-----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, VpnrMR03Qm+t+hE/gBuSzKkNy7TwEQ1D2G0opI2oo7tvmMX4qw+SPb5Y/3EOL8nE NqoFyRjwmR5W6weA2kgQ7A== 0000950131-96-000048.txt : 19960111 0000950131-96-000048.hdr.sgml : 19960111 ACCESSION NUMBER: 0000950131-96-000048 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19960109 ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19960109 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: 96502143 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 UNITED STATES 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): JANUARY 9, 1996 --------------- FIRST BANK SYSTEM, INC. ----------------------- (Exact name of registrant as specified in its charter) DELAWARE 1-6880 41-0255900 -------- ------ ---------- (State or other jurisdiction (Commission (I.R.S. Employer of Incorporation) File Number) Identification No.) 601 SECOND AVENUE SOUTH, MINNEAPOLIS, MINNESOTA 55402 - ----------------------------------------------- ----- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: 612-973-1111 ------------ NOT APPLICABLE -------------- (Former name or former address, if changed since last report) Item 5. Other Events ------------ On January 9, 1996, First Bank System, Inc. ("the Company") released its fourth quarter and full year 1995 earnings summary to the public. The Company is hereby filing with the Securities and Exchange Commission a copy of its press release dated January 9, 1996, as well as materials used in the January 9, 1996 analyst conference call. Item 7. Financial Statements, Pro Forma Financial Information and Exhibits ------------------------------------------------------------------ c.) Exhibits Exhibit 99.1 Press release of First Bank System, Inc. dated January 9, 1996. Exhibit 99.2 Materials used in the January 9, 1996, analyst conference call. INDEX TO EXHIBITS Document -------- 99.1 Press release of First Bank System, Inc. dated January 9, 1996 99.2 Materials used in the January 9, 1996, analyst conference call. SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Report to be signed on its behalf by the undersigned hereunto duly authorized. FIRST BANK SYSTEM, INC. /s/ David J. Parrin By ___________________________ David J. Parrin Senior Vice President & Controller Date: January 9, 1996 --------------- -2- EX-99.1 2 PRESS RELEASE DATED 01-09-96 Contact: -------- Wendy L. Raway John R. Danielson Media Relations Investor Relations (612) 973-2429 (612) 973-2261 FIRST BANK SYSTEM REPORTS RECORD -------------------------------- FOURTH QUARTER AND FULL YEAR 1995 EARNINGS ------------------------------------------
- ------------------------------------------------------------------------------------------------------ 4Q 4Q PERCENT PERCENT EARNINGS SUMMARY 1995 1994 CHANGE 1995 1994 CHANGE - ------------------------------------------------------------------------------------------------------ From continuing operations before merger-related items: Operating earnings (in millions) $ 150.7 $122.6 22.9 $568.1 $470.4 20.8 Earnings per common share (primary) 1.14 0.90 26.7 4.19 3.36 24.7 Earnings per common share (fully diluted) 1.12 0.90 24.4 4.11 3.32 23.8 Net income (in millions) 150.7 (35.3) nm 568.1 305.0 86.3 Earnings per common share (primary) 1.14 (0.28) nm 4.19 2.15 94.9 Earnings per common share (fully diluted) 1.12 (0.28) nm 4.11 2.14 92.1 Dividends paid per common share 0.3625 0.29 25.0 1.45 1.16 25.0 Book value per common share (period-end) 20.59 18.63 10.5 Return on average common equity* (%) 22.4 18.0 21.3 17.6 Return on average assets* (%) 1.80 1.43 1.73 1.40 Net interest margin (%) 4.83 4.79 4.91 4.74 Efficiency ratio* (%) 51.2 57.3 53.9 58.1 * from continuing operations and before merger-related items - ------------------------------------------------------------------------------------------------------
MINNEAPOLIS, January 9, 1996 -- First Bank System, Inc. (NYSE: FBS) today reported record net income of $150.7 million, or $1.12 per fully diluted share, for the fourth quarter of 1995, compared with operating income of $122.6 million, or $0.90 per share, in the fourth quarter of 1994. The reported net loss for the fourth quarter of 1994 (including discontinued operations and merger-related items) was $35.3 million, or $0.28 per share. Return on average assets and return on average common equity were 1.80 percent and 22.4 percent, respectively, in First Bank System Reports Fourth Quarter 1995 Results January 9, 1996 Page 2 the fourth quarter of 1995, compared with returns of 1.43 percent and 18.0 percent in the fourth quarter of 1994, from continuing operations before merger- related items. The strong results for the fourth quarter reflected growth in noninterest income, lower operating expenses, and effective capital management. Noninterest income for the quarter increased $24.7 million, or 14.3 percent, from the fourth quarter of 1994, excluding merger-related items. Total noninterest expense in the fourth quarter of 1995 decreased $24.5 million, or 7.9 percent, from the same period in 1994, excluding merger-related charges. The efficiency ratio, or ratio of expenses to revenues, continued to improve, to 51.2 percent in the fourth quarter of 1995 from 57.3 percent in the fourth quarter of 1994, excluding merger-related charges. A decrease of 3.5 million average common shares outstanding also contributed to the improvement in earnings per share in the current quarter, compared with the fourth quarter of 1994, reflecting stock buybacks primarily connected with the Company's planned acquisition of FirsTier. Fourth quarter net interest income on a taxable-equivalent basis was lower by $6.5 million, or 1.8 percent, than in the fourth quarter of 1994. The decrease in net interest income was primarily attributable to lower total earning assets (as loan growth was more than offset by sales and maturities of securities) and higher funding costs, including the cost of funding the buyback of common stock, purchased primarily in connection with the planned acquisition of FirsTier. Net interest income in the fourth quarter was $3.2 million higher than in the third quarter (representing an annualized increase of 3.5 percent), reflecting annualized loan growth (excluding residential mortgage loan balances) of 12.9 percent and a stable net interest margin. The provision for credit losses for the quarter was up by $3.5 million, or 12.7 percent, from the provision in fourth quarter 1994, before merger-related charges, while reserve coverage as a percentage of nonperforming assets strengthened from 204 percent at the end of 1994 to 308 percent at the end of 1995. First Bank System Reports Fourth Quarter 1995 Results January 9, 1996 Page 3 Net income in 1995 was $568.1 million, or $4.11 per fully diluted share, compared with $470.4 million, or $3.32 per fully diluted share, from continuing operations before merger-related items in 1994. On the same basis, return on average assets and return on average common equity for 1995 were 1.73 percent and 21.3 percent, respectively, compared with 1.40 percent and 17.6 percent, respectively, for 1994. The improvement in annual earnings reflects increased net interest income and noninterest income and lower noninterest expense. Reported net income for 1994, including discontinued operations and merger- related items, was $305.0 million, or $2.14 per fully diluted share. Nonperforming assets dropped to $153.7 million at December 31, 1995, a decrease of $13.2 million, or 7.9 percent, from September 30, 1995, and $78.6 million, or 33.8 percent, from December 31, 1994. The provision for credit losses of $31.0 million exceeded net charge-offs of $29.0 million in the fourth quarter. The ratio of net charge-offs to average loans improved to 0.44 percent in the fourth quarter of 1995, compared with 0.77 percent in the fourth quarter of 1994 and 0.47 in the third quarter of 1995. The ratio of the allowance for credit losses to nonperforming loans continued to indicate very strong reserve coverage at 401 percent, compared with 400 percent at the end of last quarter and 283 percent at December 31, 1994. First Bank System's Chairman, President and Chief Executive Officer, John F. Grundhofer, said, "This has been another great quarter and year for us. We are pleased to report continued record operating results and momentum in earnings per share for the fourth quarter and for the year, reflecting growth in revenues, as well as ongoing cost control and effective capital management. We have just announced plans to begin marketing a cobranded Visa card with Target Stores. This partnership will foster additional growth in our payment systems business and is another step in our successful program to build the First Bank System franchise." He added, "And, of course, we are particularly excited about our upcoming merger with First Interstate Bancorp, which we believe provides significant value for the shareholders of both First Bank System Reports Fourth Quarter 1995 Results January 9, 1996 Page 4 companies. We are confident that these shareholders will recognize the superior value offered by the First Bank/First Interstate combination and that the transaction will be approved and completed in the first quarter of 1996." On November 6, 1995, First Bank System and First Interstate Bancorp announced that they had entered into a definitive agreement whereby First Bank System will exchange 2.6 shares of its common stock for each share of First Interstate. The new institution, which will use the First Interstate name, will have approximately $90 billion in assets, $7 billion in shareholders' equity, and the largest service territory west of the Mississippi among regional banks, consisting of 7.6 million households, 1,514 branch locations and 4,692 ATMs in 21 states. The transaction is subject to shareholder and regulatory approvals. On January 3, 1996, First Bank System and Target Stores announced that they will offer a cobranded Visa credit card beginning in January 1996. This will be the first cobranded card offered by a major discount retailer. Target serves over one million shoppers a day through 673 stores in 33 states. On December 21, 1995, First Bank System announced that it had received approval from the Federal Reserve Board to complete its previously announced acquisition of FirsTier Financial, Inc., with $3.6 billion in assets, $2.8 billion in deposits, and 63 offices in Nebraska and Iowa. The transaction, subject to approval by the shareholders of FirsTier, is expected to close in February 1996. On December 8, 1995, the Company completed the sale of its Edina Realty operations to a local investor group. The financial results of Edina Realty have been accounted for as discontinued operations. On November 1, 1995, First Bank System announced that it had completed its previously announced acquisitions of First Bank of Omaha and Southwest Bank, also of Omaha. First Bank System Reports Fourth Quarter 1995 Results January 9, 1996 Page 5 On August 22, 1995, the Company announced that it had agreed to acquire the corporate trust business of BankAmerica Corporation. With this acquisition, First Bank System becomes the nation's largest provider of domestic corporate trust services as measured by revenues. Most of this transaction closed in the fourth quarter of 1995 and the transaction will be substantially completed in the first quarter of 1996. On September 7, 1995, First Bank System announced that it will seek a buyer for most of its mortgage banking company and that it will instead deliver mortgage loan products through its bank branches and telemarketing.
- ----------------------------------------------------------------------------------------------------------- INCOME STATEMENT HIGHLIGHTS - ----------------------------------------------------------------------------------------------------------- (Taxable-equivalent basis, $ in millions, except for earnings per share) 4Q 4Q PERCENT PERCENT 1995 1994 CHANGE 1995 1994 CHANGE ----------------------------------------------------------- Net interest income $363.7 $ 370.2 (1.8) $1,454.0 $1,434.5 1.4 Provision for credit losses 31.0 27.5 12.7 115.0 107.1 7.4 Noninterest income 197.3 172.6 14.3 783.1 670.1 16.9 Noninterest expense 287.3 311.8 (7.9) 1,205.9 1,224.1 (1.5) ------------------- ---------------------- Income from continuing operations before taxes and merger-related items 242.7 203.5 19.3 916.2 773.4 18.5 Taxable-equivalent adjustment 3.4 3.6 (5.6) 13.8 15.1 (8.6) Income taxes 88.6 77.3 14.6 334.3 287.9 16.1 ------------------- ---------------------- Income from continuing operations before merger-related items 150.7 122.6 22.9 568.1 470.4 20.8 Discontinued operations* -- (1.9) nm -- (8.5) nm Merger-related items (after-tax) -- (156.0) nm -- (156.9) nm ------------------- ---------------------- Net income $150.7 ($35.3) nm $ 568.1 $ 305.0 86.3 =================== ====================== Earnings per share (fully diluted) $ 1.12 ($0.28) nm $ 4.11 $ 2.14 92.1 =================== ====================== * Edina Realty - -----------------------------------------------------------------------------------------------------------
Net Interest Income - ------------------- Fourth quarter net interest income on a taxable-equivalent basis was $363.7 million, which was lower by $6.5 million, or 1.8 percent, than in the fourth quarter of 1994, but $3.2 million, or 3.5 percent (on an annualized basis), higher than in the third quarter of 1995. The improvement from the third quarter was primarily attributable to an increase in average loan balances, which were up by $486 First Bank System Reports Fourth Quarter 1995 Results January 9, 1996 Page 6 million, or 7.6 percent on an annualized basis, from the third quarter of 1995. Excluding residential mortgage loan balances, average loans for the fourth quarter increased by $659 million, or 12.9 percent on an annualized basis, from the third quarter. The average yield on earning assets was lower in the fourth quarter than in the third quarter, reflecting the latest reduction in market interest rates. The average cost of interest-bearing liabilities in the fourth quarter was essentially unchanged from that of the third quarter, however, as a result of a shift in balances from deposits to borrowings. The net interest margin in the fourth quarter of 1995 was essentially unchanged from that of the third quarter. The decline in net interest income in the fourth quarter of 1995, compared with the same period of last year, was primarily attributable to a decrease in the average balance of securities and an increase in funding costs, including the cost of funding the repurchase of common stock. Partially offsetting the impact of lower securities balances were the effects of increased average loan balances and average loan yields. The yield on loans in the fourth quarter of 1995 averaged 8.88 percent, or 34 basis points higher than the yield of 8.54 percent in the fourth quarter of last year, reflecting increased market interest rates in 1995. Average loans for the fourth quarter totaled $26.0 billion, or 7.0 percent higher than the total of $24.3 billion in the fourth quarter of last year, as a result of growth in both nonmortgage consumer and commercial loans, partially offset by a decrease in the balance of residential mortgage loans. Excluding residential mortgage loan balances, average loans for the fourth quarter increased by $2.0 billion, or 10.7 percent, over the same quarter in 1994, as demand for small business and middle market loans, credit cards, and home equity loans remained strong. First Bank System Reports Fourth Quarter 1995 Results January 9, 1996 Page 7
- ----------------------------------------------------------------------- AVERAGE LOANS - ----------------------------------------------------------------------- ($ IN MILLIONS) 4Q 3Q 4Q 1995 1995 1994 ---------------------------- Commercial $ 8,291 $ 8,091 $ 7,209 Financial institutions 915 814 832 Commercial real estate 2,985 2,746 2,791 ---------------------------- Total commercial 12,191 11,651 10,832 Residential mortgage 5,026 5,199 5,352 Home equity and second mortgage 2,764 2,679 2,433 Credit card 2,428 2,347 2,264 Other 3,613 3,660 3,439 ---------------------------- Total consumer 13,831 13,885 13,488 Total loans $26,022 $25,536 $24,320 ============================ Total, excluding residential mortgage $20,996 $20,337 $18,968 ============================ - -----------------------------------------------------------------------
The increase in funding costs in the fourth quarter of 1995, compared with the same period of last year, resulted from generally higher rates paid on interest-bearing liabilities, as well as a shift in the mix of average balances from lower cost deposits to higher cost borrowings. The average rate paid on interest-bearing liabilities in the fourth quarter of 1995 was 4.75 percent, or 62 basis points higher than for same period in 1994. Average interest-bearing deposits in the fourth quarter decreased $1.9 billion (10.3 percent) from the fourth quarter of 1994. This decrease in average deposit balances reflects the divestiture in 1995 of $848 million of deposits, as well as the national trend over the past year of consumers moving funds into alternative investment vehicles. The net interest margin of 4.83 percent in the fourth quarter of 1995 was slightly higher than the margin of 4.79 percent in the fourth quarter of 1994. The effect of the shift in the mix of earning assets, from lower margin securities and residential mortgage loan balances to higher yielding consumer and commercial loans, effectively offset the impact of the shift in interest- bearing liabilities from deposits to higher rate borrowings. First Bank System Reports Fourth Quarter 1995 Results January 9, 1996 Page 8 For the year, net interest income on a taxable-equivalent basis was $1.45 billion, an increase of $19.5 million, or 1.4 percent, from 1994. The improvement in net interest income resulted from a 103 basis-point increase in the average yield on earning assets, reflecting increases in market interest rates during 1994 and the first quarter of 1995, as well as a shift in the mix of earning assets from securities and residential mortgage-related balances to other commercial and consumer loan balances. Offsetting most of the effect of the higher yield on assets was a similar increase, of 102 basis points, in funding costs. Rates on deposits and borrowings were generally higher in 1995 than in 1994, and borrowings comprised a greater portion of interest-bearing liabilities during 1995 than in 1994.
- ---------------------------------------------------------------------------------------------------- NONINTEREST INCOME - ---------------------------------------------------------------------------------------------------- ($ in millions) 4Q 4Q PERCENT PERCENT 1995 1994 CHANGE 1995 1994 CHANGE -------------------------------------------------------- Credit card fees $ 61.7 $ 50.3 22.7 $232.7 $ 179.0 30.0 Trust fees 47.8 41.7 14.6 175.3 159.2 10.1 Service charges on deposit accounts 30.4 30.7 (1.0) 123.7 127.3 (2.8) Securities losses -- (1.0) nm -- (3.8) nm Investment products 7.6 6.4 18.8 27.6 29.6 (6.8) Other 49.8 44.5 11.9 192.8 178.8 7.8 ------------------- ------------------ Subtotal 197.3 172.6 14.3 752.1 670.1 12.2 Gain on sale of branches -- -- nm 31.0 -- nm Merger-related securities losses -- (111.2) nm -- (111.2) nm ------------------- ------------------ Total noninterest income $197.3 $ 61.4 221.3 $783.1 $ 558.9 40.1 =================== ================== - ----------------------------------------------------------------------------------------------------
Noninterest Income - ------------------ Fourth quarter noninterest income was $197.3 million, or $24.7 million (14.3 percent) higher than in the same quarter of 1994, excluding merger-related items. The improvement resulted primarily from growth in credit card and trust fees. Credit card fees increased $11.4 million, or 22.7 percent, from the fourth quarter of 1994, as a result of higher sales volumes for First Bank System Reports Fourth Quarter 1995 Results January 9, 1996 Page 9 Purchasing Card, Corporate Card, the Northwest Airlines WorldPerks credit card and merchant processing. Trust fees were up over the fourth quarter of 1994 by $6.1 million, or 14.6 percent, reflecting growth in corporate and personal trust fees. Investment product fees in the fourth quarter were higher by $1.2 million, or 18.8 percent, than in the same period of last year, reflecting an increase in sales of mutual funds. For the year, noninterest income was $783.1 million, or $113.0 million (16.9 percent) higher in 1995 than in 1994, excluding merger-related items. Excluding a $31.0 million gain on the sale of branches in 1995, noninterest income increased $82.0 million, or 12.2 percent, over 1994 (before merger-related items). Credit card fees were up $53.7 million, or 30.0 percent, and trust fees were up $16.1 million, or 10.1 percent, over last year.
NONINTEREST EXPENSE - ------------------------------------------------------------------------------------------------------ ($ in millions) - ------------------------------------------------------------------------------------------------------ 4Q 4Q PERCENT PERCENT 1995 1994 CHANGE 1995 1994 CHANGE ------------------------------------------------------- Salaries $111.1 $116.5 (4.6) $ 441.0 $ 450.7 (2.2) Employee benefits 20.4 24.4 (16.4) 96.4 105.7 (8.8) Net occupancy 24.3 25.0 (2.8) 98.6 103.8 (5.0) Furniture and equipment 22.4 22.6 (0.9) 94.2 88.3 6.7 Amortization of goodwill and intangibles 14.9 13.8 8.0 57.1 50.4 13.3 FDIC insurance 5.6 14.4 (61.1) 35.8 58.4 (38.7) Advertising 8.1 8.5 (4.7) 32.0 35.5 (9.9) Other personnel costs 12.5 8.6 45.3 40.9 35.7 14.6 Professional services 11.3 11.9 (5.0) 36.9 38.5 (4.2) Data processing 4.9 5.6 (12.5) 17.8 20.3 (12.3) Other 51.8 60.5 (14.4) 224.2 236.8 (5.3) ----------------- --------------------- Subtotal 287.3 311.8 (7.9) 1,174.9 1,224.1 (4.0) Nonrecurring charges -- -- nm 31.0 -- nm Merger-related charges -- 123.9 nm -- 125.3 nm ----------------- --------------------- Total noninterest expense $287.3 $435.7 (34.1) $1,205.9 $1,349.4 (10.6) ================= ===================== - ------------------------------------------------------------------------------------------------------
Noninterest Expense - ------------------- Fourth quarter noninterest expense totaled $287.3 million, a decrease of $24.5 million, or 7.9 percent, from the fourth quarter of 1994, excluding merger-related charges. The overall First Bank System Reports Fourth Quarter 1995 Results January 9, 1996 Page 10 reduction from last year reflects ongoing expense control and efficiencies realized through the integration of acquisitions. Salaries and employee benefits expense for the fourth quarter decreased by $9.4 million, or 6.7 percent, compared with expenses in the fourth quarter of 1994. FDIC insurance expense was $8.8 million, or 61.1 percent, lower this quarter than in the same period of last year because the FDIC lowered the premium rate in the third quarter of 1995, from 23 basis points to four basis points on deposits. Compared with the same periods of 1994, amortization of goodwill and intangibles expense for the fourth quarter and full year increased by $1.1 million, or 8.0 percent, and $6.7 million, or 13.3 percent, respectively, as a result of higher intangible balances relating to recent acquisitions, including the BankAmerica corporate trust business and the two Omaha banks. Most of the increase in other personnel expense for both periods in 1995 resulted from contract programming costs associated with several technology projects which are currently in progress. For the year, noninterest expense was $1.21 billion in 1995, or $18.2 million (1.5 percent) lower than in 1994, before merger-related charges. Included in other noninterest expense in 1995, were nonrecurring charges of $31.0 million, relating to a change in Company's policy for expensing software costs and the write-off of miscellaneous other assets. Excluding these nonrecurring charges, noninterest expense for 1995 decreased by $49.2 million, or 4.0 percent, from last year (before merger-related charges). Salaries and benefits expense for the year were $19.0 million, or 3.4 percent, lower than in 1994. FDIC insurance expense in 1995 was lower by $22.6 million, or 38.7 percent, than in 1994 as a result of the decrease this year in the premium rate charged by the FDIC. The increase in furniture and equipment expense in 1995 was primarily related to automated teller machines deployed in Circle K convenience stores late in 1994 and lobby automation and other equipment associated with acquisitions. First Bank System Reports Fourth Quarter 1995 Results January 9, 1996 Page 11
- -------------------------------------------------------------------------------- ALLOWANCE FOR CREDIT LOSSES - -------------------------------------------------------------------------------- ($ in millions) 4Q 4Q 1995 1994 1995 1994 ---------------------------------- Balance, beginning of period $468.5 $477.7 $474.7 $466.1 Net charge-offs (recoveries) Commercial (6.7) 15.5 (13.6) 31.0 Consumer 35.7 31.6 134.6 109.3 ---------------------------------- Total 29.0 47.1 121.0 140.3 Provision for credit losses 31.0 44.0 115.0 123.6 Net additions related to acquisitions 3.0 0.1 4.8 25.3 ---------------------------------- Balance, end of period $473.5 $474.7 $473.5 $474.7 ================================== Net charge-offs to average loans (%) 0.44 0.77 0.48 0.59 Allowance for credit losses to period-end loans (%) 1.79 1.93 - --------------------------------------------------------------------------------
Credit Quality - -------------- Credit quality continued to show strength in the fourth quarter of 1995. Total net charge-offs for the current quarter were lower by $18.1 million, or 38.4 percent, than for the fourth quarter of 1994. Commercial loan net recoveries for the quarter were $6.7 million, compared with net charge-offs of $15.5 million in the fourth quarter of 1994. Consumer loan net charge-offs increased $4.1 million, or 13.0 percent, from the fourth quarter of 1994, reflecting higher loan balances and credit card sales volumes. The provision for credit losses was $31.0 million this quarter, higher by $3.5 million, or 12.7 percent, than in the fourth quarter of 1994, before merger-related charges. The allowance for credit losses was $473.5 million at December 31, 1995, compared with $474.7 million at December 31, 1994 and $468.5 million at September 30, 1995. The ratio of allowance for credit losses to nonperforming loans was 401 percent, compared with 400 percent at the end of the third quarter of 1995 and 283 percent at the end of the fourth quarter of 1994. First Bank System Reports Fourth Quarter 1995 Results January 9, 1996 Page 12
- --------------------------------------------------------------------------------------- ASSET QUALITY - --------------------------------------------------------------------------------------- ($ in millions) DEC 31 SEP 30 JUN 30 MAR 31 DEC 31 1995 1995 1995 1995 1994 ---------------------------------------- Nonperforming loans Commercial $ 25.1 $ 22.6 $ 18.8 $ 21.7 $ 36.5 Financial institutions -- -- -- -- -- Commercial real estate 43.8 47.3 56.2 71.6 72.6 Consumer 49.3 47.2 45.5 54.8 58.8 ----------------------------------------- Total 118.2 117.1 120.5 148.1 167.9 Other real estate 33.2 46.6 50.5 63.7 64.0 Other nonperforming assets 2.3 3.2 3.7 3.9 0.4 ----------------------------------------- Total nonperforming assets* $153.7 $166.9 $174.7 $215.7 $232.3 ========================================= Accruing loans 90 days past due $ 38.8 $ 40.7 $ 34.1 $ 32.3 $ 23.4 ========================================= Allowance to nonperforming loans (%) 401 400 388 318 283 Allowance to nonperforming assets (%) 308 281 268 218 204 Nonperforming assets to loans plus ORE (%) 0.58 0.64 0.68 0.85 0.94 * does not include accruing loans 90 days past due - ---------------------------------------------------------------------------------------
Nonperforming assets at December 31, 1995 totaled $153.7 million, down by $13.2 million, or 7.9 percent, from the balance at September 30, 1995, and by $78.6 million, or 33.8 percent, from the balance at December 31, 1994. The ratio of nonperforming assets to loans and other real estate was 0.58 percent at December 31, 1995, compared with 0.64 percent at September 30, 1995 and 0.94 percent at December 31, 1994. First Bank System Reports Fourth Quarter 1995 Results January 9, 1996 Page 13
- -------------------------------------------------------------------------------- CAPITAL POSITION - -------------------------------------------------------------------------------- (PERCENT) DEC 31 SEP 30 JUN 30 MAR 31 DEC 31 1995 1995 1995 1995 1994 ------------------------------------------ Common equity to assets 7.7 8.0 8.1 8.1 7.3 Tangible common equity to assets* 6.5 6.8 6.9 6.9 6.2 Total shareholders' equity to assets 8.0 8.3 8.4 8.4 7.7 * calculated by deducting goodwill from common equity and assets - --------------------------------------------------------------------------------
Capital - ------- At December 31, 1995, the common-equity-to-assets ratio was 7.7 percent, compared with the ratio of 7.3 percent at December 31, 1994, and the regional bank peer group average of 7.4 percent at September 30, 1995. Total shareholders' equity-to-assets at December 31, 1995 was 8.0 percent, compared with 7.7 percent at December 31, 1994, and a peer group average of 7.9 percent at September 30, 1995.
- -------------------------------------------------------------------------------- COMMON SHARES - -------------------------------------------------------------------------------- (MILLIONS) 4Q 3Q 2Q 1Q YEAR 1995 1995 1995 1995 1995 --------------------------------- Beginning shares outstanding 129.4 133.4 135.4 133.8 133.8 Shares issued for: Acquisitions 1.2 -- -- 1.6 2.8 Stock option and stock purchase plans and other corporate purposes 0.7 0.3 0.7 1.0 2.7 --------------------------------- 1.9 0.3 0.7 2.6 5.5 Shares repurchased (4.0) (4.3) (2.7) (1.0) (12.0) --------------------------------- Ending shares outstanding 127.3 129.4 133.4 135.4 127.3 ================================= - --------------------------------------------------------------------------------
In the fourth quarter, First Bank System purchased 4.0 million shares of its common stock primarily in connection with the planned acquisition of FirsTier. These programs allow for the Company to repurchase up to a total of 24.3 million shares by the end of 1996. During 1995, First Bank System purchased 12.0 million shares related to the share repurchase programs and for purchase business combinations. First Bank System Reports Fourth Quarter 1995 Results January 9, 1996 Page 14 First Bank System is a regional bank holding company headquartered in Minneapolis. The Company provides complete financial services to individuals and institutions through 9 banks, a savings association and other financial companies with approximately 350 offices, located primarily in the 11 states of Minnesota, Colorado, North Dakota, South Dakota, Montana, Illinois, Wisconsin, Iowa, Kansas, Nebraska and Wyoming. ###
First Bank System, Inc. and Subsidiaries CONSOLIDATED STATEMENT OF INCOME Three Months Ended Year Ended ------------------------------------------------------- December 31 December 31 December 31 December 31 (In Millions, Except Per-Share Data) 1995 1994 1995 1994 - ---------------------------------------------------------------------------------------------------------------------- INTEREST INCOME (Unaudited) Loans $580.4 $521.4 $2,273.4 $1,914.7 Securities: Taxable 50.8 85.9 226.0 327.9 Exempt from federal income taxes 2.8 2.9 11.2 12.0 Other interest income 8.2 9.7 34.6 33.5 ------------------------------------------------------- Total interest income 642.2 619.9 2,545.2 2,288.1 INTEREST EXPENSE Deposits 168.5 164.2 706.7 597.3 Federal funds purchased and repurchase agreements 30.5 36.6 118.1 103.1 Other short-term funds borrowed 33.4 8.9 90.2 20.4 Long-term debt 49.5 43.6 190.0 147.9 ------------------------------------------------------- Total interest expense 281.9 253.3 1,105.0 868.7 ------------------------------------------------------- Net interest income 360.3 366.6 1,440.2 1,419.4 Provision for credit losses 31.0 44.0 115.0 123.6 ------------------------------------------------------- Net interest income after provision for credit losses 329.3 322.6 1,325.2 1,295.8 NONINTEREST INCOME Credit card fees 61.7 50.3 232.7 179.0 Trust fees 47.8 41.7 175.3 159.2 Service charges on deposit accounts 30.4 30.7 123.7 127.3 Insurance commissions 5.9 7.8 26.7 29.2 Securities losses -- (112.2) -- (115.0) Gain on sale of branches -- -- 31.0 -- Other 51.5 43.1 193.7 179.2 ------------------------------------------------------- Total noninterest income 197.3 61.4 783.1 558.9 NONINTEREST EXPENSE Salaries 111.1 116.5 441.0 450.7 Employee benefits 20.4 24.4 96.4 105.7 Net occupancy 24.3 25.0 98.6 103.8 Furniture and equipment 22.4 22.6 94.2 88.3 Amortization of goodwill and other intangible assets 14.9 13.8 57.1 50.4 FDIC insurance 5.6 14.4 35.8 58.4 Advertising 8.1 8.5 32.0 35.5 Other personnel costs 12.5 8.6 40.9 35.7 Professional services 11.3 11.9 36.9 38.5 Data processing 4.9 5.6 17.8 20.3 Merger and integration -- 64.8 -- 66.2 Merger-related severance -- 56.5 -- 56.5 Other 51.8 63.1 255.2 239.4 ------------------------------------------------------- Total noninterest expense 287.3 435.7 1,205.9 1,349.4 ------------------------------------------------------- Income (loss) from continuing operations before income taxes 239.3 (51.7) 902.4 505.3 Applicable income taxes (credit) 88.6 (18.3) 334.3 191.8 ------------------------------------------------------- Income (loss) from continuing operations 150.7 (33.4) 568.1 313.5 Loss from discontinued operations -- (1.9) -- (8.5) ------------------------------------------------------- Net income (loss) $150.7 ($35.3) $568.1 $305.0 ------------------------------------------------------- Net income (loss) applicable to common equity $148.8 ($37.6) $560.6 $292.4 ------------------------------------------------------- EARNINGS PER COMMON SHARE Primary average common and common equivalent shares 130,635,206 134,124,412 133,936,030 136,274,991 Primary income (loss) from continuing operations $1.14 ($.27) $4.19 $2.21 Primary loss from discontinued operations -- (.01) -- (.06) ------------------------------------------------------- Primary net income (loss) $1.14 ($.28) $4.19 $2.15 ------------------------------------------------------- Fully diluted average common and common equivalent shares 134,204,414 134,124,412 138,148,158 140,128,566 Fully diluted income (loss) from continuing operations $1.12 ($.27) $4.11 $2.20 Fully diluted loss from discontinued operations -- (.01) -- (.06) ------------------------------------------------------- Fully diluted net income (loss) $1.12 ($.28) $4.11 $2.14 -------------------------------------------------------
First Bank System, Inc. and Subsidiaries CONSOLIDATED BALANCE SHEET
December 31 December 31 (In Millions) 1995 1994 - -------------------------------------------------------------------------------- ASSETS Cash and due from banks $1,837 $1,707 Federal funds sold 35 135 Securities purchased under agreements to resell 230 336 Trading account securities 86 77 Available-for-sale securities 3,256 5,185 Loans 26,400 24,556 Less allowance for credit losses 474 475 -------------------------- Net loans 25,926 24,081 Bank premises and equipment 413 479 Interest receivable 197 198 Customers' liability on acceptances 223 178 Other assets 1,671 1,752 -------------------------- Total assets $33,874 $34,128 ========================== LIABILITIES AND SHAREHOLDERS' EQUITY Deposits: Noninterest-bearing $6,357 $5,933 Interest-bearing 16,157 18,323 -------------------------- Total deposits 22,514 24,256 Federal funds purchased 2,000 1,630 Securities sold under agreements to repurchase 269 938 Other short-term funds borrowed 2,116 658 Long-term debt 3,201 2,981 Acceptances outstanding 223 178 Other liabilities 826 875 -------------------------- Total liabilities 31,149 31,516 Shareholders' equity: Preferred stock 103 118 Common stock 170 168 Capital surplus 909 866 Retained earnings 1,918 1,593 Unrealized gain (loss) on securities, net of tax 23 (106) Treasury stock (398) (27) -------------------------- Total shareholders' equity 2,725 2,612 -------------------------- Total liabilities and shareholders' equity $33,874 $34,128 ==========================
First Bank System, Inc. and Subsidiaries CONSOLIDATED STATEMENT OF INCOME
Three Months Ended ----------------------------------------------------------------------------- (In Millions, Except Per-Share Data) December 31 September 30 June 30 March 31 December 31 (Unaudited) 1995 1995 1995 1995 1994 - --------------------------------------------------------------------------------------------------------------------------------- Interest Income Loans $580.4 $573.8 $572.0 $547.2 $521.4 Securities: Taxable 50.8 52.6 56.1 66.5 85.9 Exempt from federal income taxes 2.8 2.8 2.8 2.8 2.9 Other interest income 8.2 8.3 9.0 9.1 9.7 ----------------------------------------------------------------------------- Total interest income 642.2 637.5 639.9 625.6 619.9 Interest Expense Deposits 168.5 173.0 186.8 178.4 164.2 Federal funds purchased and repurchase agreements 30.5 24.8 31.9 30.9 36.6 Other short-term funds borrowed 33.4 34.6 15.7 6.5 8.9 Long-term debt 49.5 48.0 46.0 46.5 43.6 ----------------------------------------------------------------------------- Total interest expense 281.9 280.4 280.4 262.3 253.3 ----------------------------------------------------------------------------- Net interest income 360.3 357.1 359.5 363.3 366.6 Provision for credit losses 31.0 31.0 27.0 26.0 44.0 ----------------------------------------------------------------------------- Net interest income after provision for credit losses 329.3 326.1 332.5 337.3 322.6 Noninterest Income Credit card fees 61.7 62.7 56.7 51.6 50.3 Trust fees 47.8 42.8 43.0 41.7 41.7 Service charges on deposit accounts 30.4 30.9 30.3 32.1 30.7 Insurance commissions 5.9 7.5 7.0 6.3 7.8 Securities losses -- -- -- -- (112.2) Gain on sale of branches -- 31.0 -- -- -- Other 51.5 41.6 52.7 47.9 43.1 ----------------------------------------------------------------------------- Total noninterest income 197.3 216.5 189.7 179.6 61.4 Noninterest Expense Salaries 111.1 108.0 109.8 112.1 116.5 Employee benefits 20.4 22.1 25.4 28.5 24.4 Net occupancy 24.3 24.3 24.3 25.7 25.0 Furniture and equipment 22.4 23.5 24.8 23.5 22.6 Amortization of goodwill and other intangible assets 14.9 13.9 14.2 14.1 13.8 FDIC insurance 5.6 2.8 13.8 13.6 14.4 Advertising 8.1 8.4 9.2 6.3 8.5 Other personnel costs 12.5 11.0 9.8 7.6 8.6 Professional services 11.3 8.5 10.5 6.6 11.9 Data processing 4.9 4.2 4.4 4.3 5.6 Merger and integration -- -- -- -- 64.8 Merger-related severance -- -- -- -- 56.5 Other 51.8 84.4 57.0 62.0 63.1 ----------------------------------------------------------------------------- Total noninterest expense 287.3 311.1 303.2 304.3 435.7 ----------------------------------------------------------------------------- Income (loss) from continuing operations before income taxes 239.3 231.5 219.0 212.6 (51.7) Applicable income taxes (credit) 88.6 85.8 81.1 78.8 (18.3) ----------------------------------------------------------------------------- Income (loss) from continuing operations 150.7 145.7 137.9 133.8 (33.4) Loss from discontinued operations -- -- -- -- (1.9) ----------------------------------------------------------------------------- Net income (loss) $150.7 $145.7 $137.9 $133.8 ($35.3) ----------------------------------------------------------------------------- Net income (loss) applicable to common equity $148.8 $143.9 $136.0 $131.9 ($37.6) ----------------------------------------------------------------------------- Earnings Per Common Share Primary average common and common equivalent shares 130,635,206 133,648,942 135,855,386 135,545,733 134,124,412 Primary income (loss) from continuing operations $1.14 $1.08 $1.00 $.97 ($.27) Primary loss from discontinued operations -- -- -- -- (.01) Primary net income (loss) ----------------------------------------------------------------------------- $1.14 $1.08 $1.00 $.97 ($.28) ----------------------------------------------------------------------------- Fully diluted average common and common equivalent shares 134,204,414 137,623,189 139,508,911 139,604,166 134,124,412 Fully diluted income (loss) from continuing operations $1.12 $1.06 $.99 $.96 ($.27) Fully diluted loss from discontinued operations -- -- -- -- (.01) ----------------------------------------------------------------------------- Fully diluted net income (loss) $1.12 $1.06 $.99 $.96 ($.28) -----------------------------------------------------------------------------
First Bank System, Inc. and Subsidiaries CONSOLIDATED BALANCE SHEET
December 31 September 30 June 30 March 31 December 31 (In Millions) 1995 1995 1995 1995 1994 - ------------------------------------------------------------------------------------------------------------------------ (Unaudited) (Unaudited) (Unaudited) ASSETS Cash and due from banks $ 1,837 $ 1,586 $ 1,772 $ 1,598 $ 1,707 Federal funds sold 35 27 47 26 135 Securities purchased under agreements to resell 230 233 380 227 336 Trading account securities 86 164 202 90 77 Available-for-sale securities 3,256 3,302 3,426 3,535 5,185 Loans 26,400 25,877 25,699 25,215 24,556 Less allowance for credit losses 474 469 467 470 475 ------------------------------------------------------------------- Net loans 25,926 25,408 25,232 24,745 24,081 Bank premises and equipment 413 410 438 475 479 Interest receivable 197 189 192 185 198 Customers' liability on acceptances 223 165 165 189 178 Other assets 1,671 1,474 1,602 1,642 1,752 ------------------------------------------------------------------ Total assets $33,874 $32,958 $33,456 $32,712 $34,128 ================================================================== LIABILITIES AND SHAREHOLDERS' EQUITY Deposits: Noninterest-bearing $ 6,357 $ 5,779 $ 5,749 $ 5,346 $ 5,933 Interest-bearing 16,157 16,116 17,100 18,131 18,323 ------------------------------------------------------------------ Total deposits 22,514 21,895 22,849 23,477 24,256 Federal funds purchased 2,000 1,330 1,539 1,839 1,630 Securities sold under agreements to repurchase 269 272 380 440 938 Other short-term funds borrowed 2,116 2,554 2,085 275 658 Long-term debt 3,201 3,127 2,793 2,917 2,981 Acceptances outstanding 223 165 165 189 178 Other liabilities 826 879 828 818 875 Total liabilities ------------------------------------------------------------------ 31,149 30,222 30,639 29,955 31,516 Shareholders' equity: Preferred stock 103 105 106 106 118 Common stock 170 169 169 169 168 Capital surplus 909 900 898 868 866 Retained earnings 1,918 1,837 1,746 1,671 1,593 Unrealized gain (loss) on securities, net of tax 23 (3) (11) (57) (106) Treasury stock (398) (272) (91) -- (27) ------------------------------------------------------------------ Total shareholders' equity 2,725 2,736 2,817 2,757 2,612 ------------------------------------------------------------------ Total liabilities and shareholders' equity $33,874 $32,958 $33,456 $32,712 $34,128 ==================================================================
First Bank System, Inc. and Subsidiaries CONSOLIDATED QUARTERLY AVERAGE BALANCE SHEET
(In Millions) December 31 September 30 June 30 March 31 December 31 (Unaudited) 1995 1995 1995 1995 1994 - ------------------------------------------------------------------------------------------------------------------------ ASSETS Securities: U.S. Treasury $922 $919 $988 $1,065 $1,253 Mortgage-backed securities 1,752 1,831 1,920 2,464 3,547 State & political subdivisions 177 173 177 175 182 U.S. agencies and other 426 433 488 551 652 - ------------------------------------------------------------------------------------------------------------------------ Total securities 3,277 3,356 3,573 4,255 5,634 Unrealized gain (loss) on available-for-sale securities 18 (13) (50) (138) (160) - ------------------------------------------------------------------------------------------------------------------------ Net securities 3,295 3,343 3,523 4,117 5,474 Trading account securities 108 87 93 82 97 Federal funds sold and resale agreements 253 263 293 311 359 Loans: Commercial: Commercial 8,291 8,091 8,166 7,496 7,209 Financial institutions 915 814 642 724 832 Real Estate: Commercial mortgage 2,615 2,406 2,428 2,444 2,480 Construction 370 340 363 357 311 - ------------------------------------------------------------------------------------------------------------------------ Total commercial 12,191 11,651 11,599 11,021 10,832 Consumer: Residential mortgage 4,710 4,841 5,003 5,069 5,118 Residential mortgage held for sale 316 358 210 174 234 Home equity and second mortgage 2,764 2,679 2,587 2,445 2,433 Credit card 2,428 2,347 2,292 2,294 2,264 Other 3,613 3,660 3,673 3,589 3,439 - ------------------------------------------------------------------------------------------------------------------------ Total consumer 13,831 13,885 13,765 13,571 13,488 - ------------------------------------------------------------------------------------------------------------------------ Total loans 26,022 25,536 25,364 24,592 24,320 Allowance for credit losses 472 469 473 478 484 - ------------------------------------------------------------------------------------------------------------------------ Net loans 25,550 25,067 24,891 24,114 23,836 Other earning assets 244 238 236 226 272 - ------------------------------------------------------------------------------------------------------------------------ Total earning assets* 29,904 29,480 29,559 29,466 30,682 Cash and due from banks 1,613 1,659 1,709 1,677 1,827 Other assets 2,097 2,111 2,160 2,175 2,166 - ------------------------------------------------------------------------------------------------------------------------ Total assets $33,160 $32,768 $32,905 $32,702 $34,031 ======================================================================================================================== LIABILITIES AND SHAREHOLDERS' EQUITY Noninterest-bearing deposits $5,799 $5,591 $5,435 $5,511 $6,028 Interest-bearing deposits: Interest checking 2,753 2,728 2,854 2,967 2,879 Money market accounts 3,891 3,871 3,928 3,739 3,847 Other savings accounts 1,590 1,633 1,697 1,933 2,208 Savings certificates 6,986 7,256 8,107 8,347 7,816 Certificates over $100,000 976 1,028 1,160 1,078 1,298 - ------------------------------------------------------------------------------------------------------------------------ Total interest-bearing deposits 16,196 16,516 17,746 18,064 18,048 Short-term borrowings 4,198 3,928 3,077 2,535 3,390 Long-term debt 3,146 2,892 2,876 2,935 2,872 - ------------------------------------------------------------------------------------------------------------------------ Total interest-bearing liabilities 23,540 23,336 23,699 23,534 24,310 Other liabilities 1,077 1,043 995 1,020 930 Preferred equity 104 105 106 106 118 Common equity 2,629 2,701 2,701 2,623 2,744 Unrealized gain (loss) on AFS securities, net of taxes 11 (8) (31) (92) (99) - ------------------------------------------------------------------------------------------------------------------------ Total liabilities and shareholders' equity $33,160 $32,768 $32,905 $32,702 $34,031 ========================================================================================================================
* Before deducting the allowance for credit losses and excluding the unrealized gain or loss on available-for-sale securities. First Bank System, Inc. and Subsidiaries CONSOLIDATED DAILY AVERAGE BALANCE SHEET AND RELATED YIELDS AND RATES
1995 1994 ----------------------------------------------------------- % Change For the Three Months Ended December 31 Interest Interest Average Yields Yields Balance (In Millions) and and Increase (Unaudited) Balance Interest Rates Balance Interest Rates (Decrease) - ------------------------------------------------------------------------------------------------------------------------- Assets U.S. Treasury $922 $14.6 6.28% $1,253 $16.9 5.35% (26.4)% Mortgage-backed securities 1,752 29.7 6.73 3,547 59.1 6.61 (50.6) State & political subdivisions 177 4.7 10.53 182 4.9 10.68 (2.7) U.S. agencies and other 426 6.1 5.68 652 9.4 5.72 (34.7) ------------------- ----------------- Total securities 3,277 55.1 6.67 5,634 90.3 6.36 (41.8) Unrealized gain (loss) on available-for-sale securities 18 (160) --------- -------- Net securities 3,295 5,474 Trading account securities 108 1.5 5.51 97 1.2 4.91 11.3 Federal funds sold and resale agreements 253 3.4 5.33 359 4.6 5.08 (29.5) Loans: Commercial: Commercial 8,291 172.5 8.25 7,209 144.4 7.95 15.0 Financial institutions 915 9.5 4.12 832 7.0 3.34 10.0 Real estate: Commercial mortgage 2,615 59.6 9.04 2,480 54.0 8.64 5.4 Construction 370 8.7 9.33 311 6.8 8.67 19.0 ------------------- ---------------- Total commercial 12,191 250.3 8.15 10,832 212.2 7.77 12.5 Consumer: Residential mortgage 4,710 90.0 7.58 5,118 91.6 7.10 (8.0) Residential mortgage held for sale 316 6.0 7.53 234 4.5 7.63 35.0 Home equity and second mortgage 2,764 67.8 9.73 2,433 55.6 9.07 13.6 Credit card 2,428 73.6 12.03 2,264 69.2 12.13 7.2 Other 3,613 94.5 10.38 3,439 90.4 10.43 5.1 ------------------- ---------------- Total consumer 13,831 331.9 9.52 13,488 311.3 9.16 2.5 ------------------- ---------------- Total loans 26,022 582.2 8.88 24,320 523.5 8.54 7.0 Allowance for credit losses 472 484 (2.5) --------- -------- Net loans 25,550 23,836 7.2 Other earning assets 244 3.4 5.53 272 3.9 5.69 (10.3) ------------------- ---------------- Total earning assets* 29,904 645.6 8.57 30,682 623.5 8.06 (2.5) Cash and due from banks 1,613 1,827 (11.7) Other assets 2,097 2,166 (3.2) --------- -------- Total assets $33,160 $34,031 (2.6)% ========= ======== Liabilities and Shareholders' Equity Noninterest-bearing deposits $5,799 $6,028 (3.8)% Interest-bearing deposits: Interest checking 2,753 10.2 1.47 2,879 11.1 1.53 (4.4) Money market accounts 3,891 36.6 3.73 3,847 31.1 3.21 1.1 Other savings accounts 1,590 9.4 2.35 2,208 13.5 2.43 (28.0) Savings certificates 6,986 96.2 5.46 7,816 89.4 4.54 (10.6) Certificates over $100,000 976 16.1 6.54 1,298 19.1 5.84 (24.8) ------------------- ---------------- Total interest-bearing deposits 16,196 168.5 4.13 18,048 164.2 3.61 (10.3) Short-term borrowings 4,198 63.9 6.04 3,390 45.5 5.32 23.8 Long-term debt 3,146 49.5 6.24 2,872 43.6 6.02 9.5 ------------------- ---------------- Total interest-bearing liabilities 23,540 281.9 4.75 24,310 253.3 4.13 (3.2) Other liabilities 1,077 930 15.8 Preferred equity 104 118 (11.9) Common equity 2,629 2,744 (4.2) Unrealized gain (loss) on available-for-sale securities, net of taxes 11 (99) (111.1) --------- --------- Total liabilities and shareholders' equity $33,160 $34,031 (2.6)% ========= ========= Net interest income $363.7 $370.2 ======= ======= Gross interest margin 3.82% 3.93% ------- ------- Gross interest margin without taxable-equivalent increments 3.77% 3.89% ------- ------- Net interest margin 4.83% 4.79% ------- ------- Net interest margin without taxable-equivalent increments 4.78% 4.74% ------- -------
Interest and rates are presented on a fully taxable-equivalent basis under a tax rate of 35 percent. Interest income and rates on loans include loan fees. Nonaccrual loans are included in average loan balances. * Before deducting the allowance for credit losses and excluding the unrealized gain (loss) on available-for-sale securities.
First Bank System, Inc. and Subsidiaries CONSOLIDATED DAILY AVERAGE BALANCE SHEET AND RELATED YIELDS AND RATES 1995 1994 ----------------------------------------------------------- % Change For the Year Ended December 31 Interest Interest Average Yields Yields Balance (In Millions) and and Increase (Unaudited) Balance Interest Rates Balance Interest Rates (Decrease) - -------------------------------------------------------------------------------------------------------------------- ASSETS Securities: U.S. Treasury $ 973 $ 60.6 6.23% $ 1,574 $ 82.8 5.26% (38.2)% Mortgage-backed securities 1,989 135.5 6.81 3,288 208.7 6.35 (39.5) State & political subdivisions 176 18.6 10.57 188 20.0 10.64 (6.4) U.S. agencies and other 474 28.3 5.97 619 34.4 5.56 (23.4) ------------------ ------------------ Total securities 3,612 243.0 6.73 5,669 345.9 6.10 (36.3) Unrealized loss on available-for-sale securities (45) (69) -------- ------- Net securities 3,567 5,600 Trading account securities 92 5.0 5.43 73 3.4 4.66 26.0 Federal funds sold and resale agreements 280 16.2 5.79 405 16.5 4.07 (30.9) Loans: Commercial: Commercial 8,013 687.8 8.58 6,832 506.6 7.42 17.3 Financial institutions 774 31.7 4.10 1,146 30.1 2.63 (32.5) Real estate: Commercial mortgage 2,474 223.4 9.03 2,365 202.2 8.55 4.6 Construction 358 33.7 9.41 268 21.4 7.99 33.6 ------------------ ------------------ Total commercial 11,619 976.6 8.41 10,611 760.3 7.17 9.5 Consumer: Residential mortgage 4,904 371.9 7.58 5,345 385.6 7.21 (8.3) Residential mortgage held for sale 265 20.3 7.66 387 27.4 7.08 (31.5) Home equity and second mortgage 2,620 253.5 9.68 2,223 193.2 8.69 17.9 Credit card 2,341 290.5 12.41 2,054 248.9 12.12 14.0 Other 3,634 368.5 10.14 3,243 308.3 9.51 12.1 ------------------ ------------------ Total consumer 13,764 1,304.7 9.48 13,252 1,163.4 8.78 3.9 ------------------ ------------------ Total loans 25,383 2,281.3 8.99 23,863 1,923.7 8.06 6.4 Allowance for credit losses 473 486 (2.7) -------- ------- Net loans 24,910 23,377 6.6 Other earning assets 236 13.5 5.72 255 13.7 5.37 (7.5) ------------------ ------------------ Total earning assets* 29,603 2,559.0 8.64 30,265 2,303.2 7.61 (2.2) Cash and due from banks 1,664 1,749 (4.9) Other assets 2,137 2,086 2.4 -------- ------- Total assets $32,886 $33,545 (2.0)% ======== ======= LIABILITIES AND SHAREHOLDERS' EQUITY Noninterest-bearing deposits $5,584 $6,310 (11.5)% Interest-bearing deposits: Interest checking 2,825 44.5 1.58 2,940 44.4 1.51 (3.9) Money market accounts 3,858 145.3 3.77 4,035 110.2 2.73 (4.4) Other savings accounts 1,712 42.1 2.46 2,245 49.5 2.20 (23.7) Savings certificates 7,669 404.8 5.28 7,750 315.4 4.07 (1.0) Certificates over $100,000 1,060 70.0 6.60 1,381 77.8 5.63 (23.2) ------------------ ------------------ Total interest-bearing deposits 17,124 706.7 4.13 18,351 597.3 3.25 (6.7) Short-term borrowings 3,440 208.3 6.06 2,658 123.5 4.65 29.4 Long-term debt 2,963 190.0 6.41 2,609 147.9 5.67 13.6 ------------------ ------------------ Total interest-bearing liabilities 23,527 1,105.0 4.70 23,618 868.7 3.68 (0.4) Other liabilities 1,036 871 18.9 Preferred equity 105 143 (26.6) Common equity 2,664 2,646 0.7 Unrealized loss on available-for-sale securities, net of taxes (30) (43) (30.2) -------- ------- Total liabilities and shareholders' equity $32,886 $33,545 (2.0)% ======== ======= Net interest income $1,454.0 $1,434.5 ======== ======== Gross interest margin 3.94% 3.93% ===== ===== Gross interest margin without taxable-equivalent increments 3.90% 3.88% ===== ===== Net interest margin 4.91% 4.74% ===== ===== Net interest margin without taxable-equivalent increments 4.87% 4.69% ===== ===== Interest and rates are presented on a fully taxable-equivalent basis under a tax rate of 35 percent. Interest income and rates on loans include loan fees. Nonaccrual loans are included in average loan balances. * Before deducting the allowance for credit losses and excluding the unrealized loss on available-for-sale securities.
First Bank System, Inc. and Subsidiaries Loan Portfolio December 31, 1995 September 30, 1995 June 30, 1995 March 31, 1995 December 31, 1994 ------------------------------------------------------------------------------------------------ Percent Percent Percent Percent Percent (Dollars in Millions) Amount of Total Amount of Total Amount of Total Amount of Total Amount of Total ------------------------------------------------------------------------------------------------ (Unaudited) (Unaudited) (Unaudited) Commercial: Commercial $ 8,271 31.3% $ 8,311 32.1% $ 8,274 32.2% $ 8,178 32.4% $ 7,285 29.7% Financial institutions 1,060 4.0 851 3.3 748 2.9 559 2.2 787 3.2 Real estate: Commercial mortgage 2,784 10.6 2,476 9.6 2,414 9.4 2,461 9.8 2,454 10.0 Construction 403 1.5 356 1.4 331 1.3 374 1.5 330 1.3 ----------------------------------------------------------------------------------------------- Total commercial 12,518 47.4 11,994 46.4 11,767 45.8 11,572 45.9 10,856 44.2 Consumer: Residential mortgage 4,655 17.6 4,772 18.4 4,940 19.2 5,060 20.1 5,098 20.8 Residential mortgage held for sale 257 1.0 357 1.4 311 1.2 180 0.7 197 0.8 Home equity and second mortgage 2,805 10.6 2,704 10.4 2,666 10.4 2,505 9.9 2,453 10.0 Credit card 2,586 9.8 2,397 9.3 2,321 9.0 2,248 8.9 2,409 9.8 Automobile 1,821 6.9 1,867 7.2 1,884 7.3 1,837 7.3 1,770 7.2 Revolving credit 757 2.9 742 2.9 747 2.9 737 2.9 725 2.9 Installment 607 2.3 644 2.5 686 2.7 699 2.8 712 2.9 Student 394 1.5 400 1.5 377 1.5 377 1.5 336 1.4 ----------------------------------------------------------------------------------------------- Total consumer 13,882 52.6 13,883 53.6 13,932 54.2 13,643 54.1 13,700 55.8 ----------------------------------------------------------------------------------------------- Total loans $26,400 100.0% $25,877 100.0% $25,699 100.0% $25,215 100.0% $24,556 100.0% ================================================================================================
First Bank System, Inc. and Subsidiaries SUPPLEMENTAL FINANCIAL DATA (Dollars in Millions, Except Per Share Data) (Unaudited) December 31 September 30 June 30 March 31 December 31 1995 1995 1995 1995 1994 ----------- ------------ ----------- ----------- ----------- Ending Common Shares Outstanding 127,334,568 129,429,363 133,419,566 135,421,355 133,832,409 Book Value per Common Share $20.59 $20.33 $20.33 $19.58 $18.63 Intangibles: Goodwill $ 438 $ 412 $ 416 $ 426 $ 411 Mortgage Servicing Rights 40 40 44 42 47 Other Intangibles 298 177 184 194 194 ------------------------------------------------------------------------ Total Intangibles $ 776 $ 629 $ 644 $ 662 $ 652 Three Months Ended ------------------------------------------------------------------------ December 31 September 30 June 30 March 31 December 31 1995 1995 1995 1995 1994 ----------- ------------ ----------- ----------- ----------- Net Interest Income * $363.7 $360.5 $363.0 $366.8 $370.2 Net Interest Margin * 4.83% 4.85% 4.93% 5.05% 4.79% Efficiency Ratio ** 51.2% 53.9% 54.9% 55.7% 57.3% Interest Yield on Average Loans 8.88% 8.95% 9.08% 9.06% 8.54% Rate Paid on Average Interest Bearing Liabilities 4.75% 4.77% 4.75% 4.52% 4.13% Return on Average Assets *** 1.80% 1.76% 1.68% 1.66% 1.43% Return on Average Common Equity *** 22.4% 21.2% 20.4% 21.1% 18.0% Preferred Dividends $ 1.9 $ 1.8 $ 1.9 $ 1.9 $ 2.3 Gross Charge-offs $ 50.9 $ 52.7 $ 53.8 $ 51.7 $ 67.1 Gross Recoveries $ 21.9 $ 22.7 $ 23.9 $ 19.6 $ 20.0 Average Full-Time Equivalent Employees 12,918 12,894 13,237 13,874 14,588
* On a taxable-equivalent basis ** Excluding merger-related charges *** From continuing operations, excluding merger-related items EX-99.2 3 MATERIALS USED IN CONFERENCE CALL [LOGO OF FIRST BANK] 4Q95 Earnings Release First Bank System, Inc. Richard A. Zona Vice Chairman & CFO January 9, 1996 RECORD 4Q95 AND FULL YEAR 1995 EARNINGS - --------------------------------------------------------------------------------
4Q 4Q PERCENT 3Q PERCENT PERCENT 1995 1994 CHANGE 1995 CHANGE 1995 1994 CHANGE From continuing operations before merger-related items: Operating earnings (millions) $150.7 $122.6 22.9 $145.7 3.4 $568.1 $470.4 20.8 Earnings per common share (fully diluted) 1.12 0.90 24.4 1.06 5.7 4.11 3.32 23.8 Return on average common equity* (%) 22.4 18.0 21.2 21.3 17.6 Return on average assets* (%) 1.80 1.43 1.76 1.73 1.40 Net interest margin (%) 4.83 4.79 4.85 4.91 4.74 Efficiency ratio* (%) 51.2 57.3 53.9 53.9 58.1 Average FTE 12,918 14,588 (11.4) 12,894 0.2
* From continuing operations and before merger-related items 2 INCOME STATEMENT HIGHLIGHTS - -------------------------------------------------------------------------------- (Taxable-equivalent basis, $ in millions, except for earnings per share)
4Q 4Q PERCENT 3Q PERCENT 1995 1994 CHANGE 1995 CHANGE Net interest income $363.7 $370.2 (1.8) $360.5 0.9 Provision for credit losses 31.0 27.5 12.7 31.0 - Noninterest income 197.3 172.6 14.3 185.5 6.4 Noninterest expense 287.3 311.8 (7.9) 280.1 2.6 ------ ------ ------ Income from continuing operations before taxes and merger-related and nonrecurring items $242.7 $203.5 19.3 $234.9 3.3 Taxable-equivalent adjustment 3.4 3.6 (5.6) 3.4 - Income taxes 88.6 77.3 14.6 85.8 3.3 ------ ------ ------ Income from continuing operations before merger-related and nonrecurring items $150.7 $122.6 22.9 $145.7 3.4 Discontinued operations* - (1.9) nm - - Merger-related items (after-tax) - (156.0) nm - - Gain on sale of branches less nonrecurring expenses - - nm - nm ------ ------ ------ Net income $150.7 ($35.3) nm $145.7 3.4 ====== ====== ====== Earnings per share (fully diluted) $ 1.12 ($0.28) nm $1.06 5.7 ====== ====== ====== * Edina Realty
3 STRONG NONINTEREST INCOME GROWTH - --------------------------------------------------------------------------------
4Q 4Q Percent 3Q Percent Percent $ in millions 1995 1994 Change 1995 Change 1995 1994 Change Credit card fees $61.7 $50.3 22.7 $62.7 (1.6) $232.7 $179.0 30.0 Trust fees 47.8 41.7 14.6 42.8 11.7 175.3 159.2 10.1 Service charges on deposit accts 30.4 30.7 (1.0) 30.9 (1.6) 123.7 127.3 (2.8) Securities losses -- (1.0) nm -- -- -- (3.8) nm Investment products 7.6 6.4 18.8 7.8 (2.6) 27.6 29.6 (6.8) Other 49.8 44.5 11.9 41.3 20.6 192.8 178.8 7.8 ------ ------ ------ ------ ------ Subtotal $197.3 $172.6 14.3 $185.5 6.4 $752.1 $670.1 12.2 Gain on sale of branches -- -- 31.0 31.0 -- Merger-related securities losses -- (111.2) -- -- (111.2) ------ ------ ------ ------ ------ Total noninterest income $197.3 $ 61.4 $216.5 $783.1 $558.9 ====== ====== ====== ====== ======
4 WELL-CONTROLLED NONINTEREST EXPENSE - --------------------------------------------------------------------------------
4Q 4Q Percent 3Q Percent Percent $ in millions 1995 1994 Change 1995 Change 1995 1994 Change Salaries & employee benefits $131.5 $140.9 (6.7) $130.1 1.1 $ 537.4 $ 556.4 (3.4) Net occupancy 24.3 25.0 (2.8) 24.3 -- 98.6 103.8 (5.0) Furniture and equipment 22.4 22.6 (0.9) 23.5 (4.7) 94.2 88.3 6.7 Amortization of goodwill & intangibles 14.9 13.8 8.0 13.9 7.2 57.1 50.4 13.3 Advertising 8.1 8.5 (4.7) 8.4 (3.6) 32.0 35.5 (9.9) Other personnel costs 12.5 8.6 45.3 11.0 13.6 40.9 35.7 14.6 Professional services 11.3 11.9 (5.0) 8.5 32.9 36.9 38.5 (4.2) Data processing 4.9 5.6 (12.5) 4.2 16.7 17.8 20.3 (12.3) Other 51.8 60.5 (14.4) 53.4 (3.0) 224.2 236.8 (5.3) ------ ------ ------ -------- -------- Subtotal excluding FDIC $281.7 $297.4 (5.3) $277.3 1.6 $1,139.1 $1,165.7 (2.3) FDIC insurance 5.6 14.4 (61.1) 2.8 100.0 35.8 58.4 (38.7) ------ ------ ------ -------- -------- Subtotal $287.3 $311.8 (7.9) $280.1 2.6 $1,174.9 $1,224.1 (4.0) Nonrecurring charges -- -- 31.0 31.0 -- Merger-related charges -- 123.9 -- -- 125.3 ------ ------ ------ -------- -------- Total noninterest expense $287.3 $435.7 $311.1 $1,205.9 $1,349.4 ====== ====== ====== ======== ========
5 BALANCE SHEET MANAGEMENT - -------------------------------------------------------------------------------
Quarterly Average Balances -------------------------------------------------------- 4Q 3Q Percent 4Q Percent $ millions 1995 1995 Change 1994 Change ASSETS Securities $ 3,277 $ 3,356 (2.4) $ 5,634 (41.8) Loans 26,022 25,536 1.9 24,320 7.0 Other 3,861 3,876 (0.4) 4,077 (5.3) ------- ------- ------- Total assets $33,160 $32,768 1.2 $34,031 (2.6) ======= ======= ======= LIABILITIES AND SHAREHOLDERS' EQUITY Noninterest-bearing deposits $ 5,799 $ 5,591 3.7 $ 6,028 (3.8) Interest-bearing deposits: Interest checking 2,753 2,728 0.9 2,879 (4.4) Money market accounts 3,891 3,871 0.5 3,847 1.1 Other savings accounts 1,590 1,633 (2.6) 2,208 (28.0) Savings certificates 6,986 7,256 (3.7) 7,816 (10.6) Certificates > $100,000 976 1,028 (5.1) 1,298 (24.8) ------- ------- ------- Total interest-bearing deposits $16,196 $16,516 (1.9) $18,048 (10.3) Short-term borrowings 4,198 3,928 6.9 3,390 23.8 Long-term debt 3,146 2,892 8.8 2,872 9.5 Other liabilities 1,077 1,043 3.3 930 15.8 Equity 2,744 2,798 (1.9) 2,763 (0.7) ------- ------- ------- Total liabilities & equity $33,160 $32,768 1.2 $34,031 (2.6) ======= ======= =======
6 GROWING LOANS - -------------------------------------------------------------------------------- . Increased loans (excluding residential mortgage loans) by $2.0 billion or 10.7%
Quarterly Average Balances --------------------------------------------------- 4Q 3Q Percent 4Q Percent $ millions 1995 1995 Change 1994 Change Commercial: Commercial $ 8,291 $ 8,091 2.5 $ 7,209 15.0 Financial institutions 915 814 12.4 832 10.0 Commercial mortgage 2,615 2,406 8.7 2,480 5.4 Construction 370 340 8.8 311 19.0 ------- ------- ------- Total commercial $12,191 $11,651 4.6 $10,832 12.5 Consumer: Home equity and second mortgage 2,764 2,679 3.2 2,433 13.6 Credit card 2,428 2,347 3.5 2,264 7.2 Other 3,613 3,660 (1.3) 3,439 5.1 ------- ------- ------- Subtotal $ 8,805 $ 8,686 1.4 $ 8,136 8.2 Residential mortgage 5,026 5,199 (3.3) 5,352 (6.1) ------- ------- ------- Total consumer $13,831 $13,885 (0.4) $13,488 2.5 ------- ------- ------- Total loans $26,022 $25,536 1.9 $24,320 7.0 ======= ======= ======= Total loans excl. residential mtge. $20,996 $20,337 3.2 $18,968 10.7 ======= ======= =======
7 ASSET QUALITY IMPROVEMENT - -------------------------------------------------------------------------------- . NPAs down 33.8% from previous year . Allowance/NPLs = 401%
$ in millions Dec 31 Sep 30 Percent Dec 31 Percent 1995 1995 Change 1994 Change Nonperforming loans Commercial $ 25.1 $ 22.6 11.1 $ 36.5 (31.2) Commercial real estate 43.8 47.3 (7.4) 72.6 (39.7) Consumer 49.3 47.2 4.4 58.8 (16.2) ------ ------ ------ Total $118.2 $117.1 0.9 $167.9 (29.6) Other real estate 33.2 46.6 (28.8) 64.0 (48.1) Other nonperforming assets 2.3 3.2 (28.1) 0.4 475.0 ------ ------ ------ Total nonperforming assets * $153.7 $166.9 (7.9) $232.3 (33.8) ====== ====== ====== Accruing loans 90 days past due $ 38.8 $ 40.7 (4.7) $ 23.4 65.8 ====== ====== ====== Allowance to nonperforming loans (%) 401 400 283 Allowance to nonperforming assets (%) 308 281 204 Nonperforming assets to loans + ORE (%) 0.58 0.64 0.94 Net charge-offs to average loans (%) 0.44 0.47 0.77
* does not include accruing loans 90 days past due 8 SHARE BUYBACK PROGRAM CONTINUES - ------------------------------------------------------------------------------- . 12 million shares repurchased during 1995 . Committed to managing capital for shareholder benefit
millions 4Q 3Q 2Q 1Q Year 1995 1995 1995 1995 1995 Beginning shares outstanding 129.4 133.4 135.4 133.8 133.8 Shares issued for: Acquisitions 1.2 -- -- 1.6 2.8 Employee stock plans 0.7 0.3 0.7 1.0 2.7 ----- ----- ----- ----- ----- 1.9 0.3 0.7 2.6 5.5 Shares repurchased (4.0) (4.3) (2.7) (1.0) (12.0) ----- ----- ----- ----- ----- Ending shares outstanding 127.3 129.4 133.4 135.4 127.3 ===== ===== ===== ===== =====
9 -----END PRIVACY-ENHANCED MESSAGE-----