EX-99.2 3 y41054ex99-2.txt INVESTOR PRESENTATION MATERIALS 1 THE FOLLOWING ARE MATERIALS USED IN A PRESENTATION FOR INVESTORS AND ANALYSTS REGADING THE MERGER HELD ON OCTOBER 4, 2000 [FIRSTAR LOGO] MERGER WITH [US BANCORP LOGO] OCTOBER 4, 2000 SETTING THE STANDARD FOR GROWTH, PROFITABILITY AND DIVERSIFICATION 2 FORWARD LOOKING INFORMATION -------------------------------------------------------------------------------- THIS PRESENTATION CONTAINS FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995. SUCH STATEMENTS INCLUDE, BUT ARE NOT LIMITED TO STATEMENTS ABOUT THE BENEFITS OF THE MERGER BETWEEN FIRSTAR CORPORATION AND U.S. BANCORP, INCLUDING FUTURE FINANCIAL AND OPERATING RESULTS, FIRSTAR'S PLANS, OBJECTIVES, EXPECTATIONS AND INTENTIONS AND OTHER STATEMENTS THAT ARE NOT HISTORICAL FACTS. SUCH STATEMENTS ARE BASED UPON THE CURRENT BELIEFS AND EXPECTATIONS OF FIRSTAR'S AND U.S. BANCORP'S MANAGEMENT AND ARE SUBJECT TO SIGNIFICANT RISKS AND UNCERTAINTIES. ACTUAL RESULTS MAY DIFFER FROM THOSE SET FORTH IN THE FORWARD-LOOKING STATEMENTS. THE FOLLOWING FACTORS, AMONG OTHERS, COULD CAUSE ACTUAL RESULTS TO DIFFER FROM THOSE SET FORTH IN THE FORWARD-LOOKING STATEMENTS: THE ABILITY TO OBTAIN GOVERNMENTAL APPROVALS OF THE MERGER ON THE PROPOSED TERMS AND SCHEDULE: THE FAILURE OF FIRSTAR CORPORATION AND U.S. BANCORP STOCKHOLDERS TO APPROVE THE MERGER; THE RISK THAT BUSINESSES WILL NOT BE INTEGRATED SUCCESSFULLY; THE RISK THAT THE REVENUE SYNERGIES AND COST SAVINGS FROM THE MERGE MAY NOT BE FULLY REALIZED OR MAY TAKE LONGER TO REALIZE THAN EXPECTED; DISRUPTION FROM THE MERGER MAKING IT MORE DIFFICULT TO MAINTAIN RELATIONSHIPS WITH CLIENTS; EMPLOYEES OR SUPPLIERS; INCREASED COMPETITION AND ITS EFFECT ON PRICING, SPENDING, THIRD-PARTY RELATIONSHIPS AND REVENUES; THE RISK OF NEW AND CHANGING REGULATION IN THE U.S. AND INTERNATIONALLY. ADDITIONAL FACTORS THAT COULD CAUSE FIRSTAR CORPORATION'S AND U.S. BANCORP'S RESULTS TO DIFFER MATERIALLY FROM THOSE DESCRIBED IN THE FORWARD-LOOKING STATEMENTS CAN BE FOUND IN THE 1999 ANNUAL REPORTS ON FORMS 10-K OF FIRSTAR AND U.S BANCORP, FILED WITH THE SECURITIES AND EXCHANGE COMMISSION AND AVAILABLE AT THE SECURITIES AND EXCHANGE COMMISSION'S INTERNET SITE (HTTP://WWW.SEC.GOV). STOCKHOLDERS ARE URGED TO READ THE JOINT PROXY STATEMENT/PROSPECTUS REGARDING THE PROPOSED TRANSACTION WHEN IT BECOMES AVAILABLE, BECAUSE IT WILL CONTAIN IMPORTANT INFORMATION. STOCKHOLDERS WILL BE ABLE TO OBTAIN A FREE COPY OF THE JOINT PROXY STATEMENT/PROSPECTUS, AS WELL AS OTHER FILINGS CONTAINING INFORMATION ABOUT FIRSTAR CORPORATION AND U.S. BANCORP, WITHOUT CHARGE, AT THE SEC'S INTERNET SITE (HTTP://WWW.SEC.GOV). COPIES OF THE JOINT PROXY STATEMENTS/PROSPECTUSES CAN ALSO BE OBTAINED, WITHOUT CHARGE, BY DIRECTING A REQUEST TO FIRSTAR CORPORATION, 777 EAST WISCONSIN AVENUE, MILWAUKEE, WI 53202, ATTENTION: JOE MESSINGER (414) 765-5235 OR TO U.S. BANCORP 601 SECOND AVENUE SOUTH, MINNEAPOLIS, MINNESOTA 55402-4302, ATTENTION JUDY MURPHY (612) 973-2429 OR JOHN DANIELSON (612) 973-2264. 3 -------------------------------------------------------------------------------- 1. Transaction Rationale 2. The New U.S. Bancorp 3. Emphasis on Execution 4. Transaction Economics 5. Summary Appendix 4 -------------------------------------------------------------------------------- TRANSACTION RATIONALE -------------------------------------------------------------------------------- 5 1 TRANSACTION RATIONALE -------------------------------------------------------------------------------- STRATEGICALLY AND FINANCIALLY ATTRACTIVE - Maintains industry-leading earnings growth with benefits of geographic and business mix diversification - Combines high growth Western markets with stable Midwestern economies - Creates critical mass in core business lines while building substantial scale in higher growth specialty businesses - Strong execution skills and platform across the new business mix - Immediate accretion with conservative synergies - Enhances advantages from being a low cost provider of financial services - Low risk execution which leverages proven merger integration skills 6 2 TRANSACTION RATIONALE -------------------------------------------------------------------------------- REGIONAL SCALE, BALANCE AND DIVERSIFICATION THROUGHOUT FRANCHISE - Access to high growth West and Northwest economies [MAP] NORTHWEST $18.9B HH GROWTH 7.2% WEST $13.6B HH GROWTH 7.8% UPPER MIDWEST $34.2B HH GROWTH 3.1% LOWER MIDWEST $39.6B HH GROWTH 3.4%
[LOGO] PRO FORMA REGIONAL RANK BASED ON DEPOSITS 7 3 TRANSACTION RATIONALE -------------------------------------------------------------------------------- COMPLEMENTARY AND DIVERSIFIED BUSINESSES PROVIDE THE PLATFORM TO LEVERAGE LONG TERM EARNINGS GROWTH - Overlaying Firstar's high growth consumer banking model onto U.S. Bancorp franchise
CONSUMER BANKING GROWTH RATES Firstar 21.2% U.S. Bancorp 6.1%
SUSTAINED LONG-TERM EARNINGS GROWTH HIGH GROWTH BUSINESSES
U.S. BANCORP ------------ - Payment Systems - U.S. Bancorp Piper Jaffray - Wealth Management - Home Equity Lending - SBA Lending
FIRSTAR ------- - Consumer Finance - Personal Transaction Accounts - Mutual Fund Processing - Custody - Treasury Management - Small Business Lending
8 4 TRANSACTION RATIONALE -------------------------------------------------------------------------------- LEVERAGING COMPLEMENTARY CORE COMPETENCIES
FIRSTAR ------- - Emphasis on Execution - Excellence in Traditional Banking Activities - Disciplined Financial and Operational Management - "Best in Class" Employee Base
U.S. BANCORP ------------ - High P/E and Growth in Non-Bank Businesses - High Growth Markets - Strong Product Array - "Best in Class" Employee Base
SETTING THE STANDARD FOR GROWTH, PROFITABILITY AND DIVERSIFICATION 9 -------------------------------------------------------------------------------- THE NEW U.S. BANCORP -------------------------------------------------------------------------------- 10 5 THE NEW U.S. BANCORP --------------------------------------------------------------------------------
ENHANCED MANAGEMENT TEAM DEPTH ------------------------------ CHAIRMAN: JOHN F. GRUNDHOFER PRESIDENT & CEO: JERRY A. GRUNDHOFER FINANCE: DAVID MOFFETT WEALTH MANAGEMENT/ TRUST & INVESTMENTS/ CAPITAL MARKETS: ANDREW DUFF CONSUMER: RICHARD DAVIS PAYMENT SYSTEMS: DANIEL FRATE LARGE CORPORATE: JOSEPH HASTEN MIDDLE MARKET: DANIEL QUINN IT/OPERATIONS: WILLIAM CHENEVICH CREDIT: ROBERT HOFFMANN HUMAN RESOURCES: STEVE SMITH LEGAL: LEE MITAU
11 6 THE NEW U.S. BANCORP -------------------------------------------------------------------------------- A PREMIER FINANCIAL SERVICES FIRM WITH A DIVERSIFIED, HIGHER-GROWTH BUSINESS MIX [CHART] WEALTH MANAGEMENT & CAPITAL MARKETS(1) 19% CONSUMER PRO FORMA FINANCIAL REVENUE SERVICES BREAKDOWN PAYMENT 38% SYSTEMS 14% CORPORATE FINANCIAL SERVICES 29%
(1) Includes Trust, Investment Services and Investment Banking. 12 7 THE NEW U.S. BANCORP -------------------------------------------------------------------------------- CONSUMER FINANCIAL SERVICES POWERHOUSE WITH COST EFFECTIVE DISTRIBUTION Top Regional Broker Top Consumer Over 2,200 (11th nationally/100+ Lender ($41BN/Top 10) Branches Offices in 18 states) (Top 5) Top ATM Network Top Home (7.700/Top 5) CONSUMER Equity Lender FINANCIAL ($13BN/Top 5) High Performance SERVICES Community On-Line Banking Banking Model (420,000 Customers) Mutual Funds ($50BN Mutual Fund Assets)
13 8 THE NEW U.S. BANCORP -------------------------------------------------------------------------------- FIRSTAR'S CONSUMER FINANCIAL SERVICES GROWTH SUCCESS HAS BEEN ACCOMPLISHED IN LOWER GROWTH MIDWEST ECONOMIES: - U.S. Bancorp's franchise provides high growth demographics PROJECTED FIVE YEAR HOUSEHOLD GROWTH RATE (1999-2004)
AVERAGE = 5.2 Firstar Markets 3.4% U.S. Bancorp Markets 6.2%
% OF DEPOSITS IN LARGE, HIGH GROWTH MARKETS(1)
SUPERREGIONAL PEER GROUP AVERAGE (2) = 40.0% Firstar 12.0% U.S. Bancorp 52.0%
(1) Large Markets defined as MSAs with over 100,000 households. High growth market defined as large MSAs with projected 1999-2004 household growth rates higher than the U.S. average (5.2%). (2) Consists of BAC, FBF, FTU, KEY, NCC, PNC, ONE, STI, WB and WFC. 14 9 THE NEW U.S. BANCORP -------------------------------------------------------------------------------- COMPLEMENTARY CORPORATE FINANCIAL SERVICES CAPABILITIES
CORE ---- - Large Corporate - Extensive Fortune 2000 Relationships - Opportunity to Leverage Payment Systems - Middle Market - Similar Relationship Manager Focused Models - Opportunity to Leverage Piper Jaffray - Treasury Management - Leading Share of Paper Electronic Corporate Payments - Browser-Based Information and Transactions - B2B Opportunities
SPECIALTY --------- - Corporate Trust - Top 3 Overall - Top 2 in Municipal Issues - Leasing - #7 Bank-Owned Leasing Company - Small Business Lending - Top 3 Overall - Correspondent Banking - #1 in Midwest
15 10 THE NEW U.S. BANCORP -------------------------------------------------------------------------------- A LEADER IN WEALTH MANAGEMENT AND CAPITAL MARKETS
[US BANCORP LOGO] - $145BN in AUM Piper Jaffray(R) - $400BN in Total Assets under Administration [US BANCORP LOGO] Investments - $50BN in Mutual Fund Assets > [FIRST AMERICAN FUNDS(R)LOGO] - #7 Mutual Fund Processor The power of disciplined investing(R) - 45 Mutual Funds with Morningstar 4 and 5 Star Ratings [FIRSTAR FAMILY OF FUNDS LOGO] [FIRSTAR STELLAR FUNDS LOGO] - #9 in IPO underwriting and #7 in Technology IPOs [FIRSTAR LOGO] Investments Services, Inc.
16 11 THE NEW U.S. BANCORP -------------------------------------------------------------------------------- A LEADER IN PAYMENT SYSTEMS - CORPORATE PAYMENT SYSTEMS - Corporate Card - Business Card - Purchasing Card - Fleet Card - RETAIL PAYMENT SYSTEMS - Consumer Card - Consumer Lines of Credit - MERCHANT PROCESSING - ATM PROCESSING - E-COMMERCE INITIATIVES / B2B JOINT VENTURES - #5 IN CREDIT CARD CHARGE VOLUME - #1 IN COMMERCIAL CARDS - A LEADER IN STATE AND FEDERAL GOVERNMENT PAYMENT PROCESSING - #6 DEBIT CARD ISSUER - #11 IN MERCHANT PROCESSING - #3 ATM NETWORK/SWITCH 20+% REVENUE GROWTH 17 12 THE NEW U.S. BANCORP -------------------------------------------------------------------------------- DIVERSIFIED FEE INCOME STREAM [PIE CHART]
PRO FORMA FEE INCOME BREAKDOWN Mutual Fund Processing and Custody 2.1% Mortgage Banking 3.6% Cash Managment Income 5.8% Deposit Fees 12.0% Investment Banking and Brokerage 13.5% Payment Systems Income 21.0% Trust Income 23.6% Other Fees 18.4% --------------------------------------- 42.% in High Growth Businesses --------------------------------------- FEE INCOME / TOTAL NET REVENUES 43.2%
18 13 THE NEW U.S. BANCORP ------------------------------------------------------------------------------- A COMBINATION OF TWO HIGH PERFORMING COMPANIES - Both companies embrace strategy of being low cost provider of financial services
FOR THE QUARTER ENDED JUNE 30, 2000 ------------------------------------------------------------------------------------------------------------------------------ TOP 25 BANK FIRSTAR U.S. BANCORP COMBINED(1) RANK (2) ------------------------------------------------------------------------------------------------------------------------------ ROA 1.91% 1.86% 1.98% 3 ROE 23.4 20.2 22.7 4 Net Interest Margin 4.06 4.72 4.41 4 Efficiency Ratio(3) 39.9 49.3 43.2 2 Banking Efficiency Ratio(4) 39.9 41.2 37.8 - Fee Income Ratio 35.4 48.0 43.2 10 ------------------------------------------------------------------------------------------------------------------------------
Note: Financial data for Firstar and U.S. Bancorp is pro forma for pending acquisitions and excludes merger related charges. (1) Includes fully phased-in transaction synergies and impact of anticipated deposit divestiture. (2) Based on data for the quarter ended June 30, 2000. (3) Excludes amortization of intangible assets. (4) Excludes investment banking and brokerage activity as well as amortization of intangibles. 19 --------------------------------------------------------- EMPHASIS ON EXECUTION --------------------------------------------------------- 20 14 EMPHASIS ON EXECUTION -------------------------------------------------------------------------------- LOW EXECUTION RISK - Combined management team has extensive proven experience with large transactions - Thoughtful, deliberate approach to merger integration - All transactions completed ahead of schedule - Mercantile integration successfully completed in September 2000 - Complementary business lines and minimal geographic overlap diminish run-off concerns - Single operating/systems platform strategy utilized by both companies - Firstar has consistently delivered stated financial results on acquisitions
=========================================================================================================================== EPS ESTIMATE PROJECTION PRE- PROJECTION PRO FORMA ACTUAL RESULT / YEAR TRANSACTION FOR TRANSACTION CURRENT PROJECTION --------------------------------------------------------------------------------------------------------------------------- Star / Firstar 1999 $1.07 $1.13 $1.25 Firstar / Mercantile 2000 1.38 1.52 1.52 ---------------------------------------------------------------------------------------------------------------------------
21 15 EMPHASIS ON EXECUTION -------------------------------------------------------------------------------- FIRSTAR'S HIGHLY SUCCESSFUL APPROACH TO MERGER INTEGRATION
KEY INTEGRATION ELEMENT TARGETED RESULTS IMMEDIATE, HANDS ON > - Aligns employees with combined "best practices" SENIOR MANAGEMENT business paradigm INVOLVEMENT - Maintenance of competencies and strengths of acquired company CUSTOMER AND EMPLOYEE > - Thoughtful integration process aids employee RETENTION retention - Limit impact on acquired customer base wherever possible - Continuously monitor customer satisfaction - Quick remediation if issues arise CONSTANT TRACKING AND > - Weekly tracking to monitor progress and measure integration MEASUREMENT OF results PERFORMANCE - Sales of all products in all markets monitored constantly - Employee performance reinforced by financial incentives STAYING COMPETITIVE DURING > - Maintenance/improvement of competitive position INTEGRATION PROCESS relative to peers
22 16 EMPHASIS ON EXECUTION -------------------------------------------------------------------------------- FIRSTAR INVESTMENTS IN SERVICE [FIRSTAR LOGO] - Customer service is an integral element of Firstar's operating strategy and results supported at the highest level - Firstar guarantees delivery on key customer service standards for each line of business [CIRCLE OF SERVICE EXCELLENCE LOGO] - Exporting service strategy to new markets - Circle of Service Program - Customer Satisfaction Surveys - Meet the CEO employee meetings - Buddy Branches/Ambassador Programs [THE FIVE STAR SERVICE GUARANTEE LOGO] - Employee recognition and incentive programs tied to sales and service and aligned between line and support functions
23 17 EMPHASIS ON EXECUTION -------------------------------------------------------------------------------- FIRSTAR INVESTMENTS IN TECHNOLOGY - Firstar has invested approximately $800 million from 1997-2000 in technology, product development, product distribution, and infrastructure INVESTMENTS - Primary investments IN - Internet TECHNOLOGY - Telecommunications - Mainframe/Hardware - Software Development - Data Warehouse - New Full Service Branches - In-Store Branches - Branch Platform Technology
24 ------------------------------------------ TRANSACTION ECONOMICS ------------------------------------------ 25 18 TRANSACTION SUMMARY -------------------------------------------------------------------------------- FIXED EXCHANGE RATIO: 1.265 Firstar shares per U.S. Bancorp share PRICE PER U.S. BANCORP SHARE:(1) $28.30 STRUCTURE: Pooling of interests / Tax-free exchange Cross option agreements in place TRANSACTION VALUE: $21.2 billion EXPECTED CLOSING: 1st Quarter 2001 INTEGRATION COMPLETION: 4th Quarter 2002 COST SAVINGS: 8% of U.S. Bancorp's expense base (5% of combined) phased in 25% in 2001, 80% in 2002, 100% in 2003 (1) Based on Firstar's price of $22.38 as of September 29, 2000. 26 19 TRANSACTION SUMMARY -------------------------------------------------------------------------------- DIVIDEND:(1) Firstar intends to increase dividend post- closing to $0.75, providing U.S. Bancorp shareholders with an 11% increase over U.S. Bancorp's current dividend - a 15.4% increase to current Firstar dividend OWNERSHIP SPLIT: Firstar 50.5% / U.S. Bancorp 49.5% MANAGEMENT: John F. Grundhofer - Chairman until 12/31/02 Jerry A. Grundhofer - President and CEO BOARD: 25 member Board: Firstar - 14 U.S. Bancorp - 11 NAME: U.S. Bancorp HEADQUARTERS: Minneapolis (1) All dividends on common stock subject to determination by Firstar Board of Directors in its discretion. 27 20 TRANSACTION SUMMARY -------------------------------------------------------------------------------- BANKING HEADQUARTERS [MAP] [STAR] Seattle Portland Sacremento Los Angeles San Diego Phoenix Las Vegas Reno Boise Salt Lake City Denver Cheyenne Billings Kansas City Omaha Sioux Falls Fargo Minneapolis Des Moines St. Louis Little Rock Milwaukee Chicago Cincinatti Louisville Nashville Cleveland [STAR] Banking Headquarters 28 21 TRANSACTION ECONOMICS -------------------------------------------------------------------------------- DISCIPLINED USE OF A PREMIUM MULTIPLE
---------------------------------------------------------------------------------------------------------- TRANSACTION TRANSACTION FIRSTAR MULTIPLE AS A % OF PRICE = $28.30(1) MULTIPLES(1) MULTIPLES FIRSTAR MULTIPLE ---------------------------------------------------------------------------------------------------------- Price as a Multiple to: 2000E EPS 13.0x 14.7x 88% 2001E EPS 12.0 12.8 94 Book Value 2.63 3.49 75 Tangible Book Value 4.55 4.92 93
-------------------------------------------------------------------------------- (1) Based on Firstar's price of $22.38 as of September 29, 2000, and the 1.265 exchange ratio. 29 22 TRANSACTION ECONOMICS -------------------------------------------------------------------------------- - Immediate EPS accretion based on conservative assumptions - EPS accretion does not include any potential revenue enhancements - Accretion does not rely on reinvestment of excess capital - Utilizes Street estimates for Firstar and Firstar Management estimates for U.S. Bancorp based on transaction analysis - Conservative 8% expense savings assumptions (5% of combined) - Optimizes two highly efficient franchises - Conservative relative to other market extension transactions - Realistically phased in at 25% in 2001, 80% in 2002, and 100% in 2003 - Restructuring charge estimated to be $800 million pre-tax - IRR in excess of 15% 30 23 TRANSACTION ECONOMICS -------------------------------------------------------------------------------- ACCRETION SUMMARY - 1.265 EXCHANGE RATIO (DOLLARS IN MILLIONS; EXCEPT PER SHARE AMOUNTS)
----------------------------------------------------------------------------------------------------------------------- 2001 2002 2003 ----------------------------------------------------------------------------------------------------------------------- Projected Firstar Net Income - First Call $1,698 $1,953 $2,245 Projected U.S. Bancorp Net Income - Management (1) 1,766 1,951 2,156 Cost Savings(2) 27 118 148 ------- ------- ------- Projected Net Income $3,490 $4,021 $4,549 ----------------------------------------------------------------------------------------------------------------------- ORIGINAL FIRSTAR FULLY DILUTED EPS $1.75 $2.02 $2.32 PRO FORMA FULLY DILUTED EPS 1.82 2.10 2.37 ACCRETION 3.7% 3.9% 2.2% YEAR OVER YEAR EPS GROWTH 19.9 15.2 13.1 ----------------------------------------------------------------------------------------------------------------------- -----------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------ (1) Firstar Management EPS estimates equal to $2.35 in 2001 (First Call 2001 EPS = $2.42) grown at 10.5% thereafter. (2) Cost savings equal to 8% of U.S. Bancorp's expense base and are phased in 25% in 2001, 60% in 2002 and 100% in 2003. Cost savings are also net of cost of financing restructuring charge and impact of estimated divestitures. 31 24 TRANSACTION ECONOMICS -------------------------------------------------------------------------------- THE NEW U.S. BANCORP HAS SEVERAL WAYS TO MAINTAIN INDUSTRY LEADING LONG TERM EPS GROWTH RATE: EACH 1% INCREASE IN PRO FORMA COMPANY EPS GROWTH RATE IS EQUAL TO: [CHART]
Pre-Tax Income $ 63 million ADDITIONAL COST SAVINGS U.S. Bancorp Expense Base 1.9% Combined Expense Base 1.3% REVENUE ENHANCEMENTS U.S. Bancorp Net Revenue Base 0.9% Combined Net Revenue Base 0.6%
32 25 TRANSACTION ECONOMICS -------------------------------------------------------------------------------- THE NEW U.S. BANCORP WILL ALSO GENERATE OVER $5 BILLION IN EXCESS EQUITY OVER NEXT 3 YEARS: - Current EPS projections do not rely on reinvestment of excess equity - Tangible common equity ratio assumed to be 6.24% on 3/31/01 EXCESS EQUITY GENERATED BY NEW U.S. BANCORP (2001-2003) ($ IN MILLIONS) [GRAPH]
2001 $917 $917 2002 $2,069 $2,986 2003 $2,343 $5,329
YEAR-END 2001 2002 2003 TANGIBLE COMMON EQUITY RATIO 7.04% 8.16% 9.31%
Note: Excess equity is based on a 6.5% target tangible common ratio and 5% asset growth. 33 26 TRANSACTION ECONOMICS -------------------------------------------------------------------------------- EXPECTED COST SAVINGS
-------------------------------------------------------------------------------- COST SAVINGS -------------------------------------------------------------------------------- Major Business Lines $101 Systems & Operations 85 G&A/Other 80 ------------- Total $266(1)
-------------------------------------------------------------------------------- (1) Equates to $168MM after tax cost savings. 34 27 TRANSACTION ECONOMICS -------------------------------------------------------------------------------- CONSERVATIVE COST SAVINGS
RECENT MERGER TRANSACTIONS --------------------------------------------------------------------------------------------------------------------- COST SAVINGS AS % OF COST SAVINGS ------------------------------- ANNOUNCE DATE BUYER / SELLER ($MM) TARGET EXP. COMBINED EXP. --------------------------------------------------------------------------------------------------------------------- 10/00 FIRSTAR / U.S. BANCORP $266 8% 5% 4/99 Firstar / Mercantile 169 19 8 3/99 Fleet Financial / BankBoston 600 21 9 7/98 Star Banc / Firstar 174 23 16 6/98 Norwest / Wells Fargo 650 14 7 4/98 NationsBank / BankAmerica 2,203 26 13 4/98 Bank One / First Chicago NBD 930 28 10 ---------- ---------- Transaction Average 22% 11% ---------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------- Note: Cost savings are pre-tax and are based on information disclosed in investor presentations. 35 28 TRANSACTION ECONOMICS -------------------------------------------------------------------------------- ESTIMATED MERGER RELATED CHARGES (DOLLARS IN MILLIONS)
--------------------------------------------------------------------------------------------- TOTAL --------------------------------------------------------------------------------------------- Conversion Costs $226 Employee Related 208 Systems / Operations 118 Occupancy / Equipment Writedowns 48 Other 200 ----- Total Pre-Tax Merger Related Charges $800 Total After-Tax Related Charges $578(1) ---------------------------------------------------------------------------------------------
(1) Assumes an effective tax rate of 37% and 75% of restructuring charge is tax deductible. 36 29 SUMMARY -------------------------------------------------------------------------------- STRATEGICALLY COMPELLING - Enhanced scale and scope of core businesses - Proven high growth specialty businesses - Higher growth demographics - Leveraging complementary core compentencies FINANCIALLY ATTRACTIVE - Immediately accretive - Industry leading growth rate maintained - Superior financial performance LOW EXECUTION RISK - Conservative assumptions - Proven integration track record - Strong management team in place 37 -------------------------------------------------------------------------------- APPENDIX -------------------------------------------------------------------------------- 38 30 FOOTPRINT -------------------------------------------------------------------------------- CONTIGUOUS FRANCHISE WITH CRITICAL MASS SERVING OVER 10 MILLION CUSTOMERS IN HIGH GROWTH MARKETS - Operations in 9 of the top 15 highest growth states in the U.S.(1) [MAP] (1) Based on household growth Note: Circled numbers represent new U.S. Bancorp market share ranks based on deposits. 39 31 MARKET SHARE -------------------------------------------------------------------------------- LEADING MARKET SHARE IN MAJOR MSA'S, MANY WITH HIGHER GROWTH CHARACTERISTICS THAN U.S. AVERAGE (5.2%) TOP 15 MSAS (DOLLARS IN MILLIONS)
--------------------------------------------------------------------------------------------------- % MARKET MARKET PROJECTED HOUSEHOLD MSA $ DEPOSITS SHARE RANK GROWTH RATE --------------------------------------------------------------------------------------------------- Minneapolis(1) $15,317 35.8% 1 4.2% St. Louis 9,228 25.6 1 3.5 Portland 5,489 34.9 1 7.7 Milwaukee 5,084 19.1 2 2.0 Seattle-Tacoma 4,879 13.4 3 7.2 Cincinnati 4,221 16.3 3 3.2 Denver 3,922 15.7 2 5.2 Kansas City 2,786 11.3 3 5.2 Chicago 2,712 1.7 11 1.6 Cleveland 1,892 4.1 7 1.8 Omaha 1,485 15.2 2 4.8 San Diego 1,445 5.5 6 6.7 Los Angeles 1,356 1.0 17 4.3 Boise 1,105 31.6 2 10.9 Nashville 1,096 6.8 4 7.1 ---------------------------------------------------------------------------------------------------
(1) Before assumed divestitures of deposits. 40 32 LOAN COMPOSITION -------------------------------------------------------------------------------- AS OF JUNE 30, 2000 (DOLLARS IN MILLIONS)
---------------------------------------------------------------------------------------------------------------------- FIRSTAR (1) U.S. BANCORP (1) COMBINED (2) ------------------- ---------------------- ------------------------- AMOUNT % AMOUNT % AMOUNT % ---------------------------------------------------------------------------------------------------------------------- Commercial $19,040 35% $34,038 50% $53,077 43% Commercial RE 11,578 22 14,563 21 26,141 21 Consumer 15,426 28 17,242 25 32,668 27 Residential Mortgage 8,092 15 2,752 4 10,844 9 ----------- ------------ --------- Total $54,135 $68,595 $122,730 Loan Portfolio Yield 8.54% 9.30% 8.96% ----------------------------------------------------------------------------------------------------------------------
(1) Pro forma for pending acquisitions. (2) Excludes impact of divestitures. 41 33 DEPOSIT COMPOSITION -------------------------------------------------------------------------------- AS OF JUNE 30, 2000 (DOLLARS IN MILLIONS)
------------------------------------------------------------------------------------------------------------------------- FIRSTAR (1) U.S. BANCORP (1) COMBINED (2) ------------------------ -------------------------- ---------------------------- BALANCE % OF TOTAL BALANCE % OF TOTAL BALANCE % OF TOTAL ------------------------------------------------------------------------------------------------------------------------- Non-Interest Bearing $10,088 19% $16,424 31% $26,513 25% Interest Bearing: Savings & NOW $9,912 18% $8,412 16% $18,323 17% Money Market 9,962 18 12,539 23 22,501 21 Time 24,428 45 15,791 30 40,220 37 ------- ------- --------- Total Interest Bearing $44,302 81% $36,742 69% $81,044 75% ------- ------- --------- Total Deposits $54,390 $53,167 $107,557 ------- ------- --------- MEMO: Cost of Deposits 3.62% 3.19% 3.41% -------------------------------------------------------------------------------------------------------------------------
(1) Pro forma for pending acquisitions. (2) Excludes impact of divestitures. 42 34 CREDIT QUALITY -------------------------------------------------------------------------------- AT OR FOR THE QUARTER ENDED JUNE 30, 2000 (DOLLARS IN MILLIONS)
------------------------------------------------------------------------------------------------------------------- FIRSTAR U.S. BANCORP COMBINED(1) ------------------------------------------------------------------------------------------------------------------- Total Loans, Net $53,417 $67,556 $120,974 Nonperforming Loans 210 369 579 Nonperforming Assets 229 409 638 Loan Loss Reserve 718 1,039 1,757 NPLs/Loans 0.39% 0.54% 0.48% NPAs/Assets 0.30 0.46 0.39 NCOs/Average Loans 0.38 0.99 0.72 Reserves/Loans 1.33 1.51 1.43 Reserves/NPLs 342 281 303 Reserves/NPAs 313 254 276 -------------------------------------------------------------------------------------------------------------------
(1) Excludes impact of any divestitures.