basic ...............................................      $   0.13      $   0.79      $      1.44       $     2.25
  Diluted .............................................          0.13          0.76             1.41             2.18

AVERAGE COMMON SHARES OUTSTANDING (IN THOUSANDS)
  Basic ...............................................       133,899       123,748          129,561          122,069
  Diluted .............................................       135,261       130,069          133,784          127,925
</TABLE>


The accompanying notes are an integral part of these consolidated financial
statements.


                                       4
<PAGE>   5


                  UNION PLANTERS CORPORATION AND SUBSIDIARIES
           CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
                      NINE MONTHS ENDED SEPTEMBER 30, 1998
                                  (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                                       UNREALIZED
                                                                                                        GAIN ON
                                     CONVERTIBLE              ADDITIONAL                               AVAILABLE
                                      PREFERRED     COMMON      PAID-IN      RETAINED      UNEARNED     FOR SALE
                                        STOCK       STOCK       CAPITAL      EARNINGS    COMPENSATION  SECURITIES     TOTAL
                                      --------    ---------   ----------   -----------   ------------  ----------  -----------
                                                                          (DOLLARS IN THOUSANDS)

<S>                                   <C>         <C>         <C>         <C>            <C>           <C>         <C>        
BALANCE, JANUARY 1, 1998 ..........   $ 54,709    $ 624,438    $ 545,520    $ 1,409,088    $(14,364)     $49,330   $ 2,668,721

Comprehensive income
 Net earnings .....................         --           --           --        188,065          --           --       188,065
 Other comprehensive income,
   net of taxes:
   Net change in the unrealized
   gain on available for sale 
   securities......................         --           --           --             --          --       31,296        31,296
                                      --------    ---------    ---------    -----------    --------      -------   -----------
          Total comprehensive 
            income.................         --           --           --        188,065          --       31,296       219,361
Cash dividends
 Common stock, $1.50 per share ....         --           --           --       (149,572)         --           --      (149,572)
 Preferred stock, $1.50 per 
   share...........................         --           --           --         (1,604)         --           --        (1,604)
 Pooled institutions prior to
   pooling ........................         --           --           --        (27,503)         --           --       (27,503)
Common stock issued under
  employee benefit plans and
  dividend reinvestment plan,
  net of stock exchanged ..........         --        8,902       40,229           (137)       (720)          --        48,274
Issuance of common stock for
  acquisitions ....................         --       46,604      145,712        114,394        (466)       1,779       308,023
Conversion of debt of
  acquired institution ............         --        3,986       14,026             --          --           --        18,012
Other stock transactions of
  pooled institutions prior to 
  pooling .........................         --       (8,430)    (111,514)        21,466          --           --       (98,478)
Conversion of preferred stock .....    (30,208)       7,552       22,654             --          --           --            (2)
Common stock repurchased for
  use in business combinations ....         --       (4,611)     (10,978)       (37,076)         --           --       (52,665)
                                      --------    ---------    ---------    -----------    --------      -------   -----------
BALANCE, SEPTEMBER 30, 1998  ......   $ 24,501    $ 678,441    $ 645,649    $ 1,517,121    $(15,550)     $82,405   $ 2,932,567
                                      ========    =========    =========    ===========    ========      =======   ===========
</TABLE>

--------------------
<TABLE>
<CAPTION>
                                                       TAX
                                    BEFORE-TAX      (EXPENSE)     NET OF TAX
                                      AMOUNT         BENEFIT        AMOUNT
                                     --------       --------       --------

<S>                                 <C>            <C>            <C>
DISCLOSURE OF RECLASSIFICATION
AMOUNT:
Net change in the unrealized
  gains on available for sale
  securities arising during
  the period .................      $  36,558      $ (14,495)     $  22,063
Less: reclassification for
  gains (losses) included in
  net income..................        (15,111)         5,878         (9,233)
                                    ---------      ---------      ---------
Net change in the unrealized
   gain on available for sale
   securities..................     $  51,669      $ (20,373)     $  31,296
                                    =========      =========      =========
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.


                                       5
<PAGE>   6


                  UNION PLANTERS CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENT OF CASH FLOWS
                                  (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                                      NINE MONTHS ENDED
                                                                                                         SEPTEMBER 30,
                                                                                                -----------------------------
                                                                                                    1998             1997
                                                                                                -----------       -----------
                                                                                                 (DOLLARS IN THOUSANDS)
<S>                                                                                             <C>               <C>
OPERATING ACTIVITIES
  Net earnings ...........................................................................      $   188,065       $   278,666
  Reconciliation of net earnings to net cash provided by operating activities:
    Provision for losses on loans, other real estate, and FHA/VA foreclosure claims ......          127,459           106,688
    Provisions for merger-related charges ................................................           51,152                --
    Depreciation and amortization of premises and equipment ..............................           46,937            37,627
    Amortization and write-off of goodwill, other intangibles, and mortgage servicing
      rights..............................................................................           35,764            28,182
    Net accretion of investment securities ...............................................            3,744            (4,217)
    Net realized (gains) losses on sales of investment securities ........................           15,111            (4,500)
    Deferred income tax (benefit) expense ................................................          (35,294)             (125)
    (Increase) decrease in assets
          Trading account assets and loans held for resale ...............................          (95,298)          (18,508)
          Other assets ...................................................................           65,772          (282,774)
    Increase (decrease) in accrued interest, expenses, taxes, and other liabilities ......           22,402           (16,429)
    Other, net ...........................................................................            2,039             3,985
                                                                                                -----------       -----------
          Net cash provided by operating activities ......................................          427,853           128,595
                                                                                                -----------       -----------

INVESTING ACTIVITIES
  Net decrease (increase) in short-term investments ......................................            6,240           (85,716)
  Proceeds from sales of available for sale securities ...................................        1,051,902         1,116,665
  Proceeds from maturities, calls, and prepayments of available for sale securities ......        2,993,834         1,985,512
  Purchases of available for sale securities .............................................       (5,616,048)       (2,955,693)
  Net decrease (increase) in loans .......................................................          744,963          (250,480)
  Net cash received (used) from acquisitions of financial institutions ...................        1,434,729           (18,920)
  Purchases of premises and equipment, net ...............................................          (49,294)          (55,013)
  Other, net .............................................................................               --            10,299
                                                                                                -----------       -----------
          Net cash provided (used) by investing activities ...............................          566,326          (253,346)
                                                                                                -----------       -----------

FINANCING ACTIVITIES
  Net decrease in deposits ...............................................................         (924,148)          (34,793)
  Net increase in short-term borrowings ..................................................           29,021           117,098
  Proceeds from long-term debt, net ......................................................          722,340           414,080
  Repayment of long-term debt ............................................................         (808,294)         (373,114)
  Proceeds from issuance of common stock .................................................           36,096            21,936
  Purchase and retirement of common stock ................................................         (151,095)          (20,898)
  Cash dividends paid ....................................................................         (179,082)         (116,891)
  Other, net .............................................................................               --             6,008
                                                                                                -----------       -----------
          Net cash provided (used) by financing activities ...............................       (1,275,162)           13,426
                                                                                                -----------       -----------
  Net decrease in cash and cash equivalents ..............................................         (280,983)         (111,325)
  Cash and cash equivalents at the beginning of the period ...............................        1,355,625         1,318,743
                                                                                                -----------       -----------
  Cash and cash equivalents at the end of the period .....................................      $ 1,074,642       $ 1,207,418
                                                                                                ===========       ===========

SUPPLEMENTAL DISCLOSURES
  Cash paid for
    Interest .............................................................................      $   767,867       $   733,930
    Taxes ................................................................................          121,220           131,179
  Unrealized gain on available for sale securities .......................................          133,880            59,906
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements


                                       6
<PAGE>   7


                  UNION PLANTERS CORPORATION AND SUBSIDIARIES
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1.  PRINCIPLES OF ACCOUNTING

      The consolidated financial statements of Union Planters Corporation and
its subsidiaries (the Corporation) have been prepared in accordance with
generally accepted accounting principles. The foregoing financial statements
are unaudited; however, in the opinion of management, all adjustments,
consisting only of normal recurring adjustments, necessary for a fair statement
of the consolidated financial condition, results of operations, and cash flows
for the interim periods have been included.

      The accounting policies followed by the Corporation for interim financial
reporting are consistent with the accounting policies followed for annual
financial reporting except as noted below. The notes included herein should be
read in conjunction with the consolidated financial statements and related
notes included in Exhibit 99.1 to this Form 10-Q (1997 Restated Financial
Statements). The Corporation's consolidated financial statements for December
31, 1997 were restated for four acquisitions that were completed in the third
quarter of 1998 and accounted for as poolings of interests (see Note 2 to these
interim financial statements). The 1997 Restated Financial Statements became
the historical financial statements of the Corporation for 1997 upon the filing
of this Form 10-Q. Certain 1997 amounts have been reclassified to be consistent
with the 1998 financial reporting presentation.

      Effective January 1, 1998, the Corporation adopted the provisions of
Statement of Financial Accounting Standards (SFAS) No. 130, "Reporting
Comprehensive Income," which are reflected in the Consolidated Statement of
Changes in Shareholders' Equity.


                                       7
<PAGE>   8


NOTE 2.  ACQUISITIONS

CONSUMMATED ACQUISITIONS

     Reference is made to Note 2 of the 1997 Restated Financial Statements for
information regarding acquisitions completed in 1997.

<TABLE>
<CAPTION>
                                            DATE        COMMON SHARES     METHOD OF
            INSTITUTION                 ACQUIRED          ISSUED       ACCOUNTING   TOTAL ASSETS  TOTAL EQUITY
-------------------------------------   ---------        ---------     ----------   ------------  ------------
                                                                                       (DOLLARS IN MILLIONS)

<S>                                     <C>            <C>              <C>         <C>            <C>
 
Sho-Me Financial Corporation ......      1/1/98           1,153,459      Purchase        $   374      $   61
  Springfield, Missouri (1)

Security Bancshares, Inc. .........      4/1/98             490,821      Pooling of          146          15
  Des Arc, Arkansas                                                      Interests

Magna Group, Inc. (MGR) ...........      7/1/98          33,398,818      Pooling of        7,683         639
  St. Louis, Missouri (2) and (3)                                        Interests

Peoples First Corporation (Peoples)      7/1/98           6,031,031      Pooling of        1,427         142
  Paducah, Kentucky (2)                                                  Interests

Merchants Bancshares, Inc. ........      7/31/98          2,018,744      Pooling of          565          58
(Merchants)                                                              Interests
 Houston, Texas (2)                     

CB&T, Inc. ........................      7/7/98           1,449,127      Pooling of          278          34
  McMinnville, Tennessee                                                 Interests

Capital Savings Bancorp, Inc. .....      7/8/98             724,613      Pooling of          207          21
  Jefferson City, Missouri                                               Interests

First National Bancshares of
  Wetumpka, Inc. ..................      7/31/98            835,709      Pooling of          202          23
   Wetumpka, Alabama                                                     Interests

Alvin Bancshares, Inc. ............      8/1/98             423,869      Pooling of          117          12
  Alvin, Texas                                                           Interests

First Community Bancshares, Inc. ..      8/5/98             125,782      Pooling of           39           1
  Middleton, Tennessee                                                   Interests

Duck Hill Bank ....................      8/1/98              42,396      Purchase             21           3
  Duck Hill, Mississippi (4)

AMBANC Corporation (AMBANC) .......      8/31/98          3,387,548      Pooling of          731          75
  Vincennes, Indiana (2)                                                 Interests

Transflorida Bank .................      8/31/98          1,655,371      Pooling of          334          40
  Boca Raton, Florida                                                    Interests

Purchase of 24 branches and
  assumption of $1.5 billion of
  deposits of California Federal
  Bank in  Florida (5) ............      9/11/98                N/A      Purchase          1,389         N/A
      
                                                          ----------                     -------      ------
          TOTAL ...................                       51,737,288                     $13,513      $1,124
                                                          ==========                     =======      ======
</TABLE>

--------------------

(1)  The Corporation repurchased the majority of the shares issued in this
     transaction. Goodwill and other intangibles resulting from the transaction
     were approximately $29 million.
(2)  The Corporation has restated its 1997 historical financial statements for
     these acquisitions, which are considered significant. See Exhibit 99.1 to
     this Form 10-Q.
(3)  On May 1, 1998, MGR acquired Charter Bank, S.B. (Charter), an Illinois
     savings bank. At the date of consummation, Charter had total assets of
     approximately $406 million, total deposits of approximately $309 million,
     and total shareholder's equity of approximately $67 million. Goodwill and
     other intangibles resulting from the Charter acquisition were
     approximately $47 million.
(4)  The Corporation repurchased the majority of the shares issued in this
     transaction. Goodwill and other intangibles resulting from the transaction
     were $594,000.
(5)  The premium paid for the deposits purchased and the resulting goodwill and
     other intangibles were approximately $110 million.


                                       8
<PAGE>   9


      The following table summarizes the impact of the significant acquisitions
shown below which were accounted for as poolings of interests.

<TABLE>
<CAPTION>
                                              NET INTEREST INCOME      NONINTEREST INCOME        NET EARNINGS
                                              -------------------      ------------------        ------------
                                                                 (DOLLARS IN MILLIONS)

<S>                                           <C>                      <C>                       <C>
JANUARY 1, 1998 TO DATE OF ACQUISITION
         MGR .........................                $    126            $     20                 $     12
         Peoples .....................                      29                   5                       --
         AMBANC ......................                       7                   3                       --
         Merchants ...................                      17                   4                        2
                                                      --------            --------                 --------
               TOTAL .................                $    179            $     32                 $     14
                                                      ========            ========                 ========


NINE MONTHS ENDED SEPTEMBER 30, 1997
        Union Planters ...............                $    574            $    273                 $    203
        MGR ..........................                     178                  48                       50
        Peoples ......................                      43                   8                       14
        AMBANC .......................                      21                   5                        6
        Merchants ....................                      20                   5                        6
                                                      --------            --------                 --------
               UNION PLANTERS POOLED .                $    836            $    339                 $    279
                                                      ========            ========                 ========
</TABLE>

PENDING ACQUISITIONS
      Through its acquisition program, the Corporation has the following
pending acquisitions, which are considered probable of consummation.

<TABLE>
<CAPTION>
                                                  PROJECTED                                        ANTICIPATED
                                                 ACQUISITION            APPROXIMATE                 METHOD OF      APPROXIMATE
            INSTITUTION                              DATE              CONSIDERATION               ACCOUNTING     TOTAL ASSETS
----------------------------------------------   -----------------------------------------       --------------   ------------
                                                                                                     (DOLLARS IN MILLIONS)
<S>                                              <C>                   <C>                       <C>              <C>
Purchase 56 branches of First Chicago
  NBD Corporation in Indiana .................       2/12/99           $294 million              Purchase          $   1,800
                                                                       premium in cash (1)

Ready State Bank .............................      12/31/98           3,214,000 shares          Pooling                 595
  Hialeah, Florida                                                     of common stock           of interests

First Mutual Bancorp, Inc. ...................      12/31/98           1,100,000 shares          Purchase                370
  Decatur, Illinois (2)                                                of common stock

Southeast Bancorp, Inc. ......................      12/31/98           1,250,000 shares          Pooling                 335
  Corbin, Kentucky                                                     of common stock           of interests

First & Farmers Bancshares, Inc. .............       1/31/99           $76 million in cash       Purchase                275
  Somerset, Kentucky

FSB, Inc. ....................................      12/31/98           907,000 shares            Pooling                 145
  Covington, Tennessee                                                 of common stock           of interests

La Place Bancshares, Inc. ....................      12/31/98           412,000 shares            Pooling
  La Place, Louisiana                                                  of common stock           of interests             70
                                                                                                                   ---------

          TOTAL ..............................                                                                     $   3,590
                                                                                                                   =========
</TABLE>

--------------------

(1)  The purchase price of the premises and equipment to be purchased has not
     yet been determined.
(2)  The Corporation intends to purchase, in the open market, approximately one
     million UPC common shares to facilitate its purchase of First Mutual
     Bancorp, Inc.


                                       9
<PAGE>   10


NOTE 3.  LOANS

      Loans are summarized by type as follows:

<TABLE>
<CAPTION>
                                                           SEPTEMBER 30,                    
                                                   ----------------------------      DECEMBER 31,
                                                       1998             1997             1997
                                                   -----------      -----------      -----------
                                                               (DOLLARS IN THOUSANDS)

<S>                                                <C>              <C>              <C>        
Commercial, financial, and agricultural .....      $ 3,418,843      $ 3,112,319      $ 3,210,652
Foreign .....................................          221,140          148,115          207,343
Accounts receivable - factoring .............          643,894          604,214          579,067
Real estate - construction ..................        1,060,420          938,795          960,405
Real estate - mortgage
  Secured by 1-4 family residential .........        5,724,171        5,370,623        5,361,456
  FHA/VA government-insured/guaranteed ......          762,998        1,385,442        1,331,993
  Other mortgage ............................        4,155,489        3,783,698        3,828,230
Home equity .................................          472,618          430,115          443,762
Consumer
  Credit cards and related plans ............          535,362          620,418          612,902
  Other consumer ............................        2,625,244        2,510,068        2,560,649
Direct lease financing ......................           67,142           68,078           65,755
                                                   -----------      -----------      -----------
          TOTAL LOANS .......................      $19,687,321      $18,971,885      $19,162,214
                                                   ===========      ===========      ===========
</TABLE>
      Nonperforming loans are summarized as follows:

<TABLE>
<CAPTION>
                                                                          SEPTEMBER 30,         DECEMBER 31,
                                                                               1998                 1997
                                                                          -------------         ------------
                                                                                (DOLLARS IN THOUSANDS)

<S>                                                                        <C>                  <C>
NONACCRUAL LOANS
  Domestic....................................................             $   141,933          $   132,672
  Foreign.....................................................                   1,276                   96
RESTRUCTURED LOANS............................................                   6,414               15,250
                                                                           -----------          -----------
          TOTAL NONPERFORMING LOANS...........................             $   149,623          $   148,018
                                                                           ===========          ===========

FHA/VA GOVERNMENT-INSURED/GUARANTEED LOANS ON NONACCRUAL STATUS            $     9,309          $    14,933
                                                                           ===========          ===========
</TABLE>


NOTE 4.  ALLOWANCE FOR LOSSES ON LOANS

      The changes in the allowance for losses on loans for the three and nine
months ended September 30, 1998, are summarized as follows:

<TABLE>
<CAPTION>
                                                                         THREE MONTHS ENDED       NINE MONTHS ENDED
                                                                         SEPTEMBER 30, 1998      SEPTEMBER 30, 1998
                                                                         ------------------      ------------------
                                                                                   (DOLLARS IN THOUSANDS)

<S>                                                                      <C>                     <C>         
BEGINNING BALANCE.............................................              $    323,132            $    310,385
Provision for losses on loans.................................                    47,152                 122,436
Recoveries of loans previously charged off....................                     6,215                  19,628
Loans charged off.............................................                   (37,515)               (123,530)
Increase due to acquisitions..................................                    13,659                  23,724
                                                                            ------------            ------------
BALANCE, SEPTEMBER 30, 1998...................................              $    352,643            $    352,643
                                                                            ============            ============
</TABLE>


      As of September 30, 1998, the amount of the Corporation's impaired loans
and the disclosures related thereto were not considered significant.


                                      10
<PAGE>   11


NOTE 5.  INVESTMENT SECURITIES

      The amortized cost and fair value of investment securities are summarized
as follows:

<TABLE>
<CAPTION>
                                                                                     SEPTEMBER 30, 1998
                                                         --------------------------------------------------------------------------
                                                                                         UNREALIZED
                                                         AMORTIZED            --------------------------------
                                                            COST                 GAINS               LOSSES             FAIR VALUE
                                                         -----------          -----------          -----------          ----------
                                                                                   (DOLLARS IN THOUSANDS)

<S>                                                      <C>                  <C>                  <C>                  <C>
AVAILABLE FOR SALE SECURITIES
U. S. Government obligations
  U. S. Treasury..................................       $   321,269          $     5,790          $        --          $   327,059
  U. S. Government agencies
    Collateralized mortgage obligations...........         2,284,300               27,892                7,627            2,304,565
    Mortgage-backed...............................           692,543               23,463                  179              715,827
    Other.........................................         2,246,205               21,942                  442            2,267,705
                                                         -----------          -----------          -----------          -----------
          Total U. S. Government obligations......         5,544,317               79,087                8,248            5,615,156
Obligations of states and political subdivisions..         1,246,307               57,464                  431            1,303,340
Other stocks and securities.......................           943,083                6,820                  812              949,091
                                                         -----------          -----------          -----------          -----------
          TOTAL AVAILABLE FOR SALE SECURITIES.....       $ 7,733,707          $   143,371          $     9,491          $ 7,867,587
                                                         ===========          ===========          ===========          ===========


<CAPTION>
                                                                                      DECEMBER 31, 1997
                                                         --------------------------------------------------------------------------
                                                                                         UNREALIZED
                                                         AMORTIZED            --------------------------------
                                                             COST                GAINS                LOSSES             FAIR VALUE
                                                         -----------          -----------          -----------          -----------
                                                                                   (DOLLARS IN THOUSANDS)

<S>                                                      <C>                  <C>                  <C>                  <C>
AVAILABLE FOR SALE SECURITIES
U. S. Government obligations
  U. S. Treasury..................................       $   987,384          $     5,207          $       907          $   991,684
  U. S. Government agencies
    Collateralized mortgage obligations...........         1,237,290                5,471                4,827            1,237,934
    Mortgage-backed...............................           951,955               24,151                1,061              975,045
    Other.........................................         1,294,531               10,158                2,319            1,302,370
                                                         -----------          -----------          -----------          -----------
          Total U. S. Government obligations......         4,471,160               44,987                9,114            4,507,033
Obligations of states and political subdivisions..           890,912               44,159                  851              934,220
Other stocks and securities.......................           398,998                1,369                  916              399,451
                                                         -----------          -----------          -----------          -----------
          TOTAL AVAILABLE FOR SALE SECURITIES.....       $ 5,761,070          $    90,515          $    10,881          $ 5,840,704
                                                         ===========          ===========          ===========          ===========
</TABLE>

      Investment securities having a carrying value of approximately $3.1
billion at September 30, 1998 and $3.3 billion at December 31, 1997,
respectively, were pledged to secure public and trust funds on deposit,
securities sold under agreements to repurchase and Federal Home Loan Bank
advances.

      The following table presents the gross realized gains and losses on
investment securities for the nine months ended September 30, 1998 and 1997.

<TABLE>
<CAPTION>
                                                                  REALIZED GAINS                            REALIZED LOSSES
                                                         --------------------------------          --------------------------------
                                                             1998                 1997                 1998                 1997
                                                         -----------          -----------          -----------          -----------
                                                                                   (DOLLARS IN THOUSANDS)

<S>                                                      <C>                  <C>                  <C>                  <C>        
Available for sale securities...............             $     8,731          $     6,464          $    23,842          $     1,964
                                                         ===========          ===========          ===========          ===========
</TABLE>

NOTE 6. OTHER ASSETS

      Other assets include receivables related to GNMA, FNMA, investors,
escrows, and foreclosure advances; investment portfolio receivables; and
miscellaneous receivables totaling $41.2 million, $438.9 million and $126.3
million, respectively at September 30, 1998, September 30, 1997, and December
31, 1997. The larger balance at September 30, 1997 is due primarily to trade
date receivables related to the securitization and sale of single family
residential mortgages.


                                       11
<PAGE>   12


NOTE 7.  OTHER NONINTEREST INCOME AND EXPENSE

<TABLE>
<CAPTION>
                                                                THREE MONTHS ENDED                         NINE MONTHS ENDED
                                                                   SEPTEMBER 30,                             SEPTEMBER 30,
                                                         --------------------------------          --------------------------------
                                                             1998                 1997                 1998                 1997
                                                         ------------         -----------          -----------          -----------
                                                                                   (DOLLARS IN THOUSANDS)
<S>                                                      <C>                  <C>                  <C>                  <C>
OTHER NONINTEREST INCOME
  Gain on sale of securitized loans...................   $        --          $        --          $    19,605          $        --
  Gain on sale of branches/deposits and
     other selected assets............................            (3)              10,795                2,787               11,166
  Gain on sale of residential mortgages...............         3,138                9,605                9,015               12,489
  Mortgage origination fees...........................         3,916                1,884                7,580                2,849
  Customer ATM usage fees.............................         5,361                4,611               14,308               12,855
  Insurance commissions...............................         3,589                3,278               10,218                9,549
  Annuity sales income................................         2,631                2,056                5,273                6,759
  Brokerage fee income................................         4,754                3,888               14,492               10,086
  Letters of credit fees..............................         1,741                1,500                4,710                4,357
  VSIBG partnership earnings..........................           540                  787                2,432                1,626
  Other income........................................        16,147               13,516               55,741               40,050
                                                         -----------          -----------          -----------          -----------
          TOTAL OTHER NONINTEREST INCOME..............   $    41,814          $    51,920          $   146,161          $   111,786
                                                         ===========          ===========          ===========          ===========

OTHER NONINTEREST EXPENSE
  Merger-related expenses.............................   $    77,776          $     4,733          $    94,818          $     5,364
  Amortization of mortgage servicing rights...........         5,745                4,406               15,755               12,897
  Amortization of goodwill and other intangibles......         7,622                5,452               19,931               15,283
  Other contracted services...........................         7,540                7,085               19,407               21,083
  Stationery and supplies.............................         6,594                6,485               19,745               19,237
  Postage and carrier.................................         6,883                6,636               20,977               18,636
  Advertising and promotion...........................         5,051                5,357               17,045               15,028
  Communications......................................         6,265                4,812               17,850               14,048
  Other personnel services............................         4,017                3,152               10,477                8,851
  Other real estate expense...........................         2,480                2,499                7,285                6,796
  Miscellaneous charge-offs...........................         2,845                2,927                8,703                8,273
  Legal fees..........................................         2,780                2,794                9,139                8,668
  Provision for losses on FHA/VA  foreclosure claims..           824                  888                3,546                2,327
  Taxes other than income.............................         2,852                2,933                9,563                8,486
  Travel..............................................         2,447                2,238                7,062                6,401
  Consultant fees.....................................         3,679                2,416                7,693                6,642
  Merchant credit card charges........................         3,513                2,706                9,471                7,340
  Dues, subscriptions, and contributions..............         1,658                1,818                5,569                5,599
  Brokerage and clearing fees on trading activities...         1,141                  968                4,009                3,440
  Accounting and audit fees...........................           921                1,208                3,278                3,688
  Insurance...........................................         1,184                1,242                3,044                3,880
  FDIC insurance......................................           744                1,219                1,140                3,509
  Federal Reserve fees................................         1,040                  797                3,010                2,241
  Prepayment penalty--FHLB advances...................         5,860                   --                6,555                   --
  Write-off of impaired assets........................         7,513                   --                7,513                   --
  Other expense.......................................        11,421               11,779               31,913               36,272
                                                         -----------          -----------          -----------          -----------
          TOTAL OTHER NONINTEREST EXPENSE.............   $   180,395          $    86,550          $   364,498          $   243,989
                                                         ===========          ===========          ===========          ===========
</TABLE>

NOTE 8.  INCOME TAXES

      Applicable income taxes for the nine months ended September 30, 1998,
were $113.3 million, resulting in an effective tax rate of 37.6%. Applicable
income taxes for the same period in 1997 were $144.3 million, resulting in an
effective tax rate of 34.1%. The increase in the effective rate in 1998, as
compared to 1997, is due primarily to nondeductible merger-related expenses and
the change in the mix of taxable and nontaxable revenues. The tax expense
(benefit) applicable to investment securities gains and losses for the nine
months ended September 30, 1998 and 1997 was $5.9 million and $1.8 million,
respectively.

      At September 30, 1998, the Corporation had a net deferred tax asset of
$147.7 million compared to $113.8 million at December 31, 1997. The net
deferred tax asset includes a deferred tax liability related to the net
unrealized gain on available for sale securities of $39.6 million and $29.9
million at those dates, respectively. Based upon historical earnings and
anticipated future earnings, management believes that normal operations will
generate sufficient taxable income to realize in full these deferred tax
benefits. Therefore, no extraordinary strategies are deemed necessary by
management to generate taxable income for purposes of realizing the net
deferred tax asset.


                                      12
<PAGE>   13


NOTE 9.  BORROWINGS

SHORT-TERM BORROWINGS

      Short-term borrowings include federal funds purchased and securities sold
under agreements to repurchase and other short-term borrowings. Federal funds
purchased arise primarily from the Corporation's market activity with its
correspondent banks and generally mature in one business day. Securities sold
under agreements to repurchase are secured by U. S. Government and agency
securities.

      Short-term borrowings are summarized as follows:

<TABLE>
<CAPTION>
                                                                                    SEPTEMBER 30,                   
                                                                           --------------------------------          DECEMBER 31,
                                                                               1998                 1997                 1997
                                                                           -----------          -----------          -----------
                                                                                          (DOLLARS IN THOUSANDS)
<S>                                                                        <C>                  <C>                  <C>
BALANCES AT QUARTER END:
Federal funds purchased and securities sold
  under agreements to repurchase..............................             $ 1,802,136          $ 1,550,580          $ 1,553,310
FHLB advances.................................................                  15,000              208,485              210,860
Other short-term borrowings...................................                  12,139               18,888               20,177
                                                                           -----------          -----------          -----------
          Total short-term borrowings.........................             $ 1,829,275          $ 1,777,953          $ 1,784,347
                                                                           ===========          ===========          ===========

FEDERAL FUNDS PURCHASED AND SECURITIES SOLD UNDER
  AGREEMENTS TO REPURCHASE
          Daily average balance...............................             $ 1,418,978          $ 1,243,994          $ 1,260,919
          Weighted average interest rate......................                    5.00%                4.97%                4.98%
</TABLE>

SHORT- AND MEDIUM-TERM BANK NOTES

      The Corporation's principal subsidiary, Union Planters Bank, National
Association (UPB), has a $1-billion short-and medium-term bank note program to
supplement UPB's funding sources. Under the program UPB may from time to time
issue bank notes having maturities ranging from 30 days to one year from their
respective issue dates (Short-Term Bank Notes) and bank notes having maturities
of more than one year to 30 years from their respective dates of issue
(Medium-Term Bank Notes). At September 30, 1998 and December 31, 1997, UPB had
no Short-Term Bank Notes outstanding. A summary of the Medium-Term Bank Notes
follows.

<TABLE>
<CAPTION>
                                                                            SEPTEMBER 30, 1998        DECEMBER 31, 1997
                                                                            ------------------        -----------------
                                                                                       (DOLLARS IN THOUSANDS)

<S>                                                                         <C>                       <C>        
Balances at period end........................................              $      105,000            $     135,000
Fixed-rate notes..............................................                     105,000                  135,000
Range of maturities...........................................                8/99 - 10/01             8/98 - 10/01
</TABLE>

FEDERAL HOME LOAN BANK (FHLB) ADVANCES

      Certain of the Corporation's banking and thrift subsidiaries had
outstanding advances from the FHLB under Blanket Agreements for Advances and
Security Agreements (the Agreements). The Agreements enable these subsidiaries
to borrow funds from the FHLB to fund mortgage loan programs and to satisfy
certain other funding needs. The value of the mortgage-backed securities and
mortgage loans pledged under the Agreements must be maintained at not less than
115% and 150%, respectively, of the advances outstanding. At September 30,
1998, the Corporation had an adequate amount of mortgage-backed securities and
loans to satisfy the collateral requirements. A summary of the advances is as
follows.

<TABLE>
<CAPTION>
                                                                                   SEPTEMBER 30,                   
                                                                          ---------------------------------        DECEMBER 31,
                                                                               1998               1997                 1997
                                                                          --------------       -------------       ------------
                                                                                          (DOLLARS IN THOUSANDS)
<S>                                                                       <C>                  <C>                 <C>        
Balances at period end........................................            $     589,261        $     996,788       $     830,252
Range of interest rates.......................................             3.25% - 7.95%        3.25% - 8.95%       3.25% - 8.95%
Range of maturities...........................................              1998 - 2015          1997 - 2025         1998 - 2017
</TABLE>


                                      13
<PAGE>   14

OTHER LONG-TERM DEBT

      The Corporation's other long-term debt is summarized as follows:

<TABLE>
<CAPTION>
                                                                                    SEPTEMBER 30,                   
                                                                           --------------------------------          DECEMBER 31,
                                                                                1998               1997                 1997
                                                                           -----------          -----------          -----------
                                                                                          (DOLLARS IN THOUSANDS)

<S>                                                                        <C>                  <C>                  <C>
Corporation-Obligated Mandatorily Redeemable
  Capital Pass-through Securities of Subsidiary Trust
  holding solely a Corporation-Guaranteed Related
  Subordinated Note (Trust Preferred Securities)..............             $   199,000          $   198,965          $   198,973
Variable-rate asset-based certificates........................                 275,000              275,000              275,000
6.75% Subordinated Notes due 2005.............................                  99,581               99,521               99,536
6.25% Subordinated Notes due 2003.............................                  74,735               74,683               74,696
6.50% Putable/Callable Subordinated Notes due 2018............                 301,763                   --                   --
Other long-term debt..........................................                  98,718               81,976               87,740
                                                                           -----------          -----------          -----------
          TOTAL OTHER LONG-TERM DEBT..........................             $ 1,048,797          $   730,145          $   735,945
                                                                           ===========          ===========          ===========
</TABLE>

NOTE 10.  SHAREHOLDERS' EQUITY

COMMON STOCK

      At the Corporation's annual meeting April 16, 1998, shareholders approved
an increase in the number of authorized common shares from 100 million to 300
million.

PREFERRED STOCK

      The Corporation's outstanding preferred stock, all of which is
convertible into shares of the Corporation's common stock, is summarized as
follows:

<TABLE>
<CAPTION>
                                                                                    SEPTEMBER 30,                   
                                                                           --------------------------------          DECEMBER 31,
                                                                                1998               1997                 1997
                                                                           -----------          -----------          -----------
                                                                                          (DOLLARS IN THOUSANDS)
<S>                                                                        <C>                  <C>                  <C>
Preferred stock, without par value, 10,000,000 shares authorized
  Series A Preferred Stock,
    750,000 shares authorized, none issued............................     $        --          $        --          $        --
  Series E, 8% Cumulative, Convertible, Preferred Stock 
    (stated at liquidation value of $25 per share)
    980,046 shares issued and outstanding (2,289,594 at September 30,
    1997 and 2,188,358 at December 31, 1997)..........................          24,501               57,240               54,709
                                                                           -----------          -----------          -----------
          TOTAL PREFERRED STOCK.......................................     $    24,501          $    57,240          $    54,709
                                                                           ===========          ===========          ===========
</TABLE>

NOTE 11.  CONTINGENT LIABILITIES

CONTINGENT LIABILITIES

      The Corporation and/or various subsidiaries are parties to certain
pending or threatened civil actions which are described in Item 3, Part I of
the Corporation's 1997 10-K, in Note 19 to the Corporation's 1997 Restated
Financial Statements, and in Note 10 included in the unaudited interim
consolidated financial statements in the Corporation's quarterly reports on
Form 10-Q dated March 31, 1998 and June 30, 1998. Various other legal
proceedings pending against the Corporation and/or its subsidiaries have arisen
in the ordinary course of business.

      Based upon present information, including evaluations of certain actions
by outside counsel, management believes that neither the Corporation's
financial position, results of operations, nor liquidity will be materially
affected by the ultimate resolution of pending or threatened lawsuits. There
were no significant developments during the third quarter of 1998 in any of the
pending or threatened actions that affected such opinion.

                                      14

<PAGE>   15

NOTE 12.  EARNINGS PER SHARE

      The calculation of net earnings per share is summarized as follows:

<TABLE>
<CAPTION>
                                                           THREE MONTHS ENDED SEPTEMBER 30,          NINE MONTHS ENDED SEPTEMBER30,
                                                          ---------------------------------         ------------------------------
                                                             1998                 1997                 1998                 1997
                                                          ------------         ------------         ------------        ----------
                                                                        (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

<S>                                                      <C>                  <C>                  <C>                 <C>
BASIC:
  Net earnings.................................          $     17,457         $     98,269         $    188,065        $    278,666
    Less preferred dividends...................                  (502)              (1,125)              (1,604)             (3,834)
                                                         ------------         ------------         ------------        ------------
  Net earnings applicable to common shares.....          $     16,955         $     97,144         $    186,461        $    274,832
                                                         ============         ============         ============        ============
  Net earnings per common share--basic.........          $        .13         $        .79         $       1.44        $       2.25
                                                         ============         ============         ============        ============

DILUTED:
  Net earnings.................................          $     17,457         $     98,269         $    188,065        $    278,666
  Elimination of interest on convertible debt                      --                  472                 (864)                398
                                                         ------------         ------------         ------------        ------------
  Net earnings applicable to common shares.....          $     17,457         $     98,471         $    187,201        $    279,064
                                                         ============         ============         ============        ============
  Average common shares outstanding............           133,899,234          123,747,698          129,561,035         122,069,300
  Stock option adjustment......................             1,361,339            1,966,542            1,542,468           1,879,293
  Preferred stock adjustment...................                    --            2,994,970            1,719,003           3,451,489
  Effect of other dilutive securities..........                    --            1,359,662              961,733             524,539
                                                         ------------         ------------         ------------        ------------
  Average common shares outstanding............           135,260,573          130,068,872          133,784,239         127,924,621
                                                         ============         ============          ===========        ============
  Net earnings per common share--diluted.......          $        .13         $        .76         $       1.41        $       2.18
                                                         ============         ============         ============        ============
</TABLE>


ITEM 2 -- MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
          RESULTS OF OPERATIONS

      The following provides a narrative discussion and analysis of significant
changes in the Corporation's results of operations and financial condition.
This discussion should be read in conjunction with the consolidated financial
statements and related financial analysis set forth in the Corporation's 1997
Restated Financial Statements, the Corporation's Quarterly Reports on Form 10-Q
dated March 31, 1998 and June 30, 1998, the Corporation's interim unaudited
financial statements and notes for the three and nine months ended September
30, 1998, included in Part I hereof, and the supplemental financial data
included in this discussion. The 1997 Restated Financial Statements were
restated for four acquisitions that were completed in the third quarter of 1998
and accounted for as poolings of interests (see Note 2 to the unaudited interim
consolidated financial statements included herein). The Corporation also
restated Management's Discussion and Analysis of Results of Operations and
Financial Condition (1997 Restated MD&A) and Selected Financial Data. The 1997
Restated Financial Statements, 1997 Restated MD&A, and the restated Selected
Financial Data are filed as Exhibit 99.1 to this Form 10-Q.

      Certain of the information included in this discussion contains
forward-looking statements and information that are based on management's
belief as well as certain assumptions made by, and information currently
available to management. Specifically, this 10-Q contains forward-looking
statements with respect to the adequacy of the allowance for losses on loans;
the effect of legal proceedings on the Corporation's financial condition,
results of operations, and liquidity; charges related to pending acquisitions;
cost savings related to integration of completed acquisitions; anticipated
effective dates of acquisitions; and year 2000 compliance issues. When used in
this discussion, the words "anticipate," "project," "expect," "believes," and
similar expressions are intended to identify forward-looking statements.
Although management of the Corporation believes that the expectations reflected
in such forward-looking statements are reasonable; it can give no assurance
that such expectations will prove to have been correct. Such forward-looking
statements are subject to certain risks, uncertainties, and assumptions. Should
one or more of these risks materialize, or should any such underlying
assumptions prove to be incorrect, actual results may vary materially from
those anticipated, estimated, projected, or expected. Among key factors that
may have a direct bearing on the Corporation's operating results are
fluctuations in the economy, especially in the Southeast and Midwest; the
relative strength and weakness in the consumer and commercial credit sector and
in the real estate market; the actions taken by the Federal Reserve for the
purpose of managing the economy; the Corporation's ability to realize
anticipated cost savings related to both recently completed and pending
acquisitions; the ability of the Corporation to achieve anticipated revenue
enhancements; its success in assimilating acquired operations into the
Corporation's culture, including its ability to instill the Corporation's
credit culture and approach to operating efficiencies into acquired operations;
the continued growth of the markets in which the Corporation operates
consistent with recent historical experience; the absence of undisclosed
material contingencies inherent in acquired operations, including asset quality
and litigation contingencies; the enactment of legislation impacting the
operations of the Corporation; and the Corporation's ability to expand into new
markets and to maintain profit margins in the face of pricing pressure.


                                      15
<PAGE>   16


SELECTED FINANCIAL DATA

     The following table presents selected financial highlights for the three
and nine months ended September 30, 1998
and 1997.

<TABLE>
<CAPTION>
                                                                                                              PERCENTAGE CHANGE
                                                 THREE MONTHS ENDED              NINE MONTHS ENDED          ---------------------
                                                    SEPTEMBER 30,                   SEPTEMBER 30,           THREE           NINE
                                              --------------------------      --------------------------    ------         ------
                                                 1998            1997            1998            1997       MONTHS         MONTHS
                                              ----------      ----------      ----------      ----------    ------         ------
                                                                      (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

<S>                                           <C>             <C>             <C>             <C>           <C>            <C>  
Net earnings........................          $  17,457       $  98,269       $ 188,065       $ 278,666      (82)%          (33)%
Basic earnings per common share.....                .13             .79            1.44            2.25      (84)           (36)
Diluted earnings per common share...                .13             .76            1.41            2.18      (83)           (35)
Return on average assets............                .24%           1.40%            .88%           1.37%
Return on average common equity.....               2.40           15.58            9.23           15.79
Dividends per common share..........          $     .50       $     .40       $    1.50       $   1.095       25             37
Net interest margin (FTE)...........               4.32%           4.47%           4.45%           4.55%
Interest rate spread (FTE)..........               3.51            3.67            3.65            3.77
Expense ratio.......................               1.50            1.42            1.50            1.50
Efficiency ratio....................              55.69           52.63           54.51           53.02
Book value per common share.........                                          $   21.43       $   21.13                       1
Leverage ratio......................                                               9.29%           9.67%
Common share prices:
  High closing price................          $   61.94       $   56.50       $   67.31       $   56.50
  Low closing price.................              40.25           49.25           40.25           38.38
  Closing price at quarter end......              50.25           55.88           50.25           55.88
</TABLE>

--------------------

Net interest margin = Net interest income as a percentage of average earning
assets

Interest rate spread = Difference in the yield on average earning assets and
the rate on average interest-bearing liabilities

Expense ratio = Operating net noninterest expense [noninterest expense minus
noninterest income, excluding significant nonrecurring revenues/expenses,
investment securities gains (losses), and goodwill and other intangibles
amortization] divided by average assets

Efficiency ratio = Operating noninterest expense (excluding significant
nonrecurring expenses and goodwill and other intangibles amortization) divided
by net interest income (FTE) plus noninterest income, excluding significant
nonrecurring revenues and investment securities gains (losses)

FTE = Fully taxable-equivalent basis


                                      16
<PAGE>   17


OPERATING RESULTS--NINE MONTHS ENDED SEPTEMBER 30, 1998

      The following table presents the contributions to diluted earnings per
common share. A discussion of the operating results follows this table.

                           UNION PLANTERS CORPORATION
               CONTRIBUTIONS TO DILUTED EARNINGS PER COMMON SHARE

<TABLE>
<CAPTION>
                                                                                      NINE MONTHS ENDED                   
                                                                                        SEPTEMBER 30,                     EPS
                                                                               -------------------------------          INCREASE
                                                                                  1998                 1997            (DECREASE)
                                                                               ----------           ----------         ----------

<S>                                                                            <C>                  <C>                <C>        
Net interest income-FTE...............................................         $     6.59           $     6.70         $     (.11)
Provision for losses on loans.........................................               (.92)                (.82)              (.10)
                                                                               ----------           ----------         ----------
  NET INTEREST INCOME AFTER PROVISION FOR LOSSES ON LOANS-FTE.........               5.67                 5.88               (.21)
                                                                               ----------           ----------         ----------

NONINTEREST INCOME
  Service charges on deposit accounts.................................                .80                  .82               (.02)
  Mortgage servicing income...........................................                .33                  .33                --
  Bank card income....................................................                .23                  .23                --
  Factoring commissions...............................................                .17                  .17                --
  Trust service income................................................                .14                  .14                --
  Profits and commissions from trading activities.....................                .03                  .04               (.01)
  Investment securities gains (losses)................................               (.11)                 .04               (.15)
  Other income........................................................               1.10                  .87                .23
                                                                               ----------           ----------         ----------
          Total noninterest income....................................               2.69                 2.64                .05
                                                                               ----------           ----------         ----------

NONINTEREST EXPENSE
  Salaries and employee benefits......................................               2.45                 2.38               (.07)
  Net occupancy expense...............................................                .39                  .41                .02
  Equipment expense...................................................                .38                  .36               (.02)
  Other expense.......................................................               2.71                 1.90               (.81)
                                                                               ----------           ----------         ----------
          Total noninterest expense...................................               5.93                 5.05               (.88)
                                                                               ----------           ----------         ----------

          EARNINGS BEFORE INCOME TAXES-FTE............................               2.43                 3.47              (1.04)
Applicable income taxes-FTE...........................................               1.02                 1.29                .27
                                                                               ----------           ----------         ----------
          NET EARNINGS................................................               1.41                 2.18               (.77)
Less preferred stock dividends........................................                --                   --                 --
                                                                               ----------           ----------         ----------
          DILUTED EARNINGS PER SHARE..................................         $     1.41           $     2.18         $     (.77)
                                                                               ==========           ==========         ==========

Change in net earnings applicable to diluted earnings per share using
  previous year average shares outstanding............................                                                 $     (.71)
Change in average shares outstanding..................................                                                       (.06)
                                                                                                                       ----------
  Change in net earnings..............................................                                                 $     (.77)
                                                                                                                       ==========

Average diluted shares (in thousands).................................            133,784              127,925        
                                                                               ==========           ==========
</TABLE>

--------------------

FTE = Fully taxable-equivalent basis


                        THIRD QUARTER EARNINGS OVERVIEW

      For the third quarter of 1998, the Corporation reported earnings of $17.5
million compared to $98.3 million for the same period in 1997. Diluted earnings
per common share for the third quarter of 1998 were $.13 compared to $.76 for
the same period in 1997. Net earnings for the nine months ended September 30,
1998 were $188.1 million, or $1.41 per diluted common share. This compares to
net earnings of $278.7 million, or $2.18 per diluted common share, for the same
period in 1997.

      Results for the third quarter of 1998 and for the nine months ended
September 30, 1998 were significantly impacted by previously disclosed
merger-related expenses related to the twelve acquisitions completed during the
third quarter of 1998 (see Note 2 to the unaudited interim consolidated
financial statements). These charges totaled $77.8 million and $94.8 million,
respectively, for the three and nine months ended September 30, 1998 compared
to $4.7 million and $5.4 million, respectively, for the same periods in 1997.
In addition to these charges a number of other items impacted results for both
1998 and 1997. A summary of the significant items follows:


                                      17
<PAGE>   18


<TABLE>
<CAPTION>
                                                                 THREE MONTHS ENDED              NINE MONTHS ENDED
                                                                   SEPTEMBER 30,                   SEPTEMBER 30,
                                                             -------------------------       -------------------------
                                                                1998            1997            1998           1997
                                                             ---------       ---------       ----------     ----------
                                                                               (DOLLARS IN THOUSANDS)

               <S>                                           <C>             <C>             <C>            <C>      
               EARNINGS BEFORE INCOME TAXES........          $  34,587       $ 149,349       $ 301,386      $ 422,957
               ADD (SUBTRACT) THE IMPACT OF THE FOLLOWING
               ITEMS
               Investment securities (gains) losses             (1,561)         (3,508)         15,111         (4,500)
               Gain on sale of branches and other assets            (3)        (10,795)         (8,187)       (11,166)
               Merger-related expenses.............             77,776           4,733          94,818          5,364
               Write-off of impaired assets........              7,513              --           7,513             --
               Prepayment penalty - FHLB advances..              5,860              --           6,555             --
               ADJUSTED EARNINGS BEFORE TAXES .....            124,172         139,779         417,196        412,655
               Adjusted taxes......................             42,733          46,988         147,071        139,918
               ADJUSTED EARNINGS...................             81,439          92,791         270,125        272,737
</TABLE>


                               EARNINGS ANALYSIS

NET INTEREST INCOME

      Net interest income (FTE) for the third quarter of 1998 was $296.3
million, an $8.2 million increase over the third quarter of 1997, which was
$288.1 million. For the nine months ended September 30, 1998, net interest
income (FTE) was $881.5 million compared to $856.9 million for the same period
in 1997. Net interest income for both the three and nine months ended September
30, 1998 was positively impacted by purchase acquisitions in the latter half of
1997 and certain smaller 1998 poolings of interests which were included from
the date of acquisition. These acquisitions improved net interest income $16.1
million and $31.5 million, respectively, for the three and nine months ended
September 30, 1998 compared to the same periods in 1997. Reference is made to
the Corporation's average balance sheet and analysis of volume and rate
changes, which follow this discussion for additional information regarding the
changes in net interest income.

      The net interest margin for the third quarter of 1998 was 4.32% which
compares to 4.47% for the same quarter last year. The net interest margin for
the first nine months of 1998 was 4.45%, 10 basis points lower than the net
interest margin for the same period in 1997. The interest rate spread decreased
to 3.51% for the third quarter of 1998 from 3.67% for the third quarter of
1997.

INTEREST INCOME

      The following table presents a breakdown of average earning assets for
the three and nine months ended September 30, 1998 and 1997.

<TABLE>
<CAPTION>
                                                          THREE MONTHS ENDED                          NINE MONTHS ENDED
                                                             SEPTEMBER 30,                               SEPTEMBER 30,
                                                     ------------------------------             ------------------------------
                                                       1998                 1997                  1998                1997
                                                     ---------            ---------             ---------           ---------
                                                                               (DOLLARS IN BILLIONS)

<S>                                                  <C>                  <C>                   <C>                 <C>     
Average earning assets......................         $   27.2             $   25.6              $   26.5            $   25.2
 Comprised of:
  Loans.....................................               72%                  75%                   74%                 75%
  Investment securities.....................               26                   23                    24                  23
  Other earning assets......................                2                    2                     2                   2

--------------------

Fully taxable equivalent yield on
  average earning assets....................             8.21%                8.43%                 8.39%               8.50%
</TABLE>


      Interest income (FTE) increased $20.7 million for the third quarter of
1998 compared to the same period in 1997. The increase is attributable to a
$1.7 billion increase in average earning assets, which resulted in a $30.8
million increase in interest income. This increase was partially offset by a 22
basis point decrease in the average yield on earning assets, which decreased
interest income, approximately $10.1 million. The lower yield on average
earning assets is attributable to a lower interest rate environment in 1998
compared to 1997. For the first nine months of 1998, interest income increased
$62.1 million due primarily to the growth of average earning assets, primarily


                                      18
<PAGE>   19


loans and investment securities, which increased interest income approximately
$78.4 million. This increase was partially offset by an 11 basis point decrease
in the average yield on earning assets, which decreased interest income
approximately $16.3 million.

INTEREST EXPENSE

      The following table presents a breakdown of average interest-bearing
liabilities for the three and nine months ended September 30, 1998 and 1997.

<TABLE>
<CAPTION>
                                                                THREE MONTHS ENDED                         NINE MONTHS ENDED
                                                                   SEPTEMBER 30,                             SEPTEMBER 30,
                                                           ------------------------------            ---------------------------
                                                             1998                 1997                 1998               1997
                                                           ---------            ---------            ---------          --------
                                                                                    (DOLLARS IN BILLIONS)

<S>                                                        <C>                  <C>                  <C>                <C>     
Average interest-bearing liabilities........               $   22.6             $   21.2             $   22.0           $   21.0
 Comprised of:
  Deposits..................................                     84%                  83%                  84%                83%
  Short-term borrowings.....................                      7                    8                    7                  8
  FHLB advances and long-term debt..........                      9                    9                    9                  9
--------------------

Rates paid on average interest-bearing liabilities             4.70%                4.76%                4.74%              4.73%
</TABLE>

      Interest expense increased $12.5 million in the third quarter of 1998
compared to the same period in 1997. The increase is due primarily to a $1.3
billion increase in average interest-bearing liabilities, primarily growth in
interest-bearing deposits from acquired entities and the issuance of $300
million of 6.5% Putable/Callable Subordinated Notes in March 1998, which
increased interest expense approximately $16.1 million. This increase was
partially offset by a six basis points decrease in the average rate paid for
interest-bearing liabilities, which decreased interest expense approximately
$3.6 million. For the first nine months of 1998, interest expense increased
$37.5 million compared to the same period in 1997. The $1.0 billion increase in
average interest-bearing liabilities accounted for $40.0 million of the
increase. This increase was offset by a lower rate paid on average
interest-bearing liabilities, which equates to a $2.5 million decrease.

PROVISION FOR LOSSES ON LOANS

      The provision for losses on loans for the third quarter of 1998 was $47.2
million, or .99% of average loans on an annualized basis, compared to $38.8
million, or .87% of average loans, for the same period in 1997. For the nine
months ended September 30, 1998, the provision for losses on loans was $122.4
million compared to $104.4 million for the same period in 1997.

      The increase in the provision for losses on loans was attributable to
growth in indirect automobile, small business, crop production, and
asset-backed loans, and additional provisions to increase the level of reserves
for commercial real estate loans in banks acquired in the third quarter due to
a more aggressive strategy in dealing with these credits. Additionally, the
provision for losses on loans related to the credit card portfolio remained
high throughout the first nine months of 1998. However, subsequent to the end
of the third quarter of 1998, the Corporation entered into an agreement to sell
a majority of its credit card portfolio (see "Sale of the Credit Card
Portfolio" below). Reference is made to the "Allowance for Losses on Loans"
discussion for additional information regarding loan charge-offs and the
anticipated level of the provision for losses on loans.

NONINTEREST INCOME

      Noninterest income for the third quarter of 1998 was $122.5 million, a
decrease of $6.9 million from the same period in 1997. For the nine months
ended September 30, 1998, noninterest income was $360.5 million compared to
$337.6 million for the same period in 1997. The major components of noninterest
income are presented on the face of the statement of earnings and in Note 7 to
the unaudited interim consolidated financial statements.

      The decline in noninterest income for the third quarter of 1998 compared
to the same period in 1997 is due to several factors. First, in the third
quarter of 1997, the Corporation sold certain branches in East Tennessee
resulting in a gain of $10.8 million. Second, in the third quarter of 1997, the
Corporation sold approximately $300 million of mortgage loans that resulted in
the gain on the sale of residential mortgages decreasing $6.5 million for the
quarter. Finally, investment securities gains decreased $1.9 million for the
quarter. Offsetting these declines for the quarter were increases in the
following noninterest income categories: (i) service charges on deposits and


                                      19
<PAGE>   20


other deposit related fees increased $3.0 million for the quarter; (ii)
mortgage origination fees increased $2.0 million due to higher volumes of
mortgage originations; and (iii) mortgage servicing income increased $1.1
million for the quarter.

      For the nine months ended September 30, 1998, noninterest income was
significantly impacted by two items. First, during the second quarter of 1998,
the Corporation had a gain of $19.6 million from the securitization of FHA/VA
loans. The transaction involved the securitization and sale of previously
defaulted FHA and VA guaranteed loans serviced by one of the Corporation's
subsidiaries. Partially offsetting this gain were investment securities losses
of $15.1 million for the nine months ended September 30, 1998 compared to
investment securities gains of $4.5 million for the same period in 1997. The
losses in 1998 related to the write-down, in the second quarter of 1998, of
certain mortgage-backed securities of one of the entities acquired. Other items
impacting noninterest income for the nine months ended September 30, 1998
compared to the same period in 1997 were: (i) a $5.4 million gain was
recognized by one of the entities acquired related to the sale of the stock of
a company owned; (ii) mortgage origination fees increased $4.7 million between
the two periods due to a higher volume of originations; (iii) service charges
and other deposit transaction fees increased $4.1 million; (iv) brokerage fee
income increased $4.4 million due to higher transaction volumes; (v) mortgage
servicing income increased $2.1 million; and (vi) bank card income increased
$1.8 million. These increases were partially offset by an $8.4 million decrease
in gains on the sale of branches and other assets due primarily to the sale of
East Tennessee branches during the third quarter of 1997 and a decline in gain
on sale of residential mortgages of $3.5 million due to a lower volume of
transactions.

NONINTEREST EXPENSE

      Noninterest expense for the third quarter of 1998 increased $107.1
million to $329.4 million compared to $222.3 million for the third quarter of
1997. For the nine months ending September 30, 1998, noninterest expense
increased $149.2 million to $795.2 million. The major components of noninterest
expense are detailed on the face of the statement of earnings and in Note 7 to
the unaudited interim consolidated financial statements.

      The significant increase for both the three and nine months ended
September 30, 1998 compared to the same periods in 1997 was due to previously
disclosed merger-related expenses of $77.8 million and $94.8 million,
respectively. For the same period in 1997 these expenses totaled $4.7 million
and $5.4 million, respectively. These expenses included: (i) salaries, employee
benefits, and other employment-related charges for employment contract
payments, change in control agreements, early retirement and involuntary
separation and related benefits, postretirement expenses, and termination of
assumed pension plans of acquired entities; (ii) write-downs of office
buildings and equipment to be sold, lease buyouts, assets determined to be
obsolete or no longer of use, and equipment not compatible with the
Corporation's equipment; (iii) professional fees for legal, accounting,
consulting, and financial advisory services; and (iv) other expenses such as
asset write-offs, charge-offs of prepaid assets, cancellation of vendor
contracts, computer conversion costs, and other costs which normally arise from
consolidation of operational activities. Also contributing to the increase in
noninterest expense in 1998 were prepayment penalties of $5.9 million and $6.6
million, respectively, related to restructuring certain of the acquired
companies borrowings and asset write-off of impaired assets of $7.5 million for
both periods.

      Noninterest expenses for the three and nine months ended were impacted by
purchase acquisitions and certain poolings of interests transactions which were
included in the Corporation's results from the date of acquisition. These
transactions increased noninterest expense approximately $11.6 million and
$22.5 million, respectively, for the three and nine months ended September 30,
1998 compared to the same periods in 1997. Salaries and employee benefits
represented the largest single item of these expenses and increased salary and
employee benefit expense $4.6 million and $8.8 million, respectively.

      Salaries and employee benefits expense, the largest component of
noninterest expense, increased $10.4 million and $24.1 million, respectively,
for the three and nine months ended September 30, 1998 compared to the same
periods in 1997. The Corporation had 11,734 full-time-equivalent employees at
September 30, 1998 compared to 11,603 at September 30, 1997.

      Currently, a significant amount of management time is being spent on the
operational consolidation of most of the banking charters, integration of
recently completed acquisitions, and ensuring Year-2000 compliance.
Additionally, the Corporation is upgrading technology and standardizing
products and services throughout the Corporation's twelve-state, 800 plus
branch network. These activities, in management's opinion, are taking
management time and energies that would otherwise be spent on other efforts.
Quantifying the exact impact is not possible. While these efforts impact
operations over the short-run, they are expected to enhance customer service as
well as earnings in the future as integration of branch facilities and back
office systems from charter consolidation and recent acquisitions are completed
and standardized products are put in place. With management's emphasis on the
activities discussed above, management expects its acquisition activity will
slow for the near term. 


                                      20
<PAGE>   21


SALE OF THE CREDIT CARD PORTFOLIO

      On October 15, 1998, the Corporation sold substantially all of the credit
card portfolio of UPB to MBNA Bank America, N.A. (MBNA) and also entered into
additional agreements to sell to MBNA a large majority of the credit card
portfolios of Union Planters Bank of Kentucky (formerly Peoples) and Magna
Bank, N.A., which was merged with UPB on October 9, 1998. As part of the
transaction, MBNA has been appointed the exclusive issuer of Union Planters'
credit cards. The portfolio being sold totaled approximately $460 million. In
connection with the sale the Corporation expects to recognize a net gain from
the sale of approximately $65 million to $70 million on a pretax basis
(approximately $40 million to $43 million after taxes) in the fourth quarter of
1998. Certain estimated costs related to selling the credit card portfolios
(e.g. employee severance, equipment write-offs, other fees, etc.) have been
netted against the gain. A smaller portion of this transaction will settle in
the first quarter of 1999. In the fourth quarter of 1998, management expects to
charge-off approximately $10 million to $15 million of credit cards receivables
that will not be purchased by MBNA.

FOURTH QUARTER EARNINGS CONSIDERATIONS

      Historically, as the Corporation acquires entities, merger-related and
other significant charges have been incurred. (Reference is made to Table 1 in
the 1997 Restated MD&A - Exhibit 99.1 to this Form 10-Q). Typically, these
charges include the following: (i) salaries, employee benefits, and other
employment-related charges for employment contract payments, change in control
agreements, early retirement and involuntary separation and related benefits,
postretirement expenses, and assumed pension expenses of acquired entities;
(ii) write-downs of office buildings and equipment to be sold, lease buyouts,
assets determined to be obsolete or no longer of use, and equipment not
compatible with the Corporation's equipment; (iii) professional fees for legal,
accounting, consulting, and financial advisory services; and (iv) other
expenses such as asset write-offs, charge-offs of prepaid assets, cancellation
of vendor contracts, computer conversion costs, and other costs which normally
arise from consolidation of operational activities. These charges totaled $48.1
million, $52.8 million, and $12.1 million in 1997, 1996, and 1995,
respectively. As discussed above, these expenses were $77.8 million and $94.8
million, respectively, for the three and nine months ended September 30, 1998
compared to $4.7 million and $5.4 million, respectively, for the same periods
in 1997. The level of the charges is directly related to the size of the
institution being acquired. Expenses of the type described above in the range
of $5 million to $6 million (both on a pretax and after tax basis) are expected
in the fourth quarter of 1998 in connection with the current pending
acquisitions (see Note 2 to the interim unaudited consolidated financial
statements). Additionally, expenses (primarily settlement of employment
agreements) of approximately $30 million (both on a pretax and after tax basis)
related to entities acquired in the third quarter of 1998 are expected to be
incurred in the fourth quarter of 1998 due to decisions made subsequent to
September 30, 1998. The settlement amount is subject to finalization of the
assumptions to be used in determining the amounts due under the agreements. To
the extent that the Corporation's recognition of these charges is contingent
upon consummation of a particular transaction, those charges would be
recognized in the period in which such transaction closes. This range of
potential charges is based on currently available information as well as
preliminary estimates. This range is provided as an estimate of the significant
charges which may be in the aggregate required and should be viewed
accordingly.

      Subsequent to September 30, 1998, the Corporation expensed that portion
of certain restricted stock grants that would otherwise have remained
unrecognized at the recipients earliest possible retirement age. This will have
the effect of increasing benefits expense in the fourth quarter of 1998 by
approximately $8.9 million ($5.5 million on an after tax basis). Additionally,
in connection with the consolidation of certain loan and deposit functions, the
Corporation is implementing a plan to image all documents related to loans and
deposits. During the fourth quarter of 1998, the Corporation will engage a
third party to image all its current documents. The total expenses estimated to
be incurred in the fourth quarter of 1998 related to this project is
approximately $4.8 million ($2.9 million on an after tax basis).

      Certain acquisitions during 1998, primarily the Sho-Me Financial
Corporation acquisition, the purchase of branches from California Federal Bank,
and the Charter acquisition (acquired by MGR in May 1998), have significantly
increased the level of goodwill and other intangibles to $361 million at
September 30, 1998. Given the changing market conditions, primarily interest
rates and the related volatility of the mortgage markets, the Corporation plans
to perform a review of the realization of these intangibles and other related
assets such as investment securities premiums during the fourth quarter of
1998. The impact of this review cannot be quantified at this time.

CHARTER CONSOLIDATION

      In the 1997 Restated MD&A (filed as Exhibit 99.1 to this Form 10-Q) is a
discussion of the legal merger of the majority of the Corporation's banking
subsidiaries effective January 1, 1998 ("Charter Consolidation"). In connection
with the merger, the 


                                      21
<PAGE>   22


Corporation incurred 1997 charges totaling approximately $16.7 million. For the
nine months ended September 30, 1998, no additional significant charges were
incurred and there were no reversals of the charges accrued in 1997. The
anticipated annual cost savings from the consolidation, approximately $15 to
$20 million on a pretax basis, are still expected by mid-year to year end 1999
but have not yet been fully recognized.

IMPACT OF ACQUISITIONS

      The following table presents the balance sheet impact of the 1998
acquisitions completed to date on selected balance sheet categories (Dollars in
millions):



<TABLE>
        <S>                                                                                   <C>
        BALANCE SHEET DATA (AT DATE OF ACQUISITION)
           Total assets...............................................                        $    13,513
           Loans, net of unearned income .............................                              7,676
           Allowance for losses on loans..............................                                117
           Total deposits.............................................                             10,850
           Shareholders' equity.......................................                              1,124
</TABLE>



      The following table presents the estimated impact of the Corporation's
1997 and 1998 purchase acquisitions and certain poolings of interests accounted
for from date of acquisition on selected income statement categories (Dollars
in thousands):

<TABLE>
        QUARTER TO DATE SEPTEMBER 30, 1998

           <S>                                                                                <C>        
           Net interest income........................................                        $    16,055
           Provision for losses on loans..............................                             (1,863)
           Noninterest income.........................................                              3,009
           Noninterest expense........................................                            (11,565)
                                                                                              -----------
           Pretax earnings............................................                        $     5,636
                                                                                              ===========

        NINE MONTHS ENDED SEPTEMBER 30, 1998

           Net interest income........................................                        $    31,546
           Provision for losses on loans..............................                             (2,579)
           Noninterest income.........................................                              5,727
           Noninterest expense........................................                            (22,546)
                                                                                              -----------
           Pretax earnings............................................                        $    12,148
                                                                                              ===========
</TABLE>


                                      22
<PAGE>   23

                  UNION PLANTERS CORPORATION AND SUBSIDIARIES
           CONSOLIDATED DAILY AVERAGE BALANCE SHEET AND INTEREST RATES

<TABLE>
<CAPTION>
                                                                                THREE MONTHS ENDED SEPTEMBER 30,
                                                      ---------------------------------------------------------------------------
                                                                      1998                                           1997
                                                      ---------------------------------       -----------------------------------
                                                                    INTEREST       FTE                        INTEREST       FTE
                                                      AVERAGE        INCOME/      YIELD/      AVERAGE          INCOME/      YIELD/
                                                      BALANCE        EXPENSE       RATE       BALANCE          EXPENSE       RATE
                                                      -------        -------       ----       -------          -------       ----
                                                                                   (DOLLARS IN THOUSANDS)
<S>                                                <C>             <C>            <C>        <C>              <C>           <C>  
ASSETS
  Interest-bearing deposits at
    Financial institutions..................       $    27,516     $    158        2.28%     $    92,578      $  1,358       5.82%
  Federal funds sold and securities
    purchased under agreements to resell....           173,476        2,444        5.59          258,099         3,707       5.70
  Trading account assets....................           250,228        3,964        6.28          199,179         3,593       7.16
  Investment securities(1)(2)
    Taxable.................................         5,887,563       89,739        6.05        5,002,355        80,090       6.35
    Tax-exempt..............................         1,167,637       21,438        7.28          826,920        18,777       9.01
                                                   -----------     --------                  -----------      --------
        Total investment securities.........         7,055,200      111,177        6.25        5,829,275        98,867       6.73
  Loans, net of unearned income(1)(3)(4)....        19,720,035      445,873        8.97       19,178,816       435,415       9.01
                                                   -----------     --------                  -----------      --------
        TOTAL EARNING ASSETS(1)(2)(3)(4)....        27,226,455      563,616        8.21       25,557,947       542,940       8.43
                                                   -----------     --------                  -----------      --------
  Cash and due from banks...................           821,124                                   873,664
  Premises and equipment....................           524,285                                   500,071
  Allowance for losses on loans.............          (336,662)                                 (270,951)
  Other assets..............................         1,225,674                                 1,130,850
                                                   -----------                               -----------
        TOTAL ASSETS........................       $29,460,876                               $27,791,581
                                                   ===========                               ===========

LIABILITIES AND SHAREHOLDERS' EQUITY
  Money market accounts.....................       $ 2,994,046     $ 30,285        4.01%     $ 2,734,518      $ 25,701       3.73%
  Savings deposits..........................         4,380,043       22,454        2.03        4,050,757        22,970       2.25
  Certificates of deposit of 
    $100,000 and over.......................         2,613,847       39,234        5.96        2,412,204        35,045       5.76
  Other time deposits.......................         8,942,697      120,961        5.37        8,525,435       118,343       5.51
  Short-term borrowings
    Federal funds purchased and securities
      sold under agreements to repurchase...         1,524,276       19,549        5.09        1,343,394        17,100       5.05
   Short-term bank notes....................                --           --                       79,348         1,150       5.75
   Other....................................            61,658          534        3.44          188,499         2,950       6.21
  Long-term debt
    Federal Home Loan Bank advances.........           905,378       12,127        5.31        1,087,539        14,985       5.47
    Subordinated capital notes..............           478,433        7,722        6.40          199,762         3,657       7.26
    Medium-term bank notes..................           121,304        2,020        6.61          135,000         2,236       6.57
    Trust Preferred Securities..............           198,996        4,128        8.23          198,960         4,128       8.23
    Other...................................           356,836        8,276        9.20          280,277         6,544       9.26
                                                   -----------     --------                  -----------      --------
        TOTAL INTEREST-BEARING LIABILITIES          22,577,514      267,290        4.70       21,235,693       254,809       4.76
  Noninterest-bearing demand deposits.......         3,358,582           --                    3,197,788            --
                                                   -----------     --------                  -----------      --------
        TOTAL SOURCES OF FUNDS..............        25,936,096      267,290                   24,433,481       254,809
                                                                                                              --------
  Other liabilities.........................           699,847                                   824,128
  Shareholders' equity                                                                        
    Preferred stock.........................            26,565                                    59,899
    Common equity...........................         2,798,368                                 2,474,073
                                                   -----------                               -----------
        Total shareholders' equity..........         2,824,933                                 2,533,972
                                                   -----------                               -----------
        TOTAL LIABILITIES AND SHAREHOLDERS'
              EQUITY........................       $29,460,876                                27,791,581 
                                                   ===========                               ===========
NET INTEREST INCOME(1)......................                       $296,326                                   $288,131
                                                                   ========                                   ========
INTEREST-RATE SPREAD(1).....................                                       3.51%                                     3.67%
                                                                                   ====                                      ====
NET INTEREST MARGIN(1)......................                                       4.32%                                     4.47%
                                                                                   ====                                      ====

TAXABLE-EQUIVALENT ADJUSTMENTS:
    Loans...................................                       $  2,412                                   $    540
    Investment securities...................                          5,270                                      6,630
                                                                   --------                                   --------
        TOTAL...............................                       $  7,682                                   $  7,170
                                                                   ========                                   ========
</TABLE>
--------------------

(1)  Taxable-equivalent yields are calculated assuming a 35% federal income tax
     rate.
(2)  Yields are calculated on historical cost and exclude the impact of the
     unrealized gain (loss) on available for sale securities.
(3)  Includes loan fees, immaterial in amount, in both interest income and the
     calculation of the yield on loans.
(4)  Includes loans on nonaccrual status.


                                       23
<PAGE>   24


                   UNION PLANTERS CORPORATION AND SUBSIDIARIES
                       ANALYSIS OF VOLUME AND RATE CHANGES

<TABLE>
<CAPTION>
                                                                            THREE MONTHS ENDED SEPTEMBER 30,
                                                                                   1998 VERSUS 1997
                                                                        --------------------------------------
                                                                         INCREASE (DECREASE)
                                                                        DUE TO CHANGE IN:(1)
                                                                        --------------------
                                                                        AVERAGE          AVERAGE      INCREASE
                                                                        VOLUME            RATE       (DECREASE)
                                                                        ------            ----       ----------
                                                                                     (DOLLARS IN THOUSANDS)
<S>                                                                    <C>             <C>            <C>      
INTEREST INCOME
  Interest-bearing deposits at financial institutions ...........      $  (643)       $   (557)      $(1,200)
  Federal funds sold and securities purchased under agreements to      
   resell........................................................       (1,194)            (69)       (1,263)
  Trading account assets ........................................          838            (467)          371
  Investment securities (FTE) ...................................       19,576          (7,266)       12,310
  Loans, net of unearned income (FTE) ...........................       12,210          (1,752)       10,458
                                                                       -------        --------       -------
          TOTAL INTEREST INCOME .................................       30,787         (10,111)       20,676
                                                                       -------        --------       -------

INTEREST EXPENSE
  Money market accounts .........................................        2,542           2,042         4,584
  Savings deposits ..............................................        1,763          (2,279)         (516)
  Certificates of deposit of $100,000 and over ..................        2,999           1,190         4,189
  Other time deposits ...........................................        5,651          (3,032)        2,619
  Short-term borrowings .........................................         (329)           (788)       (1,117)
  Long-term debt ................................................        3,424            (702)        2,722
                                                                       -------        --------       -------
          TOTAL INTEREST EXPENSE ................................       16,050          (3,569)       12,481
                                                                       -------        --------       -------
CHANGE IN NET INTEREST INCOME (FTE) .............................      $14,737        $ (6,542)      $ 8,195
                                                                       =======        ========       =======

PERCENTAGE INCREASE IN NET INTEREST INCOME OVER PRIOR PERIOD ....                                       2.84%
                                                                                                     =======
</TABLE>

FTE = Fully taxable-equivalent basis

(1)   The change due to both rate and volume has been allocated to change due
      to volume and change due to rate in proportion to the relationship of the
      absolute dollar amounts of the change in each.


                                       24
<PAGE>   25


                   UNION PLANTERS CORPORATION AND SUBSIDIARIES
           CONSOLIDATED DAILY AVERAGE BALANCE SHEET AND INTEREST RATES

<TABLE>
<CAPTION>
                                                                                NINE MONTHS ENDED SEPTEMBER 30,
                                                                                -------------------------------
                                                                      1998                                     1997
                                                   -------------------------------------     ---------------------------------------
                                                                     INTEREST      FTE                        INTEREST         FTE
                                                     AVERAGE          INCOME/     YIELD/        AVERAGE        INCOME/        YIELD/
                                                     BALANCE          EXPENSE      RATE         BALANCE        EXPENSE         RATE
                                                     -------          -------      ----         -------        -------         ----
                                                                                  (DOLLARS IN THOUSANDS)
<S>                                                <C>             <C>            <C>        <C>              <C>             <C>  
ASSETS
  Interest-bearing deposits at
    Financial institutions.................        $    32,639     $    1,113      4.56%     $    53,784      $    2,167       5.39%
  Federal funds sold and securities
    purchased under agreements to resell...            264,945         11,061      5.58          275,241          11,483       5.58
  Trading account assets...................            203,998          9,787      6.41          215,124          11,732       7.29
  Investment securities(1)(2)
    Taxable................................          5,425,557        254,760      6.28        4,996,901         241,134       6.45
    Tax-exempt.............................          1,008,548         56,973      7.55          803,830          55,035       9.15
                                                   -----------     ----------                -----------      ----------
        Total investment securities........          6,434,105        311,733      6.48        5,800,731         296,169       6.83
  Loans, net of unearned income(1)(3)(4)...         19,542,661      1,328,418      9.09       18,823,016       1,278,468       9.08
                                                   -----------     ----------                -----------      ----------
        TOTAL EARNING ASSETS(1)(2)(3)(4)...         26,478,348      1,662,112      8.39       25,167,896       1,600,019       8.50
                                                                   ----------                                 ----------
  Cash and due from banks..................            863,245                                   852,312
  Premises and equipment...................            513,759                                   485,856
  Allowance for losses on loans............           (323,335)                                 (268,411)
  Other assets.............................          1,191,983                                 1,002,989
                                                   -----------                               -----------
        TOTAL ASSETS.......................        $28,724,000                               $27,240,642
                                                   ===========                               ===========

LIABILITIES AND SHAREHOLDERS' EQUITY
  Money market accounts....................        $ 2,954,925     $   87,100      3.94%     $ 2,682,541      $   73,266       3.65%
  Savings deposits.........................          4,216,036         65,841      2.09        4,079,980          68,808       2.25
  Certificates of deposit of 
     $100,000 and over.....................          2,582,288        112,494      5.82        2,288,809          98,142       5.73
  Other time deposits......................          8,698,369        355,210      5.46        8,437,101         346,660       5.49
  Short-term borrowings
    Federal funds purchased and securities
      sold under agreements to repurchase..          1,418,978         53,097      5.00        1,243,994          46,252       4.97
   Short-term bank notes...................                 --             --        --          156,282           6,798       5.82
   Other...................................             60,077          3,303      7.35          244,073          11,094       6.08
  Long-term debt
    Federal Home Loan Bank advances........          1,030,702         40,570      5.26        1,097,128          44,988       5.48
    Subordinated capital notes.............            398,862         20,337      6.82          200,269          10,982       7.33
    Medium-term bank notes.................            130,385          6,491      6.66          135,000           6,708       6.64
    Trust Preferred Securities.............            198,987         12,383      8.32          198,951          12,383       8.32
    Other..................................            337,321         23,793      9.43          248,938          17,077       9.17
                                                   -----------     ----------                -----------      ----------
        TOTAL INTEREST-BEARING LIABILITIES          22,026,930        780,619      4.74       21,013,066         743,158       4.73
  Noninterest-bearing demand deposits......          3,289,654             --                  3,107,502              --
                                                   -----------     ----------                -----------      ----------
        TOTAL SOURCES OF FUNDS.............         25,316,584        780,619                 24,120,568         743,158
                                                                                                              ----------
  Other liabilities........................            672,699                                   723,799
  Shareholders' equity                                                                        
    Preferred stock........................             34,380                                    69,370
    Common equity..........................          2,700,337                                 2,326,905
                                                   -----------                               -----------
        Total shareholders' equity.........          2,734,717                                 2,396,275
                                                   -----------                               -----------
        TOTAL LIABILITIES AND SHAREHOLDERS'
             EQUITY........................        $28,724,000                                27,240,642 
                                                   ===========                               =========== 
NET INTEREST INCOME(1)....................                         $  881,493                                 $  856,861
                                                                   ==========                                 ==========
INTEREST-RATE SPREAD(1)...................                                         3.65%                                       3.77%
                                                                                   ====                                        ====
NET INTEREST MARGIN(1)....................                                         4.45%                                       4.55%
                                                                                   ====                                        ====

TAXABLE-EQUIVALENT ADJUSTMENTS:
    Loans................................                          $    8,487                                 $    1,651
    Investment securities................                              14,500                                     19,480
                                                                   ----------                                 ----------
        TOTAL..........................                            $   22,987                                 $   21,131
                                                                   ==========                                 ==========
</TABLE>
--------------------

(1)  Taxable-equivalent yields are calculated assuming a 35% federal income tax
     rate.
(2)  Yields are calculated on historical cost and exclude the impact of the
     unrealized gain (loss) on available for sale securities.
(3)  Includes loan fees, immaterial in amount, in both interest income and the
     calculation of the yield on loans.
(4)  Includes loans on nonaccrual status.


                                      25
<PAGE>   26

                  UNION PLANTERS CORPORATION AND SUBSIDIARIES
                      ANALYSIS OF VOLUME AND RATE CHANGES

<TABLE>
<CAPTION>
                                                                                         NINE MONTHS ENDED SEPTEMBER 30,
                                                                                                1998 VERSUS 1997
                                                                           ------------------------------------------------------
                                                                                 INCREASE (DECREASE)
                                                                                DUE TO CHANGE IN:(1)
                                                                           ---------------------------------
                                                                              AVERAGE              AVERAGE             INCREASE
                                                                              VOLUME                RATE              (DECREASE)
                                                                           ------------         ------------         ------------
                                                                                          (DOLLARS IN THOUSANDS)

<S>                                                                        <C>                  <C>                  <C>
INTEREST INCOME
  Interest-bearing deposits at financial institutions.........             $      (758)         $      (296)         $    (1,054)
  Federal funds sold and securities purchased under agreements to                 (429)                   7                 (422)
   resell.....................................................
  Trading account assets......................................                    (585)              (1,360)              (1,945)
  Investment securities (FTE).................................                  31,213              (15,649)              15,564
  Loans, net of unearned income (FTE).........................                  48,917                1,033               49,950
                                                                           -----------          -----------          -----------
          TOTAL INTEREST INCOME...............................                  78,358              (16,265)              62,093
                                                                           -----------          -----------          -----------

INTEREST EXPENSE
  Money market accounts.......................................                   7,771                6,063               13,834
  Savings deposits............................................                   2,242               (5,209)              (2,967)
  Certificates of deposit of $100,000 and over................                  12,763                1,589               14,352
  Other time deposits.........................................                  10,680               (2,130)               8,550
  Short-term borrowings.......................................                  (6,329)              (1,415)              (7,744)
  Long-term debt..............................................                  12,853               (1,417)              11,436
                                                                           -----------          -----------          -----------
          TOTAL INTEREST EXPENSE..............................                  39,980               (2,519)              37,461
                                                                           -----------          -----------          -----------
CHANGE IN NET INTEREST INCOME (FTE)...........................             $    38,378          $   (13,746)         $    24,632
                                                                           ===========          ===========          ===========

PERCENTAGE INCREASE IN NET INTEREST INCOME OVER PRIOR PERIOD..                                                              2.87%
                                                                                                                     ===========
</TABLE>

--------------------

FTE = Fully taxable-equivalent basis

(1)   The change due to both rate and volume has been allocated to change due
      to volume and change due to rate in proportion to the relationship of the
      absolute dollar amounts of the change in each.



                              FINANCIAL CONDITION

      The Corporation's total assets were $30.5 billion at September 30, 1998
compared to $27.9 billion at September 30, 1997, and $28.0 billion at December
31, 1997. Average assets for the three and nine months ended September 30, 1998
were $29.5 billion and $28.7 billion, respectively, compared to $27.8 billion
and $27.2 million, respectively, for both periods in 1997. The table above
provides the impact of the acquisitions on the Corporation's balance sheet.

INVESTMENT SECURITIES

      The Corporation's investment securities portfolio of $7.9 billion at
September 30, 1998 consisted entirely of available for sale securities, which
are carried on the balance sheet at fair value. This compares to investment
securities of $5.8 billion at December 31, 1997. At September 30, 1998, and
December 31, 1997, these securities had net unrealized gains of $133.9 million
and $79.6 million, respectively. Reference is made to Note 5 to the interim
unaudited consolidated financial statements which provides the composition of
the investment portfolio at September 30, 1998 and December 31, 1997.
Transactions in this portfolio have the primary purpose of managing liquidity
and interest-rate risk and to take advantage of market conditions that create
economically attractive investment returns.

      U. S. Treasury and U. S. Government agency obligations represented
approximately 71.4% of the investment securities portfolio at September 30,
1998. The Corporation has some credit risk in the investment portfolio;
however, management does not consider that risk to be significant and does not
believe that cash flows will be significantly impacted.


                                      26
<PAGE>   27


      The REMIC and CMO issues in the investment securities portfolio are 77%
U. S. Government agencies issues; the remaining 23% are readily marketable,
collateralized mortgage obligations backed by agency-pooled collateral or
whole-loan collateral. The limited credit risk in the investment securities
portfolio consisted of 16.6% municipal obligations and 2.6% stocks and
corporate debentures (75% of which is Federal Home Loan Bank and Federal
Reserve Bank stock), and 8.9% investment grade collateralized mortgage
obligations.

      At September 30, 1998, the Corporation held approximately $63.5 million
of structured notes, which constituted approximately .8% of the investment
securities portfolio. Structured notes have uncertain cash flows, which are
driven by interest-rate movements and may expose a company to greater market
risk than traditional medium-term notes. All of the Corporation's investments
of this type are government-agency issues (primarily Federal Home Loan Bank and
Federal National Mortgage Association). The structured notes vary in type but
primarily include step-up bonds, floating-rate notes, and index-amortizing
notes. These securities have maturities less than seven years and are carried
in the Corporation's available for sale securities portfolio at fair value. At
September 30, 1998, these securities had unrealized gains of approximately
$84,000. The market risk associated with the structured notes is not considered
material to the Corporation's financial position, results of operations, or
liquidity, and involves limited credit risk.

LOANS

      At September 30, 1998, loans, net of unearned income, were $19.7 billion
compared to $18.9 billion and $19.1 billion at September 30, 1997 and December
31, 1997, respectively. Average loans for the third quarter of 1998 were $19.7
billion, a 3% increase (6.8% excluding FHA/VA government-insured/guaranteed
loans) over $19.2 billion for the third quarter of 1997. For the nine months
ended September 30, 1998, average loans were $19.5 billion compared to $18.8
billion for the same period in 1997. Note 3 to the interim unaudited
consolidated financial statements included in Part I. Item 1 of this report
presents the composition of the loan portfolio.

      Single-family residential loans increased $354 million between September
30, 1998 and 1997 due primarily to acquisitions. The growth has been partially
offset by declines due to the refinancing activity in the current low interest
rate environment. The level of credit card loans has declined $85 million and
$78 million, respectively, since both September 30, 1997 and year-end 1997 (See
"Sale of Credit Card Portfolio" above). Other consumer loans increased $115
million since September 30, 1997 due primarily to acquisitions. Commercial
(including foreign loans, factoring receivables, and direct lease financing),
financial, and agricultural loans have also demonstrated growth, increasing
$418 million since September 30, 1997. The amount of loans outstanding was
impacted by the sale of $381 million of FHA/VA loans that were securitized (see
the "Noninterest Income" discussion) in the second quarter of 1998 and by the
sale of $104 million of adjustable-rate mortgage loans in the first quarter of
1998.

      Management believes that the loan portfolio is adequately diversified
which minimizes the risks in the portfolio. The largest concentration of loans
is single-family residential loans. Loans are spread primarily over the
twelve-state area the Corporation's banking subsidiaries serve. The Corporation
does not have any loans to hedge funds. The Corporation has a limited amount of
foreign exposure, less than 1% of the loan portfolio. The Corporation's foreign
loans are primarily U.S. dollar trade finance loans to correspondent banks in
Central and South America. The Corporation has no significant loans to foreign
governments.

ALLOWANCE FOR LOSSES ON LOANS

      The Corporation maintains the allowance for losses on loans at a level
that is believed adequate to absorb losses inherent in the loan portfolio. A
formal review is prepared quarterly to assess the risk in the portfolio and to
determine the adequacy of the allowance for losses on loans. The review
includes analyses of certain problem loans, historical loan loss experience,
the levels of classified and nonperforming loans, reviews and evaluations of
specific loans, changes in the nature and volume of loans, the results of
regulatory examinations and current economic conditions, and the related impact
on specific borrowers and industry groups. This review is presented to, and
approved by, senior management and a committee of the Board of Directors.


                                       27
<PAGE>   28


      The following table provides a reconciliation of the allowance for losses
on loans (the allowance) and certain key ratios for the nine-month periods
ended September 30, 1998 and 1997 and for the year ended December 31, 1997.

<TABLE>
<CAPTION>
                                                                                 NINE MONTHS ENDED                  
                                                                                    SEPTEMBER 30,                    YEAR ENDED
                                                                           --------------------------------          DECEMBER 31,
                                                                              1998                 1997                 1997
                                                                           -----------          -----------          -----------
                                                                                          (DOLLARS IN THOUSANDS)

<S>                                                                        <C>                  <C>                  <C>        
BALANCE AT THE BEGINNING OF PERIOD............................             $   310,385          $   257,638          $   257,638
LOANS CHARGED OFF
  Commercial, financial, and agricultural.....................                  32,273               32,062               40,436
  Foreign.....................................................                      --                   --                   --
  Real estate - construction..................................                   2,934                  148                  240
  Real estate - mortgage......................................                  18,644                6,310                9,764
  Credit cards and related plans..............................                  40,580               40,865               34,904
  Consumer....................................................                  29,075               23,046               52,125
  Direct lease financing......................................                      24                   18                   30
                                                                           -----------          -----------          -----------
          Total charge-offs...................................                 123,530              102,449              137,499
                                                                           -----------          -----------          -----------

RECOVERIES ON LOANS PREVIOUSLY CHARGED OFF
  Commercial, financial, and agricultural.....................                   6,776                6,767                7,896
  Foreign.....................................................                      20                   --                   10
  Real estate - construction..................................                     260                  378                  518
  Real estate - mortgage......................................                   2,806                2,538                3,301
  Credit cards and related plans..............................                   3,361                2,517                4,647
  Consumer....................................................                   6,400                6,082                6,862
  Direct lease financing......................................                       5                   27                   27
                                                                           -----------          -----------          -----------
          Total recoveries....................................                  19,628               18,309               23,261
                                                                           -----------          -----------          -----------

Net charge-offs...............................................                (103,902)             (84,140)            (114,238)
Provision charged to expense..................................                 122,436              104,440              150,606
Increase due to acquisitions..................................                  23,724               13,146               16,379
                                                                           -----------          -----------          -----------
          BALANCE AT END OF PERIOD............................             $   352,643          $   291,084          $   310,385
                                                                           ===========          ===========          ===========

Total loans, net of unearned income, at end of period.........             $19,653,468          $18,936,526          $19,126,708
Less: FHA/VA government insured/guaranteed loans..............                 762,998            1,385,442            1,331,993
                                                                           -----------          -----------          -----------

          LOANS USED TO CALCULATE RATIOS......................             $18,890,470          $17,551,084          $17,794,715
                                                                           ===========          ===========          ===========

Average total loans, net of unearned income, during period....             $19,542,661          $18,823,016          $18,897,828
Less: Average FHA/VA government-insured/guaranteed loans......               1,025,467            1,531,908            1,500,120
                                                                           -----------          -----------          -----------

          AVERAGE LOANS USED TO CALCULATE RATIOS..............             $18,517,194          $17,291,108          $17,397,708
                                                                           ===========          ===========          ===========

RATIOS (1):
  Allowance at end of period to loans, net of unearned income.                    1.87%                1.66%                1.74%
  Charge-offs to average loans, net of unearned income (2)....                     .89                  .79                  .79
  Recoveries to average loans, net of unearned income (2).....                     .14                  .14                  .13
  Net charge-offs to average loans, net of unearned income (2)                     .75                  .65                  .66
  Provision to average loans, net of unearned income (2)......                     .88                  .81                  .87
</TABLE>

--------------------

(1)  Ratio calculations exclude FHA/VA government-insured/guaranteed loans,
     since they represent minimal credit risk.
(2)  Amounts annualized for September 30, 1998 and 1997.

      The allowance at September 30, 1998 was $352.6 million compared to $310.4
million at December 31, 1997 and $291.1 million at September 30, 1997. Net
charge-offs for the third quarter of 1998 were $31.3 million compared to $24.1
million for the third quarter of 1997. For the nine months ended September 30,
1998, net charge-offs were $103.9 million compared to $84.1 million for the
same period in 1997. Approximately $25 million of the increase in year to date
charge-offs resulted from conforming the banks acquired in the third quarter of
1998 to the Corporation's charge-off policies. The remainder of the increase
resulted from higher losses in the retail and factoring portions of the
portfolio and losses related to one low-to-moderate income housing project
loan.

      Management expects to complete a review of the portfolios of the banks
acquired in the fourth quarter of 1998. It is expected that this review, along
with a possible loss related to one large asset-backed credit will result in a
higher than normal provision in the fourth quarter. Additionally, delinquent
credit card loans not purchased in the sale of the Corporation's credit card
portfolio will be charged off 


                                      28
<PAGE>   29


resulting in additional charge-offs of approximately $10 million to $15 million.
Adjusting for the effects of conforming the charge-off policies and losses on
credit cards, management estimates that normalized charge-offs for the nine
months ended September 30, 1998 were approximately $50 million, or .36% of
average loans on an annualized basis.

NONPERFORMING ASSETS

     NONACCRUAL, RESTRUCTURED, AND PAST DUE LOANS AND FORECLOSED PROPERTIES

<TABLE>
<CAPTION>
                                                                                    SEPTEMBER 30,                   
                                                                           --------------------------------          DECEMBER 31,
                                                                              1998                 1997                 1997
                                                                           -----------          -----------          -----------
                                                                                          (DOLLARS IN THOUSANDS)
<S>                                                                        <C>                  <C>                  <C>
NONACCRUAL LOANS
  Domestic....................................................             $   141,933          $   130,538          $   132,672
  Foreign.....................................................                   1,276                   96                   96
RESTRUCTURED LOANS............................................                   6,414               15,520               15,250
                                                                           -----------          -----------          -----------
          TOTAL NONPERFORMING LOANS...........................                 149,623              146,154              148,018
                                                                           -----------          -----------          -----------

FORECLOSED PROPERTY
  Other real estate owned, net................................                  22,787               26,910               26,106
  Other foreclosed property...................................                   4,412                4,708                5,062
                                                                           -----------          -----------          -----------
          TOTAL FORECLOSED PROPERTIES.........................                  27,199               31,618               31,168
                                                                           -----------          -----------          -----------

          TOTAL NONPERFORMING ASSETS..........................             $   176,822          $   177,772          $   179,186
                                                                           ===========          ===========          ===========

LOANS 90 DAYS OR MORE PAST DUE AND NOT ON NONACCRUAL STATUS
  Domestic....................................................             $    54,588          $    43,447          $    47,467
  Foreign.....................................................                      --                   --                   --
                                                                           -----------          -----------          -----------
          TOTAL LOANS 90 DAYS OR MORE PAST DUE................             $    54,588          $    43,447          $    47,467
                                                                           ===========          ===========          ===========

FHA/VA GOVERNMENT-INSURED/GUARANTEED LOANS
  Loans 90 days or more past due and not on nonaccrual status.             $   348,954          $   513,951          $   517,124
  Nonaccrual..................................................                   9,309                   --               14,923

RATIOS(1):
  Nonperforming loans as a percentage of loans................                      .79%                .83%                 .83%
  Nonperforming assets as a percentage of loans plus foreclosed                     .93                1.01                 1.01
   properties.................................................
  Allowance for losses on loans as a percentage of nonperforming loans              236                 199                  210
  Loans 90 days or more past due and not on nonaccrual status
    as a percentage of loans..................................                      .29                 .25                  .27
</TABLE>

--------------------

(1) FHA/VA government-insured/guaranteed loans are excluded from loans in the
ratio calculations.

     The breakdown of nonaccrual loans and loans 90 days or more past due and
not on nonaccrual status, both excluding FHA/VA loans, is as follows:

<TABLE>
<CAPTION>
                                                                                                            LOANS 90 DAYS
                                                                   NONACCRUAL LOANS (1)                  OR MORE PAST DUE (1)
                                                             --------------------------------      -------------------------------
                                                             SEPTEMBER 30,        DECEMBER 31,     SEPTEMBER 30,       DECEMBER 31,
                      LOAN TYPE                                   1998                 1997             1998              1997
-------------------------------------------------------      -----------          -----------      -----------         -----------
                                                                                     (DOLLARS IN THOUSANDS)

<S>                                                          <C>                  <C>              <C>                 <C>        
Secured by single family residential...................      $    65,264          $    63,707      $    12,867         $    13,551
Secured by nonfarm nonresidential......................           20,369               15,260            7,116               4,151
Other real estate......................................           17,690               19,676            5,075               4,395
Commercial, financial, and agricultural,
  including foreign loans and direct lease financing...           30,809               25,524           15,822               4,125
Credit cards and related plans.........................              281                   --            8,215              15,343
Other consumer.........................................            8,796                8,601            5,493               5,902
                                                             -----------          -----------      -----------         -----------
          TOTAL........................................      $   143,209          $   132,768      $    54,588         $    47,467
                                                             ===========          ===========      ===========         ===========
</TABLE>

--------------------

(1)  See the preceding table for the amount of FHA/VA
     government-insured/guaranteed loans on nonaccrual status and 90 days or
     more past due and not on nonaccrual status.

                                      29
<PAGE>   30


      LOANS OTHER THAN FHA/VA LOANS. As a percentage of loans and foreclosed
properties, nonperforming assets were .93% at September 30, 1998 compared to
1.01% at September 30, 1997 and .93% at June 30, 1998. The coverage of
nonperforming loans (allowance for losses on loans as a percentage of
nonperforming loans) was 236% at September 30, 1998, which compares to 199% at
September 30, 1997 and 226% at June 30, 1998.

      Restructured loans decreased $8.8 million from December 31, 1997 to $6.4
million at September 30, 1998. The decline relates primarily to two loans which
were removed from restructured status since they have been and are currently
paying in accordance with contractual terms of the restructuring and had
effective interest rates, at the time of modification, equal to or greater than
new loans with comparable risk. Nonaccrual loans increased $10.4 million and
$8.6 million from December 31, 1997 and June 30, 1998, respectively. Foreclosed
properties decreased $4.0 million from December 31, 1997 and were level with
the balances outstanding at June 30, 1998.

      Loans 90 days or more past due and still accruing interest totaled $54.6
million, or .29% of loans, at September 30, 1998. This compares to loans 90
days past due of $47.5 million, or .27%, of loans at December 31, 1997. The
table above details the composition of these loans.

      FHA/VA LOANS. FHA/VA government-insured/guaranteed loans (FHA/VA loans)
do not, in management's opinion, have traditional credit risk and risk of
principal loss is considered minimal. FHA/VA loans 90 days or more past due and
still accruing interest totaled $349 million at September 30, 1998 which
compares to $517 million at December 31, 1997. The decrease in past due loans
relates primarily to a decline in the overall size of the FHA/VA portfolio and
to FHA loans being moved to foreclosure sooner due to changed FHA requirements.
The rate of foreclosure and loan payoffs continues to exceed the acquisition
and buyout of delinquent loans from GNMA servicing pools. At September 30, 1998
and December 31, 1997, $9.3 million and $14.9 million, respectively, of these
loans were placed on nonaccrual status by management because the contractual
payment of interest by FHA/VA had stopped due to missed filing dates. No loss
of principal is expected from these loans.

POTENTIAL PROBLEM ASSETS

      Potential problem assets consist of assets which are generally secured
and not currently considered nonperforming, but where information about
possible credit problems has caused management to have serious doubts as to the
ability of the borrowers to comply in the future with present repayment terms.
Historically, these assets have been loans, which have become nonperforming. At
September 30, 1998, the Corporation had potential problem assets (all of which
were loans) of $57.3 million.

DEPOSITS

      The Corporation's core deposit base is its most important and stable
funding source and consists of deposits from the communities served by the
Corporation.

<TABLE>
<CAPTION>
                                                                                     AVERAGE DEPOSITS
                                                  -------------------------------------------------------------------------------
                                                                 THREE MONTHS ENDED                       NINE MONTHS ENDED
                                                  ---------------------------------------------              SEPTEMBER 30,
                                                          SEPTEMBER 30,               JUNE 30,       ----------------------------
                                                      1998             1997             1998             1998             1997
                                                  -----------      -----------      -----------      -----------      -----------
                                                                                  (DOLLARS IN THOUSANDS)
<S>                                               <C>              <C>              <C>              <C>              <C>        
Demand deposits ............................      $ 3,358,582      $ 3,197,788      $ 3,347,222      $ 3,289,654      $ 3,107,502
Money market acounts(1) ....................        2,994,046        2,734,518        2,929,718        2,954,925        2,682,541
Savings deposits(2) ........................        4,380,043        4,050,757        4,193,679        4,216,036        4,079,980
Other time deposits(3) .....................        8,942,697        8,525,435        8,578,214        8,698,369        8,437,101
                                                  -----------      -----------      -----------      -----------      -----------
          Total core deposits ..............       19,675,368       18,508,498       19,048,833       19,158,984       18,307,124
Certificates of deposit of $100,000 and over        2,613,847        2,412,204        2,576,684        2,582,288        2,288,809
                                                  -----------      -----------      -----------      -----------      -----------
          Total average deposits ...........      $22,289,215      $20,920,702      $21,625,517      $21,741,272      $20,595,933
                                                  ===========      ===========      ===========      ===========      ===========
</TABLE>

--------------------

(1)  Includes money market savings accounts, High Yield accounts, and super NOW
     accounts.
(2)  Includes regular and premium savings accounts and NOW accounts.
(3)  Includes certificates of deposit under $100,000, investment savings
     accounts, and other time deposits.

      Average deposits for the third quarter of 1998 were $22.3 billion, which
represents increases of $1.4 billion and $664 million, respectively, from the
average deposits for the third quarter of 1997 and the second quarter of 1998.
Small acquisitions in late 1997 and early 1998 increased total deposits
approximately $3.3 billion. Also, during 1997 and the first and second quarters
of 1998, the Corporation sold certain branch locations including related
deposits which totaled approximately $255 million.


                                      30
<PAGE>   31


LIQUIDITY
      The Corporation requires liquidity sufficient to meet cash requirements
for deposit withdrawals, to make new loans and satisfy loan commitments, to
take advantage of attractive investment opportunities, and to repay borrowings
at maturity. Deposits, available for sale securities, and money market
investments are the Corporation's primary sources of liquidity. Liquidity is
also achieved through short-term borrowings, borrowings under available lines
of credit, and issuance of securities and debt instruments in the financial
markets. The Corporation has adequate liquidity to meet its operating
requirements.

      Parent company liquidity is achieved and maintained by dividends received
from subsidiaries, interest on advances to subsidiaries, and interest on its
available for sale investment securities portfolio. At September 30, 1998, the
parent company had cash and cash equivalents totaling $194.2 million and net
working capital of $230.7 million. At October 1, 1998, the Corporation's
banking subsidiaries could have paid dividends totaling $119 million without
prior regulatory approval. The actual amount of dividends planned to be paid in
the fourth quarter of 1998 will be limited by management to approximately $74
million due to capital and liquidity requirements of individual financial
institutions. The payment of additional dividends by the Corporation's
subsidiaries will be dependent on the future earnings and growth of the
subsidiaries. Management believes that the parent company has adequate
liquidity to meet its cash needs, including the payment of its regular
dividends, servicing of its debt, and cash needed for acquisitions.

SHAREHOLDERS' EQUITY
      The Corporation's total shareholders' equity increased by $263.8 million
from December 31, 1997 to $2.9 billion at September 30, 1998. The increase was
due to common stock issued in connection with benefit plans and acquisitions of
$275.8 million, the net increase in the unrealized gain on available for sale
securities of $31.3 million, and retained net earnings of $9.4 million. These
increases were partially offset by the repurchase of $52.7 million of common
stock in connection with acquisitions.

CAPITAL ADEQUACY

      The following table presents capital adequacy information for the
Corporation:

<TABLE>
<CAPTION>
                                                                                   NINE MONTHS ENDED
                                                                                      SEPTEMBER 30,                   
                                                                               --------------------------             DECEMBER 31,
                                                                                1998                 1997                 1997
                                                                               -----                -----                -----
<S>                                                                            <C>                  <C>                  <C>
CAPITAL ADEQUACY DATA
  Total shareholders' equity/total assets (at period end)..........            9.61%                9.60%                9.53%
  Average shareholders' equity/average total assets................            9.52                 8.80                 9.36
  Tier 1 capital/unweighted average assets (leverage ratio)(1).....            9.29                 9.67                 9.62
</TABLE>

--------------------

(1) Based on period-end capital and quarterly adjusted average assets.


                                      31
<PAGE>   32


      The following table presents the Corporation's risk-based capital and
capital adequacy ratios. The Corporation's regulatory capital ratios qualify
the Corporation for the "well-capitalized" regulatory classification.

                               RISK-BASED CAPITAL

<TABLE>
<CAPTION>
                                                                                   NINE MONTHS ENDED
                                                                                     SEPTEMBER 30,
                                                                           --------------------------------          DECEMBER 31,
>>>                                                                            1998                 1997                1997
                                                                           -----------          -----------          -----------
                                                                                          (DOLLARS IN THOUSANDS)

<S>                                                                        <C>                  <C>                  <C>
TIER 1 CAPITAL
  Shareholders' equity.............................................        $ 2,932,567          $ 2,680,841          $ 2,668,721
  Trust Preferred Securities and minority interest in consolidated             208,765              213,396              214,360
  subsidiaries.....................................................
  Less:  Goodwill and other intangibles............................           (355,525)            (186,902)            (180,635)
         Disallowed deferred tax asset.............................             (1,235)              (1,596)              (1,651)
         Unrealized gain on available for sale securities..........            (82,405)             (37,070)             (49,330)
         Other deductions..........................................                 --                 (114)                  --
                                                                           -----------          -----------          -----------
                 TOTAL TIER 1 CAPITAL..............................          2,702,167            2,668,555            2,651,465
TIER 2 CAPITAL
  Allowance for losses on loans ...................................            251,567              238,156              233,429
  Qualifying long-term debt........................................            476,079              174,204              174,232
  Nonqualifying securities.........................................                 --                   --                  (71)
                                                                           -----------          -----------          -----------
                 TOTAL CAPITAL BEFORE DEDUCTIONS...................          3,429,813            3,080,915            3,059,055
  Less: investment in unconsolidated subsidiaries..................            (10,866)              (2,078)             (10,628)
                                                                           ------------         -----------          -----------
                 TOTAL CAPITAL.....................................        $ 3,418,947            3,078,837            3,048,427
                                                                            ==========          ===========          ===========

RISK-WEIGHTED ASSETS...............................................        $20,024,313          $18,999,577          $18,601,136
                                                                           ===========          ===========          ===========

RATIOS AS A PERCENT OF END OF PERIOD RISK-WEIGHTED ASSETS
  Tier 1 capital...................................................              13.49%               14.05%               14.25%
  Total capital....................................................              17.07                16.20                16.39
</TABLE>

      At September 30, 1998, total shareholders' equity was 9.61% of total
assets and the leverage ratio was 9.29% compared to 9.53% and 9.62%,
respectively, at December 31, 1997. The decrease in the Tier I capital ratio
and leverage ratio is attributable primarily to the increase in goodwill and
other intangibles by $173.1 million (deducted from Tier 1 capital) since
December 31, 1997 in connection with acquisitions. This decrease was partially
offset by the growth in total shareholders' equity. The increase in the total
capital to risk-weighted assets ratio is primarily attributable to the
issuance, by UPB, of $300 million of 6.5% Putable/Callable Subordinated Notes,
due March 15, 2018, putable or callable on March 15, 2008, which qualify as
Tier II capital for regulatory purposes. Reference is made to Note 9 to the
interim unaudited consolidated financial statements included in Part I. Item 1
of this report for additional information regarding these subordinated notes.

YEAR-2000 RISK FACTORS

      The Corporation's 1997 Restated MD&A discusses under the heading "Year
2000 Risk Factors" potential problems which could affect the Corporation's data
processing systems with the advent of the "Year 2000," the steps taken and to
be taken by the Corporation to address these potential problems, and the
estimated cost of achieving Year-2000 compliance. The Corporation is currently
on schedule to be fully compliant and tested by December 31, 1998, as stated in
its 1997 Annual Report. The Corporation continues to estimate that it will
incur expenses approximating $750,000 to achieve Year-2000 compliance with
respect to its own systems. The $750,000 does not include the cost of computer
equipment scheduled to be replaced in the normal course of business, which is
estimated to be $3.8 million and constitutes a reallocation within the capital
budget. The Corporation's practice is to convert the data processing systems of
acquired entities to the Corporation's data processing systems, which are
expected to be Year-2000 compliant. Therefore, the aggregate cost related to
pending acquisitions becoming Year-2000 compliant is not considered significant
beyond normal conversion costs (see the discussion of merger-related charges
under the heading "Earnings Considerations Related to Pending Acquisitions").

      The Corporation is developing contingency plans in three broad
categories. The first set of contingency plans, which has been completed, is
for all critical applications that are not currently Year-2000 compliant and
tested, even though it is expected that these applications will be compliant on
schedule. The second set of contingency plans will address any Year-2000
related failures of critical applications after they have been fully tested and
put into production. Although there is a low probability that a fully compliant
and tested application will have a Year-2000 related failure, it is deemed
prudent to have a contingency plan in place. The third and final set of
contingency plans will address other disruptions, some of which are beyond the
control of the Corporation. Some examples would be 


                                      32
<PAGE>   33


disruption of utilities such as power, water, or telecommunications. Also
included in this category would be any major hardware failures that would
require processing to be moved to a disaster recovery backup site. The
Corporation's Business Resumption Plan does cover most of the potential
disruptions in this category, and the appropriate sections from that plan will
be incorporated into the Year-2000 contingency plan. The Corporation will
complete all contingency plans by December 31, 1998.

      The Year-2000 compliance of future potential acquisitions is a potential
risk factor of the Corporation's acquisition program. As part of its due
diligence process, the systems and application software of the target
acquisitions are reviewed to determine if they are Year-2000 compliant or, upon
conversion to the Corporation's systems, will be Year-2000 compliant prior to
year end 1998. Regulatory authorities have indicated they will not approve
applications for permission to effect acquisitions unless the applicant has
provided assurance satisfactory to them that they will be Year-2000 compliant
and that the status of an applicant's Year-2000 compliance could impact the
availability of expedited processing of applications.

      As discussed in the 1997 Restated Financial Statements, the Corporation
has risk arising from the advent of Year-2000 related to its lending activities
and could be adversely affected should significant customers of the Corporation
fail to address the issues appropriately. The Corporation is continuing to
monitor the Year-2000 compliance efforts of its major borrowing customers.
Major customers are rated as to their efforts toward Year-2000 compliance. If
resources employed or progress toward compliance is deemed insufficient, the
Corporation works with and assists the customers to achieve a satisfactory
level of compliance. The potential impact of major customers not taking
appropriate actions cannot be quantified at this time.

      The Corporation also faces risks from the Year-2000 related to other
financial institutions that provide short-term funding sources to its banking
subsidiaries. If these entities are not Year-2000 compliant, their ability to
provide short-term funding to the Corporation will be impacted and could have
an adverse impact on the Corporation. The Corporation is reviewing these
entities' efforts to become Year-2000 compliant in an effort to minimize any
risk.

IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS

      In June 1998, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 133, "Accounting for
Derivative Instruments and Hedging Activities" (FASB 133). FASB 133 provides a
consistent standard for the recognition and measurement of derivatives and
hedging activities. The new Standard resolves the inconsistencies that existed
with respect to derivatives accounting, and dramatically changes the way many
derivative transactions and hedged items are reported.

      FASB 133 requires all derivatives to be recorded on the balance sheet at
fair value and establishes "special accounting" for the following three
different types of hedges: hedges of changes in fair value of assets,
liabilities, or firm commitments (fair value hedges); hedges of the variable
cash flows of forecasted transactions (cash flow hedges); and hedges of foreign
currency exposure of net investment in foreign operations. The Statement is
effective for years beginning after June 15, 1999, but companies can early
adopt as of the beginning of any fiscal quarter that begins after June 1998.
The Corporation is evaluating the impact of this new Standard and has not
determined if it will adopt the new Standard early.

      In October 1998, the FASB issued SFAS No. 134, "Accounting for
Mortgage-Backed Securities Retained after the Securitization of Mortgage Loans
Held for Sale by a Mortgage Banking Enterprise, an amendment of FASB No. 65.
FASB No. 65, "Accounting for Certain Mortgage Banking Activities," establishes
accounting and reporting standards for certain activities of mortgage banking
enterprises. Statement No. 65, as amended by FASB No. 115, "Accounting for
Certain Investments in Debt and Equity Securities," and Statement No. 125,
"Accounting for Transfers and Servicing of Financial Assets and Extinguishment
of Liabilities," requires that after the securitization of a mortgage loan held
for sale, an entity engaged in mortgage banking activities classify the
resulting mortgage-backed security as a trading security. This Statement
further amends FASB No. 65 to require that after securitization of mortgage
loans held for sale, an entity engaged in mortgage banking activities classify
the resulting mortgage-backed securities or other retained interests based on
its ability and intent to sell or hold the investments. This Statement conforms
the subsequent accounting for securities retained after the securitization of
mortgage loans by a mortgage banking enterprise with the subsequent accounting
for securities retained after the securitization of other types of assets by a
nonmortgage banking enterprise. The implementation of this new standard is not
expected to have a material impact on the Corporation's operations. 


                                      33
<PAGE>   34

ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

ASSET LIABILITY AND MARKET RISK MANAGEMENT

      The Corporation's assets and liabilities are principally financial in
nature and the resulting earnings thereon, primarily net interest income, are
subject to changes as a result of changes in market interest rates and the mix
of the various assets and liabilities. Interest rates in the financial markets
affect the Corporation's decisions on pricing its assets and liabilities, which
impacts net interest income, the Corporation's primary cash flow stream. As a
result, a substantial part of the Corporation's risk management activities is
devoted to managing interest-rate risk. Currently, the Corporation does not
have any significant risks related to foreign exchange, commodities or equity
risk exposure.

      INTEREST-RATE RISK. One of the most important aspects of management's
efforts to sustain long-term profitability for the Corporation is the
management of interest-rate risk. Management's goal is to maximize net interest
income within acceptable levels of interest-rate risk and liquidity. To achieve
this goal, a proper balance must be maintained between assets and liabilities
with respect to size, maturity, repricing date, rate of return, and degree of
risk. Reference is made to the "Investment Securities," "Loans," and "Other
Earning Assets" discussions in the 1997 Annual Report and in this discussion
for additional information regarding risks related to these items.

      The Corporation's Funds Management Committee oversees the conduct of
global asset/liability management. The Committee reviews the asset/liability
structure and interest-rate risk monthly for the lead bank and quarterly for
the Corporation's other subsidiaries.

      The Corporation uses interest-rate sensitivity (GAP) analysis to monitor
the amounts and timing of balances exposed to changes in interest rates, as
shown in the following table. The analysis presented has been made at a point
in time and could change significantly on a daily basis. The GAP Report is not
relied upon exclusively to evaluate the impact of, or predict how the
Corporation is positioned to react to, changing interest rates. Other methods
such as simulation analysis are also considered in evaluating the Corporation's
interest-rate risk. Key assumptions in the simulation analysis include
prepayment speeds on mortgage-related assets, cash flows and maturities of
financial instruments held for purposes other than trading, changes in volumes
and pricing, deposit sensitivity, and management's financial capital plan.
These assumptions are inherently uncertain and, as a result, the simulation
cannot precisely estimate net interest income or precisely predict the impact
of higher or lower interest rates on net interest income. Actual results will
differ from simulated results due to timing, magnitude, and frequency of
interest rate changes and changes in market conditions and management
strategies, among others.

      At September 30, 1998, the GAP analysis indicated that the Corporation
was asset sensitive with $833 million more assets than liabilities repricing
within one year. At 3% of total assets, this position was within management's
policy limit of 10% of total assets.


                                      34
<PAGE>   35

                  UNION PLANTERS CORPORATION AND SUBSIDIARIES
                RATE SENSITIVITY ANALYSIS AT SEPTEMBER 30, 1998

<TABLE>
<CAPTION>
                                                                     INTEREST-SENSITIVE WITHIN (1) (7)
                                            ----------------------------------------------------------------------------------------
                                                                                                                     NON-
                                             0-90     91-160    181-365      1-3      3-5      5-15       OVER     INTEREST-
                                             DAYS      DAYS       DAYS      YEARS    YEARS    YEARS     15 YEARS   BEARING    TOTAL
                                            ------   -------    -------    ------   ------   -------    --------   --------- -------
                                                                           (DOLLARS IN MILLIONS)

<S>                                         <C>      <C>        <C>        <C>      <C>      <C>        <C>        <C>       <C>
ASSETS
  Loans and leases (2) (3) (4) ......       $7,587   $ 1,994    $ 2,979    $4,544   $1,731   $   510    $    12    $   330   $19,687
  Investment securities (5) (6) .....        1,473       728        820     2,323    1,078     1,023        423         --     7,868
  Other earning assets ..............          613        14          5         1       --        --         --         --       633
  Other assets ......................           --        --         --        --       --        --         --      2,337     2,337
                                            ------   -------    -------    ------   ------   -------    -------    -------   -------
          Total Assets ..............       $9,673   $ 2,736    $ 3,804    $6,868   $2,809   $ 1,533    $   435    $ 2,667   $30,525
                                            ======   =======    =======    ======   ======   =======    =======    =======   =======
                                                                                                                                    
SOURCES OF FUNDS                                                                                                                    
  Money market deposits (7) (8) .....       $  973   $    --    $   973    $1,297   $   --   $    --    $    --    $    --   $ 3,243
  Other savings and time deposits ...        3,868     2,232      2,462     3,416      302     1,810          4         --    14,094
  Certificates of deposit of                                                                                                        
    $100,000 and over ...............          928       549        620       513       48         3         --         --     2,661
  Short-term borrowings .............        1,809         6         10         4       --        --         --         --     1,829
  Short- and medium-term bank notes             --        --         --        45       60        --         --         --       105
  Federal Home Loan Bank advances ...          582         1          1         2        1         2         --         --       589
  Other long-term debt ..............          366        --         --        82      100       501         --      1,049          
  Noninterest-bearing deposits ......           --        --         --        --       --        --         --      3,290     3,290
  Other liabilities .................           --        --         --        --       --        --         --        732       732
  Shareholders' equity ..............           --        --         --        --       --        --         --      2,933     2,933
                                            ------   -------    -------    ------   ------   -------    -------    -------   -------
          Total sources of funds ....       $8,526   $ 2,788    $ 4,066    $5,277   $  493   $ 1,915    $   505    $ 6,955   $30,525
                                            ======   =======    =======    ======   ======   =======    =======    =======   =======
                                                                                                                                    
Interest-rate sensitivity gap .......       $1,147   $   (52)   $  (262)   $1,591   $2,316   $  (382)   $   (70)   $(4,288)       --
                                                                                                                                    
Cumulative interest-rate                                                                                                            
  sensitivity gap (8) ...............        1,147     1,095        833     2,424    4,740     4,358      4,288         --        --
                                                                                                                                   
Cumulative gap as a percentage                                                                                                     
  of total assets (8) ...............            4%        4%         3%       16%      16%       14%        14%        --        --
                                                                                                                               
</TABLE>

------------------------------

Management has made the following assumptions in presenting the above analysis:

(1)   Assets and liabilities are generally scheduled according to their
      earliest repricing dates regardless of their contractual maturities.
(2)   Nonaccrual loans and accounts receivable-factoring are included in the
      noninterest-bearing category.
(3)   Fixed-rate mortgage loan maturities are estimated based on the currently 
      prevailing principal-prepayment patterns of comparable mortgage-backed 
      securities.
(4)   Delinquent FHA/VA loans are scheduled based on foreclosure and repayment
      patterns.
(5)   The scheduled maturities of mortgage-backed securities and CMOs assume
      principal prepayment of these securities on dates estimated by
      management, relying primarily upon current and consensus interest-rate
      forecasts in conjunction with the latest three-month historical prepayment
      schedules.
(6)   Securities are generally scheduled according to their call dates when
      valued at a premium to par. 
(7)   Money market deposits and savings deposits that have no contractual
      maturities are scheduled according to management's best estimate of their
      repricing in response to changes in market rates. The impact of changes
      in market rates would be expected to vary by product type and market. 
(8)   If all money market, NOW, and savings deposits had been included in the
      0-90 Days category above, the cumulative gap as a percentage of total
      assets would have been negative (4%) (4%) and (4%) for the 0-90 Days,
      91-180 Days, and 181-365 Days categories and positive 1%, 3%, 4%, and 4%,
      respectively, for the 1-3 Years, 3-5 Years, 5-15 Years, and over 15 Years
      categories at September 30, 1998.


                                      35
<PAGE>   36

PART II -- OTHER INFORMATION

ITEM 1 -- LEGAL PROCEEDINGS

      During the period covered by this report, there have been no new material
legal proceedings or material developments in pending material litigation to
which the Corporation or any of its subsidiaries is a party or of which any of
their property is subject, other than ordinary routine litigation incidental to
their business. Information concerning legal proceedings is contained in Item
3, Part I of the Corporation's 1997 Form 10-K, Note 19 to the Corporation's
consolidated financial statements on page 71 of the 1997 Annual Report, and
Note 11 to the Corporation's unaudited interim consolidated financial
statements included herein under Item 1 of Part I.

ITEM 2 -- CHANGES IN SECURITIES

      None

ITEM 3 -- DEFAULTS UPON SENIOR SECURITIES

      None

ITEM 4 -- SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

      None

ITEM 5 -- OTHER INFORMATION

      None

ITEM 6 -- EXHIBITS AND REPORTS ON FORM 8-K

      a)   Exhibits:
         11     Computation of Earnings per Common Share (incorporated by
                reference to Note 12 to the Corporation's unaudited interim
                consolidated financial statements included herein)
         23     Consent of PricewaterhouseCoopers LLP
         27.1   Financial Data Schedule - September 30, 1998 Form 10-Q (for SEC 
                use only)
         27.2   Financial Data Schedule -- Restated 1997 Financial Statements
                (Exhibit 99.1) (for SEC use only) 23 Consent of
                PricewaterhouseCoopers LLP
         99.1   Union Planters Corporation 1997 audited financial statements,
                Management's Discussion and Analysis of Results of Operations
                and Financial Condition, and Selected Financial Data restated
                for acquisitions completed in the third quarter of 1998 and
                accounted for as a poolings of interests (See Note 2 to the
                unaudited interim consolidated financial statements for a
                description of the acquisitions completed in the third quarter
                of 1998)


                                       36
<PAGE>   37

      b) Reports on Form 8-K:

<TABLE>
<CAPTION>
      Date of Current Report                             Subject
      ----------------------                             -------

      <S>                                     <C>   
      2.   July 10, 1998                      Consummation of the Magna Group, Inc. acquisition was reported under
                                              Item 2, and consummation and announcement of other acquisitions was 
                                              reported under Item 5. The following financial statements were filed
                                              pursuant to Item 7: (1) Magna Group, Inc. Consolidated Financial
                                              Statements for the years ended December 31, 1997, 1996, and 1995,
                                              consisting of Consolidated Statements of Income for the years ended
                                              December 31, 1997, 1996, and 1995, Consolidated Balance Sheets as of
                                              December 31, 1997 and 1996, Consolidated Statements of Changes in
                                              Stockholders' Equity for the years ended December 31, 1997, 1996, and 
                                              1995, Consolidated Statements of Cash Flows for the years ended
                                              December 31, 1997, 1996, and 1995, and Notes to the Consolidated 
                                              Financial Statements; (2) Magna Group, Inc. Unaudited Interim Consolidated 
                                              Financial Statements as of and for the three months ended March 31, 1998 
                                              and 1997, consisting of Condensed Consolidated Balance Sheets as of 
                                              March 31, 1998 and December 31, 1997, Condensed Consolidated 
                                              Statements of Income for the three months ended March 31, 1998 and 1997,
                                              Condensed Consolidated Statements of Cash Flows for the three months
                                              ended March 31, 1998 and 1997, and the Notes to Condensed Consolidated
                                              Financial Statements; and (3) the Corporation's unaudited pro forma 
                                              consolidated financial statements as of and for the three months ended 
                                              March 31, 1998 and for the three years ended December 31, 1997, consisting
                                              of Unaudited Pro Forma Consolidated Balance Sheet as of March 31, 1998,
                                              Unaudited Pro Forma Consolidated Statement of Earnings for the three 
                                              months ended March 31, 1998, Unaudited Pro Forma Consolidated
                                              Statement of Earnings for the year ended December 31, 1996, Unaudited Pro 
                                              Forma Consolidated Statement of Earnings for the year ended December 31,
                                              1995, and Notes to Unaudited Pro Forma Consolidated Statement.

      3.   July 16, 1998                      Press release announcing second quarter of 1998 net earnings, reported
                                              under Item 5

      4.   September 1, 1998                  Announcement of agreement to acquire Ready State Bank reported under Item 5.

      5.   September 8, 1998                  Announcement of agreement to acquire 51 branches of First Chicago NBO 
                                              Corporation in Indiana with approximately $1.8 billion in deposits, reported
                                              under Item 5.

      6.   October 15, 1998                   Press release announcing third quarter of 1998 net earnings, reported under 
                                              Item 5.

      7.   October 16, 1998                   Announcement of the sale of the credit card portfolio,reported under Item 5.
</TABLE>


                                      37
<PAGE>   38

                                   SIGNATURES


      Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.




                                      UNION PLANTERS CORPORATION
                                      -------------------------------
                                             (Registrant)



Date:     November 10, 1988     
     --------------------------


                                      By:   /s/ Benjamin W. Rawlins, Jr.  
                                         ---------------------------------------
                                            Benjamin W. Rawlins, Jr.
                                            Chairman and Chief Executive Officer



                                      By:   /s/ John W. Parker              
                                         ---------------------------------------
                                            John W. Parker
                                            Executive Vice President and
                                            Chief Financial Officer



                                      By:   /s/ M. Kirk Walters                
                                         ---------------------------------------
                                            M. Kirk Walters
                                            Senior Vice President,Treasurer,
                                            and Chief Accounting Officer


                                      38