-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, QWfBAqjygAQnOD71NHuj6kdr8x17Y7ChmIKvm2vJPrWyqLZ8SSW8VLztPTx5dXfz 5AcW2dIJQLMhEpiI8gLGMg== 0000891836-98-000384.txt : 19980610 0000891836-98-000384.hdr.sgml : 19980610 ACCESSION NUMBER: 0000891836-98-000384 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980607 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19980609 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: WELLS FARGO & CO CENTRAL INDEX KEY: 0000105598 STANDARD INDUSTRIAL CLASSIFICATION: NATIONAL COMMERCIAL BANKS [6021] IRS NUMBER: 132553920 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-06214 FILM NUMBER: 98644348 BUSINESS ADDRESS: STREET 1: 420 MONTGOMERY ST CITY: SAN FRANCISCO STATE: CA ZIP: 94104 BUSINESS PHONE: 8004114932 MAIL ADDRESS: STREET 1: 343 SANSOME ST 3RD FL STREET 2: WELLS FARGO BANK CITY: SAN FRANCISCO STATE: CA ZIP: 94163 8-K 1 FORM 8-K, WELLS FARGO & COMPANY SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------ FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 ------------------ Date of Report (Date of earliest event reported) JUNE 8, 1998 ------------------------------ WELLS FARGO & COMPANY - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) DELAWARE 1-6214 13-2553920 - -------------------------------------------------------------------------------- (State of incorporation) (Commission File Number) (IRS Employer Identification No.) 420 MONTGOMERY STREET, SAN FRANCISCO, CALIFORNIA 94163 - -------------------------------------------------------------------------------- (Address of principal executive offices) 1-800-411-4932 - -------------------------------------------------------------------------------- (Registrant's telephone number, including area code) NOT APPLICABLE - -------------------------------------------------------------------------------- (Former name or former address, if changed since last report) ITEMS 1 - 4. Not Applicable. ITEM 5. OTHER EVENTS. A final version of the presentation to analysts, dated June 8, 1998, regarding the proposed merger between Norwest Corporation ("Norwest") and Wells Fargo & Company ("Wells Fargo"), is attached as Exhibit 99.1 hereto and is incorporated by reference herein. For information regarding the proposed merger, reference is made to the Current Report on Form 8-K filed by Wells Fargo on June 7, 1998. The exhibit to this current report on Form 8-K contains forward looking statements with respect to the financial conditions, results of operations and businesses of each of Norwest and Wells Fargo and, assuming the consummation of the merger, a combined Norwest/Wells Fargo including statements relating to: (a) the cost savings and accretion to reported earnings that will be realized from the merger; (b) the impact on revenues of the merger, and (c) the restructuring charges expected to be incurred in connection with the merger. These forward looking statements involve certain risks and uncertainties. Factors that may cause actual results to differ materially from those contemplated by such forward looking statements include, among others, the following possibilities: (1) expected cost savings from the merger cannot be fully realized or realized within this expected timeframe; (2) revenues following the merger are lower than expected; (3) competitive pressure among financial services companies increases significantly; (4) costs or difficulties related to the integration of the businesses of Norwest and Wells Fargo are greater than expected; (5) changes in the interest rate environment reduce interest margins; (6) general economic conditions, either internationally or nationally or in the states in which the combined company will be doing business, are less favorable than expected; or (7) legislation or regulatory requirements or changes adversely affect the businesses in which the combined company would be engaged. Such forward-looking statements speak only as of the date on which such statements were made, and Wells Fargo undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which any such statement is made to reflect the occurrence of unanticipated events. ITEM 7. EXHIBITS. (99.1) Final Analyst Presentation Materials, dated June 8, 1998. -2- SIGNATURE 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. WELLS FARGO & COMPANY By /s/ GUY ROUNSAVILLE, JR. -------------------------------------- Name: Guy Rounsaville, Jr. Title: Executive Vice President and General Counsel Date: June 8, 1998 EX-99.1 2 ANALYST PRESENTATION MATERIALS, DATED 6/8/98 Norwest + Wells Fargo "Creating ... The Premier Financial Services Company in the Western Hemisphere" June 8, 1998 Forward Looking Statements This presentation contains forward looking statements with respect to the financial conditions, results of operations and businesses of Norwest and Wells Fargo and, assuming the consummation of the merger, a combined Norwest/Wells Fargo including statements relating to: (a) the cost savings and accretion to reported earnings that will be realized from the merger; (b) the impact on revenues of the merger, and (c) the restructuring charges expected to be incurred in connection with the merger. These forward looking statements involve certain risks and uncertainties. Factors that may cause actual results to differ materially from those contemplated by such forward looking statements include, among others, the following possibilities: (1) expected cost savings from the merger cannot be fully realized or realized within this expected timeframe; (2) revenues following the merger are lower than expected; (3) competitive pressure among financial services companies increases significantly; (4) costs or difficulties related to the integration of the businesses of Norwest and Wells Fargo are greater than expected; (5) changes in the interest rate environment reduce interest margins; (6) general economic conditions, either internationally or nationally or in the states in which the combined company will be doing business, are less favorable than expected; or (7) legislation or regulatory requirements or changes adversely affect the businesses in which the combined company would be engaged. The New Company o Name Wells Fargo o Headquarters Corporate San Francisco Midwest Minneapolis o Management Board of Directors 50/50 Split Chairman Paul Hazen President & CEO Dick Kovacevich Transaction Overview o Terms o Fixed exchange ratio o 10 Norwest Shares for each Wells Fargo share o 19.9% option to each party o Structure o Negotiated Merger of Equals o Tax Free Exchange o Pooling of Interests
COMBINED COMPANY STATISTICS DOLLARS IN MILLIONS ============================================================================================================================ WELLS NORWEST % FARGO % COMBINED RANK ------------- ------- ----------- ------- -------------- -------- MARKET CAPITALIZATION $ 30,068 49.3% $ 30,980 50.7 $ 61,047 4 (Share Price @ 6/05/98) BALANCE SHEET (3/31/98) - ----------------------- Assets $ 96,094 50.3% $ 94,820 49.7% $ 190,914 7 Loans 42,162 39.5% 64,504 60.5% 106,666 Deposits 57,833 44.4% 72,316 55.6% 130,149 Common Equity 6,920 35.6% 12,528 64.4% 19,448 Tangible Common Equity 5,825 60.8% 3,757 39.2% 9,582 REVENUE (3/31/98 YTD) $ 1,889 50.4% $ 1,856 49.6% $ 3,745 NET INCOME (3/31/98 YTD) $ 368 53.9% $ 315 46.1% $ 683 KEY RATIOS (3/31/98) - -------------------- Return on Assets 1.69% 1.34% 1.51% 8 Net Interest Margin 5.77% 6.01% 5.89% 1 Return on Realized Common Equity 22.9% 10.1% 14.5% 22 Equity/Assets 7.39% 13.50% 0.43% 1
Transaction Overview o Substantial EPS accretion to all shareholders o Synergies $650 mm expense reduction o Merger costs $950 mm o Targeted close Second Half 1998 o Due diligence Completed o Approvals Required Regulatory Wells Fargo Shareholders Norwest Shareholders "A Compelling Partnership" Norwest + Wells Fargo "Leveraging Complementary Strengths" Leveraging Complementary Strengths o Norwest o Outstanding sales and service culture o Strong revenue generation o Wells Fargo o Alternative delivery leader o Outstanding expense efficiency The New Wells Fargo o Major cross-sell focus o Spanning 9 of 10 highest growth states o Broader business and product line o Leading market share in complementary businesses The New Wells Fargo o #1, 2, or 3 Bank Deposit Share in 73 MSA's o #1 Mortgage Originator and Servicer o #1 Bank Commercial Real Estate Lender o #1 Bank-Owned Insurance Agency o #1 Agricultural Bank o #2 Small Business Lender o #4 Bank Mutual Fund Manager o #4 Middle Market Lender o #1 Internet Bank o Premier Consumer Finance Company Complementary Retail Banking Wells Fargo Focus Norwest Focus - -------------------------------------------------------------------------------- o Western o Midwest, Rocky Mountains, Southwest - -------------------------------------------------------------------------------- o Larger, higher density markets o Smaller, lower density markets - -------------------------------------------------------------------------------- o Optimized branch/in-store o High performance, community bank configuration "store-based" distribution - -------------------------------------------------------------------------------- o Leadership in alternative o Superior sales culture and customer delivery systems customer service focused on cross-sell - -------------------------------------------------------------------------------- Flexibility to Change o Each has superior yet distinct approaches to delivering community banking services o Both methods will be employed depending on each market's characteristics o Result: diverse distribution capabilities to service the broadest range of customers and markets Premier Banking Franchise in the West and Midwest [Map] Premier Banking Franchise in the West and Midwest
Pro Forma Combined Pro Forma Combined - ------------------------------------------------------------------------------------------------------- State Rank in Deposits Market Rank in Deposits Market State share(%) State Share(%) - ------------------------------------------------------------------------------------------------------- California #2 $54.2 14 South #1 $2.1 20 Dakota - ------------------------------------------------------------------------------------------------------- Texas 4 13.8 7 Wisconsin 5 1.9 3 - ------------------------------------------------------------------------------------------------------- Minnesota 2 12.6 22 Nebraska 3 1.9 7 - ------------------------------------------------------------------------------------------------------- Arizona 3 8.2 23 Indiana 6 1.7 3 - ------------------------------------------------------------------------------------------------------- Colorado 1 7.6 19 Montana 1 1.3 16 - ------------------------------------------------------------------------------------------------------- Nevada 1 5.0 32 North 2 1.1 12 Dakota - ------------------------------------------------------------------------------------------------------- Iowa 1 4.1 10 Utah 8 0.5 3 - ------------------------------------------------------------------------------------------------------- Oregon 2 3.0 11 Idaho 4 0.5 5 - ------------------------------------------------------------------------------------------------------- New Mexico 2 2.4 18 Wyoming 4 0.4 7 - ------------------------------------------------------------------------------------------------------- Washington 4 2.2 4 Illinois 69 0.4 -- - ------------------------------------------------------------------------------------------------------- Ohio 193 0.1 -- - ------------------------------------------------------------------------------------------------------- ($ in billions) Note: Share and rankings based on June 30, 1997 commercial banking and thrift deposits adjusted for subsequent acquisitions and divestitures. Source: SNL Securities.
Presence in Growth Markets o Combined franchise in 9 of 10 fastest growing states o Benefits from projected demographic trends o Accelerating population growth in California o 25% of projected U.S. population growth o Sustained growth in Texas, Mountain, and Western States o A further 25% of projected U.S. population growth o Leveraging of national mortgage banking and consumer finance presence Strong Presence in Attractive Markets Total Deposits Pro Forma - -------------------------------------------------------------------------------- Top 15 MSA Markets for Norwest/Wells Fargo ($bn) Share Rank - -------------------------------------------------------------------------------- 1 San Francisco $19 43% #1 - -------------------------------------------------------------------------------- 2 Los Angeles-Long Beach 9 12 2 - -------------------------------------------------------------------------------- 3 Minneapolis-St. Paul 9 26 2 - -------------------------------------------------------------------------------- 4 Phoenix-Mesa 6 24 3 - -------------------------------------------------------------------------------- 5 Denver 5 27 1 - -------------------------------------------------------------------------------- 6 Oakland 4 18 2 - -------------------------------------------------------------------------------- 7 Houston 4 11 3 - -------------------------------------------------------------------------------- 8 Orange County 4 20 2 - -------------------------------------------------------------------------------- 9 San Jose 4 20 2 - -------------------------------------------------------------------------------- 10 Las Vegas 3 30 2 - -------------------------------------------------------------------------------- 11 San Diego 3 21 2 - -------------------------------------------------------------------------------- 12 Sacramento 2 26 2 - -------------------------------------------------------------------------------- 13 Portland-Vancouver 2 13 3 - -------------------------------------------------------------------------------- 14 Riverside-San Bernardino 2 17 2 - -------------------------------------------------------------------------------- 15 Des Moines 2 30 1 - -------------------------------------------------------------------------------- Note: Share and rankings are based on June 30, 1997 commercial banking deposits adjusted for subsequent acquisitions and divestitures. Source: SNL Securities. Leading Retail Banking Market Share MSA Market Deposits Percent of Share Rank # of MSAs ($ bn) Total Deposits Cumulative - -------------------------------------------------------------------------------- 1 19 $33 26% 26% - -------------------------------------------------------------------------------- 2 33 51 41 67 - -------------------------------------------------------------------------------- 3 21 16 13 80 - -------------------------------------------------------------------------------- Other 33 11 9 89 Non-MSA 14 11 100 -- -- - -------------------------------------------------------------------------------- Total $125 100% The combined entity will rank among the top three in market share in 73 MSAs comprising 80% of its deposit base. Note: Share and rankings are based on June 30, 1997 commercial bank deposits adjusted for subsequent acquisitions and divestitures. Source: SNL Securities. Leadership in Retail Distribution o #1 in total stores (5,777) o #3 Bank network (2,800 stores) o #1 Retail mortgage network (741 stores) o Largest mortgage banking originator (1 out of 15 mortgages) o Largest mortgage banking servicer (2,000,000 customers) o #1 Premier, U.S. Consumer finance company (1,425 stores) o #3 ATM network in U.S. (6,500 ATMs) o #1 Internet bank for consumers (460,000 customers) o #1 Supermarket bank (900 stores) o Leader in telephone banking functionality o Leading NAFTA bank o #1 Mexican border o #1 Canadian border Broad Product Capability Consumer/Small Business Wells Fargo Norwest - -------------------------------------------------------------------------------- Auto Leasing Auto Lending Credit Cards Credit Cards Mutual Funds Consumer Finance Private Banking Mortgage Banking Small Business Lending Mutual Funds Trust Private Banking Brokerage Small Business Lending Student Lending Insurance Trust Brokerage - -------------------------------------------------------------------------------- Market Leadership Positions Spanning Entire Spectrum of Consumer and Wholesale Products. Broad Product Capability Wholesale/Corporate Wells Fargo Norwest - -------------------------------------------------------------------------------- Leasing Leasing Agricultural Lending Agricultural Lending Capital Markets Asset-Based Lending Commercial Real Estate Capital Markets Corporate Lending Commercial Real Estate Merchant Processing Corporate Lending Private Equity/Venture Capital Corporate Trust Merchant Processing Private Equity/Venture Capital - -------------------------------------------------------------------------------- Market Leadership Positions Spanning Entire Spectrum of Consumer and Wholesale Products. Business Line Leadership Lending U.S. Rank* ------- ---------- Commercial Real Estate #1 Agricultural #1 Small Business Loans #2 Middle Market Loans #4 * Norwest/Wells Fargo combined Business Line Leadership ($ in Billions) Wells Norwest Fargo Combined Rank - -------------------------------------------------------------------------------- Mortgage Banking - -------------------------------------------------------------------------------- Servicing $211 -- $211 #1 - -------------------------------------------------------------------------------- Origination $55 -- $55 #1 - -------------------------------------------------------------------------------- ACH Volume $240 $67 $307 #2 - -------------------------------------------------------------------------------- Mutual Funds $21 $25 $46 #4 - -------------------------------------------------------------------------------- Merchant Processing Volume $4 $19 $23 #6 - -------------------------------------------------------------------------------- Credit Card Outstanding $2 $5 $6 #8 - -------------------------------------------------------------------------------- Significant Customer Base Norwest Wells Fargo Combined - -------------------------------------------------------------------------------- Retail Banking 3mm 6.1mm 9.1mm households - -------------------------------------------------------------------------------- Mortgage 2.1mm -- 2.1mm customers - -------------------------------------------------------------------------------- Consumer Finance 3.2mm -- 3.2mm customers - -------------------------------------------------------------------------------- Small Business 284k 750k 1.0mm customers - -------------------------------------------------------------------------------- Middle Market 10k 13k 23k customers - -------------------------------------------------------------------------------- Large Corporate 1.2k 1.5k 2.7k customers - -------------------------------------------------------------------------------- Complementary Expertise: Efficiency o Wells Fargo's 1998 First Quarter cash efficiency ratio was 52% o Further opportunities to bring Norwest's expense efficiency closer to Wells Fargo's average (not included in expense assumptions) o Norwest's target: efficiency ratio in mid-50's o Expect to achieve without compromising focus on revenue growth Complementary Expertise: Revenue Growth o Norwest's average annual revenue growth of 16% over last 10 years o Focused on cross-sell to grow revenue per customer o Substantial opportunities to bring Wells Fargo's cross-sell to Norwest's average (not included in revenue assumptions) o Wells Fargo's revenue growth for 1998 and beyond projected 6% annually o Exceeds Wall Street projections Low Execution Risk o Negotiated Merger of Equals o Realistic Expense Savings Projections o No revenue enhancements included in model o Focus on "People As Our Competitive Advantage" o "Retain & Retrain" o Deliberate Integration Plan: "Will Take the Time to Do It Right" o Year-2000 Conversions on Schedule People as a Competitive Advantage o Maximize return on team member capital o "Retain & Retrain" approach o Maintain alignment between interests of shareholders and teammates o Enhance ability to outperform the competition o Facilitate alternative job placement in combined businesses and locations o Maximize return on shareholder capital o Synergies over three years -- build sustainable long term value, with appropriate considerations for Year-2000 o Retain talented teammates Common Disciplines o Consistent shareholder-value focus o Strong credit culture o Disciplined approach to acquisitions Pro Forma Financial Review Pro Forma Financial Results ($ in millions) 1999E 2000E 2001E - -------------------------------------------------------------------------------- Norwest Net Income to Common* $1,748 $1,967 $2,210 Wells Fargo Net Income to Common** 1,632 1,913 2,130 -------------------------------------------- Subtotal $3,380 $3,880 $4,340 After-Tax Synergies 202 288 403 Earnings on Excess Capital*** 176 215 369 -------------------------------------------- Pro Forma GAAP Net Income $3,758 $4,363 $5,112 Intangibles Amortization 560 550 540 -------------------------------------------- Pro Forma Cash Net Income $4,318 $4,913 $5,652 * Based on analyst estimates and long term growth rates. ** Based on Wells Fargo Management Plan. *** Reinvestment of excess capital at 4% after-tax. Pro Forma Financial Results 1999E 2000E 2001E Pro Forma Norwest - ----------------- Cash EPS $2.56 $2.91 $3.35 % Accretion 7.6% 9.4% 12.8% GAAP EPS $2.23 $2.59 $3.03 % Accretion -- 3.2% 7.4% Note: Estimates exclude one-time merger related costs. Wells Fargo Management Sources of Difference ($ in millions) 1999E 2000E 2001E ----- ----- ----- Net income (Analyst Estimates) $1,418 $1,572 $1,725 Increased Revenue 74 121 185 Lower Provision/Credit Losses 50 60 60 First Interstate/Other Expense Saves 60 120 120 Year 2000 Expense Run-Off 30 40 40 ------------------------------- Net Income (Management Forecast) $1,632 $1,913 $2,130 ------------------------------- Expense Savings Amount Source of Savings ($mm) Comments - ----------------------------------------------------------------------- Systems $200 o Conversion to one system platform Operations 120 o Consolidation of operations Branch Consolidations 175 o Based on states with market place overlap General Administration 155 o Elimination of duplicate overhead --- functions Total Cost Saves $650 * Expenses excluding intangible amortization. Expense Savings Projected in Recent Major Bank Transactions - -------------------------------------------------------------------------------- ($ in Millions) Cost Saves as a % of Smaller Pre-Tax Non-Interest Non-Interest Merger Partners Expense Base Expense Savings - --------------- -------------- --------------- Norwest/Wells Fargo 15% $ 650 Corestates/First Union 46% $ 723 First Interstate/Wells Fargo 37 800 Chase/Chemical 41 1,800 BankAmerica/NationsBank 27% $2,000 First Chicago NBD/Banc One 28 930 First America/National City 31 243 US Bancorp/First Banks 30 340 First Chicago/NBO Bancorp 10 200 - -------------------------------------------------------------------------------- Opportunities Not Included in Financial Model o Increase Wells Fargo's current products per household to Norwest average o Improve Norwest banking efficiency ratio to level of Wells Fargo o Other cross-business integration revenue opportunities Merger Costs Employee Related Expenses $295 Systems/Operations/Customers Conversions 350 Branch Consolidations/Name Change/Signage 185 Investment Bankers/Legal Fees/Travel/Other 120 ---- Total, Pre-Tax $950 ($ in millions) Financial Benefits o First year accretion* o Immediate on cash basis o Break-even for GAAP o $650 mm expense savings over three years o Significant capital generation o Improved productivity o Strong balance sheet * Excluding non-recurring transition expenses Conclusion o Merger of two great companies continuing to build shareholder value o Highly complementary business mix and skills o Good deal for both shareholder groups; immediate cash EPS accretion* o Focus on building long term value o Conservative financial management and accounting will continue in the future o Will take advantage of what each is good at to identify best practices and use throughout the combined company * Before one-time transaction costs -----END PRIVACY-ENHANCED MESSAGE-----