-----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, Eq/xCO5kZL5z77HgQd34V46KpCFPGxkTRV0ZtqLPyz3iT/sSVvFt8puHuRLqjTtY fJTvgy960+jhb7mwycg8dw== 0000891836-98-000377.txt : 19980609 0000891836-98-000377.hdr.sgml : 19980609 ACCESSION NUMBER: 0000891836-98-000377 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19980607 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19980608 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: 98643613 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 7, 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. Wells Fargo & Company, a Delaware corporation ("Wells Fargo"), and Norwest Corporation, a Delaware corporation ("Norwest"), have entered into an Agreement and Plan of Merger, dated as of June 7, 1998 (the "Merger Agreement"). The Merger Agreement provides for the merger of Wells Fargo with and into Norwest (the "Merger"). The name of the combined company will be Wells Fargo & Company and its headquarters will be located in San Francisco, California. Paul Hazen, Chairman and Chief Executive Officer of Wells Fargo, will be the Chairman of the Board of Directors of the combined company. Richard M. Kovacevich, Chairman and Chief Executive Officer of Norwest, will be the President and Chief Executive Officer of the combined company. The board of directors of the combined company will consist of an equal number of representatives from each of Wells Fargo and Norwest. The Merger is expected to be (1) accounted for under the "pooling-of-interests" method of accounting and (2) a "reorganization" under the Internal Revenue Code of 1986, as amended. At the effective time of the Merger, each share of common stock, par value $5.00 per share, of Wells Fargo ("Wells Fargo Common Stock"), outstanding immediately prior to the effective time of the Merger will be converted into 10 shares of common stock, par value $1-2/3 per share, of Norwest ("Norwest Common Stock"). Also, at the effective time of the Merger, each share of Wells Fargo Adjustable Rate Cumulative Preferred Stock, Series B, without par value ("Wells Fargo Series B Preferred"), outstanding immediately prior to the effective time of the Merger will be converted into one share of Adjustable-Rate Cumulative Preferred Stock of Norwest, Series B ("Norwest Series B Preferred") and each share of Wells Fargo 6.59% Adjustable Rate Noncumulative Preferred Stock, Series H, without par value ("Wells Fargo Series H Preferred"), outstanding immediately prior to the effective time of the Merger will be converted into one share of 6.59% Adjustable Rate Noncumulative Preferred Stock of Norwest, Series H ("Norwest Series H Preferred"). The terms of Norwest Series H Preferred and Norwest Series B Preferred will be substantially the same as the terms of Wells Fargo Series H Preferred and Wells Fargo Series B Preferred, respectively. Consummation of the Merger is subject to a number of conditions, including (1) the adoption of the Merger Agreement by the stockholders entitled to vote thereon of each of Norwest and Wells Fargo, (2) receipt of all requisite governmental approvals (including the approval of the Board of Governors of the Federal Reserve System), and (3) certain other customary conditions. As an inducement and condition to Norwest's entering into the Merger Agreement, Wells Fargo, as issuer, and Norwest, as grantee, entered into a Stock Option Agreement (the "Wells Fargo Option Agreement") wherein Wells Fargo granted to Norwest an option to purchase approximately 19.9% of the outstanding shares of Wells Fargo Common Stock on certain terms and conditions set forth therein. The option is exercisable only upon the -2- occurrence of certain events, including the acquisition by any person of beneficial ownership of 20% or more of the Wells Fargo Common Stock then outstanding, or agreement by Wells Fargo to engage in, or the recommendation of Wells Fargo's Board of Directors that Wells Fargo's stockholders approve, any of the following types of business combinations: (1) a merger or consolidation, or any similar transaction, involving Wells Fargo or any significant subsidiary; (2) a purchase, lease or other acquisition of all or a substantial portion of the assets or deposits of Wells Fargo or any significant subsidiary or (3) a purchase of securities representing more than 20% of the voting power of the issuers. As an inducement and condition to Wells Fargo's entering into the Merger Agreement, Norwest and Wells Fargo also entered into a substantially identical stock option agreement (the "Norwest Option Agreement") pursuant to which Norwest has granted to Wells Fargo an option to purchase up to approximately 19.9% of the outstanding shares of Norwest Common Stock on certain terms and conditions set forth therein. A copy of the joint press release of June 8, 1998, regarding the Merger is attached as Exhibit 99.1 hereto and is incorporated herein by reference. The foregoing description of such press release is qualified in its entirety by reference to the full text of such press release. A copy of the presentation to investors, dated June 8, 1998, regarding the Merger and given jointly by Norwest and Wells Fargo, is attached as Exhibit 99.2 hereto and is incorporated by reference herein. The foregoing description of such presentation is qualified in its entirety by reference to the full text of such presentation. The exhibits to this current report on Form 8-K contain 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 -3- 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) Joint press release, dated June 8, 1998, issued by Wells Fargo & Company and Norwest Corporation. (99.2) Investor Presentation Materials, dated June 8, 1998, regarding the Merger. -4- 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 -5- EX-99.1 2 JOINT PRESS RELEASE, DATED JUNE 8, 1998 MEDIA INVESTORS Larry Haeg Kim Kellogg Robert S. Strickland Cindy Koehn Norwest Corporation Wells Fargo Norwest Corporation Wells Fargo 612-667-7043 415-396-3606 612-667-7919 415-393-3099 WELLS FARGO AND NORWEST TO MERGE San Francisco and Minneapolis, June 8, 1998 -- Wells Fargo & Company (NYSE: WFC) and Norwest Corporation (NYSE: NOB) said today they have signed a definitive agreement for a merger of equals to create the Western Hemisphere's most extensive and diversified financial services network. The combined company will have $191 billion in assets, more than 90,000 employees, more than 20 million customers, and 5,777 financial services stores in all 50 states, Canada, the Caribbean, Latin America and elsewhere internationally. The transaction is valued at approximately $34 billion. Common stockholders of Wells Fargo will receive 10 shares of common stock of Norwest in exchange for each share of Wells Fargo common stock. After the exchange, it is expected that Wells Fargo stockholders will own approximately 52.5 percent of the combined companies and Norwest stockholders approximately 47.5 percent. Norwest's dividend will remain the same. When the merger is completed, Paul Hazen, chairman and chief executive officer of Wells Fargo, will become chairman of the new organization. Richard M. Kovacevich, chairman and chief executive officer of Norwest, will become president and chief operating officer of Norwest, and Rod Jacobs, president of Wells Fargo, will continue in their current positions until the merger is completed and will head the transition team that will recommend the organizational structure of the new company. "We believe the partnership of these two companies offers terrific opportunities for customers, employees, and shareholders," said Hazen. "The possibilities and power of this combination offer a tremendously exciting vision for our future." "This merger of equals will bring together two high performing companies with complementary businesses, products, technology, markets and customers," said Kovacevich. "It will be a leading franchise in the western United States with all the resources necessary to meet all of our customers' financial needs and serve them when, where and how they want to be served." "In addition to our nationwide presence in mortgage and our presence across the Americas in consumer finance," added Kovacevich, "our combined banking franchise will have a top four market share in 16 of our 21 banking states across the Midwest, Rocky Mountain and Western regions. We'll have the largest number of financial services stores in the nation. Wells Fargo's leadership in alternative delivery is a perfect complement to Norwest's leadership in community banking." "By sharing successful best practices across our two companies," said Hazen, "we can take advantage of the unique strengths of both organizations to serve our customers better and deliver even greater shareholder value. This merger will result in a -2- dynamic new organization that is geographically diverse and focused on delivering long term benefits for our stockholders, customers, team members and communities." The merger is expected to be accounted for as a pooling of interests, to be completed in the second half of this year and to be a tax-free reorganization for federal income tax purposes. The merger has been approved by both companies' boards, requires regulatory and stockholder approval, is expected to break even on a GAAP (Generally Accepted Accounting Principles) basis and to add to cash earnings per share for stockholders of both companies in the first year of operation, excluding transaction costs. The new name of the combined companies will be Wells Fargo & Company, one of the most widely known brand names in the financial services industry. The corporate headquarters of the combined company will be in San Francisco. Minneapolis will be headquarters for the combined Midwest banking business. "The question of where to locate the headquarters of the new organization was perhaps the most difficult part of this process," said Kovacevich. "Since the new organization will have $54 billion in deposits in California and only $13 billion in deposits in Minnesota, it makes sense for the corporate headquarters to be closest to the highest concentration of customers and that's California." "Of the more than 90,000 team members who will make up the new organizations, only 2,130 headquarters staff in San Francisco and Minneapolis, or 2.3 percent of the 90,000, will be directly affected by this headquarters decision." -3- "To manage this process, both companies have instituted an immediate hiring freeze," said Hazen. "Through natural turnover, growth, a good economy, and our commitment to 'retain and retrain' as many affected team members as possible, our goal is to offer as many opportunities as we can to headquarters team members for comparable positions in the combined company either in the Twin Cities area, San Francisco or elsewhere so they can continue their careers with the company. Also, because technology today creates the advantage of 'virtual offices,' some corporate functions could remain in Minneapolis." Merger details include: o Wells Fargo has granted Norwest an option to purchase, under certain circumstances, up to 19.9 percent of Wells Fargo's outstanding shares of common stock. In addition, Norwest has granted Wells Fargo an option to purchase, under certain circumstances, up to 19.9 percent of Norwest's outstanding shares of common stock. o The two companies estimate there will be approximately $950 million in transition-related expenses and expect to achieve at least $650 million in cost savings by the third year of operation. The new company will: o rank 1st in financial services stores in the western hemisphere, o rant 1st in mortgage originations and servicing, o rank 1st in internet banking, -4- o rank 1st in agricultural lending among U.S. banks, o rank 2nd in the number of small business loans among U.S. banks, o rank 2nd in the number of ATMs in the U.S., o rank 4th in middle-market lending among all banks, o rank 3rd among all banks in mutual funds under management, o rank 4th in market capitalization among U.S. bank holding companies, o rank 7th in assets among U.S. bank holding companies, o continue to be the nation's leading commercial real estate leader, o be an industry leader in alternative banking strategy, as developed by Wells Fargo, o be an industry leader in community banking strategy, as developed by Norwest Banks, o have the Americas' premier consumer finance company, through Norwest Financial, o have the largest bank-owned insurance agency.
3/31/98 Norwest Wells Fargo Combined - ------------------------------------------------------------------------------------ Assets (billions) $ 96.1 $ 94.8 $ 190.9 Loans (billions) $ 44.2 $ 64.5 $ 108.7 Income (billions -1997) $ 1,351 $ 1,155 $ 2,506 Revenue (billions - 1997) $ 9.659 9.608 $ 19.267 Deposits (billions) $ 57.8 $ 72.3 $ 130.1 Customers (millions) 9.9 10 19.9 Mortgage originations (billions) $ 60 -- $ 60 Mortgage Servicing (billions) $ 211 -- $ 211 Credit Card Loans (billions) $ 1.6 $ 4.4 $ 6.0 Consumer Credit Card Accounts (millions) 1.6 3.2 4.8 Stores 3,847 1,930 5,777
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3/31/98 Norwest Wells Fargo Combined - ------------------------------------------------------------------------------------ ATMs 1,752 4,400 6,152 Market Capitalization (billions) $ 30 $ 32 $ 62 Common Shares Outstanding (millions) 757.6 85.3 Net interest margin 5.77 6.01 5.89 Employees 58,255 32,414 90,669 Fortune 500 rank (1997) 157 160 65
Wells Fargo operates one of the largest consumer banking businesses in the U.S., serving more than 10 million households in 10 Western states. Norwest Corporation is a $96.1 billion financial solutions company providing banking, insurance, investments, mortgage and consumer finance through 3,847 stores in all 50 states, Canada, the Caribbean, Latin America and elsewhere internationally. This news release contains forward-looking statements with respect to the financial conditions, results of operations and businesses of Wells Fargo and Norwest and, assuming the consummation of the merger, a combined Wells Fargo/Norwest 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 -6- (7) legislation or regulatory requirements or changes adversely affect the businesses in which the combined company would be engaged. # # # -7- EX-99.2 3 INVESTOR PRESENTATION MATERIALS, DATED 6/8/98 Norwest Corporation + Wells Fargo Corporation "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 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 Outstanding Sales and Service Culture o Major cross-sell focus o Superior Distribution Capabilities o Enhanced Diversification 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 76 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 #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 - -------------------------------------------------------------------------------- Complementary Retail Banking 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 #3 $54.2 14 South #1 $2.1 20 Dakota - ------------------------------------------------------------------------------------------------------- Texas 4 13.8 7 Wisconsin 5 1.9 3 - ------------------------------------------------------------------------------------------------------- Minnesota 2 12.6 22 Nebraska 3 1.9 7 - ------------------------------------------------------------------------------------------------------- Arizona 3 8.2 23 Indiana 6 1.7 3 - ------------------------------------------------------------------------------------------------------- Colorado 1 7.6 19 Montana 1 1.3 16 - ------------------------------------------------------------------------------------------------------- Nevada 1 5.0 32 North 2 1.1 12 Dakota - ------------------------------------------------------------------------------------------------------- Iowa 1 4.1 10 Utah 8 0.5 3 - ------------------------------------------------------------------------------------------------------- Oregon 2 3.0 11 Idaho 4 0.5 5 - ------------------------------------------------------------------------------------------------------- New Mexico 2 2.4 18 Wyoming 4 0.4 7 - ------------------------------------------------------------------------------------------------------- Washington 5 2.2 4 Illinois 69 0.4 -- - ------------------------------------------------------------------------------------------------------- Ohio 193 0.1 -- - ------------------------------------------------------------------------------------------------------- ($ 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 $19 43% #1 - -------------------------------------------------------------------------------- 2 Los Angeles-Long Beach 9 12 2 - -------------------------------------------------------------------------------- 3 Minneapolis-St. Paul 9 26 2 - -------------------------------------------------------------------------------- 4 Phoenix-Mesa 6 24 3 - -------------------------------------------------------------------------------- 5 Denver 5 27 1 - -------------------------------------------------------------------------------- 6 Oakland 4 18 2 - -------------------------------------------------------------------------------- 7 Houston 4 11 3 - -------------------------------------------------------------------------------- 8 Orange County 4 20 2 - -------------------------------------------------------------------------------- 9 San Jose 4 20 2 - -------------------------------------------------------------------------------- 10 San Diego 3 21 2 - -------------------------------------------------------------------------------- 11 Sacramento 2 26 2 - -------------------------------------------------------------------------------- 12 Las Vegas 2 16 2 - -------------------------------------------------------------------------------- 13 Portland-Vancouver 2 13 3 - -------------------------------------------------------------------------------- 14 Riverside-San Bernardino 2 17 2 - -------------------------------------------------------------------------------- 15 Des Moines 2 30 1 - -------------------------------------------------------------------------------- Note: Share and rankings are based on June 30, 1997 commercial banking deposits adjusted for subsequent acquisitions and divestitures. Source: SNL Securities. Leading Retail Banking Market Share MSA Market Deposits Percent of Share Rank # of MSAs ($ bn) Total Deposits Cumulative - -------------------------------------------------------------------------------- 1 19 $34 27% 27% - -------------------------------------------------------------------------------- 2 33 49 39 66 - -------------------------------------------------------------------------------- 3 24 21 17 83 - -------------------------------------------------------------------------------- Other 31 6 5 88 Non-MSA 15 12 100 -- -- - -------------------------------------------------------------------------------- Total $125 100% The combined entity will rank among the top three in market share in 76 MSAs comprising 85% 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 (5,400) 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 - -------------------------------------------------------------------------------- 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 $28 $50 #4 - -------------------------------------------------------------------------------- Merchant Processing Volume $4 $16 $20 #8 - -------------------------------------------------------------------------------- Credit Card Outstanding $2 $5 $7 #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 1.0mm 1.3mm 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 Transaction Adjustments*** 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. *** Includes on-going impact of divestitures, reinvestment of excess capital and other adjustments. 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% Pro Forma per Original Wells Fargo Share - ---------------------------------------- Cash EPS $26.60 $29.10 $33.50 % Accretion 13.6% 15.8% 20.1% GAAP EPS $22.30 $25.90 $30.30 % Accretion 29.2% 30.9% 34.8% Note: Estimates exclude one-time merger related costs. Wells Fargo Comparison of Wall Street and Management Forecasts Long- Term Annual Growth 1998E 1999E 2000E 2001E Rate ----- ----- ----- ----- ------ Cash EPS* - --------- Management $21.25 $25.16 $29.43 $33.17 16.0% Analyst Estimates $20.25 $22.56 $25.14 $27.90 11.3% GAAP EPS* - --------- Management $16.00 $19.86 $24.07 $27.74 20.1% Analyst $15.01 $17.26 $19.78 $22.47 14.4% Estimates * Diluted EPS Wells Fargo Management Forecast ($ 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 $2,130 ------------------------------- Expense Savings % of Amount Combined Source of Savings ($mm) Expenses* Comments - -------------------------------------------------------------------------------- Systems $200 2.4% o Conversion to one system platform Operations 120 1.4 o Consolidation of operations Branch Consolidations 175 2.1 o Based on states with market place overlap General Administration 155 1.8 o Elimination of --- --- duplicate overhead functions Total Cost Saves $650 7.7% * Expenses excluding intangible amortization. Expense Savings Projected in Recent Major Bank Transactions - -------------------------------------------------------------------------------- ($ 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% $2,000 First Chicago NBD/Banc One 28 930 First America/National City 31 243 US Bancorp/First Banks 30 340 - -------------------------------------------------------------------------------- Opportunities Not Included in Financial Model Annual Pre-Tax Income Potential ($mm) ------------------ o Increase Wells Fargo's current products per $700 household to Norwest average o Improve Norwest banking efficiency ratio to 400 level of Wells Fargo o Other cross-business integration revenue 150 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-----