-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, j3zyirb7pmc2Im8ch9VWU6EOx80eVyyd4svmjJVEUnbTNUzI9Bh9RIbDLs/mjDSm m85W0fmoTw7/e3f6/J5MZw== 0000912057-94-003004.txt : 19940912 0000912057-94-003004.hdr.sgml : 19940912 ACCESSION NUMBER: 0000912057-94-003004 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19940909 ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19940909 FILER: COMPANY DATA: COMPANY CONFORMED NAME: FIRST BANK SYSTEM INC CENTRAL INDEX KEY: 0000036104 STANDARD INDUSTRIAL CLASSIFICATION: 6021 IRS NUMBER: 410255900 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 001-06880 FILM NUMBER: 94548546 BUSINESS ADDRESS: STREET 1: 601 SECOND AVE S STREET 2: FIRST BANK PL CITY: MINNEAPOLIS STATE: MN ZIP: 55402-4302 BUSINESS PHONE: 6129731111 FORMER COMPANY: FORMER CONFORMED NAME: FIRST BANK STOCK CORP DATE OF NAME CHANGE: 19720317 8-K/A 1 FORM 8-K/A UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K/A - AMENDMENT NO. 1 CURRENT REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of report (Date of earliest event reported): SEPTEMBER 9, 1994 ----------------- FIRST BANK SYSTEM, INC. ----------------------- (Exact name of registrant as specified in its charter) DELAWARE 1-6880 41-0255900 (State or other jurisdiction (Commission (I.R.S. Employer of Incorporation) File Number) Identification No.) 601 SECOND AVENUE SOUTH, MINNEAPOLIS, MINNESOTA 55402 ----------------------------------------------- ----- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: 612-973-1111 ------------ NOT APPLICABLE -------------- (Former name or former address, if changed since last report) The undersigned registrant hereby amends its Current Report on Form 8-K filed on August 5, 1994, to add a new item 7(b) incorporating the Pro Forma Financial Information as set forth in the pages attached hereto: Item 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS (b) Pro Forma Financial Information - Proforma financial information, required to be filed pursuant to Item 7(b) of Form 8-K filed on August 5, 1994, reflecting the acquisition of Metropolitan Financial Corporation. 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. FIRST BANK SYSTEM, INC. By /s/ David J. Parrin -------------------------------- David J. Parrin Senior Vice President & Controller DATE: SEPTEMBER 9, 1994 -2- UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION The following unaudited Pro Forma Combined Balance Sheet as of June 30, 1994, combines the historical consolidated balance sheets of FBS and MFC as if the Merger had been effective on June 30, 1994, after giving effect to certain adjustments described in the attached Notes to Pro Forma Combined Financial Statements. The unaudited Pro Forma Combined Statements of Income for the six months ended June 30, 1994 and 1993, and the years ended December 31, 1993, 1992 and 1991, present the combined results of operations of FBS and MFC as if the Merger had been effective at the beginning of each period, after giving effect to certain adjustments described in the attached Notes to Pro Forma Combined Financial Statements. The unaudited pro forma combined financial statements and accompanying notes reflect the application of the pooling-of-interests method of accounting for the MFC transaction. Under this method of accounting, the recorded assets, liabilities, shareholders' equity, income and expenses of FBS and MFC are combined and recorded at their historical amounts. The pro forma combined financial information included within is not necessarily indicative of the results of the future operations of the combined entity or the actual results that would have been achieved had the acquisition been consummated prior to the periods indicated. INDEX
PAGE --------- Pro Forma Combined Balance Sheet at June 30, 1994................................................. F-2 Pro Forma Combined Statements of Income: Six months Ended June 30, 1994................................................................ F-3 Six months Ended June 30, 1993................................................................ F-4 Year ended December 31, 1993.................................................................. F-5 Year ended December 31, 1992.................................................................. F-6 Year ended December 31, 1991.................................................................. F-7 Notes to Pro Forma Combined Financial Statements.................................................. F-8
F-1 FIRST BANK SYSTEM, INC. UNAUDITED PRO FORMA COMBINED BALANCE SHEET ACQUISITION OF METROPOLITAN FINANCIAL CORPORATION JUNE 30, 1994 (DOLLARS IN MILLIONS)
MERGER FBS MFC ADJUSTMENTS PRO FORMA HISTORICAL HISTORICAL (SEE NOTES) COMBINED ----------- ----------- ----------- ----------- ASSETS Cash and due from banks.......................................... $ 1,488 $ 74 $ (549) $ 1,013 Federal funds sold and other short-term deposits................. 119 44 163 Securities purchased under agreements to resell................ 293 -- 293 Trading account securities..................................... 58 -- 58 Available-for-sale securities.................................. 3,863 617 1,549 6,029 Investment securities............................................ -- 1,603 (1,603) -- Loans............................................................ 18,704 5,241 23,945 Less allowance for credit losses............................... 440 40 14 494 ----------- ----------- ----------- ----------- Net loans...................................................... 18,264 5,201 (14) 23,451 Bank premises and equipment...................................... 391 102 (20) 473 Interest receivable.............................................. 140 45 185 Customers' liability on acceptances.............................. 144 -- 144 Other assets..................................................... 1,172 329 34 1,535 ----------- ----------- ----------- ----------- Total assets............................................... $ 25,932 $ 8,015 $ (603) $ 33,344 ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- LIABILITIES AND SHAREHOLDERS' EQUITY Deposits Noninterest-bearing.......................................... $ 5,829 $ 210 $ (21) $ 6,018 Interest-bearing............................................. 13,088 5,421 (549) 17,960 ----------- ----------- ----------- ----------- Total deposits............................................. 18,917 5,631 (570) 23,978 Federal funds purchased.......................................... 1,602 -- 1,602 Securities sold under agreements to repurchase................... 780 162 942 Other short-term funds borrowed.................................. 379 488 867 Long-term debt................................................... 1,312 1,110 2,422 Acceptances outstanding.......................................... 144 -- 144 Other liabilities................................................ 553 121 56 730 ----------- ----------- ----------- ----------- Total liabilities.......................................... 23,687 7,512 (514) 30,685 Shareholders' Equity Preferred stock................................................ 106 0 0 106 Common stock................................................... 145 1 26 172 Capital surplus................................................ 729 237 (38) 928 Retained earnings.............................................. 1,340 286 (77) 1,549 Treasury stock................................................. (75) (21) (96) ----------- ----------- ----------- ----------- Total shareholders' equity................................. 2,245 503 (89) 2,659 ----------- ----------- ----------- ----------- Total liabilities and shareholders' equity............... $ 25,932 $ 8,015 $ (603) $ 33,344 ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
See Notes to the unaudited Pro Forma Combined Financial Statements F-2 FIRST BANK SYSTEM, INC. ACQUISITION OF METROPOLITAN FINANCIAL CORPORATION UNAUDITED PRO FORMA COMBINED STATEMENT OF INCOME FOR THE SIX MONTHS ENDED JUNE 30, 1994
FBS MFC SALE OF PRO FORMA (IN MILLIONS, EXCEPT SHARE DATA) HISTORICAL HISTORICAL SUBSIDIARY COMBINED - ----------------------------------------------------------------- ---------- ----------- ----------- ---------- INTEREST INCOME Loans............................................................ $700.4 $ 201.3 $ 901.7 Securities: Taxable........................................................ 100.2 53.2 153.4 Exempt from federal income taxes............................... 6.1 -- 6.1 Other interest income............................................ 11.7 2.9 14.6 ----- ----------- ------- Total interest income........................................ 818.4 257.4 1,075.8 INTEREST EXPENSE Deposits......................................................... 174.4 110.6 285.0 Federal funds purchased and repurchase agreements................ 29.7 2.3 32.0 Other short-term funds borrowed.................................. 6.8 0.8 7.6 Long-term debt................................................... 29.9 35.0 64.9 ----- ----------- ------- Total interest expense....................................... 240.8 148.7 389.5 ----- ----------- ------- Net interest income.............................................. 577.6 108.7 686.3 Provision for credit losses...................................... 47.0 5.6 52.6 ----- ----------- ------- Net interest income after provision for credit losses............ 530.6 103.1 633.7 NONINTEREST INCOME Trust fees....................................................... 78.6 -- 78.6 Credit card fees................................................. 79.5 -- 79.5 Service charges on deposit accounts.............................. 58.5 6.5 65.0 Edina Realty commission income................................... -- 17.5 $ (17.5) 0.0 Insurance commissions............................................ 11.1 4.0 15.1 Securities gains................................................. -- 0.1 0.1 Other............................................................ 77.8 13.0 (0.3) 90.5 ----- ----------- ----------- ------- Total noninterest income..................................... 305.5 41.1 (17.8) 328.8 NONINTEREST EXPENSE Salaries......................................................... 192.7 33.6 (5.2) 221.1 Employee benefits................................................ 47.0 8.8 (0.9) 54.9 Net occupancy.................................................... 43.7 12.0 (3.7) 52.0 Furniture and equipment.......................................... 39.3 3.0 (0.7) 41.6 FDIC insurance................................................... 23.8 6.4 30.2 Professional services............................................ 15.0 2.6 (0.6) 17.0 Amortization of goodwill and other intangibles................... 17.9 2.4 20.3 Other............................................................ 136.1 32.5 (6.7) 161.9 ----- ----------- ----------- ------- Total noninterest expense.................................... 515.5 101.3 (17.8) 599.0 ----- ----------- ----------- ------- Income before income taxes....................................... 320.6 42.9 (0.0) 363.5 Applicable income taxes.......................................... 119.4 16.3 (0.1) 135.6 ----- ----------- ----------- ------- Net income....................................................... $201.2 $ 26.6 $ 0.1 $ 227.9 ----- ----------- ----------- ------- ----- ----------- ----------- ------- Net income applicable to common equity........................... $193.8 $ 220.5 ----- ------- ----- ------- EARNINGS PER COMMON SHARE Average common and common equivalent shares...................... 113,487,845 135,296,222 Primary and fully diluted net income............................. $1.71 $1.63
See Notes to unaudited Pro Forma Combined Financial Statements F-3 FIRST BANK SYSTEM, INC. ACQUISITION OF METROPOLITAN FINANCIAL CORPORATION UNAUDITED PRO FORMA COMBINED STATEMENT OF INCOME FOR THE SIX MONTHS ENDED JUNE 30, 1993
FBS MFC SALE OF PRO FORMA (IN MILLIONS, EXCEPT SHARE DATA) HISTORICAL HISTORICAL SUBSIDIARY COMBINED - ----------------------------------------------------------------- ---------- ----------- ------------- ---------- INTEREST INCOME Loans............................................................ $692.1 $ 153.9 $846.0 Securities: Taxable........................................................ 118.4 71.4 189.8 Exempt from federal income taxes............................... 6.7 -- 6.7 Other interest income............................................ 18.7 2.4 21.1 ----- ----------- ------- Total interest income........................................ 835.9 227.7 1,063.6 INTEREST EXPENSE Deposits......................................................... 227.6 116.5 344.1 Federal funds purchased and repurchase agreements................ 15.2 -- 15.2 Other short-term funds borrowed.................................. 9.0 0.7 9.7 Long-term debt................................................... 26.1 16.0 42.1 ----- ----------- ------- Total interest expense....................................... 277.9 133.2 411.1 ----- ----------- ------- Net interest income.............................................. 558.0 94.5 652.5 Provision for credit losses...................................... 71.2 3.9 75.1 ----- ----------- ------- Net interest income after provision for credit losses............ 486.8 90.6 577.4 NONINTEREST INCOME Trust fees....................................................... 72.0 -- 72.0 Credit card fees................................................. 63.0 -- 63.0 Service charges on deposit accounts.............................. 58.3 4.8 63.1 Edina Realty commission income................................... -- 16.3 $ (16.3) 0.0 Insurance commissions............................................ 9.8 1.5 11.3 Securities gains................................................. 0.3 -- 0.3 Other............................................................ 78.3 14.1 (0.6) 91.8 ----- ----------- ------ ------- Total noninterest income..................................... 281.7 36.7 (16.9) 301.5 NONINTEREST EXPENSE Salaries......................................................... 196.8 31.6 (4.5) 223.9 Employee benefits................................................ 46.7 7.0 (0.8) 52.9 Net occupancy.................................................... 47.8 11.0 (3.2) 55.6 Furniture and equipment.......................................... 35.7 2.5 (0.7) 37.5 FDIC insurance................................................... 23.5 4.8 28.3 Professional services............................................ 16.9 2.3 (0.1) 19.1 Amortization of goodwill and other intangibles................... 15.2 2.0 17.2 Merger, integration and restructuring............................ 72.2 3.5 75.7 Other............................................................ 134.7 29.1 (6.0) 157.8 ----- ----------- ------ ------- Total noninterest expense.................................... 589.5 93.8 (15.3) 668.0 ----- ----------- ------ ------- Income before income taxes....................................... 179.0 33.5 (1.6) 210.9 Applicable income taxes.......................................... 68.0 3.1 (0.7) 70.4 ----- ----------- ------ ------- Net income....................................................... $111.0 $ 30.4 $ (0.9) $140.5 ----- ----------- ------ ------- ----- ----------- ------ ------- Net income applicable to common equity........................... $ 96.1 $125.6 ----- ------- ----- ------- EARNINGS PER COMMON SHARE Average common and common equivalent shares...................... 113,689,543 134,924,427 Primary and fully diluted net income............................. $0.85 $0.93
See Notes to unaudited Pro Forma Combined Financial Statements F-4 FIRST BANK SYSTEM, INC. ACQUISITION OF METROPOLITAN FINANCIAL CORPORATION UNAUDITED PRO FORMA COMBINED STATEMENT OF INCOME FOR THE YEAR ENDED DECEMBER 31, 1993
FBS MFC SALE OF PRO FORMA (IN MILLIONS, EXCEPT SHARE DATA) HISTORICAL HISTORICAL SUBSIDIARY COMBINED - --------------------------------------------------------------- ------------ ----------- ------------- ---------- INTEREST INCOME Loans.......................................................... $1,398.6 $ 331.9 $1,730.5 Securities: Taxable...................................................... 218.2 136.0 354.2 Exempt from federal income taxes............................. 14.6 -- 14.6 Other interest income.......................................... 30.4 4.8 35.2 ----- ----------- ------- Total interest income...................................... 1,661.8 472.7 2,134.5 INTEREST EXPENSE Deposits....................................................... 423.7 231.8 655.5 Federal funds purchased and repurchase agreements.............. 31.8 -- 31.8 Other short-term funds borrowed................................ 19.0 1.2 20.2 Long-term debt................................................. 54.4 41.6 96.0 ----- ----------- ------- Total interest expense..................................... 528.9 274.6 803.5 ----- ----------- ------- Net interest income............................................ 1,132.9 198.1 1,331.0 Provision for credit losses.................................... 125.2 7.8 133.0 ----- ----------- ------- Net interest income after provision for credit losses.......... 1,007.7 190.3 1,198.0 NONINTEREST INCOME Trust fees..................................................... 146.1 -- 146.1 Credit card fees............................................... 137.1 -- 137.1 Service charges on deposit accounts............................ 115.3 11.5 126.8 Edina Realty commission income................................. -- 35.3 $ (35.3) 0.0 Insurance commissions.......................................... 20.9 4.6 25.5 Securities gains............................................... 0.3 -- 0.3 Other.......................................................... 149.9 37.1 (0.9) 186.1 ----- ----------- ------ ------- Total noninterest income................................... 569.6 88.5 (36.2) 621.9 NONINTEREST EXPENSE Salaries....................................................... 389.1 63.1 (9.4) 442.8 Employee benefits.............................................. 86.3 14.8 (1.5) 99.6 Net occupancy.................................................. 93.4 23.2 (6.4) 110.2 Furniture and equipment........................................ 72.7 5.3 (1.4) 76.6 FDIC insurance................................................. 46.4 11.1 57.5 Professional services.......................................... 36.7 4.9 (1.1) 40.5 Amortization of goodwill and other intangibles................. 30.6 4.1 34.7 Merger, integration and restructuring.......................... 72.2 3.5 75.7 Other.......................................................... 273.1 62.3 (13.3) 322.1 ----- ----------- ------ ------- Total noninterest expense.................................. 1,100.5 192.3 (33.1) 1,259.7 ----- ----------- ------ ------- Income before income taxes..................................... 476.8 86.5 (3.1) 560.2 Applicable income taxes........................................ 178.8 21.3 (1.5) 198.6 ----- ----------- ------ ------- Net income..................................................... $ 298.0 $ 65.2 $ (1.6) $ 361.6 ------- ----------- ------ ------- ------- ----------- ------ ------- Net income applicable to common equity......................... $ 270.2 $ 333.8 ------- ------- ------- ------- EARNINGS PER COMMON SHARE Average common and common equivalent shares.................... 113,075,429 134,615,088 Primary and fully diluted net income........................... $2.39 $2.48
See Notes to unaudited Pro Forma Combined Financial Statements F-5 FIRST BANK SYSTEM, INC. ACQUISITION OF METROPOLITAN FINANCIAL CORPORATION UNAUDITED PRO FORMA COMBINED STATEMENT OF INCOME FOR THE YEAR ENDED DECEMBER 31, 1992
FBS MFC SALE OF PRO FORMA (IN MILLIONS, EXCEPT SHARE DATA) HISTORICAL HISTORICAL SUBSIDIARY COMBINED - --------------------------------------------------------------- ------------ ----------- ------------- ---------- INTEREST INCOME Loans.......................................................... $1,418.8 $ 268.2 $1,687.0 Securities: Taxable...................................................... 186.4 151.8 338.2 Exempt from federal income taxes............................. 12.0 -- 12.0 Other interest income.......................................... 64.1 4.8 68.9 ------- ----------- ------- Total interest income...................................... 1,681.3 424.8 2,106.1 INTEREST EXPENSE Deposits....................................................... 568.7 234.3 803.0 Federal funds purchased and repurchase agreements.............. 37.1 -- 37.1 Other short-term funds borrowed................................ 14.3 2.8 17.1 Long-term debt................................................. 66.1 35.1 101.2 ------- ----------- ------- Total interest expense..................................... 686.2 272.2 958.4 ------- ----------- ------- Net interest income............................................ 995.1 152.6 1,147.7 Provision for credit losses.................................... 183.4 8.3 191.7 ------- ----------- ------- Net interest income after provision for credit losses.......... 811.7 144.3 956.0 NONINTEREST INCOME Trust fees..................................................... 127.8 -- 127.8 Credit card fees............................................... 116.9 -- 116.9 Service charges on deposit accounts............................ 108.4 6.9 115.3 Edina Realty commission income................................. -- 32.1 $ (32.1) 0.0 Insurance commissions.......................................... 27.3 0.9 28.2 Securities gains............................................... 1.9 44.3 46.2 Other.......................................................... 153.4 29.5 (1.8) 181.1 ------- ----------- ------ ------- Total noninterest income................................... 535.7 113.7 (33.9) 615.5 NONINTEREST EXPENSE Salaries....................................................... 388.7 48.8 (8.8) 428.7 Employee benefits.............................................. 85.5 11.5 (1.4) 95.6 Net occupancy.................................................. 87.9 16.0 (6.2) 97.7 Furniture and equipment........................................ 67.2 3.9 (1.3) 69.8 FDIC insurance................................................. 42.2 9.3 51.5 Professional services.......................................... 38.7 4.8 (0.3) 43.2 Amortization of goodwill and other intangibles................. 25.2 4.0 29.2 Merger, integration and restructuring.......................... 84.0 -- 84.0 Other.......................................................... 294.9 49.6 (12.8) 331.7 ------- ----------- ------ ------- Total noninterest expense.................................. 1,114.3 147.9 (30.8) 1,231.4 ------- ----------- ------ ------- Income before income taxes..................................... 233.1 110.1 (3.1) 340.1 Applicable income taxes........................................ 78.6 42.6 (1.4) 119.8 ------- ----------- ------ ------- Income before extraordinary item and cumulative effect of changes in accounting principles.............................. 154.5 67.5 (1.7) 220.3 Extraordinary item............................................. -- (6.3) (6.3) Cumulative effect of changes in accounting principles.......... 157.3 75.9 233.2 ------- ----------- ------ ------- Net income..................................................... $ 311.8 $ 137.1 $ (1.7) $ 447.2 ------- ----------- ------ ------- ------- ----------- ------ ------- Net income applicable to common equity......................... $ 281.6 $ 417.0 ------- ------- ------- ------- EARNINGS PER COMMON SHARE Average common and common equivalent shares.................... 105,361,022 124,670,657 Primary and fully diluted income before extraordinary item and cumulative effect of changes in accounting principles......... $1.18 $1.52 Primary and fully diluted net income........................... 2.67 3.34
See Notes to unaudited Pro Forma Combined Financial Statements F-6 FIRST BANK SYSTEM, INC. ACQUISITION OF METROPOLITAN FINANCIAL CORPORATION UNAUDITED PRO FORMA COMBINED STATEMENT OF INCOME FOR THE YEAR ENDED DECEMBER 31, 1991
FBS MFC SALE OF PRO FORMA (IN MILLIONS, EXCEPT SHARE DATA) HISTORICAL HISTORICAL SUBSIDIARY COMBINED - --------------------------------------------------------------- ------------ ----------- ----------- ---------- INTEREST INCOME Loans.......................................................... $1,624.3 $ 217.0 $1,841.3 Securities: Taxable...................................................... 221.1 159.9 381.0 Exempt from federal income taxes............................. 19.1 -- 19.1 Other interest income.......................................... 97.5 30.1 127.6 ------- ----------- ------- Total interest income...................................... 1,962.0 407.0 2,369.0 INTEREST EXPENSE Deposits....................................................... 872.8 256.0 1,128.8 Federal funds purchased and repurchase agreements.............. 57.9 -- 57.9 Other short-term funds borrowed................................ 24.2 5.6 29.8 Long-term debt................................................. 100.3 40.3 140.6 ------- ----------- ------- Total interest expense..................................... 1,055.2 301.9 1,357.1 ------- ----------- ------- Net interest income............................................ 906.8 105.1 1,011.9 Provision for credit losses.................................... 202.2 8.0 210.2 ------- ----------- ------- Net interest income after provision for credit losses.......... 704.6 97.1 801.7 NONINTEREST INCOME Trust fees..................................................... 115.5 -- 115.5 Credit card fees............................................... 94.4 -- 94.4 Service charges on deposit accounts............................ 97.2 5.4 102.6 Edina Realty commission income................................. -- 26.2 $ (26.2) 0.0 Insurance commissions.......................................... 27.2 -- 27.2 Securities gains............................................... 8.9 33.4 42.3 Other.......................................................... 154.5 23.8 (1.9) 176.4 ------- ----------- ----------- ------- Total noninterest income................................... 497.7 88.8 (28.1) 558.4 NONINTEREST EXPENSE Salaries....................................................... 371.7 39.5 (9.1) 402.1 Employee benefits.............................................. 79.3 8.5 87.8 Net occupancy.................................................. 84.0 14.6 (5.9) 92.7 Furniture and equipment........................................ 64.8 3.0 (1.4) 66.4 FDIC insurance................................................. 38.5 8.0 46.5 Professional services.......................................... 37.8 2.3 (0.4) 39.7 Amortization of goodwill and other intangibles................. 21.6 5.4 27.0 Other.......................................................... 271.6 42.8 (11.2) 303.2 ------- ----------- ----------- ------- Total noninterest expense.................................. 969.3 124.1 (28.0) 1,065.4 ------- ----------- ----------- ------- Income before income taxes..................................... 233.0 61.8 (0.1) 294.7 Applicable income taxes........................................ 25.9 4.4 30.3 ------- ----------- ----------- ------- Net income..................................................... $ 207.1 $ 57.4 $ (0.1) $ 264.4 ------- ----------- ----------- ------- ------- ----------- ----------- ------- Net income applicable to common equity......................... $ 183.4 $ 240.7 ------- ------- ------- ------- EARNINGS PER COMMON SHARE Average common and common equivalent shares.................... 102,533,284 117,259,058 Primary net income............................................. $1.79 $2.05 Fully diluted net income....................................... 1.78 1.97
See Notes to unaudited Pro Forma Combined Financial Statements F-7 NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS NOTE A: BASIS OF PRESENTATION On July 21, 1994, First Bank System, Inc. ("FBS") signed a definitive agreement to acquire Metropolitan Financial Corporation ("MFC"), a regional financial services holding company headquartered in Minneapolis, Minnesota, with $8.0 billion in assets, $5.6 billion in deposits and $503 million in shareholders' equity. The agreement calls for the tax-free exchange of .6803 share of the common stock of FBS for each common share of MFC, or approximately 21.2 million FBS shares. The merger with MFC will be accounted for by FBS under the pooling of interests method of accounting in accordance with APB No. 16 and, accordingly, this method has been applied in the unaudited pro forma combined financial statements. Under this method of accounting, the recorded assets, liabilities, shareholders' equity, income, and expenses of FBS and MFC are combined and recorded at their historical amounts. FBS expects that certain adjustments will be recorded by MFC, primarily to accrue for specific, identified costs related to the merger that are expected to be incurred within one year of the closing and to conform their policies and procedures to those of FBS. The amounts of merger-related costs included or disclosed in these unaudited pro forma combined financial statements may change as additional information becomes available. The Unaudited Pro Forma Combined Balance Sheet is based on the unaudited consolidated balance sheets of FBS and MFC as of June 30, 1994. The Unaudited Pro Forma Combined Statements of Income are based on the unaudited consolidated statements of income of FBS and MFC. FBS expects to achieve operating cost savings primarily through reductions in staff, the consolidation and elimination of certain duplicate or excess office facilities, and the consolidation of certain data processing and other back office operations. The operating cost savings are expected to be achieved in various amounts at various times during the year subsequent to the closing and not ratably over, or at the beginning or end of, such period. No adjustment has been included in the unaudited pro forma combined financial statements for the anticipated operating cost savings. Certain amounts in the historical financial statements of MFC have been reclassified in the unaudited pro forma combined financial statements to conform to FBS' historical financial statement presentation. FBS completed the acquisition of Boulevard Bancorp, Inc. ("BBI") on March 25, 1994, and used the purchase method of accounting for the transaction. BBI, a holding company for four banks located in Chicago, Illinois, had $1.6 billion in assets and $1.2 billion in deposits. The unaudited statement of income for FBS for the six months ended June 30, 1994, included the results of operations of BBI since its acquisition date of March 25, 1994. The unaudited pro forma combined statements of income do not include the results of operations of BBI prior to March 25, 1994 as they are immaterial. The FBS results of operations for the year ended December 31, 1993, included merger-related charges of $72.2 million ($50.0 million after tax) associated with the acquisition of Colorado National Bankshares, Inc. These charges include a $29.7 million provision for anticipated reorganization and restructuring costs, system conversions, and customer communication costs and a $14.3 million write-down of premises and equipment related to redundant main office and branch facilities. Other charges, totaling $28.2 million, primarily involved severance. The FBS results of operations for the year ended December 31, 1992, included the effect of adopting two new accounting standards: Statement of Financial Accounting Standards ("SFAS") No. 109, "Accounting for Income Taxes," and SFAS No. 106, "Employers' Accounting for Postretirement Benefits Other than Pensions." Income from continuing operations before cumulative effect of changes in accounting principles for the year ended December 31, 1992, was reduced by $56.6 million as a result of increased income tax expense under SFAS No. 109 and $1.0 million for increased employee benefit expenses under SFAS No. 106. In addition, the net cumulative effect for prior years of adopting SFAS No. 109 and SFAS No. 106 resulted in a $157.3 million increase in net income in 1992. Also included in FBS results of operations for 1992 are merger-related charges of $124.0 million ($81.8 million after tax) associated with the acquisitions of Western Capital Investment Corporation and Bank Shares F-8 NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS--(CONTINUED) Incorporated. These charges included a $13.6 million provision for credit losses, a $26.4 million provision for losses on other real estate, and $84.0 million in merger, integration and restructuring provisions. These provisions were made to reflect FBS' intentions with respect to the disposition of problem assets and to provide for anticipated merger-related costs. MFC's earnings in 1992 include $75,941,000 resulting from the cumulative effect of an accounting change related to the adoption of Statement of Financial Accounting Standard No. 109, "Accounting for Income Taxes" (SFAS 109). The prospective adoption of SFAS 109 resulted in an effective tax rate of nearly 39 percent in 1992 compared with 7 percent in 1991 and a tax benefit in 1990. The net effect of the adoption of SFAS 109 on current year net income was an increase of $41.5 million. NOTE B: SALE OF BRANCHES Subsequent to the Merger, FBS proposes to sell the deposit relationships associated with over 40 excess branch locations. In addition, certain fixed assets which are used to service those deposit relationships will be sold. Earning assets will not be sold. NOTE C: CLASSIFICATION OF INVESTMENT SECURITIES Effective December 31, 1993, FBS adopted the provisions of Statement of Financial Accounting Standards ("SFAS") 115, "Accounting for Certain Investments in Debt and Equity Securities" and reported its entire $3.3 billion investment portfolio as available for sale. Based upon the preliminary analysis performed by FBS on the held to maturity investment securities of MFC, FBS anticipates reclassifying this entire portfolio as available for sale. The MFC investment securities reflected in the unaudited Pro Forma Combined Balance Sheet have been reclassified as available for sale securities and a mark to market adjustment of $54 million has been recorded, based on the reported market value at June 30, 1994. In addition, deferred taxes of $20 million and a reduction in shareholders' equity of $34 million were also recorded. NOTE D: SALE OF REAL ESTATE BROKERAGE SUBSIDIARY Because of regulatory restrictions on nonbanking activities, FBS expects that within two years of the closing of the Merger, it will sell Edina Realty, Inc., MFC's real estate brokerage subsidiary. NOTE E: REORGANIZATION AND RESTRUCTURING ACCRUALS The pro forma statements assume that in 1994 MFC will, consistent with generally accepted accounting principles, establish such additional accruals and reserves as may be necessary to conform MFC's credit loss reserve practices and methods to those of FBS, to reflect the plans of FBS with respect to the conduct of MFC's business following the Merger and to provide for certain costs and expenses relating to the Merger. Accordingly it is expected that additional credit-related reserves of approximately $14 million will be established and accruals aggregating approximately $67 million will be recorded to reflect specific expenses and identified restructuring charges, expected to be incurred within one year of closing. Accordingly, for purposes of the unaudited Pro Forma Combined Balance Sheet, the following accruals have been recorded: $12 million reserve for the expense of closing duplicate facilities, $30 million accrual for the estimated costs related to severance, $16 million accrual for systems and operations conversion costs, and $9 million for other specific merger-related costs. In addition, deferred tax benefits of $30 million and deferred tax liabilities of $6 million related to the pro forma adjustments have been recorded. The amount of the adjustments discussed and reflected in the unaudited pro forma consolidated balance sheet are preliminary estimates. The actual amount of the adjustments to be made by MFC will be based on information available at that time and could be different from the estimates. These adjustments have not been included in the Pro Forma Combined Statements of Income, as they are not expected to have a continuing impact on FBS. F-9 NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION--(CONCLUDED) NOTE F: SHAREHOLDERS' EQUITY In conjunction with the Merger, each of the 488,750 outstanding shares of MFC preferred stock will be converted into a right to receive $27.00 cash, plus any accumulated and unpaid dividends on such shares, and as a result, MFC's shareholders' equity in the unaudited Pro Forma Combined Balance Sheet has been reduced by $13.2 million. Common stock in the unaudited Pro Forma Combined Balance Sheet has been adjusted to reflect the par value of the FBS stock to be issued, with a related adjustment to capital surplus. Investment securities and capital surplus have been adjusted to reflect the retirement of MFC shares held by FBS prior to the merger. MFC's retained earnings reflect the adjustments for anticipated merger-related costs as discussed above. NOTE G: INCOME TAX PROVISIONS The income tax provision for adjustments related to the MFC acquisition reflected in the unaudited Pro Forma Combined Statements of Income have been computed at FBS' effective combined federal and state marginal tax rate. F-10 -----END PRIVACY-ENHANCED MESSAGE-----