-----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, M0O3wxxJL+UhLQdlz6lj86WeBLWevI7MA/U3pEriZe+jM6c65h8B0LwBx9Gg18a6 ElF9kU0cgi5reX1JqtQvdA== 0000912057-97-009468.txt : 19970321 0000912057-97-009468.hdr.sgml : 19970321 ACCESSION NUMBER: 0000912057-97-009468 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19970319 ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19970320 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: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-06880 FILM NUMBER: 97559663 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 8-K 1 FORM 8-K 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): March 19, 1997 FIRST BANK SYSTEM, INC. - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Delaware 1-6880 41-0255900 - -------------------------------------------------------------------------------- (State or other jurisdiction (Commission (IRS Employer of incorporation) File Number) Identification No.) First Bank Place, 601 Second Avenue South Minneapolis, Minnesota 55402-4302 - -------------------------------------------------------------------------------- (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.) ITEM 5. OTHER EVENTS. (a) On March 19, 1997, First Bank System, Inc., a Delaware corporation ("FBS"), and U.S. Bancorp, an Oregon corporation ("USBC"), entered into an Agreement and Plan of Merger, dated as of March 19, 1997 (the "Merger Agreement"). The Merger Agreement provides for the merger (the "Merger") of USBC with and into FBS, subject to, among other customary conditions, the affirmative vote of a majority of the outstanding shares of common stock of each of USBC and FBS, and various regulatory approvals. Pursuant to the Merger Agreement, (i) each outstanding share of USBC common stock, par value $5.00 per share (the "USBC Common Stock"), would be converted into the right to receive 0.755 shares of FBS Common Stock, par value $1.25 per share (the "FBS Common Stock"), and (ii) each outstanding share of USBC 8 1/8% Cumulative Preferred Stock, liquidation preference $25 per share, would be converted into one share of new preferred stock of FBS with substantially identical terms. Pursuant to the Merger Agreement, FBS has agreed to change its name to U.S. Bancorp as of the effective time of the Merger. John F. Grundhofer will continue as President and Chief Executive Officer of the combined company. Gerry B. Cameron, Chairman and Chief Executive Officer of USBC, will become Chairman of the combined company for a term extending through December 31, 1998. The combined company will continue to be headquartered in Minneapolis, Minnesota. The Press Release jointly issued by USBC and FBS on the date hereof announcing the Merger is included as Exhibit 99.1 hereto and is incorporated herein by reference. (b) In connection with the execution of the Merger Agreement, on March 20, 1997, FBS and USBC entered into a Stock Option Agreement, dated as of March 20, 1997 (the "USBC Option Agreement"), pursuant to which USBC granted FBS the right to purchase up to 19.9% of the shares of USBC Common Stock at a price of $47.75 per share upon the occurence of certain events described therein relating generally to the acquisition of USBC by a third party. Under certain circumstances, FBS may surrender the USBC Option Agreement in exchange for a payment of $200 million. The maximum total profit FBS may realize pursuant to the USBC Option Agreement is $300 million. (c) In connection with the execution of the Merger Agreement, on March 20, 1997, FBS and USBC also entered into a Stock Option Agreement, dated as of March 20, 1997 (the "FBS Option Agreement"), pursuant to which FBS granted 2 USBC the right to purchase up to 19.9% of the shares of FBS Common Stock at a price of $77.50 per share upon the occurrence of certain events described therein relating generally to the acquisition of FBS by a third party. Under certain circumstances, USBC may surrender the FBS Option Agreement in exchange for a payment of $200 million. The maximum total profit USBC may realize pursuant to the FBS Option Agreement is $300 million. (d) Exhibit 99.2 hereto contains investor presentation materials to be used by FBS at a presentation for analysts and investors on the date hereof relating to the Merger, and such materials are incorporated herein by reference. The presentation materials include forward-looking statements regarding each of FBS, USBC and the combined company following the Merger. The presentation materials also include a cautionary statement regarding factors which may cause actual results of operations to vary materially from the forward-looking statements contained therein. ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS. (c) Exhibits. 99.1 Press Release issued by U.S. Bancorp and First Bank System, Inc. on March 20, 1997. 99.2 Investor presentation materials to be used by FBS at a presentation for analysts and investors on March 20, 1997 relating to the Merger. 3 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. Date: March 20, 1997 FIRST BANK SYSTEM, INC. (Registrant) By: /s/ David J. Parrin ---------------------------- Name: David J. Parrin Title: Senior Vice President and Controller 4 EXHIBIT INDEX 99.1 Press Release issued by U.S. Bancorp and First Bank System, Inc. on March 20, 1997. 99.2 Investor presentation materials to be used by FBS at a presentation for analysts and investors on March 20, 1997 relating to the Merger. EX-99.1 2 EXHIBIT 99-1 EXHIBIT 99.1 [LOGO] [LOGO] Contacts: John Danielson Wendy Raway Donald F. Bowler, Jr. Mary B. Ruble Investor Relations Media Relations Patricia Stanton Karen Tolvstad First Bank System First Bank System Investor Relations Media Relations (612) 973-2261 (612) 973-2429 U.S. Bancorp U.S. Bancorp (503) 275-5702 (503) 275-6200 FIRST BANK SYSTEM TO ACQUIRE U.S. BANCORP MERGER CREATES $70 BILLION BANKING ORGANIZATION IN 17 CONTIGUOUS STATES UNDER THE NAME U.S. BANCORP; HEADQUARTERS TO BE IN MINNEAPOLIS MINNEAPOLIS/PORTLAND, March 20, 1997 -- First Bank System, Inc. (NYSE:FBS) and U.S. Bancorp (NASDAQ:USBC) today announced the signing of a definitive agreement for FBS to acquire Portland, Oregon-based U.S. Bancorp. The resulting company, which will be called U.S. Bancorp, will create the 8th largest banking organization in the U.S. based on market capitalization, and the 14th largest banking organization based on assets. The combined organization will serve nearly 4 million households and 475,000 businesses in 17 contiguous states. Under terms of the agreement, U.S. Bancorp shareholders will receive a tax-free exchange of 0.755 shares of FBS common stock for each share of U.S. Bancorp common stock. Based on FBS's closing stock price on March 19, 1997, this exchange ratio represents a price of $59.08 for each U.S. Bancorp share, resulting in a purchase price of approximately $9 billion. -2- "Together, our combined company will become the best-performing major bank in the United States, a regionally-based, nationally-competitive bank that uses technology to drive superior efficiency and customer service," said John F. Grundhofer, chairman, president and chief executive officer of First Bank System. "Our regions are contiguous, compatible and are in attractive growth markets. Our banks both have strong market presence. Our business strategies are virtually identical. Our business lines and products complement each other. And each of us has special skills and resources to offer the other. You could live a couple of lifetimes without finding another fit this good." Grundhofer will serve as the president and chief executive officer of the combined organization. U.S. Bancorp chairman and CEO, Gerry B. Cameron, will serve as chairman until his retirement in 1998. Joining Grundhofer's current direct reports will be Gary T. Duim and Robert D. Sznewajs, who will be vice chairmen in the new U.S. Bancorp. Cameron said, "U.S. Bancorp and First Bank System both have strong reputations for superior customer service, excellent employees, community involvement and future-focused thinking. These two organizations will integrate very well. Employees will be key to the future success of the combined company as we provide customers with enhanced products and services over a wider geographic territory." -3- The transaction is expected to be accretive to FBS earnings per share in the second quarter of 1998, nine months after closing. By 1999, FBS estimates earnings per share accretion of approximately 8 percent. FBS said it would incur pre-tax merger-related charges totaling $625 million through the second quarter of 1998. The acquisition will be accounted for as a pooling. The FBS board of directors has rescinded its stock repurchase authorization. In connection with the merger agreement, FBS and U.S. Bancorp have each granted the other an option for 19.9% of its outstanding shares exercisable under certain circumstances with a potential value of between $200 million and $300 million. FBS estimated that an expense reduction of approximately $340 million (pre-tax), or stated as a percentage, representing 28 percent of U.S. Bancorp's operating expenses, would be created by centralizing data processing, staff functions and some operations functions as well as through standardizing products, improving technology, and branch efficiencies and offering customers increased alternative delivery channels for bank products and services. The companies estimated that their combined operating expenses would be reduced by 14 percent. The companies said that as with any merger of this magnitude, job loss at both organizations will be unavoidable. Approximately 4,000 positions will be eliminated, however, both companies said they were committed to do whatever they could to minimize the impact through hiring restrictions, normal attrition and redeploying employees into other positions. -4- FBS said the transaction would enable it to leverage its unique position in the payment systems business by offering those services to U.S. Bancorp's extensive corporate customer base. FBS is the largest provider of Visa corporate and purchasing cards in the world. Other anticipated revenue enhancements include capitalizing on FBS' success in home equity lending, exporting U.S. Bancorp's market position and expertise in leasing to FBS' franchise, and bringing First Bank's investment management expertise to U.S. Bancorp's customers. The combined organization will use the name U.S. Bancorp and will be headquartered in Minneapolis. "The U.S. Bancorp name better reflects the expanded geographic service area of the combined organizations," Grundhofer explained. FBS said it intends to establish Portland as a major development site for its ongoing technology efforts which will be critical in order to address the needs of the combined organization. "Employees will be part of a stronger, even more dynamic industry leader," Grundhofer noted. "The merger enhances management depth, capitalizes on shared experience and creates future opportunities for employees of the new U.S. Bancorp. "The new U.S. Bancorp will have a strong shared vision in serving customers," Grundhofer added. "The investments that FBS has already made in technology to enhance customer satisfaction and address their needs can be used to the benefit of U.S. Bancorp's customers. And the combined organization will have the critical mass to invest even further in innovative products and services." Cameron also emphasized -5- that the complementary nature of the two companies' businesses and priorities as well as the non-overlapping nature of the markets served by each company would minimize disruption for customers. "We are very focused on customer needs," stated Cameron. "Mergers can be disruptive and we are determined to make this transition as smooth as possible." Customers will have access to nearly 1,000 branch offices, more than 4,500 ATMs and continued 24-hour customer service. Business customers will continue to have their needs supported through local decision making as well as over 80 products and services. "Both companies have strong records as community partners and we are totally committed to continuation of that record. Our mutual focus has been one of community development and reinvestment initiatives that build economically strong neighborhoods and contribute to the quality of life. The effort has earned both our companies outstanding Community Reinvestment Act (CRA) ratings in our major markets, as well as a high degree of community goodwill," Grundhofer noted. The FBS and U.S. Bancorp boards of directors will be combined. FBS currently has 16 directors; U.S. Bancorp currently has 12 directors. The boards of both organizations have unanimously approved the acquisition. The acquisition is contingent upon regulatory and shareholder approvals and is expected to close in the third quarter of 1997. -6- First Bank System is a regional bank holding company headquartered in Minneapolis with assets of $36.5 billion. The Company provides complete financial services to individuals and institutions through 9 banks, a savings association and other financial companies with 359 banking offices and 15 nonbanking offices, located primarily in the 11 states of Minnesota, Colorado, Nebraska, North Dakota, South Dakota, Montana, Illinois, Wisconsin, Iowa, Kansas and Wyoming. Northwest-based U.S. Bancorp is the 26th largest bank holding company in the nation, with assets of $33.3 billion. The company has 636 branches and provides comprehensive financial products and services to consumers and businesses in Oregon, Washington, Idaho, Nevada, Northern California and Utah. Merger Summary Table Name U.S. Bancorp Headquarters Minneapolis Purchase Price Approximately $9 billion Exchange Ratio 0.755 Current Price Per Share $59.08 A NEWS MEDIA TELECONFERENCE WILL BE HELD AT 12:30 P.M. (EASTERN STANDARD TIME) ON THURSDAY, MARCH 20. TO PARTICIPATE IN THE CALL, PLEASE CALL (800) 251-6682. ASK TO BE CONNECTED TO THE FIRST BANK SYSTEM/U.S. BANCORP TELECONFERENCE. INTERNATIONAL CALLERS, PLEASE CALL (706) 645-9723. /Photo available on AP PhotoExpress Network (7:00 am, March 20, 1997, and PRN 1. PRN 2); via NewsCom, 305-448-8411 or http://www.newscom.com; or via PressLink Online, 703-758-1740/ -30- Forward-Looking Information This news release contains estimates of future operating results for 1997, 1998 and 1999 for both First Bank System, Inc. and U.S. Bancorp on a stand-alone and pro forma combined basis, as well as estimates of financial condition, operating efficiencies and revenue creation on a combined basis. These estimates constitute forward-looking statements (within the meaning of the Private Securities Litigation Reform Act of 1995), which involve significant risks and uncertainties. Actual results may differ materially from the results discussed in these forward-looking statements. Factors that might cause such a difference include, but are not limited to: (1) expected cost savings from the Merger cannot be fully realized or realized within the expected time frame; (2) revenues following the Merger are lower than expected; (3) competitive pressures among depository institutions increase significantly; (4) costs or difficulties related to the integration of the business of FBS and USBC are greater than expected; (5) changes in the interest rate environment reduce interest margins; (6) general economic conditions, either nationally or in the states in which the combined company will be doing business are less favorable than expected; and (7) legislation or regulatory changes adversely affect the business in which the combined company would be engaged. PRO FORMA RECAP THE "NEW" U.S. BANCORP HEADQUARTERS: MINNEAPOLIS, MINNESOTA NATIONAL FBS U.S. BANCORP COMBINED RANK --- ------------ -------- -------- ASSETS ($ billions) $37 $33 $70 14th MARKET CAPITALIZATION $10.5 $8.5 $19 8th ($ billions) DEPOSITS ($ billions) $24 $25 $49 RETURN ON ASSETS 1.88% 1.43% 2.00+% RETURN ON EQUITY 21.4% 17.1% Mid 20s NET INTEREST MARGIN 4.89% 5.32% 5.00+% EFFICIENCY RATIO 46.8% 55.2% Low 40s STATES 11 6 17 BRANCHES Traditional 327 578 905 Store-based 32 58 90 ATMS 3,265 1,300 4,565 3rd CUSTOMERS Households (millions) 1.9 2.0 3.9 Businesses (thousands) 225 250 475 COMBINED PRODUCT STRENGTHS ($ millions) Home Equity Loans $3,263 $1,654 $ 4,917 9th Other Consumer Loans 6,699 4,111 10,810 13th Small Business Loans 1,535 2,108 3,643 6th MUTUAL FUNDS ($ billions) $12.8 $ 2.5 $ 15.3 ASSETS UNDER MANAGEMENT ($ billions) 39.3 10.2 49.5 TOTAL TRUST FEE REVENUES ($ millions) 230.7 71.6 302.3 CUSTOMER CALLS USING TELEPHONE BANKING (per year) 46 million 42 million 88 million EX-99.2 3 EXHIBIT 99-2 [LOGO] [LOGO] LEVERAGING A HIGH PERFORMANCE COMPANY FIRST BANK SYSTEM ACQUIRES U.S. BANCORP MARCH 20, 1997 FORWARD-LOOKING INFORMATION - ------------------------------------------------------------------------------ This presentation contains estimates of future operating results for 1997, 1998 and 1999 for both First Bank System, Inc. and U.S. Bancorp on a stand-alone and pro forma combined basis, as well as estimates of financial condition, operating efficiencies and revenue creation on a combined basis. These estimates constitute forward-looking statements (within the meaning of the Private Securities Litigation Reform Act of 1995), which involve significant risks and uncertainties. Actual results may differ materially from the results discussed in these forward-looking statements. Factors that might cause such a difference include, but are not limited to: (1) expected cost savings from the Merger cannot be fully realized or realized within the expected time frame; (2) revenues following the Merger are lower than expected; (3) competitive pressures among depository institutions increase significantly; (4) costs or difficulties related to the integration of the business of FBS and USBC are greater than expected; (5) changes in the interest rate environment reduce interest margins; (6) general economic conditions, either nationally or in the states in which the combined company will be doing business are less favorable than expected; and (7) legislation or regulatory changes adversely affect the businesses in which the combined company would be engaged. 2 COMMON STRATEGY - -------------------------------------------------------------------------- - Business line organization - Centrally-directed operations - Centralized staff - Standardized products - Transaction migration to direct channels - Superior credit quality - Focus on efficiency STRONG SHAREHOLDER FOCUS 3 COMBINATION LEADS TO EXCEPTIONAL FINANCIAL PERFORMANCE - -------------------------------------------------------------------------- Percent PRO FORMA PERFORMANCE FBS USBC COMBINED MEASURE 1996 1996 1999 - ---------------------------------------------------------------------- ROE 21.4 17.1 Mid 20s ROTE * 35.2 21.4 High 30s ROA 1.88 1.43 2.00+ NIM 4.89 5.32 5.00+ Efficiency * 46.8 55.2 Low 40s - ------------------- * excluding amortization of intangibles ratios exclude nonrecurring items 4 TRANSACTION SUMMARY - -------------------------------------------------------------------------- Agreement: Definitive merger agreement signed 3/19/97 Structure: Tax-free exchange Exchange Ratio: Fixed: 0.755 FBS share per USBC share Purchase Price: $9.0 Billion (a) Per Share: $59.08 (a) Accounting: Pooling Stock Buybacks: FBS Board has rescinded its stock buyback authorization Cross Options: 19.9%, minimum $200 million, maximum $300 million Due Diligence: Completed Anticipated Closing: 3Q97 - ---------------------- (a) Price as of 3/19/97 5 LEVERAGING A HIGH PERFORMANCE COMPANY - ------------------------------------------------------------------------ - Builds shareholder value - IRR = 16.2%, materially exceeds cost of equity - Accretive to earnings by 2Q98 - Accretion of 8% within 2 years - Significant cost takeouts - Clearly identifiable revenue enhancements - Complementary business line strengths - Skills to realize the full potential of fast growth markets - Leverages FBS technology and merger integration skills 6 LEVERAGING A HIGH PERFORMANCE COMPANY - ------------------------------------------------------------------------- - Builds shareholder value - Complementary business line strengths - Skills to realize the full potential of fast growth markets - Leverages FBS technology and merger integration skills 7 COMPLEMENTARY BUSINESS LINE STRENGTHS - ------------------------------------------------------------------------- FBS USBC - - Sophisticated technology - Strong name and brand identity infrastructure and expertise - - Product/Distribution paradigm - 8th largest leasing company - - High-growth Payment Systems - Sizable small business lending - - Home Equity lending - Strong Ag lending capabilities - - $39 billion asset management - Leading edge position in PC banking - - Corporate Trust leadership 8
SCALE ADVANTAGE - RETAIL - ------------------------------------------------------------------------ CUSTOMERS FBS USBC COMBINED Households (millions) 1.9 2.0 3.9 RETAIL Telephone Banking (millions/yr.) 46 42 88 ATMs 3,235 1,330 4,565 Branches - Traditional 327 578 905 Branches - Store-Based 32 58 90 Home Equity Loans ($ millions) 3,263 1,654 4,917 Other COnsumer Loans ($ millions) 6,699 4,111 10,810 Total Consumer Loans ($ millions) 9,962 5,765 15,727 (excluding residential mortgages) 9
SCALE ADVANTAGE - COMMERCIAL - ------------------------------------------------------------------------
CUSTOMERS FBS USBC COMBINED Businesses(thousands) 225 250 475 COMMERCIAL ($ millions) Leasing (bank-owned) 432 1,416 1,848 Agriculture loans 338 1,261 1,599 Small business 1,535 2,108 3,643 Total Commercial loans 14,105 17,244 31,349 10
UNIQUE PAYMENT SYSTEMS POSITION - -------------------------------------------------------------------------------- FBS USBC COMBINED Visa Charge Volume ($ billions) 19 2 21 Merchant Processing ($ billions) 16 6 22 Credit Card Loans ($ billions) 4.0 .8 4.8 (includes Corporate & Purchasing Card) Fortune 1000 Corporate Card Customers 145 145 Fortune 1000 Purchasing Card Customers 107 107
GROWING TRUST AND ASSET MANAGEMENT BUSINESSES - -------------------------------------------------------------------------------- FBS USBC COMBINED Corporate Trust Revenue ($ millions) 120 120 Corporate Trust Offices 13 13 Mutual Funds ($ billions) 12.8 2.5 15.3 Assets Under Management ($ billions) 39.3 10.2 49.5 Total Trust Fee Revenues ($ millions) 230.7 71.6 302.3
LEVERAGING A HIGH PERFORMANCE COMPANY - -------------------------------------------------------------------------------- - - Builds shareholder value - - Complementary business line strengths - - Skills to realize the full potential of fast growth markets - - Leverages FBS technology and merger integration skills ATTRACTIVE MARKETS - -------------------------------------------------------------------------------- FBS USBC COMBINED States 11 6 17 MSAs 29 28 57 Branches 359 636 995 ATMs 3,235 1,330 4,565
[U.S. MAP SHOWING COMBINED MARKETS] STRONG MARKET POSITIONS - -------------------------------------------------------------------------------- AVERAGE CUMULATIVE # OF DEPOSITS SHARE PERCENT RANK MSAS ($ BILLIONS) PERCENT COMPOSITION - -------------------------------------------------------------------------------- 1 12 20.2 32 40 2 11 8.7 20 57 3 6 5.2 15 67 Lower 28 6.5 4 80 Non MSA -- 7.9 100 -- ---- Total 57 48.5 == ====
STRONG MARKET POSITIONS - ------------------------------------------------------------------------------- DEPOSITS % MSA ($ THOUSANDS) SHARE RANK Minneapolis/St. Paul 9,221,336 30 1 Portland/Vancouver 6,139,619 39 1 Seattle/Bellevue/Everett 3,955,968 14 3 Denver 3,765,946 19 2 Boise 1,417,738 41 1 Omaha 1,401,778 16 2 Salem 677,810 28 1 Spokane 649,553 21 2 Lincoln 638,525 24 2 Sioux Falls 613,788 23 1 Eugene 499,730 22 1 Colorado Springs 407,105 16 2 - ------------------------- Source: SNL Branch Migration Database as of 6/30/96 Markets on this page 58% of total deposits 16 ATTRACTIVE MARKET GROWTH - ------------------------------------------------------------------------------- HOUSEHOLD GROWTH RATE 1990 to 1996 USBC MARKETS 2.3% FBS MARKETS 2.0% U.S. 1.5% - ------------------------- MSAs where USBC or FBS hold a top 3 ranking - 67% of total deposits 17 ATTRACTIVE MARKET GROWTH - ------------------------------------------------------------------------------- MEDIAN HOUSEHOLD INCOME GROWTH 1990 to 1996 USBC MARKETS 4.2% FBS MARKETS 3.6% U.S. 3.4% - ------------------------- MSAs where USBC or FBS hold a top 3 ranking - 67% of total deposits 18 ATTRACTIVE MARKET GROWTH - ------------------------------------------------------------------------------- HOUSEHOLD GROWTH DEPOSITS GROWTH RATE MSA ($ THOUSANDS) RATE PERCENTILE Minneapolis/St.Paul 9,221,336 2.0% 74% Portland-Vancouver 6,139,619 2.2 81 Seattle-Bellevue-Everett 3,955,968 2.1 77 Denver 3,765,946 2.8 91 Boise 1,417,738 3.8 98 Oakland 1,130,945 1.6 55 Sacramento 688,820 2.2 82 Lincoln 683,525 1.6 54 Salem 677,810 2.6 88 Spokane 649,553 1.9 68 Sioux Falls 613,788 1.9 71 Salt Lake City-Ogden 602,163 2.6 87 Colorado Springs 407,105 3.5 95 ALL U.S. MSAs 1.5% 50% - ------------------------- Source: Equifax/National Decision Systems CAGR 1990-1996 Markets on this page - 60% of total deposits 19 LEVERAGING A HIGH PERFORMANCE COMPANY - ------------------------------------------------------------------------------- - - Builds shareholder value - - Complementary business line strengths - - Skills to realize the full potential of fast growth markets - - Leverages FBS technology and merger integration skills 20 MANAGEMENT STRUCTURE Gerry Cameron Chairman Jack Grundhofer President & CEO | |-------------------|--------------|---------------|--------------| | | | | | Bob Sznewajs Phil Heasley | Rick Zona Gary Duim Vice Chairman Vice Chairman | Vice Chairman Vice Chairman | |-------------------|------------------------------|--------------| | | | | Bob Hoffmann John Murphy Rob Sayre Dan Rohr EVP EVP EVP EVP 21 TECHNOLOGY FOR THE FUTURE -U.S. Bancorp benefits from FBS' $400 million technology investment -Combined organization will save $100's of millions by leveraging technology investments USBC FBS PLANNED INVESTMENTS CURRENT CAPABILITIES -Hogan deposit system -Hogan deposit system -Interstate banking -Interstate banking -Automated teller system -Automated teller system -Customer profitability -Relationship Management System -Rapid systems integration 22 FINANCIALLY ACCRETIVE TRANSACTION PRO FORMA EARNINGS -------------------- 1998 1999 FBS Estimated EPS $6.09 $6.85 Pro Forma EPS $6.20 $7.41 Accretion 2% 8% DRIVERS -$340 million cost takeouts; $220 million in 1998; remaining in 1999 -$84 million revenue enhancements by 1999 23 COST TAKEOUTS $ Millions FBS USBC COST PERCENT PERCENT 1997 1997 TAKEOUT OF USBC OF COMBINED Staff/Admin 100 109 60 55 29 Operations 328 370 148 40 21 Occupancy 95 84 18 22 10 Business Lines: Retail 284 420 91 22 13 Payment Systems 110 34 14 41 10 Commercial/ Private Banking 181 153 3 2 1 Institutional Trust 53 32 6 19 7 Corporate Trust 71 0 0 0 0 ----- ----- ----- Total 1,222 1,202 340 28 14 ----- ----- Less:Taxes ----- ----- 133 ----- Total Cost Takeouts(AT) 207 ----- ----- 24 MERGER-RELATED CHARGES $Millions Conversion costs 190 Severance/Retention 270 Occupancy/equipment writedowns 40 Other 125 ----- Merger-related charges 625 Taxes 175 Net merger-related charges 450 ----- ----- 1997 380 1998 70 ----- 450 ----- ----- 25 REVENUE ENHANCEMENTS $Millions 1999 ------------------------------------- PRE-TAX VOLUME CONTRIBUTION Corporate/Purchasing Card Sales 1,600 9 Home Equity Loans 1,200 38 Credit Card Loans 365 19 Other Consumer Lending 230 4 Leasing 50 2 Institutional Trust/Asset Management NA 12 ------------- Total Revenue Enhancements 84 ------------- ------------- 26 TRACK RECORD OF RAPID INTEGRATION PERIOD BETWEEN COST CLOSING AND TAKEOUT SYSTEMS INTEGRATION Western Capital 35% 3 months Bank Shares 45% 6 months Colorado National 35% 2 months Boulevard 40% 1 month Metropolitan Financial 35% 1 month FirsTier 34% 3 days - -------------------------------------------------------------------------------- U.S. Bancorp 28% 6-9 months - -------------------------------------------------------------------------------- 27 FBS ACQUISITION HISTORY - 24 Acquisitions - Rapid, on-time integration - 34-45% cost takeouts ALWAYS ACHIEVED COST TAKEOUT OBJECTIVES 28 COMBINATION LEADS TO EXCEPTIONAL EFFICIENCY ADJUSTED EFFICIENCY RATIO 1991 66 1992 63 1993 58 1994 56 1995 51 1996 47 1997 1998 1999 LOW 40s PEER GROUP 1996 Fifth Third 41.8 - ------------------------------------------------ FBS 46.8 - ------------------------------------------------ Wachovia 52.0 CoreStates 52.6 Comerica 53.1 NationsBank 54.2 U.S. Bancorp 55.2 Wells Fargo 55.3 First Union 55.9 PNC 56.1 BankAmerica 57.0 Bank of Boston 57.6 Barnett 57.6 Banc One 58.2 National City 58.7 KeyCorp 58.8 SunTrust 59.2 Norwest 59.2 Fleet 59.8 First Security 60.0 Mellon 60.4 Northern Trust 60.4 Bancorp Hawaii 62.3 - ----------------------------------------- Excludes amortization of intangibles 29 SUPERIOR ROA RETURN ON ASSETS 1991 0.85 1992 1.00 1993 1.36 1994 1.63 1995 1.73 1996 1.88 1997 1998 1999 ABOVE 2.00% PEER GROUP 1996 - ------------------------------------------------ FBS 1.88 - ------------------------------------------------ CoreState 1.76 Fifth Third 1.76 Norwest 1.74 Mellon 1.65 National City 1.55 Wells Fargo 1.44 U.S. Bancorp 1.43 Wachovia 1.42 PNC 1.41 Barnett 1.39 Comerica 1.38 Banc One 1.37 First Security 1.33 KeyCorp 1.32 Fleet 1.30 First Union 1.30 SunTrust 1.27 Bank of Boston 1.26 Northern Trust 1.23 NationsBank 1.20 BankAmerica 1.11 Bancorp Hawaii 1.00 - ----------------------------------------- Excludes nonrecurring items 30 TOP-TIER ROE Return on Common Equity 1991 11.4 1992 11.7 1993 16.4 1994 19.3 1995 21.3 1996 21.4 1997 1998 1999 MID 20s PEER GROUP 1996 Norwest 24.1 - ------------------------------------------------ FBS 21.4 - ------------------------------------------------ CoreStates 19.9 Mellon 19.2 First Union 19.1 Northern Trust 18.6 Comerica 18.2 NationsBank 18.2 National City 18.1 Fifth Third 17.6 Wachovia 17.6 PNC 17.4 Fleet 17.2 KeyCorp 17.2 U.S.Bancorp 17.1 Barnett 17.0 Bank of Boston 16.8 First Security 16.2 Banc One 15.8 Bank America 13.5 SunTrust 13.1 Bancorp Hawaii 12.6 Wells Fargo 11.2 LEVERAGING A HIGH PERFORMANCE COMPANY - Builds shareholder value - Complementary business line strengths - Skills to realize the full potential of fast growth markets - Leverages FBS technology and merger integration skills APPENDIX PRICING - U S Bancorp transaction multiples appear higher than recent market transactions as a result of the significant general increase in bank stock trading multiples including FBS. - Relative multiples lower than 1995/96 averages. IMPLIED MULTIPLES EXCHANGE RATIO .755X PURCHASE PRICE FBS USBC % of FBS MULTIPLE - ----------------------- ----------------- ----------------------- PRICE P/E P/B P/E P/B P/E P/B - ----- --- --- --- --- --- --- $78.25 14.5 3.4 17.5 3.4 120% 100% 1995/96 Acquisition Averages (a) 140% 130% (a) Average of 12 largest acquisitions; at time of announcement BALANCE SHEET 12/31/96 ($ millions) FBS USBC COMBINED Net Loans 26,611 24,751 51,362 Investment Securities 3,555 3,845 7,400 Other Assets 6,323 4,664 10,987 ------- ------- ------- Total Assets 36,489 33,260 69,749 ------- ------- ------- ------- ------- ------- Deposits 24,379 24,977 49,356 Funds Purchased 4,097 2,495 6,592 Long Term Debt 3,553 1,811 5,364 Other Liabilities 1,107 966 2,073 Mandatory redeemable capital securities 300 300 600 ------- ------- ------- Total liabilities 33,436 30,549 63,985 Preferred Stock 0 150 150 Common Equity 3,053 2,561 5,614 ------- ------- ------- Total equity 3,053 2,711 5,764 ------- ------- ------- Total liabilities & equity 36,489 33,260 69,749 ------- ------- ------- ------- ------- ------- LOAN COMPOSITION 12/31/96 ($ millions) FBS USBC Combined -------------- -------------- ---------------- % OF % OF % OF BALANCE TOTAL BALANCE TOTAL BALANCE TOTAL Commercial 9,929 36.6 12,241 48.5 22,170 42.4 Lease financing 432 1.6 1,416 5.6 1,848 3.5 Commercial RE 3,744 13.8 3,587 14.2 7,331 14.0 ------ ----- ------ ----- ------ ----- Total Commercial 14,105 52.0 17,244 68.3 31,349 59.9 Residential RE 3,061 11.3 2,218 8.8 5,279 10.1 Home equity/2nd mtges 3,263 12.0 1,654 6.6 4,917 9.4 Credit card 2,858 10.5 774 3.1 3,632 6.9 Other consumer 3,841 14.2 3,337 13.2 7,178 13.7 ------ ----- ------ ----- ------ ----- Total consumer 13,023 48.0 7,983 31.7 21,006 40.1 Total loans 27,128 100.0 25,227 100.0 52,355 100.0 ------ ----- ------ ----- ------ ----- ------ ----- ------ ----- ------ ----- - ----------------------- * includes loans held for sale 36 DEPOSIT COMPOSITION 4Q96 Average ($ millions) FBS USBC Combined -------------- -------------- ---------------- % OF % OF % OF BALANCE TOTAL BALANCE TOTAL BALANCE TOTAL Noninterest bearing 6,672 29 5,831 24 12,503 26 Interest bearing Interest checking 2,848 12 2,766 11 5,614 12 Money market 4,421 19 5,936 24 10,357 22 Other savings 1,573 7 1,428 6 3,001 6 Certificates 7,762 33 8,548 35 16,310 34 ------ ----- ------ ----- ------ ----- Total int. bearing 16,604 71 18,678 76 35,282 74 ------ ----- ------ ----- ------ ----- Total deposits 23,276 100 24,509 100 47,785 100 ------ ----- ------ ----- ------ ----- ------ ----- ------ ----- ------ ----- - ----------------------------------------------------------------------- LOAN/DEPOSIT RATIO 117% 102% 109% - ----------------------------------------------------------------------- 37 CREDIT QUALITY 12/31/96 ($ millions) FBS USBC COMBINED Nonperforming loans 121 149 270 OREO and other 17 25 42 ----- ----- ----- Nonperforming assets 138 174 312 Reserve for loan losses 517 476 993 Loans 27,128 25,227 52,355 Assets 36,489 33,260 69,749 NPLs/Loans (%) .44 .59 .52 NPAs/Assets (%) .38 .52 .45 NCOs/Loans annualized (%) .57 .46 .52 Reserves/Loans (%) 1.90 1.90 1.90 Reserves/NPLs (%) 429 320 368 Reserves/NPAs (%) 375 274 318
38 [LOGO] [LOGO] -----END PRIVACY-ENHANCED MESSAGE-----