-----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, OeJh9n3aCqV4vwjJAxt8vVzrRdVhMa2vewobZV6zxV3Y54KUYs1v1zsUR9m7X4Qb qglaSHy930RfTn2z8Vg5BA== 0000912057-95-010782.txt : 19951208 0000912057-95-010782.hdr.sgml : 19951208 ACCESSION NUMBER: 0000912057-95-010782 CONFORMED SUBMISSION TYPE: DEFA14A PUBLIC DOCUMENT COUNT: 1 FILED AS OF DATE: 19951206 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: FIRST BANK SYSTEM INC CENTRAL INDEX KEY: 0000036104 STANDARD INDUSTRIAL CLASSIFICATION: NATIONAL COMMERCIAL BANKS [6021] IRS NUMBER: 410255900 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: DEFA14A SEC ACT: 1934 Act SEC FILE NUMBER: 001-06880 FILM NUMBER: 95599762 BUSINESS ADDRESS: STREET 1: FIRST BANK PL STREET 2: 601 SECOND AVE S CITY: MINNEAPOLIS STATE: MN ZIP: 55402-4302 BUSINESS PHONE: 6129731111 FORMER COMPANY: FORMER CONFORMED NAME: FIRST BANK STOCK CORP DATE OF NAME CHANGE: 19720317 DEFA14A 1 DEFA14A SCHEDULE 14A INFORMATION Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934 (Amendment No. ) Filed by the Registrant /X/ Filed by a Party other than the Registrant / / Check the appropriate box: / / Preliminary Proxy Statement / / Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) / / Definitive Proxy Statement / / Definitive Additional Materials /X/ Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12 FIRST BANK SYSTEM, INC - -------------------------------------------------------------------------------- (Name of Registrant as Specified In Its Charter) - -------------------------------------------------------------------------------- (Name of Person(s) Filing Proxy Statement, if other than the Registrant) Payment of Filing Fee (Check the appropriate box): /X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or Item 22(a)(2) of Schedule 14A. / / $500 per each party to the controversy pursuant to Exchange Act Rule 14a-6(i)(3). / / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11. 1) Title of each class of securities to which transaction applies: ------------------------------------------------------------------------ 2) Aggregate number of securities to which transaction applies: ------------------------------------------------------------------------ 3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is calculated and state how it was determined): ------------------------------------------------------------------------ 4) Proposed maximum aggregate value of transaction: ------------------------------------------------------------------------ 5) Total fee paid: ------------------------------------------------------------------------ / / Fee paid previously with preliminary materials. / / Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. 1) Amount Previously Paid: ------------------------------------------------------------------------ 2) Form, Schedule or Registration Statement No.: ------------------------------------------------------------------------ 3) Filing Party: ------------------------------------------------------------------------ 4) Date Filed: ------------------------------------------------------------------------ Contact: John R. Danielson Wendy Raway Investor Relations Media Relations First Bank System, Inc. First Bank System, Inc. (612) 973-2261 (612) 973-2429 FBS AND FIRST INTERSTATE RECEIVE POOLING LETTER FROM OUTSIDE AUDITORS, AND FBS RESPONDS TO WELLS FARGO'S ATTACKS ON STOCK REPURCHASES Minneapolis, MN, December 5, 1995. . .First Bank System, Inc. (NYSE: FBS) announced today that it and First Interstate Bancorp (NYSE: I) have received a letter from their independent auditors, Ernst & Young LLP, stating that based upon management's analysis and representations, they concur with FBS and First Interstate management that the proposed merger would qualify as a pooling of interests upon consummation of the transactions contemplated by FBS and First Interstate and closing the proposed merger in accordance with the Merger Agreement. The receipt of this letter will be reflected in the final proxy statement to be mailed to the shareholders of both companies. "We are pleased that we are able to eliminate any alleged uncertainties concerning our accounting treatment as we continue to move forward to consummate this merger," said John F. Grundhofer, Chairman, President and Chief Executive Officer of FBS. "This should end, once and for all, the persistent attempts by Wells Fargo to cast doubt on our pooling accounting treatment. The FBS-First Interstate merger will receive pooling of interests accounting treatment. End of discussion." Richard A. Zona, FBS Vice Chairman and Chief Financial Officer added that "Wells Fargo has consistently sought to confuse First Interstate shareholders by attempting to cast doubt on our pooling accounting treatment. This undoubtedly reflects Wells's concern over its great disadvantage of being required to use purchase accounting, thereby generating at least $8 billion in goodwill and other intangibles." As is customary, it is a condition to both parties' obligations to consummate the merger, that a substantially identical letter be delivered at closing. The parties fully anticipate receiving such a letter and consider such a bringdown to be a mere technicality. In addition, FBS responded today to repeated assertions by Wells Fargo that its stock repurchases have distorted the market for FBS stock and inflated the value of its proposed merger with First Interstate. Last week, Wells Fargo made additional allegations in this regard in its suit against First Interstate and FBS in Delaware. FBS has had a continuing, publicly announced stock repurchase program throughout 1993, 1994 and 1995. This has not been a clandestine, recently conceived, merger-related tactic. As publicly reported in its Reports on Form 10-K for 1993 and 1994, FBS repurchased 6.2 million and 6.3 million shares in 1993 and 1994, respectively. On January 19, 1995 and February 15, 1995, FBS announced programs to repurchase 2 million and 14 million shares, respectively, by the end of 1996. These programs were described in FBS's Reports on Form 10-Q for the first and second quarter of 1995 and its press releases announcing first and second quarter financial results. More recently, on October 10, 1995, FBS further announced that it had repurchased 4.3 million shares in the third quarter pursuant to such program and in connection with its proposed acquisition of FirsTier Financial, Inc. FBS further announced that it expected to repurchase up to 24.3 million shares during 1995 and 1996 as a result of these previously announced repurchase programs. The repurchase programs were reconfirmed at the November 6, 1995 analysts' meeting in connection with the announcement of the merger of FBS and First Interstate and described in the November 6 joint press release announcing the merger, which was also filed as an Exhibit to FBS's Report on Form 8-K filed November 13. FBS's Form 10-Q filed with the Securities and Exchange Commission on November 13, 1995, and the FBS Registration Statement on Form S-4 filed on November 20, 1995, each also contains references to such repurchase programs. As publicly reported in FBS's 1995 quarterly reports on Form 10-Q, FBS repurchased 1,040,475, 2,644,410, and 4,306,620 shares in the first, second and third quarters, respectively. Continuing this pattern in the fourth quarter, FBS expects to repurchase up to approximately 4 million shares, of which 3,144,400 have been repurchased as of today's date. In order to dispel any further misconceptions about its stock repurchase program, FBS announced today it will soon disclose in its next SEC filing its daily trading activity in its shares in 1995. Mr. Zona said, "It is clear that stock repurchase programs are a long- term feature of FBS's capital management goal of returning to its shareholders excess capital that may result from future earnings. FBS's management team implemented these programs to enhance shareholder value well before the contemplation of any merger agreement with First Interstate. Our SEC filings and public statements are crystal clear on this. It's business as usual at FBS--and repurchases are assumed in the forecasted results of a combined FBS/First Interstate contained in FBS's recently filed Registration Statement on Form S-4." In making these repurchases, FBS strictly adheres to the SEC's antimanipulation rules. One of these rules provides a safe harbor against any claim of stock manipulation if the repurchases are limited in terms of timing, manner of execution and other factors. Another of these rules limits the time periods during which the repurchases must be made and expressly prohibits repurchases during the period of merger proxy solicitations. Because of this rule, FBS was prohibited from repurchasing shares during most of October and expects to be prohibited from making repurchases for portions of December and January during the solicitation period for its FirsTier merger. More directly related to the Wells allegations, this same rule will prohibit repurchases during a period of at least a month prior to the shareholder vote on the proposed merger with First Interstate. This rule was adopted by the SEC expressly to ensure that the type of manipulation Wells has accused FBS of conducting cannot occur. That is, even if Wells's assertions about the market effect of FBS's repurchases were true (and they are not), any such effects would necessarily have dissipated by the time the First Interstate shareholders must determine which offer to accept. "Wells Fargo continues to make misleading statements with respect to our ongoing repurchase program," said Zona. "This attempt to stir up investors and the press over this issue is a classic red herring strategy designed to divert attention from the real fact that FBS has offered First Interstate shareholders a superior offer to the hostile Wells bid." First Bank System is a regional bank holding company headquartered in Minneapolis with assets of approximately $33 billion. The company provides complete financial services to individuals and institutions through 8 banks, a savings association and other financial companies with 350 offices, located primarily in the 11 states of Minnesota, Colorado, North Dakota, South Dakota, Montana, Illinois, Wisconsin, Iowa, Kansas, Nebraska and Wyoming. *** The participants in this solicitation may include FBS, the directors of FBS (John F. Grundhofer, Roger L. Hale, Delbert W. Johnson, Norman M. Jones, John H. Kareken, Richard L. Knowlton, Jerry W. Levin, Kenneth A. Macke, Marilyn C. Nelson, Edward J. Phillips, James J. Renier, S. Walter Richey, Richard L. Robinson, Richard L. Schall, and Lyle E. Schroeder), and the following executive officers and employees of FBS: Richard A. Zona (Vice Chairman and Chief Financial Officer), Philip G. Heasley (Vice Chairman and President, Retail Product Group, Lee R. Mitau (Executive Vice President, Secretary and General Counsel), Susan E. Lester (Executive Vice President), Robert H. Sayre (Executive Vice President, Human Resources), Elizabeth A. Malkerson (Senior Vice President, Corporate Relations), David R. Edstam (Executive Vice President and Treasurer), David J. Parrin (Senior Vice President and Controller), Arnold C. Hahn (Senior Vice President, Corporate Development), Andrew Cecere (Senior Vice President, Management Accounting and Forecasting), John R. Danielson (Senior Vice President, Investor Relations), Wendy Raway (Vice President and Manager of Media Relations) and Karin Glasgow (Assistant Vice President, Investor Relations.) FBS and First Interstate are parties to an Agreement and Plan of Merger, dated as of November 5, 1995, pursuant to which a wholly owned subsidiary of FBS is to merge with and into First Interstate. In addition, First Interstate has granted to FBS an option to purchase up to 19.9% of the outstanding shares of common stock of First Interstate in certain circumstances. As of October 31, 1995, certain FBS subsidiaries held 54,437 shares of First Interstate common stock in a fiduciary capacity. FBS disclaims beneficial ownership of shares of First Interstate commons stock held in such fiduciary capacity and any other shares held by any pension plan of FBS or any affiliates of FBS. Although J.P. Morgan Securities Inc. does not admit that it or any of its directors, officers, employees or affiliates is a "participant," as defined in Schedule 14A promulgated under the Securities Exchange Act of 1934 by the Securities and Exchange Commission, or that such Schedule 14A requires the disclosure of certain information concerning J.P. Morgan Securities Inc., it may assistant FBS in this solicitation. J.P. Morgan Securities Inc. engages in a full range of investment banking, securities trading, market-making brokerage services for institutional and individual clients. In the normal course of its business, J.P. Morgan Securities Inc. may trade securities of First Interstate for its own account and the account of its customers and, accordingly, may at any time hold a long or short position in such securities. Except as disclosed above, to the knowledge of FBS, none of FBS, the directors or executive officers of FBS or the employees or other representatives of FBS named above has any interest direct or indirect, by security holdings or otherwise, in First Interstate. -30- The following presentation may be deemed to be proxy solicitation material and accordingly the following information is required under SEC rules: The participants in this solicitation may include FBS, the directors of FBS (John F. Grundhofer, Roger L. Hale, Delbert W. Johnson, Norman M. Jones, John H. Kareken, Richard L. Knowlton, Jerry W. Levin, Kenneth A. Macke, Marilyn C. Nelson, Edward J. Phillips, James J. Renier, S. Walter Richey, Richard L. Robinson, Richard L. Schall, and Lyle E. Schroeder), and the following executive officers and employees of FBS: Richard A. Zona (Vice Chairman and Chief Financial Officer), Philip G. Heasley (Vice Chairman and President, Retail Product Group, Lee R. Mitau (Executive Vice President, Secretary and General Counsel), Susan E. Lester (Executive Vice President), Robert H. Sayre (Executive Vice President, Human Resources), Elizabeth A. Malkerson (Senior Vice President, Corporate Relations), David R. Edstam (Executive Vice President and Treasurer), David J. Parrin (Senior Vice President and Controller), Arnold C. Hahn (Senior Vice President, Corporate Development), Andrew Cecere (Senior Vice President, Management Accounting and Forecasting), John R. Danielson (Senior Vice President, Investor Relations), Wendy Raway (Vice President and Manager of Media Relations) and Karin Glasgow (Assistant Vice President, Investor Relations.) FBS and First Interstate are parties to an Agreement and Plan of Merger, dated as of November 5, 1995, pursuant to which a wholly owned subsidiary of FBS is to merge with and into First Interstate. In addition, First Interstate has granted to FBS an option to purchase up to 19.9% of the outstanding shares of common stock of First Interstate in certain circumstances. As of October 31, 1995, certain FBS subsidiaries held 54,437 shares of First Interstate common stock in a fiduciary capacity. FBS disclaims beneficial ownership of shares of First Interstate commons stock held in such fiduciary capacity and any other shares held by any pension plan of FBS or any affiliates of FBS. Although J.P. Morgan Securities Inc. does not admit that it or any of its directors, officers, employees or affiliates is a "participant," as defined in Schedule 14A promulgated under the Securities Exchange Act of 1934 by the Securities and Exchange Commission, or that such Schedule 14A requires the disclosure of certain information concerning J.P. Morgan Securities Inc., it may assistant FBS in this solicitation. J.P. Morgan Securities Inc. engages in a full range of investment banking, securities trading, market-making brokerage services for institutional and individual clients. In the normal course of its business, J.P. Morgan Securities Inc. may trade securities of First Interstate for its own account and the account of its customers and, accordingly, may at any time hold a long or short position in such securities. Except as disclosed above, to the knowledge of FBS, none of FBS, the directors or executive officers of FBS or the employees or other representatives of FBS named above has any interest direct or indirect, by security holdings or otherwise, in First Interstate. [LOGO] FIRST BANK SYSTEM, INC. MERGER WITH FIRST INTERSTATE BANCORP[LOG0] NOVEMBER 6, 1995 MERGER CREATES SIGNIFICANT SHAREHOLDER VALUE - -------------------------------------------------------------------------------- - Attractive complementary markets - Powerful business line combinations - Funding synergy - High cost takeouts......... 22% - Excellent IRR.............. 16% - Accretive first full year.. 18% - Stock buybacks continue 2 FBS MERGER WITH FIRST INTERSTATE BANCORP - -------------------------------------------------------------------------------- AGREEMENT: Definitive Agreement signed 11/5/95 STRUCTURE: Tax-free exchange of stock ACCOUNTING: Pooling PURCHASE PRICE: $10.3 billion PER SHARE: $132.275 (based on FBS share price of 50 7/8) EXCHANGE RATIO: 2.6 shares of FBS common stock for each share of First Interstate common stock BREAKUP FEE: $100 million LOCKUP OPTION: $100 million cap EXPECTED CLOSING: 2Q96 3 FBS MERGER WITH FIRST INTERSTATE BANCORP - -------------------------------------------------------------------------------- NAME: First Interstate Bancorp MANAGEMENT: John F. Grundhofer, Chairman & CEO William E.B. Siart, President & COO BOARD: 50/50 HEADQUARTERS: Corporate.......... Minneapolis No Business Lines.......Los Angeles redundant functions 4 ORGANIZATION STRUCTURE - -------------------------------------------------------------------------------- John F. Grundhofer Chairman & Chief Executive Officer William E.B. Siart President Chief Operating Officer Richard A. Zona Bruce G. Willison Linnet F. Deily Philip G. Heasley Vice Chairman Vice Chairman Vice Chairman Vice Chairman & CFO Corporate Banking Retail Banking Retail Product/ Operations 5 PRICING - -------------------------------------------------------------------------------- FBS FI First Interstate Share Price: -- $132.275 Market Price: $50.875 $127.75 Book Value: $20.33 $47.95 (9/30/95) Price/Market: -- 1.04x Price/Book: 2.50x 2.76x Price/'96 Earnings: 11.06x 11.96x (Based on normalized 1996 FI earnings of $11.06/ share) First Interstate Shares: -- 77.5 million - --------------------------------------------------------------------- Exchange Ratio: -- 2.6x - --------------------------------------------------------------------- FBS Shares Issued: -- 201.5 million 6 ATTRACTIVE COMPLEMENTARY MARKETS - -------------------------------------------------------------------------------- FBS FI OVERLAP COMBINED States 11 13 3 21 MSAs 29 57 3 83 [MAP] The map shows the states in which each of FBS and First Interstate operates, and the states in which both entities operate. The map indicates presence in the following states: FBS Only First Interstate Only FBS and First Interstate -------- --------------------- ------------------------ North Dakota Washington Montana South Dakota Oregon Wyoming Nebraska California Colorado Kansas Nevada Minnesota Idaho Iowa Utah Wisconsin Arizona Illinois New Mexico Texas 7 ENHANCED RETAIL DISTRIBUTION - -------------------------------------------------------------------------------- FBS* FI COMBINED Branches 366 1,148 1,514 ATMs 2,896 1,796 4,692 Retail customers 3.1 4.5 7.6 (millions) Cross-sell ratio 3.9 2.6 3.1 Business customers 236 226 462 (thousands) _____________________________ * Pro forma with FirsTier 8 STRONG MARKET POSITIONS - -------------------------------------------------------------------------------- # OF PERCENT AVERAGE RANK MSAs DEPOSITS COMPOSITION SHARE 1 14 $19.8 25 30.0 2 14 13.2 17 19.3 3 7 19.7 25 11.5 4 4 3.1 4 10.2 Lower 44 14.0 17 -- --------- --------- ------ Subtotal 83 $69.8 88 --------- --------- Non MSA 9.5 12 -------- ------ Total $79.3 100 -------- ------ -------- ------ ________________________________________________________ Source: FDIC 6/30/94 - adjusted for acquisitions 9 TOP MARKETS - -------------------------------------------------------------------------------- MSA DEPOSITS SHARE RANK Minneapolis/St. Paul 9,137,007 31.2 1 Los Angeles/Long Beach 9,113,989 7.2 3 Denver 5,597,856 28.1 1 Phoenix/Mesa 4,712,802 21.3 3 Houston 3,229,199 8.7 3 Portland/Vancouver 2,847,840 19.8 2 Seattle/Bellevue/Everett 2,608,081 10.1 4 Sacramento 2,469,495 18.4 2 San Diego 2,165,100 9.4 6 Las Vegas 2,146,420 23.4 2 Omaha 1,797,850 21.0 2 Orange County 1,740,508 5.2 5 Riverside/San Bernardino 1,145,193 6.3 3 Tucson 1,070,880 19.9 3 _________________________________________________________ Source: FDIC 6/30/94 - adjusted for acquisitions 10 COMBINING THE STRENGTHS OF TWO HIGH PERFORMING BANKS - -------------------------------------------------------------------------------- FBS FI STRENGTHS STRENGTHS - -------------------------------------------------------------------------------- - Cost management - Low cost funding - Technology - Excess core deposits - Product/Distribution - Broad customer base Paradigm - -------------------------------------------------------------------------------- - GEOGRAPHIC DIVERSITY - SUPERIOR CREDIT QUALITY - CAPITAL MANAGEMENT - CUSTOMER ORIENTATION - -------------------------------------------------------------------------------- 11 POWERFUL BUSINESS LINE COMBINATIONS - -------------------------------------------------------------------------------- CREDIT CARD FBS FI COMBINED - - Sales $15 billion $2 billion $17 billion - - Loans $2.5 billion $1.2 billion $3.7 billion Dominant Visa Corporate & Purchasing card provider MERCHANT PROCESSING - - Merchants 65,000 41,000 106,000 - - Sales $16 billion $4 billion $20 billion 6th largest 5th largest CORPORATE TRUST $145 million $32 million $177 million REVENUES Largest U.S. provider INDIRECT LENDING - - Loans $1.9 billion $3.5 billion $5.4 billion - - Dealers 1,000 900 1,900 - - Organizations $1.0 billion $2.0 billion $3.0 billion 12 POWERFUL BUSINESS LINE COMBINATIONS - -------------------------------------------------------------------------------- $ Billions FBS FI COMBINED ASSETS UNDER MANAGEMENT $29.0 $22.5 $51.5 PROPRIETARY MUTUAL FUNDS - Number 25 18 43 - Assets Under Management $7.0 $4.8 $11.8 13 PRO FORMA BALANCE SHEET - -------------------------------------------------------------------------------- 9/30/95
COMBINED FBS FI ADJUSTMENTS PRO FORMA Net loans 27,809 35,120 250 63,179 Investment securities 4,405 9,432 (4,000) 9,837 Goodwill 931 697 -- 1,628 Other assets 4,178 9,818 (390) 13,606 ------- ------- ------- ------- Total assets 37,323 55,067 (4,140) 88,250 ------- ------- ------- ------- ------- ------- ------- ------- Deposits 25,050 48,236 -- 73,286 Funds purchased 4,361 376 (4,000) 737 Long term debt 3,345 1,368 -- 4,713 Other liabilities 1,118 1,106 -- 2,224 ------- ------- ------- ------- Total liabilities 33,874 51,086 (4,000) 80,960 Preferred stock 105 350 -- 455 Common equity 3,344 3,631 (140) 6,835 ------- ------- ------- ------- Total equity 3,449 3,981 (140) 7,290 ------- ------- ------- ------- Total liabilities & equity 37,323 55,067 (4,140) 88,250 ------- ------- ------- ------- ------- ------- ------- -------
_______________________________________________________ * Pro forma with FirsTier and BAC corporate trust 14 CAPITAL - -------------------------------------------------------------------------------- Percent 9/30/95 PRO FORMA FBS* FI COMBINED Common equity/assets 8.4 6.6 7.5 Tang. common equity/assets 6.1 5.5 5.8 Tier 1 6.6 7.3 6.9 Total Capital 11.3 10.3 10.7 Leverage 6.0 6.1 6.1 ____________________________________ * Pro forma with FirsTier 15 LOAN COMPOSITION - -------------------------------------------------------------------------------- $ Millions September 30, 1995
PRO FORMA FBS* FI COMBINED ----------------- --------------- ---------------- % OF % OF % OF BALANCE TOTAL BALANCE TOTAL BALANCE TOTAL Commercial 10,127 36 10,185 28 20,313 32 Commercial RE 3,212 11 5,948 17 9,159 14 ------- ----- ------- ----- ------- ----- Total commercial 13,339 47 16,133 45 29,472 46 ------- ----- ------- ----- ------- ----- Residential RE 5,366 19 6,634 18 12,000 19 Home equity/2nd mtg. 2,907 10 5,028 14 7,935 12 Credit card 2,542 9 1,226 3 3,768 6 Indirect 1,863 7 3,500 10 5,363 8 Other consumer 2,316 8 3,446 10 5,762 9 ------- ----- ------- ----- ------- ----- Total consumer 14,994 53 19,834 55 34,828 54 ------- ----- ------- ----- ------- ----- Total loans 28,333 100 35,967 100 64,300 100 ------- ----- ------- ----- ------- ----- ------- ----- ------- ----- ------- -----
__________________________________________ * Pro forma with FirsTier 16 CREDIT QUALITY - -------------------------------------------------------------------------------- $ Millions 9/30/95 PRO FORMA FBS FI COMBINED COMBINED Nonperforming loans 127 140 267 267 OREO 51 66 117 117 ---- ---- ---- ---- Nonperforming assets 178 206 384 384 Reserve for loan losses 524 847 1,371 1,121 Loans 28,333 35,967 64,300 64,300 Assets 37,323 55,067 92,390 88,250 NPLs/Loans (%) .45 .39 .41 .41 NPAs/Assets (%) .48 .37 .42 .44 NCOs/Loans annualized (%) .46 .43 .44 .44 Reserves/Loans (%) 1.85 2.35 2.13 1.74 Reserves/NPLs (%) 414 605 514 421 Reserves/NPAs (%) 294 411 357 292 17 DEPOSIT COMPOSITION - -------------------------------------------------------------------------------- $ Millions September 30, 1995
PRO FORMA FBS* FI COMBINED ---------------- --------------- --------------- % OF % OF % OF BALANCE TOTAL BALANCE TOTAL BALANCE TOTAL Noninterest bearing: 6,324 25 17,044 35 23,368 32 Interest bearing: Interest checking 3,245 13 6,348 13 9,593 13 Money market 4,156 17 9,882 20 14,038 19 Other savings 1,770 7 5,547 11 7,317 10 Certificates 9,555 38 9,415 20 18,970 26 ------- ----- ------- ----- ------- ----- Total int. bearing 18,726 75 31,192 65 49,918 68 ------- ----- ------- ----- ------- ----- Total deposits 25,050 100 48,236 100 73,286 100 ------- ----- ------- ----- ------- ----- ------- ----- ------- ----- ------- ----- - -------------------------------------------------------------------------------- LOAN/DEPOSIT RATIO 113% 75% 88% - --------------------------------------------------------------------------------
_______________________________________ * Pro Forma with FirsTier 18 HIGH COST TAKEOUTS - -------------------------------------------------------------------------------- BASED ON FBS PRODUCT/DISTRIBUTION PARADIGM - Product managers - Standard products - Centralized data processing and operations - Centralized staff - Improved branch efficiency - Alternative distribution channels 19 RECENT BANK ACQUISITIONS - --------------------------------------------------------------------------------
WESTERN COLORADO METROPOLITAN FIRSTIER BANK SHARES CAPITAL NATIONAL BOULEVARD FINANCIAL FINANCIAL Assets ($ billion) $2.1 $2.5 $ 3.0 $ 1.6 $ 8.0 $ 3.6 Location Twin Cities Colorado Colorado Illinois Midwest Nebraska, Iowa - ------------------------------------------------------------------------------------------------- Est. Cost Savings 1993 35% 20% 7% 1994 45% 35% 35% 32% 1995 40% 30% 1996 35% 31% 1997 34% - ------------------------------------------------------------------------------------------------- Closing 12/92 12/92 5/93 3/94 1/95 1Q96 Systems Integration 6/93 3/93 7/93 4/94 2/95 1Q96
20 COST TAKEOUTS - -------------------------------------------------------------------------------- FTEs COSTS ------------------- ---------------------- NUMBER PERCENT $ MILLIONS PERCENT Staff/Executive 850 68 110 66 Data Processing 450 50 80 39 Operations 2,280 29 110 25 Occupancy/F&E 40 10 Business Lines: Retail 1,830 14 100 14 Payment Systems 250 50 30 50 Commercial 290 10 20 10 Trust 130 10 10 10 -------- ------- Total 6,080 22 500 22 -------- ------- -------- ------- 21 MERGER-RELATED CHARGES - -------------------------------------------------------------------------------- $ Millions Conversion costs $210 Severance 175 Occupancy/equipment writedowns 40 Other 50 ------ Subtotal 475 Excess reserves (250) ------ Merger-related charges 225 Taxes (85) ------ Net merger-related charges $140 ------ ------ 22 FBS EPS ACCRETION - -------------------------------------------------------------------------------- FBS YEAR BASE* COMBINED ACCRETION PERCENT 1996 $4.60 $4.64 $0.04 0.8% 1997 5.15 6.09 0.94 18.2 1998 5.75 6.99 1.24 21.5 1999 6.55 8.07 1.52 23.2 2000 7.46 9.35 1.89 25.3 * at 12.8% CAGR 23 1996 INCOME STATEMENT (EXCLUDING MERGER-RELATED CHARGES) - --------------------------------------------------------------------------------
$ Millions, except EPS BUYBACK COST COMBINED FBS FI COST TAKEOUT PRO FORMA Revenue 2,480 3,902 (9) 6,372 Provision 135 195 330 Expense 1,272 2,263 (125) 3,410 Taxes 408 556 (3) 48 1,008 ------ ------ ------- -------- ------- Net income 665 888 (6) 77 1,624 Preferred dividend 31 31 ------ ------ ------- -------- ------- Net income to common 665 857 (6) 77 1,593 ------ ------ ------- -------- ------- ------ ------ ------- -------- ------- Avg. shares outstanding 144.5 77.5 343.5 Earnings per share 4.60 11.06 4.64 +0.8% accretion ROA (%) 1.77 1.54 1.74 ROCE (%) 20.0 23.5 22.6 NIM (%) 4.80 5.56 5.39 Efficiency ratio (%) 51.2 58.0 53.5
24 1997 INCOME STATEMENT - --------------------------------------------------------------------------------
$ Millions, except EPS BUYBACK COST COMBINED FBS FI COST TAKEOUT PRO FORMA Revenue 2,696 4,135 (119) 6,712 Provision 197 214 411 Expense 1,298 2,308 (500) 3,106 Taxes 456 621 (45) 192 1,224 ------ ------ ------ ------ ------- Net income 745 992 (74) 308 1,971 Preferred dividend 31 31 ------ ------ ------ ------ ------- Net income to common 745 961 (74) 308 1,940 ------ ------ ------ ------ ------- ------ ------ ------ ------ ------- Avg. shares outstanding 144.5 77.5 318.6 Earnings per share 5.15 12.39 6.09 +18.2% accretion ROA (%) 1.79 1.65 2.03 ROCE (%) 21.0 24.6 26.5 NIM (%) 4.81 5.50 5.18 Efficiency ratio (%) 47.9 55.8 46.2
25 STOCK BUYBACKS CONTINUE - -------------------------------------------------------------------------------- - Both FBS and FI have previously established buyback programs - Tainted shares less than 10% limit - Current FBS program continues through 1Q96; resumes 4Q96 - Management committed to return excess capital to shareholders 26 [LOGOS] -REGISTRATION MARK- The following slides may be deemed to be proxy solicitation material and accordingly the following information is required under SEC rules: The participants in this solicitation may include FBS, the directors of FBS (John F. Grundhofer, Roger L. Hale, Delbert W. Johnson, Norman M. Jones, John H. Kareken, Richard L. Knowlton, Jerry W. Levin, Kenneth A. Macke, Marilyn C. Nelson, Edward J. Phillips, James J. Renier, S. Walter Richey, Richard L. Robinson, Richard L. Schall, and Lyle E. Schroeder), and the following executive officers and employees of FBS: Richard A. Zona (Vice Chairman and Chief Financial Officer), Philip G. Heasley (Vice Chairman and President, Retail Product Group, Lee R. Mitau (Executive Vice President, Secretary and General Counsel), Susan E. Lester (Executive Vice President), Robert H. Sayre (Executive Vice President, Human Resources), Elizabeth A. Malkerson (Senior Vice President, Corporate Relations), David R. Edstam (Executive Vice President and Treasurer), David J. Parrin (Senior Vice President and Controller), Arnold C. Hahn (Senior Vice President, Corporate Development), Andrew Cecere (Senior Vice President, Management Accounting and Forecasting), John R. Danielson (Senior Vice President, Investor Relations), Wendy Raway (Vice President and Manager of Media Relations) and Karin Glasgow (Assistant Vice President, Investor Relations.) FBS and First Interstate are parties to an Agreement and Plan of Merger, dated as of November 5, 1995, pursuant to which a wholly owned subsidiary of FBS is to merge with and into First Interstate. In addition, First Interstate has granted to FBS an option to purchase up to 19.9% of the outstanding shares of common stock of First Interstate in certain circumstances. As of October 31, 1995, certain FBS subsidiaries held 54,437 shares of First Interstate common stock in a fiduciary capacity. FBS disclaims beneficial ownership of shares of First Interstate commons stock held in such fiduciary capacity and any other shares held by any pension plan of FBS or any affiliates of FBS. Although J.P. Morgan Securities Inc. does not admit that it or any of its directors, officers, employees or affiliates is a "participant," as defined in Schedule 14A promulgated under the Securities Exchange Act of 1934 by the Securities and Exchange Commission, or that such Schedule 14A requires the disclosure of certain information concerning J.P. Morgan Securities Inc., it may assistant FBS in this solicitation. J.P. Morgan Securities Inc. engages in a full range of investment banking, securities trading, market-making brokerage services for institutional and individual clients. In the normal course of its business, J.P. Morgan Securities Inc. may trade securities of First Interstate for its own account and the account of its customers and, accordingly, may at any time hold a long or short position in such securities. Except as disclosed above, to the knowledge of FBS, none of FBS, the directors or executive officers of FBS or the employees or other representatives of FBS named above has any interest direct or indirect, by security holdings or otherwise, in First Interstate. [LOGO] FBS/FI FRANCHISE - -------------------------------------------------------------------------------- September 30, 1995 [MAP] The map shows the states in which each of FBS and First Interstate operates, and the states in which both entities operate. The map indicates presence in the following states: FBS Only First Interstate Only FBS and First Interstate -------- --------------------- ------------------------ North Dakota Washington Montana South Dakota Oregon Wyoming Nebraska California Colorado Kansas Nevada Minnesota Idaho Iowa Utah Wisconsin Arizona Illinois New Mexico Texas FBS*/FI PRO FORMA Assets: $92.4 billion U.S. Rank: 9th Mkt cap (11/30): $16.7 billion Offices: 1,514 ATM's: 4,692 * Pro forma with FirsTier 3 [LOGO} BUILDING THE FRANCHISE - -------------------------------------------------------------------------------- CAGR 1990 LOW -- 11/30/95 TOTAL RETURN [BAR CHART] FBS 41.7 WFC 38.9 ___________________________ FBS low 10/31/90 - $9.625 WFC low 10/12/90 - $41.25 38 [LOGO] BUILDING THE FRANCHISE - ------------------------------------------------------------------------------ CAGR 1990 - 1995* NONINTEREST REVENUE INCOME LOANS [BAR GRAPH] FBS 17.3 FBS 19.2 FBS 11.8 WFC 3.4 WFC 5.5 WFC** -2.6 ________________________________________________________________________ * 1990 is originally reported data excluding subsequent acquisitions; 1995 is 9 months annualized ** Adding back $4 billion in loans sold in 1995 39 [LOGO] BUILDING THE FRANCHISE - ------------------------------------------------------------------------------ CAGR 1990 - 1995* NET INCOME EARNINS PER SHARE [BAR GRAPH] (PRIMARY) FBS 33.7 FBS 21.7 WFC 6.4 WFC 7.1 WFC** W/PROVISION 2.6 WFC** W/PROVISION 3.1 ________________________________________________________________________ * 1990 is originally reported data excluding subsequent acquisitions; 1995 is 9 months annualized ** Assuming a normalized provision of 80 bp in 1995 40 [LOGO] BUILDING THE FRANCHISE - ------------------------------------------------------------------------------ - Retail & Community Bank - Payment Systems - Corporate Trust - First Interstate Merger 41 -----END PRIVACY-ENHANCED MESSAGE-----