FIRST SECURITY CORP /DE/, S-4, 1994-06-20

FIRST SECURITY CORP /DE/
S-4, 1994-06-20
STATE COMMERCIAL BANKS

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<PAGE>

As filed with the Securities and Exchange
Commission on June 20, 1994.
Registration No. 33-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

----------------

FORM S-4

REGISTRATION STATEMENT
Under
The Securities Act of 1933

----------------

FIRST SECURITY CORPORATION
(Exact name of registrant as specified in its charter)

DELAWARE 6711 87-6118148
(State or other (Primary Standard Industrial (I.R.S. Employer
jurisdiction of Classification Code Number) Identification No.)
incorporation
or organization)

79 SOUTH MAIN STREET
SALT LAKE CITY, UTAH 84111
(801) 246-5706
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)

--------------------------

SCOTT C. ULBRICH
EXECUTIVE VICE PRESIDENT AND CHIEF FINANCIAL OFFICER
FIRST SECURITY CORPORATION
79 SOUTH MAIN STREET
SALT LAKE CITY, UTAH 84111
(801) 246-5706
(Name, address, including zip code, and
telephone number, including area code, of agent for service)

--------------------------

Copies To:
A. ROBERT THORUP, ESQ. GERALD L. GOULDING, ESQ.
RAY, QUINNEY & NEBEKER POST OFFICE BOX 8
79 SOUTH MAIN STREET AFTON, WYOMING 83110
SALT LAKE CITY, UTAH 84111
(801) 532-1500 (307) -

--------------------------

Approximate date of commencement of proposed sale of the securities to the
public: As soon as practicable after the effective date of this Registration
Statement.

If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. / /

--------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>

TITLE OF EACH CLASS OF AMOUNT TO BE REGISTERED PROPOSED OFFERING PRICE PER PROPOSED AGGREGATE AMOUNT OF REGISTRATION
SECURITIES TO BE REGISTERED SHARE OFFERING PRICE FEE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock ($1.25 480,000 (1) shares $29.25 (2) $14,040,000 (2) $4,841.41
par value)
- ------------------------------------------------------------------------------------------------------------------------------------
Common Stock Rights (3) 480,000 rights None None None
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------

<FN>

(1) Represents the maximum number of shares of the Registrant's Common
Stock to be issued in connection with the Merger described herein,
based on the Conversion Ratio.
(2) Estimated pursuant to Rule 457(f)(2) solely for the purpose of
calculating the registration fee based on the market value of the
securities to be received by Registrant as determined on June 16,
1994.
(3) One Right to purchase Junior Series B Preferred Stock of FSC is
associated with each share of Common Stock. The Rights are not
transferable separately from the Common Stock except in limited
circumstances.

</TABLE>

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
This Registration Statement consists of _____ consecutively numbered pages.
The Exhibit Index is on consecutively numbered page ______.

<PAGE>

FIRST SECURITY CORPORATION

CROSS-REFERENCE SHEET

FOR

REGISTRATION STATEMENT ON FORM S-4 AND PROSPECTUS/PROXY STATEMENT

<TABLE>

<S> <C>
1. Forepart of Registration Statement Facing Page and pages RS-2 and RS-3 of
and Outside Front Cover Page of Registration Statement; Outside Front
Prospectus Cover Page of Prospectus/Proxy
Statement

2. Inside Front and Outside Back Cover Available Information; Information About
Pages of Prospectus FSC -- Incorporation of Certain
Documents by Reference; Table of
Contents

3. Risk Factors, Ratio of Earnings to Summary of Prospectus/Proxy Statement;
Fixed Charges and Other Information GLOSSARY; Outside Front Cover Page of
Prospectus/Proxy Statement; Selected
Comparative Financial Data; The Merger;
Information About FSC; Federal Income
Tax Consequences; Information About
STAR VALLEY.
4. Terms of the Transaction The Merger; Appendix A

5. PRO FORMA Financial Information Selected Historical, PRO FORMA and
Equivalent PRO FORMA per Share Data;
Selected Comparative Financial Data

6. Material Contacts with the Company The Merger -- Background of and Reasons
Being Acquired for the Merger; The Merger -- Interests of
Certain Persons in the Merger

7. Additional Information Required for Not Applicable
Reoffering by Persons and Parties
Deemed to be Underwriters

8. Interests of Named Experts and Legal Matters; Experts
Counsel

9. Disclosure of Commission Position on Comparative Rights of Shareholders --
Indemnification for Securities Act Directors
Liabilities

<PAGE>

10. Information with Respect to S-3 Selected Comparative Financial Data;
Registrants Information About FSC

11. Incorporation of Certain Information Information About FSC
by Reference

12. Information with Respect to S-2 or Not Applicable
S-3 Registrants

13. Incorporation of Certain Information Not Applicable
by Reference

14. Information with Respect to Not Applicable
Registrants Other than S-2 or S-3
Registrants

15. Information with Respect to S-3 Not Applicable
Companies

16. Information with Respect to S-2 or Not Applicable
S-3 Companies

17. Information with Respect to Information about STAR VALLEY;
Companies Other than S-2 or S-3 Information about FSB WYOMING;
Companies Selected Historical, PRO FORMA and
Equivalent PRO FORMA Per Share Data;
Selected Comparative Financial Data

18. Information if Proxies, Consents or Summary of Prospectus/Proxy Statement;
Authorizations are to be Solicited The Special Meetings; The Merger; Rights
of Dissenting Shareholders; Information
about FSC; Information About STAR
VALLEY; Information about FSB
WYOMING; The Merger -- Interests of
Certain Persons in the Merger

19. Information if Proxies, Consents or Not Applicable
Authorizations Are Not To Be
Solicited in an Exchange Offer

</TABLE>

<PAGE>
PROSPECTUS/PROXY STATEMENT

FIRST SECURITY CORPORATION

FIRST SECURITY BANK OF WYOMING STAR VALLEY STATE BANK
- ------------------------------ ----------------------

This Prospectus/Proxy Statement is furnished by the Directors of Star
Valley State Bank ("STAR VALLEY") and by the Directors of First Security Bank of
Wyoming ("FSB WYOMING") in connection with the votes sought from the respective
banks' Shareholders on the proposed merger of STAR VALLEY with and into FSB
WYOMING ("the Merger"), pursuant to an Agreement of Merger dated as of March 30,
1994. The votes will be taken at Special Meetings of the two banks'
Shareholders to be held on , 1994, and at any adjournments thereof
(the "Special Meetings"). Upon consummation of the Merger, each outstanding
share of STAR VALLEY common stock, $100.00 par value per share ("STAR VALLEY
Common Stock"), will be converted into 1,280 shares of First Security
Corporation ("FSC") Common Stock, $1.25 par value per share ("FSC Common
Stock"), as described in this Prospectus/Proxy Statement (FSC is the 99.9% owner
of FSB WYOMING). STAR VALLEY Shareholders will receive cash in lieu of any
fractional shares of FSC Common Stock otherwise receivable in the Merger. At
present, STAR VALLEY's Directors know of no other matters to be presented at the
STAR VALLEY Special Meeting, and there will be no other business at FSB
WYOMING's Special Meeting.

This Prospectus/Proxy Statement also constitutes FSC's Prospectus, filed
with the Securities and Exchange Commission as part of a Registration Statement
on Form S-4 under the Securities Act of 1933, as amended ("Registration
Statement"), with respect to up to 480,000 shares of FSC Common Stock to be
issued in connection with the Merger. STAR VALLEY has supplied all the
information contained herein with respect to itself, and FSC has supplied all
the information contained herein with respect to itself and FSB WYOMING.

FSC's principal executive offices are located at 79 South Main Street, Salt
Lake City, Utah 84111. FSC's information telephone number with respect to this
transaction is (801) 246-5706.

STAR VALLEY's principal executive offices are located at 485 Washington
Street, Afton, Wyoming 83110. Its telephone number is (307) 886-3126.

This Prospectus/Proxy Statement is first being mailed to Shareholders of
the two banks on or about , 1994.

This Prospectus/Proxy Statement does not constitute an offer to sell or a
solicitation of an offer to buy any of the securities offered hereby within any
jurisdiction or to any person to whom it is unlawful to make such offer or
solicitation within such jurisdiction.

_____________________

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION AND THE COMMISSION HAS NOT
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

___________________

The date of this Prospectus/Proxy Statement is , 1994

<PAGE>

TABLE OF CONTENTS

Page
----
<S> <C>
AVAILABLE INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

GLOSSARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

SUMMARY OF PROSPECTUS/PROXY STATEMENT . . . . . . . . . . . . . . . . . . . . 6

THE SPECIAL MEETINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14

THE MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16

SELECTED COMPARATIVE AND PRO FORMA FINANCIAL DATA. . . . . . . . . . . . . . .31

SELECTED COMPARATIVE HISTORICAL, PRO FORMA AND
EQUIVALENT PRO FORMA PER SHARE DATA. . . . . . . . . . . . . . . . . . . . .40

COMPARATIVE AND PRO FORMA CAPITALIZATION . . . . . . . . . . . . . . . . . . .41

INFORMATION ABOUT FSC. . . . . . . . . . . . . . . . . . . . . . . . . . . . .41

INFORMATION ABOUT STAR VALLEY. . . . . . . . . . . . . . . . . . . . . . . . .60

STAR VALLEY'S MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS. . . . . . . . . . . . . . . .67

PRINCIPAL SHAREHOLDERS OF STAR VALLEY. . . . . . . . . . . . . . . . . . . . .77

INFORMATION ABOUT FSB WYOMING. . . . . . . . . . . . . . . . . . . . . . . . .78

COMPARATIVE RIGHTS OF SHAREHOLDERS . . . . . . . . . . . . . . . . . . . . . .78

LEGAL MATTERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .84

EXPERTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .84

STAR VALLEY'S ANNUAL SHAREHOLDER MEETING . . . . . . . . . . . . . . . . . . .85

DEADLINE FOR FSC SHAREHOLDER PROPOSALS . . . . . . . . . . . . . . . . . . . .85

</TABLE>

APPENDIX A -- AGREEMENT OF MERGER
APPENDIX B -- STAR VALLEY'S FINANCIAL STATEMENTS
APPENDIX C -- STATUTES GOVERNING RIGHTS OF DISSENTING STAR VALLEY
SHAREHOLDERS

<PAGE>

-2-

AVAILABLE INFORMATION

FSC is subject to the informational reporting requirements of the
Securities Exchange Act of 1934, as amended ("Exchange Act"), and in accordance
therewith files periodic reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission"). Copies of such
reports, proxy statements and other information can be obtained, upon payment of
prescribed fees, at the Public Reference Room of the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549. Such reports, proxy statements and other
information can also be inspected at the Commission's facilities referred to
above and at the Commission's Regional Offices at Suite 1400, 500 West Madison
Street, Chicago, Illinois 60621-2511, and Room 1228, 75 Park Place, New York,
New York 10007. In addition, the FSC Common Stock is included for quotation on
the National Association of Securities Dealers Automated Quotation/National
Market System ("NASDAQ/NMS"), and such reports, proxy statements and other
information concerning FSC should be available for inspection and copying at the
offices of the National Association of Securities Dealers, Inc., 1735 K Street,
N.W., Washington, D.C. 20006.

FSC has filed with the Commission a Registration Statement on Form S-4
(together with any amendments thereto, the "Registration Statement") under the
Securities Act of 1933, as amended ("Securities Act"), with respect to the FSC
Common Stock offered hereby. This Prospectus / Proxy Statement does not contain
all the information set forth in the Registration Statement and the exhibits
thereto, certain portions of which have been omitted as permitted by the rules
and regulations of the Commission. For further information, reference is made
to the Registration Statement, including the exhibits thereto.

Statements contained in this Prospectus / Proxy Statement or in any
documents incorporated in this Prospectus / Proxy Statement by reference as to
the contents of any contract or other document referred to herein or therein are
not necessarily complete, and in each instance reference is made to the copy of
such contract or other document filed as an exhibit to the Registration
Statement or such other document, each such statement being qualified in all
respects by such reference. The Registration Statement may be inspected by
anyone without charge at the principal office of the Commission in Washington,
D.C., and copies of all or any part of it may be obtained from the Commission
upon payment of the prescribed fees.

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

There are incorporated herein by reference the following documents
filed with the Commission by FSC (File No. 1-6906):

(a) FSC's Annual Report on Form 10-K for the year ended
December 31, 1993; and

(b) FSC's Proxy Statement dated March 15, 1994; and

<PAGE>

-3-

(d) FSC's Current Report on Form 8-K dated January 24, 1994;
and

(e) Description of FSC Common Stock as included in FSC's
Registration Statement on Form S-3, filed with the
Commission on September 13, 1991, Commission File Number
33-42784.

All documents filed by FSC, respectively, with the Commission pursuant
to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date
of this Prospectus / Proxy Statement and prior to the date of the Special
Meetings are incorporated herein by reference, and such documents shall be
deemed to be a part hereof from the date of filing of such documents. Any
statement contained herein or in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus / Proxy Statement to the extent that a statement
contained herein or in any other subsequently filed document which also is or is
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any statement so modified or superseded shall not be deemed, except
as so modified or superseded, to constitute a part of this Prospectus / Proxy
Statement.

THIS PROSPECTUS / PROXY STATEMENT INCORPORATES DOCUMENTS BY REFERENCE
WHICH ARE NOT PRESENTED HEREIN OR DELIVERED HEREWITH. COPIES OF ANY SUCH
DOCUMENTS, OTHER THAN EXHIBITS TO SUCH DOCUMENTS, ARE AVAILABLE WITHOUT CHARGE
TO ANY PERSON, INCLUDING ANY BENEFICIAL OWNER, TO WHOM THIS PROSPECTUS / PROXY
STATEMENT IS DELIVERED UPON WRITTEN OR ORAL REQUEST DIRECTED, IN THE CASE OF
DOCUMENTS RELATING TO FSC, TO FIRST SECURITY CORPORATION, ATTENTION: SCOTT C.
ULBRICH, EXECUTIVE VICE PRESIDENT AND CHIEF FINANCIAL OFFICER, SUITE 200,
79 SOUTH MAIN STREET, SALT LAKE CITY, UTAH 84111; TELEPHONE NUMBER
(801) 246-5706. IN ORDER TO ASSURE TIMELY DELIVERY OF SUCH DOCUMENTS PRIOR TO
THE SPECIAL MEETINGS, ANY REQUEST SHOULD BE RECEIVED BY , 1994. COPIES
OF SUCH DOCUMENTS WILL ALSO BE AVAILABLE UPON REQUEST THEREAFTER UNTIL THE
EFFECTIVE TIME (AS DEFINED HEREINAFTER).

No agent or officer of FSC or STAR VALLEY, nor any other person, has
been authorized to give any information or to make any representations other
than as contained herein; and, if given or made, such information or
representations should not be relied upon as having been authorized by FSC or
STAR VALLEY. Neither the delivery of this Prospectus / Proxy Statement nor any
sale or exchange made hereunder shall, under any circumstances, create any
implication that there has been no change in the affairs or operations of FSC or
STAR VALLEY since the date of this Prospectus / Proxy Statement, or that the
information herein is correct as of any time subsequent to such date.

<PAGE>

-4-

GLOSSARY

As used in this Prospectus/Proxy Statement, the following are the meanings
for the terms set forth below:

"BHC ACT" means the Bank Holding Company Act of 1956, as
amended.

"BOARD OF GOVERNORS" means Board of Governors of the Federal Reserve
System.

"CLOSING" means the closing of the transactions
contemplated by the Merger Agreement.

"CLOSING DATE" means the date upon which Closing occurs.

"CODE" means the Internal Revenue Code of 1986, as
amended.

"COMMISSIONER" means the Banking Commissioner in the Department
of Audit of the State of Wyoming.

"CONVERSION RATIO" means the ratio of shares of FSC Common Stock to
be given for each share of STAR VALLEY Common
Stock as described in this Prospectus/Proxy
Statement.

"DELAWARE STATUTE" means the Delaware General Corporation Law.

"EFFECTIVE TIME" means the date when the required documents to
effect the Merger have been duly filed with the
Wyoming Secretary of State, or as soon
thereafter as the parties may agree.

"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations
thereunder.

"EXCHANGE AGENT" means First Security Bank of Utah, N.A. or such
other national bank designated by FSC to
perform the duties of exchange agent provided
for in the Merger Agreement.

"FDIC" means the Federal Deposit Insurance Corporation.

"FEDERAL RESERVE BOARD" means the Board of Governors of the Federal
Reserve System.

"FSB WYOMING" means First Security Bank of Wyoming

"FSB WYOMING COMMON STOCK" means shares of the common stock of FSB WYOMING,
par value $10.00 per share. FSC currently owns
99.9% of the issued and outstanding FSB WYOMING
common stock.

"FSB WYOMING SHAREHOLDERS" means holders of one or more shares of the
common stock of FSB WYOMING.

"FSC" means First Security Corporation.

<PAGE>

-5-

"FSC COMMON STOCK" means shares of common stock, $1.25 par value
per share, of FSC.

"GAAP" means generally accepted accounting principles
in the United States.

"IRS" means Internal Revenue Service.

"MERGER" means the merger of STAR VALLEY with and into
FSB WYOMING pursuant to the Merger Agreement.

"MERGER AGREEMENT" means the Agreement of Merger dated as of
March 30, 1994, by and among FSC, STAR VALLEY
and FSB WYOMING.

"NASDAQ NATIONAL MARKET means the National Market System of the National
SYSTEM" Association of Securities Dealers Automatic
Quotation System.

"RECORD DATE" means the close of business on , 1994.

"REGISTRATION STATEMENT" means the registration statement of FSC on
Form S-4 filed with the Securities and Exchange
Commission under the Securities Act with
respect to the FSC Common Stock issuable in
connection with the Merger.

"RIGHT" means the right to acquire a new class of stock
of FSC under certain circumstances involving the
acquisition of certain amounts of FSC shares by
a third party. (See INFORMATION ABOUT FSC--
Description to FSC's Capital Stock")

"SECURITIES ACT" means the Securities Act of 1933, as amended,
and the rules and regulations thereunder.

"SPECIAL MEETINGS" means the special meetings of STAR VALLEY
Shareholders and FSB WYOMING Shareholders that
will be held to consider and vote upon the
Merger Agreement.

"STAR VALLEY" means Star Valley State Bank, a Wyoming
state chartered bank.

"STAR VALLEY COMMON means the duly issued and authorized common
STOCK" stock of STAR VALLEY, par value $100.00 per
share.

"STAR VALLEY means those persons who are identified on the
SHAREHOLDER(S)" stock transfer records of STAR VALLEY as being
holders of STAR VALLEY Common Stock as of the
Record Date.

<PAGE>

-6-

SUMMARY OF PROSPECTUS / PROXY STATEMENT

The following is a summary of certain information contained in this
Prospectus / Proxy Statement or in documents incorporated herein by reference.
This summary is qualified in its entirety by the more detailed information
appearing elsewhere in this Prospectus / Proxy Statement, the Appendices hereto,
and the documents incorporated herein by reference. STAR VALLEY Shareholders
are urged to read carefully this Prospectus / Proxy Statement and the attached
Appendices in their entirety.

SPECIAL MEETINGS OF SHAREHOLDERS

Special Meetings of the shareholders of STAR VALLEY and of FSB WYOMING
will be held at STAR VALLEY's headquarters, 485 Washington Street, Afton,
Wyoming 83110, for STAR VALLEY Shareholders; and at 1400 Dewar Drive, Rock
Springs, Wyoming 82902 for FSB WYOMING Shareholders, on at
local time. At the Special Meetings, the shareholders of the two
banks will consider and vote upon a proposal to approve and adopt the Merger
Agreement and the transactions contemplated thereby, and such other matters as
may properly be brought before the Special Meetings. (SEE "THE SPECIAL MEETINGS
- -- General.")

RECORD DATE

Only shareholders of record in STAR VALLEY or FSB WYOMING at the close
of business on the Record Date are entitled to notice of, and to vote at, the
Special Meetings. (SEE "THE SPECIAL MEETINGS -- Shares Entitled to Vote; --
Shareholder Approval.")

VOTE REQUIRED

STAR VALLEY AND FSB WYOMING

The affirmative vote of the holders of two-thirds (2/3) of the
outstanding shares of STAR VALLEY Common Stock entitled to vote thereon is
required to approve and adopt the Merger Agreement. A similar vote is required
by FSB WYOMING Shareholders. As of the Record Date, certain STAR VALLEY
Shareholders beneficially owning approximately 76% of the outstanding shares of
STAR VALLEY Common Stock had committed to the STAR VALLEY Board that they would
vote their STAR VALLEY shares IN FAVOR of the Merger Agreement, thus assuring
approval of the Merger by STAR VALLEY Shareholders.

FSC owns 99.9% of the outstanding shares of FSB WYOMING Common Stock,
and will vote those shares in favor of the Merger Agreement, thus assuring
approval of the Merger by FSB WYOMING Shareholders.

<PAGE>

-7-
FSC

The vote of FSC's shareholders is not required to approve the Merger.

THE PARTIES

FIRST SECURITY CORPORATION

FSC is an interstate multi-bank holding company incorporated in
Delaware. At March 31, 1994, FSC had consolidated assets of $10.7 billion and
total shareholders' equity of $842 million. The principal assets of FSC are
First Security Bank of Utah, N.A., First Security Bank of Idaho, N.A., and First
Security Bank of New Mexico, N.A., all of which are national banks providing a
broad range of banking, fiduciary, financial and other services. FSC also owns
FSB WYOMING, First Security Bank of Oregon and First Security Bank of Nevada.
Along with these banking organizations, FSC also owns the stock of various
nonbank companies engaged in businesses related to banking and finance,
including securities brokerage, equipment leasing and investment management
subsidiaries. (SEE "INFORMATION ABOUT FSC")

FSC's principal executive offices are located at 79 South Main St.,
Salt Lake City, Utah 84111, and its telephone number is (801) 246-6000.

STAR VALLEY STATE BANK

STAR VALLEY is a state chartered bank insured by the FDIC and is a
member of the Federal Reserve System. It operates two (2) banking offices in
Lincoln County, Wyoming, one in Afton and one soon to be opened in Thayne. At
March 31, 1994, STAR VALLEY had assets of approximately $62.27 million and
shareholders' equity of approximately $8.18 million. The principal business of
STAR VALLEY is to obtain deposits from the public and to combine such deposits
with other available sources of funding to make residential and commercial real
estate loans; secured and unsecured commercial, corporate, and business loans;
and installment consumer loans. (SEE "INFORMATION ABOUT STAR VALLEY.")

STAR VALLEY's executive offices are located at 485 Washington Street,
Afton, Wyoming 83110, and its telephone number is (307) 886-3126.

FSB WYOMING

FSB WYOMING, a 99.9% owned Wyoming state bank subsidiary of FSC, is
insured and regulated by the FDIC. It is believed by FSC to be the eighth
largest bank in Wyoming, with banking offices in Rock Springs, Bridger Valley,
Evanston and Green River.

<PAGE>

-8-

SHARE PRICE AND DIVIDENDS

FSC

The following table sets forth, for the periods indicated, the high and
low closing bid prices per share of FSC Common Stock as reported on the NASDAQ /
NMS. FSC Common Stock is publicly traded, and trades are reported through the
NASDAQ / NMS. The information presented below with respect to FSC Common Stock
NASDAQ / NMS quotations was obtained from the National Association of Securities
Dealers, Inc. and reflects interdealer prices, without retail markup, markdown
or commissions and may not represent actual transactions. All historical per
share bid prices for the FSC Common Stock are adjusted for the 3-for-2 stock
splits distributed in 1991 and 1992.

CASH DIVIDENDS
DECLARED PER
HIGH LOW SHARE
---- --- -------------------

<S> <C> <C> <C>
1994
Second Quarter
First Quarter 29.00 25.75 0.26

1993
Fourth Quarter $30.00 $24.00 $0.23
Third Quarter 28.50 26.50 0.23
Second Quarter 30.00 25.50 0.23
First Quarter 30.25 25.50 0.19

1992
Fourth Quarter $27.50 $22.00 $0.19
Third Quarter 26.25 21.50 0.17
Second Quarter 25.25 20.17 0.17
First Quarter 23.33 18.17 0.15

1991
Fourth Quarter $19.00 $16.17 $0.15
Third Quarter 17.33 13.67 0.15
Second Quarter 16.50 12.45 0.15
First Quarter 13.00 10.00 0.14

</TABLE>

On March 29, 1994, the last trading day before the announcement of the
planned Merger, the last sale price of the FSC Common Stock as reported on the
NASDAQ / NMS was $28.75 per share. On , 1994, the closing bid price of
FSC Common Stock as reported on the NASDAQ / NMS was $ per share.

<PAGE>
-9-

FSC has paid cash dividends on its common and preferred stock without
reduction in amount for over 58 consecutive years. Since 1983, these dividends
have been paid quarterly. Currently, FSC pays a quarterly dividend of $0.26 on
shares of FSC Common Stock. Dividends on FSC's $3.15 Cumulative Preferred Stock
are paid semi-annually and are current.

STAR VALLEY Shareholders are advised to obtain current market
quotations for the FSC Common Stock. No assurance can be given concerning the
market price of the FSC Common Stock before or after the date on which the
Merger is consummated. The market price of the FSC Common Stock will fluctuate
between the date of this Prospectus / Proxy Statement and the date on which the
Merger is consummated and thereafter. Because the Conversion Ratio is fixed and
because the market price of the FSC Common Stock is subject to fluctuation, the
value of the shares of FSC Common Stock that STAR VALLEY Shareholders will
receive in the Merger may increase or decrease prior to and following the
Merger.

On the Record Date, there were approximately 49.1 million shares of FSC
Common Stock issued and outstanding held by approximately 8600 holders of
record; and on the same day there were 375 shares of STAR VALLEY Common Stock
issued and outstanding held by 45 STAR VALLEY Shareholders of record.

STAR VALLEY

There is no established trading market for STAR VALLEY Common Stock,
and accordingly there is no published information with respect to market prices.
STAR VALLEY permits fractional shares to be held and traded on its stock
transfer records.

Information concerning recent transactions in STAR VALLEY Common Stock
was gathered from STAR VALLEY's stock records by STAR VALLEY management. There
can be no assurance that there were no other trades or transfers during the last
three years that were not known to STAR VALLEY management. To STAR VALLEY
management's knowledge, there have been no sales of STAR VALLEY Common Stock in
the last three years. It appears that transfers of STAR VALLEY Common Stock
were without consideration and effected for estate planning and similar gift-
related purposes. These transfers can be summarized, in the aggregate, as
follows:

NO. OF SHARES YEAR OF TRANSFER
------------- ----------------
<S> <C>
1.00 1989
1.00 1990
3.00 1991
61.11 1992
26.94 1993
0.00 1994

</TABLE>

STAR VALLEY has paid dividends on its common shares every year since
approximately 1950, except in 1988 and 1989. In 1993, STAR VALLEY paid
dividends equal to $2,000 per share. So far in 1994, STAR VALLEY has paid no
dividends. STAR VALLEY is restricted by the Merger Agreement against the
payment of any dividends in 1994 pending

<PAGE>

-10-

closing of the Merger. However, STAR VALLEY is allowed to pay up to $1,000.00
per share (based on 375 shares outstanding) in the event that the Merger has not
closed before the regular semiannual dividend payment dates in June and/or
December 1994. In the event that the Merger has not closed on or before March
30, 1995, STAR VALLEY's Board of Directors may terminate the Merger Agreement,
and thereafter will not be restricted against the payment of dividends.

(SEE "SELECTED COMPARATIVE HISTORICAL, PRO FORMA, AND EQUIVALENT PRO
FORMA PER SHARE DATA" and "THE MERGER--Conversion Ratio")

EFFECT OF THE MERGER; EFFECTIVE TIME; TERMS OF THE MERGER

Pursuant to the Merger Agreement, STAR VALLEY will be merged with and
into FSB WYOMING. STAR VALLEY Shareholders will become shareholders of FSC.
SEE "THE MERGER." In the event that the Effective Time of the Merger has not
occurred on or before March 30, 1995, the respective Boards of Directors of STAR
VALLEY, FSB WYOMING or FSC may terminate the Merger Agreement. SEE "THE MERGER
- -- Effective Time and Consummation of the Merger."

Upon consummation of the Merger, each issued and outstanding share of
STAR VALLEY Common Stock (other than shares held, directly or indirectly by FSC
or STAR VALLEY (other than shares held in a fiduciary capacity or in respect of
a debt previously contracted) and shares held by any shareholder properly
exercising dissenters' rights) will, without any action on the part of the
holder thereof, be canceled and converted into the right to receive 1,280 SHARES
of FSC Common Stock.

Each share of FSC Common Stock received by STAR VALLEY Shareholders
will have an attached Right, which Right is part of a shareholder-rights plan
adopted by FSC in 1989. The Rights give holders the opportunity to purchase
additional equity interests in FSC at a significant discount under certain
circumstances. (SEE "INFORMATION ABOUT FSC -- Description of FSC's Capital
Stock")

(SEE "THE MERGER--Conversion Ratio," "INFORMATION ABOUT FSC --
Description of FSC's Capital Stock -- Common Stock," and "COMPARATIVE RIGHTS OF
SHAREHOLDERS -- Authorized Capital Stock.")

RECOMMENDATION OF THE STAR VALLEY BOARD; REASONS FOR THE MERGER

THE STAR VALLEY BOARD BELIEVES THAT THE TERMS OF THE MERGER AGREEMENT
AND THE TRANSACTIONS CONTEMPLATED THEREBY ARE FAIR TO AND IN THE BEST INTERESTS
OF THE STAR VALLEY SHAREHOLDERS, AND UNANIMOUSLY RECOMMENDS THAT THE STAR VALLEY
SHAREHOLDERS VOTE TO APPROVE THE MERGER AGREEMENT AND THE TRANSACTIONS
CONTEMPLATED THEREBY.

In reaching its determination to enter into the Merger Agreement, the
STAR VALLEY Board considered a number of factors, including, without limitation,
the following: the valuable consideration to be received by the STAR VALLEY
Shareholders pursuant to the

<PAGE>
-11-

Merger Agreement; the current and prospective economic environment and
competitive constraints facing financial institutions like STAR VALLEY; the STAR
VALLEY Board's evaluation of the risks to consummation of the Merger; the
increased diversity of investment risk and liquidity that the Merger would
provide to STAR VALLEY Shareholders; and the STAR VALLEY Board's review of
possible alternatives to the Merger. (SEE "THE MERGER -- Background of and
Reasons for the Merger.")

INTERESTS OF CERTAIN PERSONS IN THE MERGER

Certain Executive Officers and Directors of STAR VALLEY have interests
in the Merger that are in addition to their interests as STAR VALLEY
Shareholders generally. These include, among others, provision in the Merger
Agreement relating to the continuation of the employment of Hal R. Robinson as
an employee of FSB WYOMING pursuant to an Employment Agreement, an Agreement Not
To Compete with FSB WYOMING and a Supplemental Compensation Agreement. In
addition, Mr. Robinson will be entitled to receive employee benefits available
generally to FSB WYOMING employees of the same rank. (SEE "THE MERGER --
Interests of Certain Persons in the Merger.")

CONDITIONS; REGULATORY APPROVALS

Consummation of the Merger is subject to various conditions, including,
among others, receipt of the two banks' shareholders' approval, which is being
solicited by means of this Prospectus/Proxy Statement, receipt of the necessary
regulatory approvals, and receipt of opinions of counsel regarding certain tax
aspects of the Merger. (SEE "THE MERGER -- Conditions to the Merger.")

The regulatory approvals and consents necessary to consummate the
transactions contemplated by the Merger Agreement primarily refer to the
approval of the Federal Deposit Insurance Corporation (FDIC) and the
Commissioner. There can be no assurances as to when, if or with what conditions
such approvals will be granted. There also can be no assurance that the U.S.
Department of Justice will not challenge the Merger on antitrust grounds, or if
such a challenge is made, as to the result thereof. (SEE "THE MERGER --
Regulatory Approvals.")

CONSUMMATION OF THE MERGER

FSC and STAR VALLEY intend to consummate the Merger as soon as
practicable after approval of the Merger by the two banks' shareholders, and
after all other conditions have been met or waived. At present, the parties all
anticipate that all such conditions can be satisfied, and the Closing can occur
before September 30, 1994. SEE "THE MERGER--Effective Time and Consummation of
the Merger.")

<PAGE>

-12-

NO SOLICITATION

STAR VALLEY has agreed in the Merger Agreement that neither it nor any
of its agents or employees, directly or indirectly, will initiate, solicit or
encourage any inquiries or the making of any proposal or offer for, furnish any
confidential information relating to, or engage in any negotiations or
discussions concerning, any acquisition or purchase of STAR VALLEY.

ANTICIPATED ACCOUNTING TREATMENT

The Merger will be treated as a "purchase" for accounting purposes.
This will mean that the combination of STAR VALLEY's financial statements into
FSC financial statements will require certain adjustments to reflect the fair
market value of STAR VALLEY's assets, including the booking of "goodwill"
amounts related to the purchase transaction. No restatement of FSC's historical
financial statements will be required by the Merger. (SEE "THE MERGER --
Conditions to the Merger" and " -- Anticipated Accounting Treatment.")

CERTAIN DIFFERENCES IN SHAREHOLDERS' RIGHTS

At the Effective Time, STAR VALLEY Shareholders, except shareholders
who may perfect their dissenters' rights in accordance with Wyoming law,
automatically will become shareholders of FSC, and their rights as shareholders
of FSC will be determined by the Delaware Statute and by FSC's Certificate of
Incorporation and Bylaws. The rights of STAR VALLEY Shareholders differ from
rights of shareholders of FSC with respect to certain corporate governance
matters, including their rights to call special meetings; the procedure for
proposals to approve amendments to the Certificate of Incorporation; receipt of
dividends; the required shareholder votes as to certain matters; statutory and
other restrictions on certain business combinations and control share
acquisitions; and the existence of the FSC Rights Plan for the benefit of the
shareholders of FSC. (SEE "COMPARATIVE RIGHTS OF SHAREHOLDERS.")

SHAREHOLDERS' DISSENTERS' RIGHTS

Shareholders of either STAR VALLEY or FSB WYOMING who dissent from the
Merger have the right to demand payment for their shares of STAR VALLEY or FSB
WYOMING Common Stock and to receive cash, if the Merger is consummated, equal to
the fair value of their shares as determined by the procedures set out in
Wyoming law. Generally, to preserve dissenter's rights, a STAR VALLEY or FSB
WYOMING Shareholder must (i) before the vote at the respective Special Meeting,
deliver a written notice of intent to dissent, (ii) NOT vote in favor of the
Merger, and (iii) upon receiving a dissenter's notice from STAR VALLEY or FSB
WYOMING, respectively following the Special Meeting, file with their bank a
"payment demand" as provided in the dissenter's notice requesting the payment in
cash of the fair value of his/her STAR VALLEY or FSB WYOMING Common Stock, and
(iv) deposit the certificate(s) representing the Shareholder's STAR VALLEY or
FSB WYOMING Common Stock as directed

<PAGE>

-13-

in the dissenter's notice. (SEE "RIGHTS OF DISSENTING SHAREHOLDERS"; A copy of
the provisions of Wyoming law dealing with dissenter's rights is attached as
APPENDIX C.)

SUMMARY OF FEDERAL INCOME TAX CONSIDERATIONS

The Merger is expected to be treated as a reorganization within the
meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended (the
"Code"), and that, accordingly, for federal income tax purposes: (i) no gain or
loss will be recognized by FSC, FSB WYOMING or STAR VALLEY as a result of the
Merger; (ii) no gain or loss will be recognized by holders of STAR VALLEY Common
Stock upon the receipt of FSC Common Stock in exchange for STAR VALLEY Common
Stock pursuant to the Merger, except with respect to cash received in lieu of a
fractional share interest in FSC Common Stock; and (iii) the aggregate adjusted
tax basis of the shares of FSC Common Stock to be received by the holders of
STAR VALLEY Common Stock in the Merger will be the same as the aggregate
adjusted tax basis of the shares of STAR VALLEY Common Stock surrendered in
exchange therefor (reduced by the amount allocable to fractional share interests
for which cash is received). Consummation of the Merger is conditioned upon
receipt by FSB WYOMING, FSC and STAR VALLEY of an opinion of Ray, Quinney &
Nebeker, counsel for FSC, substantially to such effect. (SEE "THE MERGER --
Certain Federal Income Tax Considerations.")

STAR VALLEY SHAREHOLDERS SHOULD CONSULT WITH THEIR OWN TAX ADVISORS REGARDING
THE TAX CONSEQUENCES OF THE MERGER IN LIGHT OF THEIR OWN TAX SITUATIONS.

[THIS SPACE LEFT BLANK INTENTIONALLY]

<PAGE>

-14-

THE SPECIAL MEETINGS

GENERAL

Special Meetings of the STAR VALLEY Shareholders and of the FSB WYOMING
Shareholders will be held at 485 Washington Street, Afton, Wyoming 83110, for
STAR VALLEY Shareholders; and at 1400 Dewar Drive, Rock Springs, Wyoming 82902
for FSB WYOMING Shareholders, on at local time. At the
Special Meetings, the two groups of Shareholders will consider and vote upon a
proposal to approve and adopt the Merger Agreement and the transactions
contemplated thereby and such other matters as may properly be brought before
the meetings. This Prospectus / Proxy Statement is being furnished to the STAR
VALLEY Shareholders and to the FSB WYOMING Shareholders in connection with the
solicitation of proxies by the Boards of Directors of these two merging banks,
for use at the Special Meetings, and at any adjournments or postponements
thereof.

At the Special Meetings, the Shareholders of the two banks will be
asked to approve and adopt the Merger Agreement, a copy of which is attached as
Appendix A hereto, and which is more fully described herein. The Merger
Agreement provides, among other things, that STAR VALLEY will merge with and
into FSB WYOMING and, except as described below, each share of STAR VALLEY
Common Stock will be converted into 1,280 shares of FSC Common Stock.

The date on which this Prospectus / Proxy Statement is first being
sent to Shareholders of STAR VALLEY and FSB WYOMING is on or about ,
1994.

SHARES ENTITLED TO VOTE; SHAREHOLDER APPROVAL

The Boards of Directors of STAR VALLEY and FSB WYOMING have fixed,
1994, as the Record Date for the determination of those Shareholders entitled to
notice of and to vote at the Special Meetings. Only Shareholders of record at
the close of business on the Record Date will be entitled to notice of and to
vote at the Special Meetings. As of the Record Date, there were 375 shares of
STAR VALLEY Common Stock outstanding, entitled to vote and held by 45 STAR
VALLEY Shareholders. Each shareholder of record of shares of STAR VALLEY Common
Stock or FSB WYOMING on the Record Date is entitled to cast one vote per share
on the proposal to approve and adopt the Merger Agreement and any other matter
properly submitted for the vote of shareholders at the respective Special
Meetings. The presence, either in person or by properly executed proxy, of the
holders of a majority of the outstanding shares entitled to vote at the Special
Meetings is necessary to constitute a quorum at the Special Meetings. Shares
which are present in person or by proxy but abstain from voting with respect to
one or more proposals voted upon at the Special Meetings will be included for
purposes of determining a quorum at such meeting.

The approval and adoption of the Merger Agreement by the STAR VALLEY
Shareholders will require the affirmative vote of the holders of two-thirds
(2/3) of the outstanding shares of STAR VALLEY Common Stock. Becuause of the 2/3
Shareholder approval requirement approved by the parties' boards of directors in
the Merger Agreement, in determining whether the Merger Agreement has received
the requisite number of affirmative

<PAGE>

-15-

votes, abstentions and broker non-votes will have the same effect as a vote
against the Merger. As described in "THE MERGER--Conditions to the Merger,"
approval by the STAR VALLEY Shareholders holding at least 2/3 of the outstanding
STAR VALLEY Common Stock is a condition to consummation of the Merger. Certain
STAR VALLEY Shareholders representing approximately 76% of the outstanding
shares of STAR VALLEY Common Stock have agreed or otherwise indicated their
intention to vote their shares of STAR VALLEY Common Stock FOR the Merger
Agreement; and such a "yes" vote level will satisfy the STAR VALLEY Shareholder
approval condition.

99.9% of the outstanding shares of FSB WYOMING Common Stock is held by
FSC and will be voted in favor of the Merger at the FSB WYOMING Special Meeting.

Approval and adoption of the Merger Agreement by the shareholders of
FSC is not required under Delaware law.

VOTING; SOLICITATION AND REVOCATION OF PROXIES

A proxy designation and instruction sheet ("proxy") is provided to all
Shareholders as part of this Prospectus/Proxy Statement package. All shares of
STAR VALLEY Common Stock and FSB WYOMING Common Stock which are entitled to vote
and are represented at the Special Meetings by properly executed Proxies
received prior to or at the meeting, and not revoked, will be voted at such
meetings in accordance with the instructions indicated on such Proxies. If no
instructions are indicated, such Proxies will be voted FOR approval and adoption
of the Merger Agreement.

If any other matters are properly presented at the Special Meetings for
consideration, including, among other things, consideration of a motion to
adjourn the meeting to another time and/or place (including, without limitation,
for the purpose of soliciting additional proxies), the persons named in the
relevant form of proxy enclosed herewith and acting thereunder will have
discretion to vote on such matters in accordance with their best judgment. STAR
VALLEY does not have any knowledge of any matters to be presented at its Special
Meetings other than the proposal to approve the Merger Agreement. There will be
no other business at the FSB WYOMING Special Meeting.

Any Proxy given pursuant to this solicitation may be revoked by the
shareholder giving it at any time before it is voted. Proxies may be revoked by
(i) filing with the Secretary of STAR VALLEY or the Cashier of FSB WYOMING,
respectively, at or before the taking of the vote at the respective Special
Meeting, a written notice of revocation bearing a later date than the Proxy,
(ii) duly executing a later-dated proxy relating to the same shares and
delivering it to the Secretary of STAR VALLEY or the Cashier of FSB WYOMING,
respectively, before the taking of the vote at the respective Special Meetings,
or (iii) attending the respective Special Meeting and voting in person (although
attendance at the meeting will not in and of itself constitute a revocation of a
Proxy). Any written notice of revocation or subsequent Proxy should be sent so
as to be delivered to the Secretary of STAR VALLEY (for STAR VALLEY
Shareholders) at 485 Washington Street, Afton, Wyoming 83110; or to the Cashier
of FSB WYOMING (for FSB WYOMING Shareholders) at 1400 Dewar Drive, Rock

<PAGE>

-16-

Springs, Wyoming 82902, or hand delivered to the Secretary of STAR VALLEY or to
the Cashier of FSB WYOMING, respectively, before the vote is taken at the
Special Meetings.

All expenses of this solicitation, including the cost of preparing and
mailing this Prospectus / Proxy Statement, will be borne by FSC. In addition to
solicitation by use of the mails, proxies may be solicited by the Directors and
Executive Officers of STAR VALLEY in person or by telephone, telegram or other
means of communication. Such STAR VALLEY agents will not be additionally
compensated, but may be reimbursed for reasonable out-of-pocket expenses in
connection with such solicitation.

STAR VALLEY SHAREHOLDERS SHOULD NOT SEND THEIR STAR
VALLEY STOCK CERTIFICATES WITH THEIR PROXIES.

THE MERGER

Pursuant to the terms of the Merger Agreement, subject to the
satisfaction or waiver (where permissible) of certain conditions, including,
among other things, the receipt of all necessary regulatory approvals, the
expiration of all waiting periods in respect thereof, and the approval of the
Merger Agreement by the Shareholders of STAR VALLEY and FSB WYOMING, STAR VALLEY
will be merged with and into FSB WYOMING, and will cease to exist as a separate
banking entity. STAR VALLEY Shareholders will become shareholders of FSC.

The terms of and conditions to the Merger are contained in the Merger
Agreement, a copy of which is attached to this Prospectus / Proxy Statement as
Appendix A and incorporated herein by reference. The description in this
Prospectus / Proxy Statement of the terms of the Merger Agreement is qualified
in its entirety by, and made subject to, the text of the Merger Agreement.

The STAR VALLEY Board believes that the Merger is fair to, and in the
best interests of the STAR VALLEY Shareholders. Accordingly, the STAR VALLEY
Board has unanimously approved the Merger Agreement and recommends that the STAR
VALLEY Shareholders vote FOR the approval and adoption of the Merger Agreement.

FSB WYOMING's Directors have also unanimously approved the Merger and
recommend that the FSB WYOMING Shareholders vote in favor of the Merger. FSC
owns 99.9% of the outstanding shares of FSB WYOMING Common Stock, and will
vote those shares in favor of the Merger.

BACKGROUND OF AND REASONS FOR THE MERGER

STAR VALLEY is a community bank that began operations in 1907 in Afton,
Wyoming. In 1993, representatives of FSB WYOMING contacted STAR VALLEY
management and expressed an interest in acquiring STAR VALLEY. Other financial
institutions had also expressed an interest in merging with or acquiring STAR
VALLEY from time to time. Enough interest in the FSB WYOMING contact was shown
by the STAR VALLEY Board so that a

<PAGE>

-17-

Confidentiality Agreement was signed that allowed FSB WYOMING to review
financial and other information concerning STAR VALLEY. Information about FSB
WYOMING and about FSC was provided to the STAR VALLEY Board. STAR VALLEY also
informed the other financial institutions that had shown interest in a merger
about the level of discussions with FSB WYOMING. By November 1993, FSB made a
formal detailed proposal for a merger, and after further discussions and
negotiations, a Letter of Intent was signed by the parties in December 1993.
After further meetings and information exchanges among the parties, the
definitive Merger Agreement was drafted, and was signed as of March 30, 1994.

In reaching its determination to enter into the Merger Agreement, the
STAR VALLEY Board considered a number of factors, including, without limitation,
the following:

1. STAR VALLEY's Directors' familiarity with and review of
FSC's and STAR VALLEY's business, operations, financial condition,
earnings and prospects;

2. STAR VALLEY's Directors' belief that the approximately
1.7-for-one premium over book value was favorable given the unusually
high equity ratio of STAR VALLEY.

3. the expectation that the Merger will generally be a
tax-free transaction to STAR VALLEY and to the STAR VALLEY Shareholders
(SEE "THE MERGER--Certain Federal Income Tax Considerations");

4. the dividend growth potential to holders of FSC Common
Stock compared to the historical and prospective dividends payable on
the STAR VALLEY Common Stock;

5. the demographics of STAR VALLEY's shareholder base and
their expressed concerns regarding estate settlement, and, in that
connection, desire for liquidity;

6. the STAR VALLEY Board's review of the business,
operations, earnings and financial condition of FSC on a historical,
prospective and PRO FORMA basis, and the enhanced opportunities for
growth that the Merger makes possible;

7. a variety of factors affecting and relating to the overall
strategic focus of FSC, including the geographical proximity and
regional similarities of STAR VALLEY's market areas to FSB WYOMING's
existing market areas;

8. the current and prospective economic environment and
competitive constraints facing financial institutions, including STAR
VALLEY;

9. the STAR VALLEY Board's evaluation of the risks to
consummation of the Merger, including (i) the risks associated with
obtaining all necessary regulatory approvals without the imposition of
terms or conditions which would fail to satisfy the conditions to
consummation of the Merger and (ii) the fact that the shareholder
approval condition would be accomplished in large part through
commitments received from certain Shareholders;

<PAGE>

-18-

10. the increased liquidity that the Merger would provide to
current STAR VALLEY shareholders and the large market capitalization
and trading volume of FSC;

11. the STAR VALLEY Board's review of the possible
alternatives to the Merger, the range of possible values to the STAR
VALLEY Shareholders of such alternatives and the timing and likelihood
of actually receiving, and risks and rewards associated with seeking to
obtain, those values; and

12. the terms of the Merger Agreement and the other documents
executed in connection with the Merger.

The STAR VALLEY Board did not assign any specific or relative weight to these
factors in its consideration.

While the STAR VALLEY Board and FSC are optimistic that the expected
benefits from the Merger will accrue to the STAR VALLEY Shareholders and to
FSC's shareholders, there are risks inherent in a merger transaction, including,
among others, that expected cost savings through the business combination may
not be fully realized or that the change in management policies and programs
with respect to STAR VALLEY and its retail operations planned by FSC may not
have the salutary results VIS A VIS the present and future customers of STAR
VALLEY expected by the parties to the Merger. Moreover, as a result of the
Merger, STAR VALLEY Shareholders will cease being investors in an exclusively
Lincoln County, Wyoming banking business, and will become shareholders in FSC, a
multi-state and economically diverse financial services entity with a mix of
investment risks, strengths and benefits flowing from FSC's operations outside
of Wyoming.

CONVERSION RATIO

Upon consummation of the Merger, STAR VALLEY will be merged with and
into FSB WYOMING, and each issued and outstanding share of STAR VALLEY Common
Stock (other than shares held, directly or indirectly, by FSC or STAR VALLEY for
their own accounts; and other than shares held by a STAR VALLEY Shareholder
properly exercising dissenters' rights) will be converted into 1,280 shares of
FSC Common Stock. Based on the market value of FSC Common Stock at the time the
Merger Agreement was signed, as compared with the book value of STAR VALLEY at
that time, the value of the Merger to STAR VALLEY Shareholders as of the date of
the Merger Agreement (on March 30, 1994) was approximately 1.7 times the March
31, 1994 book value of STAR VALLEY. Because the Conversion Ratio is fixed, and
the market value of FSC Common Stock will fluctuate before and after the Merger,
there can be no assurance as to the value of the consideration to be received by
STAR VALLEY Shareholders in the Merger in the future.

Each share of FSC Common Stock issued in the Merger will have an
attached Right, which Right is part of a Shareholder Rights Plan adopted by FSC
in 1989. The Rights give holders the opportunity to purchase additional equity
interests in FSC under certain circumstances. (SEE "INFORMATION ABOUT FSC --
Description of FSC's Capital Stock" and "COMPARATIVE RIGHTS OF SHAREHOLDERS --
Authorized Capital Stock.")

<PAGE>

-19-

The Merger Agreement provides that, in the event FSC changes the number
of shares of FSC Common Stock issued and outstanding between the date of the
Merger Agreement and the Effective Time as a result of a stock split, stock
dividend, recapitalization, reclassification or other similar transaction, the
Conversion Ratio will be adjusted proportionately.

STOCK CERTIFICATE EXCHANGE

The Exchange Agent will distribute the shares of FSC Common Stock and
any cash payment for fractional shares, if applicable, to STAR VALLEY
Shareholders. At the Effective Time, STAR VALLEY Shareholders (other than those
STAR VALLEY Shareholders who have exercised their dissenters' rights) will cease
to have any rights as STAR VALLEY Shareholders, and their sole right will be to
receive shares of FSC Common Stock and cash in lieu of any fractional shares
pursuant to the Merger Agreement. (SEE "THE MERGER -- Conversion Ratio.")

As promptly as practicable after the Effective Time, the Exchange Agent
will mail to all STAR VALLEY Shareholders the materials, including a letter of
transmittal, with instructions, to use in exchanging certificates of STAR VALLEY
Common Stock for certificates of FSC Common Stock. As soon as practicable after
the letter of transmittal is properly completed and returned to the Exchange
Agent, along with the certificates of STAR VALLEY Common Stock, FSC will cause
to be issued and mailed to the STAR VALLEY Shareholder surrendering such items,
a certificate or certificates for the number of whole shares of FSC Common Stock
to which such person is entitled as a result of the Merger. The risk of loss of
certificates mailed to the Exchange Agent will be on the tendering STAR VALLEY
Shareholder, so due care should be taken in sending certificates for STAR VALLEY
shares to be tendered for exchange as a result of the Merger. It is recommended
that certified or registered mail be used for this purpose.

No fractional shares of FSC Common Stock will be issued in the Merger.
Instead, the Merger Agreement provides that each STAR VALLEY Shareholder, who
would otherwise have been entitled to receive a fraction of a share of FSC
Common Stock under the Conversion Ratio will receive, in lieu thereof, cash in
an amount equal to such fractional part of a share of FSC Common Stock
multiplied by the average of the closing bid and asked prices for FSC Common
Stock on the NASDAQ / NMS on the day before the Effective Time. Fractional
shares will not be entitled to dividends, voting rights or any other rights as a
shareholder in respect of any fractional share.

If a certificate for STAR VALLEY Common Stock has been lost, stolen or
destroyed, the Exchange Agent will issue the consideration properly payable in
accordance with the Merger Agreement upon receipt of appropriate evidence as to
such loss, theft or destruction, appropriate evidence as to the ownership of
such certificate by the claimant, and appropriate and customary indemnification.

After the Effective Time, there will be no permitted transfers on STAR
VALLEY's stock transfer books of shares of STAR VALLEY Common Stock issued and
outstanding at the Effective Time. If certificates representing shares of STAR
VALLEY Common Stock are

<PAGE>

-20-

presented for transfer after the Effective Time, they will be returned to the
presenter together with a form of letter of transmittal and exchange
instructions.

If any certificate for shares of FSC Common Stock is to be issued in a
name other than that in which the STAR VALLEY share certificate surrendered in
exchange therefor is registered, the STAR VALLEY certificate so surrendered must
be properly endorsed and otherwise in proper form for transfer, and the person
requesting such exchange must pay FSC any transfer or other taxes required by
reason of the issuance of a certificate for shares of FSC Common Stock in any
name other than that of the registered holder of the certificate surrendered, or
establish to the satisfaction of FSC that such tax has been paid or is not
payable.

Each share of FSC Common Stock issued in connection with the Merger
will be deemed to have been issued at the Effective Time. Accordingly, STAR
VALLEY Shareholders who receive FSC Common Stock in the Merger will be entitled
to receive any dividends or other distributions which may be payable to holders
of record of FSC Common Stock as of any date after the Effective Time. However,
no Shareholder will be entitled to receive shares of FSC Common Stock or cash,
and no dividends or other distributions will actually be paid with respect to
any shares of FSC Common Stock, until the certificate or certificates formerly
representing the shares of STAR VALLEY Common Stock have been surrendered in
accordance with the procedures described above. At the time such surrender has
been accomplished, a certificate representing the appropriate number of whole
shares of FSC Common Stock will be issued and any fractional share amount or
accrued dividends and other distributions on such shares of FSC Common Stock
will be paid by check, without interest and less taxes, if any, imposed thereon.

STAR VALLEY SHAREHOLDERS, OTHER THAN SHAREHOLDERS WHO
ELECT TO EXERCISE THEIR DISSENTERS' RIGHTS, SHOULD NOT SEND
IN THEIR STAR VALLEY COMMON STOCK CERTIFICATES UNTIL THEY
RECEIVE WRITTEN INSTRUCTIONS FROM THE EXCHANGE AGENT.

STAR VALLEY SHAREHOLDERS WISHING TO DISSENT SHOULD REFER
TO "THE MERGER--RIGHTS OF DISSENTING STAR VALLEY SHAREHOLDERS"
AND APPENDIX C.

INTERESTS OF CERTAIN PERSONS IN THE MERGER

In considering the recommendation of the STAR VALLEY Board with respect
to the Merger Agreement, STAR VALLEY Shareholders should be aware that certain
Executive Officers and Directors of STAR VALLEY have certain interests in the
Merger that are in addition to the interests of the STAR VALLEY Shareholders
generally. The STAR VALLEY Board was aware of these interests and considered
them, among other matters, in approving the Merger Agreement and the
transactions contemplated thereby.

The Merger Agreement requires as a condition to the Merger that Hal R.
Robinson, currently the Chief Executive Officer of STAR VALLEY, agree with FSC
that he will become

<PAGE>

-21-

an employee of FSB WYOMING for at least 3 years following the Effective Time of
the Merger. Compensation of Mr. Robinson following the Merger will be pursuant
to an Employment Agreement negotiated specially with FSB WYOMING. Mr. Robinson's
Employment Agreement provides, in substantial part, that Mr. Robinson will be an
employee and officer of FSB WYOMING with continuing responsibility over the STAR
VALLEY offices' operations. FSB WYOMING will pay Mr. Robinson a base salary
substantially less than his present compensation from STAR VALLEY. However, Mr.
Robinson will be entitled to participate in all FSB Wyoming insurance, bonus,
compensation, and retirement plans. Moreover, Mr. Robinson will execute and
deliver a Non-Compete Agreement whereby he agrees not to compete with FSB
WYOMING for a period of 4 years following the closing of the Merger, and he will
be paid certain additional amounts as compensation for his various agreements.

None of STAR VALLEY's Executive Officers or Directors has an agreement
for additional compensation from STAR VALLEY, or rights which become effective
upon a change of control, such as the Merger. Certain of the Directors and
Executive Officers of STAR VALLEY own shares of STAR VALLEY Common Stock. Such
shares will be converted in the Merger on the same terms and conditions as apply
to all other STAR VALLEY shareholders. As of the Record Date, STAR VALLEY's
Directors and Executive Officers, and their affiliates, beneficially own
approximately 30% of all issued and outstanding shares of STAR VALLEY Common
Stock. The Directors of STAR VALLEY, have all agreed to vote their shares of
STAR VALLEY Common Stock in favor of the Merger.

CONDITIONS TO THE MERGER

The respective obligations of the parties to effect the Merger are
subject to the satisfaction of the following conditions at or prior to the
Closing: (i) approval of the Merger Agreement and the transactions contemplated
thereby by the affirmative vote of holders of at least two-thirds (2/3) of
outstanding shares of STAR VALLEY Common Stock and of the outstanding FSB
WYOMING Common Stock; (ii) the consent to or approval of the Merger Agreement
and the transactions contemplated thereby by all applicable government
regulatory agencies, and the expiration of any statutory waiting periods
(PROVIDED, HOWEVER, that no such consent or approval shall impose any
significant condition or requirement which any party reasonably believes will be
materially diadvantageous or burdensome; (iii) the Registration Statement of
which this Prospectus/Proxy Statement forms a part shall have become effective
and no stop order suspending the effectiveness of the Registration Statement
shall have been issued and no proceedings for that purpose shall have been
initiated or threatened by the Commission; (iv) FSC and STAR VALLEY shall have
received an opinion from legal counsel to FSC to the effect that the Merger, and
any related issues agreed among the parties, will be treated for federal income
tax purposes as a tax-free reorganization within the meaning of Section 368 of
the Code; (v) no party will be subject to any order, decree or injunction of a
court or agency of competent jurisdiction or other legal restraint or
prohibition which enjoins or prohibits the consummation of the Merger; (vi) no
litigation can be pending or threatened challenging the Merger; and (vii) no
statute, rule, regulation, order, injunction or decree will have been enacted,
entered, promulgated or enforced by any governmental authority which prohibits,
restricts or makes illegal consummation of the Merger.

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The obligation of FSC and FSB WYOMING to close on the Merger are
further subject to the satisfaction or waiver of the following conditions:
(i) the representations and warranties of STAR VALLEY contained in the Merger
Agreement shall be true and correct in all material respects as of the date of
the Merger Agreement and at the Closing Time; (ii) STAR VALLEY shall have duly
performed in all material respects all obligations required to be performed by
it under the Merger Agreement, and FSB WYOMING shall have received a certificate
signed by the responsible executive officers of STAR VALLEY to that effect at
Closing; (iii) FSB WYOMING shall have received a satisfactory legal opinion from
counsel to STAR VALLEY; (iv) FSB WYOMING shall be satisfied with the financial
condition of STAR VALLEY within the parameters set out in the Merger Agreement,
including but not limited to the requirement that STAR VALLEY have a net worth
at Closing of no less than $8 million and that the deposits of STAR VALLEY shall
not be less than $50 million; (v) STAR VALLEY will satisfactorily resolve
certain environmental clean-up liabilities as provided in the Merger Agreement;
(vi) Hal Robinson shall have entered into an employment agreement, a noncompete
agreement and a supplemental compensation agreement, as provided in the Merger
Agreement; (vii) FSC shall have received a letter from STAR VALLEY's accountants
addressed to it and FSB WYOMING confirming certain matters as set out in the
Merger Agreement; and (viii) FSC shall have received "affiliates' letters" from
the affiliates of STAR VALLEY confirming certain matters pertaining to the
ownership by these persons of FSC Common Stock as a result of the Merger, all as
set forth in the Merger Agreement.

The obligations of STAR VALLEY to effect the Merger are further subject
to the satisfaction, or waiver by STAR VALLEY, of the following conditions:
(i) subject to some limitations, the representations and warranties of FSC
contained in the Merger Agreement shall be true and correct in all material
respects as of the date of the Merger Agreement and at Closing; (ii) FSC and FSB
WYOMING, respectively, shall have duly performed in all material respects all
obligations required to be performed by it under the Merger Agreement and STAR
VALLEY shall have received a certificate to this effect from responsible
officers of FSC and/or FSB WYOMING, as appropriate; (iii) STAR VALLEY shall have
received a satisfactory legal opinion from counsel to FSC; and (iv) FSB WYOMING
shall have executed and delivered those employement and related agreements with
Hal Robinson described above as a condition to FSC and FSB WYOMING.

No assurance can be provided as to when, or whether, the regulatory
consents and approvals necessary to consummate the Merger will be obtained (or,
if so obtained, that such consents and approvals will satisfy the conditions to
the Merger) or whether all of the other conditions precedent to the Merger will
be satisfied or waived by the party permitted to do so. (SEE "THE MERGER--
Regulatory Approvals", below.) If the Merger is not effected on or before March
30, 1995, the Merger Agreement may be terminated, and the Merger abandoned, by a
vote of the Board of Directors of FSC, FSB WYOMING or STAR VALLEY, unless the
failure to effect the Merger by such date is due to the failure of the party
seeking to terminate the Merger Agreement to satisfy conditions of the Merger
within the control of that party prior to Closing.

<PAGE>

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REGULATORY APPROVALS

The Merger is subject to prior approval by the FDIC and by the
Commissioner. Applications for such approvals have been filed. The FDIC may not
approve the Merger (i) if it would result in a monopoly or be in furtherance of
any combination or conspiracy to monopolize or attempt to monopolize the
business of banking in any part of the United States, or (ii) if its effect in
any section of the country may be substantially to lessen competition or to tend
to create a monopoly, or if it would in any other manner be a restraint of
trade, unless such regulatory authority finds that the anticompetitive effects
of the Merger are clearly outweighed by the public interest and by the probable
effects of the transaction in meeting the convenience and needs of the
communities to be served. The Merger may not be consummated until the thirtieth
day following the date of the FDIC's approval of the Merger, during which time
the United States Department of Justice may challenge the Merger on antitrust
grounds. The commencement of an antitrust action would stay the effectiveness of
the FDIC's approval unless a court specifically orders otherwise.

In addition, the FDIC will take into consideration, among other
factors, the financial and managerial resources and future prospects of the
institutions and the convenience and needs of the communities to be served. The
FDIC has the authority to deny an application if it concludes that the combined
organization would have an inadequate capital position or if the requirements of
the Community Reinvestment Act of 1977 are not satisfied.

Pursuant to applicable Wyoming law, the Merger also must be approved by
the Commissioner. An application for such approval has been filed and the
Commissioner has not yet issued an order approving or disapproving the Merger.

The Board of Governors also has jurisdiction to review and approve the
Merger. Based on the primary review by the FDIC and the Commissioner, the Board
of Governors has indicated that it will not review or require its approval of
the Merger.

The Merger will not be consummated unless all of the required
regulatory approvals are obtained without the imposition of any significant
condition which any party to the Merger Agreement reasonably believes will
materially disadvantage or burden FSB WYOMING on a going forward basis. (SEE
"THE MERGER-- Conditions to the Merger," above.)

There can be no assurance that the regulatory authorities described
above will approve the Merger, and if the Merger is approved, there can be no
assurance as to the date of such approvals. There can also be no assurance that
any such approvals will not contain a condition or requirement which causes such
approvals to fail to satisfy the conditions to consummation of the Merger set
forth in the Merger Agreement. There can likewise be no assurance that the
Department of Justice will not challenge the Merger, or if such a challenge is
made, as to the result thereof.

<PAGE>

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EFFECTIVE TIME AND CONSUMMATION OF THE MERGER

The Effective Time of the Merger will occur upon the filing of the
articles of merger and other required documents with the Secretary of State of
Wyoming, or as soon thereafter as is practical. (SEE "THE MERGER -- Conditions
to the Merger" and "--Regulatory Approvals.")

CONDUCT OF BUSINESS PENDING THE MERGER

Pursuant to the Merger Agreement, STAR VALLEY has agreed that until the
Effective Time it will carry on its respective business in the usual, regular
and ordinary course consistent with its historical prudent banking practices,
and will keep FSB WYOMING advised of any and all important changes in its
financial condition. STAR VALLEY has agreed to use its best efforts to
(i) preserve its business organization intact, (ii) keep available to itself and
FSB WYOMING the present services of STAR VALLEY's employees and (iii) preserve
for itself and FSC the goodwill of STAR VALLEY's customers and others with whom
business relationships exist.

The Merger Agreement also contains certain restrictions on the conduct
of STAR VALLEY's business pending consummation of the Merger. In particular, the
Merger Agreement provides that, without the prior written consent of FSB
WYOMING, STAR VALLEY may not, among other things, (i) make, declare or pay any
dividend or other distribution on any of its capital stock, except for its usual
$1,000 per share semi-annual dividend in June and December 1994, payable
assuming 375 shares of STAR VALLEY Common Stock outstanding. (SEE "SELECTED
COMPARATIVE AND PRO FORMA FINANCIAL DATA"), (ii) issue, sell or obligate itself
to issue or sell shares of STAR VALLEY Common Stock or securities convertible
into shares of STAR VALLEY Common Stock, (iii) enter into or modify (except as
may be required by law or the Merger Agreement) any benefit plan for its
directors, officers and employees, (iv) dispose of, or discontinue any portion
of its assets, business or properties, or merge or consolidate with, or acquire
all or any substantial portion of, the business or property of any other entity,
or (v) amend its Articles of Incorporation or Bylaws other than to authorize the
opening of a new branch in Thayne, Wyoming.

The Merger Agreement also provides, among other things, that FSC will
cooperate fully with STAR VALLEY to obtain all necessary regulatory approvals
required to consummate the transactions contemplated by the Merger Agreement.

NO SOLICITATION

STAR VALLEY has agreed in the Merger Agreement that neither it nor any
of its Directors or Shareholders will initiate, solicit or encourage, either
directly or indirectly, any proposal or offer concerning any acquisition or
purchase of all or any significant portion of its assets, or of any equity
securities of, or any merger consolidation or any similar transaction involving
STAR VALLEY.

<PAGE>

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WAIVER AND AMENDMENT; TERMINATION

Prior to the Effective Time, any provision of the Merger Agreement may
be waived, amended or modified by an agreement in writing approved by the Boards
of Directors of all parties, provided that the Merger Agreement may not be
amended to alter the Conversion Ratio.

The Merger Agreement may be terminated at any time prior to the
Effective Time, either before or after its approval by the holders of STAR
VALLEY Common Stock, as follows: (i) by the mutual consent of the parties if the
Boards of Directors of each so determines; (ii) by FSC and FSB WYOMING any party
if any request or application for a required regulatory approval is denied;
(iii) by any party if its Board of Directors so determines, in the event that
the Merger has not been consummated by March 30, 1995, unless the failure to
consummate the Merger is in the control of the party seeking to terminate the
Merger Agreement, (iv) by FSC and FSB WYOMING if STAR VALLEY Shareholders owning
at least 2/3 of the outstanding shares of STAR VALLEY Common Stock fail to
approve the Merger Agreement; and (v) by any party in the event any
representation or warranty of a party not seeking to terminate the Merger
agreement was materially incorrect at the time made or has become materially
incorrect through the passage of time, or if a covenant contained in the Merger
Agreement is not fulfilled, at the latest, within 30 days of notice that the
covenant has not been fulfilled.

In the event of the termination of the Merger Agreement by any party,
no party will have any further obligations under the Merger Agreement except
(i) with respect to certain provisions regarding, among other things, the
confidentiality of certain information and the payment of certain expenses, and
(ii) that no party will be relieved from any liabilities for any default of any
provisions of the Merger Agreement.

RESALES OF FSC COMMON STOCK RECEIVED IN THE MERGER

The shares of FSC Common Stock to be issued in the Merger will be
registered under the Securities Act and will be freely transferable under the
Securities Act, except for shares issued to any shareholder who may be deemed to
be an "affiliate" of STAR VALLEY for purposes of Rule 145 under the Securities
Act. However, see "CERTAIN FEDERAL INCOME TAX CONSIDERATIONS" for a discussion
of the aggregate restriction on resale. Affiliates may not sell their shares of
FSC Common Stock acquired in connection with the Merger except pursuant to an
effective registration statement under the Securities Act covering such shares
or in compliance with Rule 145 or another applicable exemption from the
registration requirements of the Securities Act. Persons who may be deemed to be
affiliates of STAR VALLEY generally include individuals or entities that
control, are controlled by or are under common control with STAR VALLEY, and may
include certain Executive Officers and Directors of STAR VALLEY as well as other
principal STAR VALLEY Shareholders.

STAR VALLEY Shareholders who are an "affiliate" (for purposes of Rule
145) of STAR VALLEY must deliver to FSC a written agreement intended to ensure
compliance with the Securities Act of 1933 as a condition to the Merger.

<PAGE>

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NASDAQ / NMS LISTING

FSC Common Stock is quoted on the NASDAQ / NMS. FSC has represented to
STAR VALLEY that FSC intends to acquire the FSC Shares to be issued to STAR
VALLEY Shareholders either in the open market or to utilize shares currently
held in its treasury. FSC will comply with all requirements of the National
Association of Securities Dealers with respect to the shares of FSC Common Stock
to be issued to the STAR VALLEY Shareholders in connection with the Merger. (SEE
"THE MERGER-- Conditions to the Merger" above.)

ANTICIPATED ACCOUNTING TREATMENT

The Merger will be treated as a "purchase" for accounting and financial
reporting purposes. Under this method of accounting, the fair value of the
recorded assets and liabilities of STAR VALLEY, and the resulting financial
"goodwill", will be combined with the assets and liabilities of FSB WYOMING at
the Effective Time. Future financial statements of FSC following the Merger will
reflect the combined operations of STAR VALLEY and FSB WYOMING for the periods
covered by such financial statements.

The unaudited PRO FORMA combined financial information for STAR VALLEY
and FSC contained in this Prospectus / Proxy Statement has been prepared using
the purchase accounting method to account for the Merger.

OPERATIONS OF STAR VALLEY AFTER THE MERGER

Following the Merger, STAR VALLEY will cease to exist as a separate
entity, and its assets and operations will become part of FSB WYOMING. STAR
VALLEY's offices will be operated under the name "First Security Bank of
Wyoming" following the Merger. Although FSB WYOMING presently intends to
continue STAR VALLEY's scope of business without substantial modification, FSB
WYOMING will continue to evaluate the personnel, business practices and
opportunities of STAR VALLEY and may make such changes as it deems appropriate
following the Merger.

EFFECT OF THE MERGER ON STAR VALLEY'S EMPLOYEE BENEFIT PLANS

Pursuant to the Merger Agreement, at the Effective Time of the Merger,
all retirement and health insurance plans maintained by STAR VALLEY for the
benefit of employees will be terminated. FSC will provide STAR VALLEY employees
who remain employed after the Merger with employee benefits on substantially the
same basis, and will apply the same eligibility standards, as apply to other
employees of FSB WYOMING.

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EFFECT OF THE MERGER ON FSB WYOMING SHAREHOLDERS

FSB WYOMING Shareholders will suffer a dilution of their percentage
interest in FSB WYOMING because FSB WYOMING will issue additional of its shares
of FSB WYOMING Common Stock to FSC as consideration for the shares of FSC Common
Stock that will be issued to the Shareholders of STAR VALLEY under the terms of
the Merger Agreement. Approximately 24,662 additional shares of FSB WYOMING
Common Stock will be issued to FSC as a result of the Merger, resulting in FSC
owning 99.97% of the FSB WYOMING Common Stock and the other FSB WYOMING
Shareholders, as a group, holding 0.03%. This compares with the pre-merger
ownership of FSC at 99.93% and the minority ownership interest at 0.07%.

CERTAIN FEDERAL INCOME TAX CONSIDERATIONS

This description of certain federal income tax considerations with
respect to the Merger is included solely for the information of the STAR VALLEY
Shareholders. No information is provided with respect to the consequences of any
applicable state, local or foreign tax laws. Applicability of the alternative
minimum tax and other tax consequences of the Merger to a STAR VALLEY
Shareholder may depend upon the individual situation of the STAR VALLEY
Shareholder. Furthermore, special tax considerations may apply to STAR VALLEY
Shareholders who are insurance companies, securities dealers, financial
institutions and foreign persons. Therefore, each STAR VALLEY Shareholder is
urged to consult his or her own tax advisor concerning the specific tax
consequences of the Merger to such STAR VALLEY Shareholder.

It is intended that the Merger will be treated as a reorganization
within the meaning of Section 368(a)(1)(A) and (a)(2)(D) of the Code and that,
accordingly, for federal income tax purposes: (i) no gain or loss will be
recognized by FSC, FSB WYOMING or STAR VALLEY as a result of the Merger; (ii) no
gain or loss will be recognized by holders of STAR VALLEY Common Stock upon the
receipt of FSC Common Stock in exchange for STAR VALLEY Common Stock pursuant to
the Merger, except as discussed below with respect to cash received in lieu of a
fractional share interest in FSC Common Stock; and (iii) the aggregate adjusted
tax basis of the shares of FSC Common Stock received by the holders of STAR
VALLEY Common Stock pursuant to the Merger will be the same as the aggregate
adjusted tax basis of the shares of STAR VALLEY Common Stock surrendered in
exchange therefor (reduced by the amount allocable to fractional share interests
for which cash is received).

Consummation of the Merger is conditioned upon the parties' receipt of
an opinion of Ray, Quinney & Nebeker, counsel for FSC, substantially to the
effect that, on the basis of facts, representations and assumptions set forth or
referred to in such opinion, the principal federal income tax consequences of
the Merger under current law will be as set forth above.

The parties do not intend to apply for a ruling from the IRS with
respect to the federal income tax consequences of the Merger. Instead, they
intend to rely on the foregoing tax opinion of Ray, Quinney & Nebeker. An
opinion of counsel is not binding upon the IRS or the courts. The tax opinion
will be based upon certain factual assumptions and upon certain representations
and assurances made by STAR VALLEY and FSC. The tax opinion will

<PAGE>

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not address the consequences of the Merger on the STAR VALLEY Shareholders under
applicable state or local income tax laws.

One of the requirements for tax-free reorganization treatment is that
shareholders of the acquired corporation acquire a substantial and continuing
interest in the acquiring corporation. The tax opinion will be based on the
assumption that the shareholders of STAR VALLEY have no plan or intention at the
time of the Merger to sell or otherwise dispose of an amount of FSC Common Stock
to be received in the Merger that would reduce their aggregate ownership of FSC
Common Stock to a number of shares having in the aggregate a value at the time
of the Merger of less than 50% of the total value of the STAR VALLEY Common
Stock outstanding immediately prior to the Merger. For purposes of such
determination, shares of STAR VALLEY Common Stock that are exchanged for cash or
other property, or surrendered by dissenters, or exchanged for cash in lieu of
the issuance of fractional shares of FSC Common Stock, will be treated as
outstanding shares of STAR VALLEY Common Stock immediately prior to the Merger.

Any cash received by the holders of STAR VALLEY Common Stock, whether
pursuant to the exercise of dissenters' rights or in lieu of a fractional share
of FSC Common Stock, will be treated as having been received in redemption of
the shares or fractional share interest so cashed out, and will result in
taxable gain or loss. The amount of such gain or loss will be the difference
between the cash received and the basis of the shares or the fractional share
interest surrendered in exchange therefor. Provided the shares or the fractional
share interest was held as a capital asset at the time of the redemption, such
gain or loss will constitute capital gain or loss, and such gain or loss will be
long term capital gain or loss if the holding period for such shares or
fractional share interest was greater than one year.

STAR VALLEY Shareholders who exchange STAR VALLEY Common Stock for FSC
Common Stock pursuant to the Merger will receive certain Rights to acquire
additional FSC stock under certain circumstances (SEE "INFORMATION ABOUT FSC--
Description of FSC's Capital Stock--FSC Common Stock"). Based upon the current
ruling position of the IRS, such Rights will not constitute other property the
receipt of which will be taxable to the STAR VALLEY Shareholders.

STAR VALLEY Shareholders should also be aware that the IRS may examine
transactions taking place before, contemporaneously with, or after a
reorganization to determine whether reorganization treatment is appropriate, or
in some cases to determine whether shareholders will be taxed on other economic
benefits that are included as part of the overall transaction. Thus, loan
transactions between parties, compensation arrangements, noncompete agreements,
consulting arrangements and other transactions could be reviewed by the IRS and
determined to constitute taxable income to specific parties to the Merger or
could be a basis for assertion that reorganization treatment is not appropriate
to the Merger. Furthermore, if the IRS were to establish as to some STAR VALLEY
Shareholders that part of the FSC Common Stock received in the Merger is
severable from the Merger, resulting in a proportionally increased equity
interest being received in the Merger by other STAR VALLEY Shareholders, the
STAR VALLEY Shareholders whose equity interests were deemed to be constructively
increased by the Merger may be treated as having received a taxable stock
dividend. Thus, notwithstanding the tax opinion, STAR VALLEY Shareholders should
consult with their tax advisors as to the tax consequences of the Merger.

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Under Section 3406 of the Code, STAR VALLEY Shareholders may be subject
to "backup withholding" at the rate of 31% on "reportable payments" to be
received by them if they fail to furnish their correct taxpayer identification
numbers or for certain other reasons. FSC will report to these persons and to
the IRS for each calendar year the amount of any reportable payments during that
year and the amount of tax withheld, if any, with respect to those reportable
payments.

The Code also imposes an alternative minimum tax and excise taxes on
certain types of transactions. Applicability of such taxes is usually
controlled, in whole or part, by other matters unrelated to the Merger or by the
unique characteristics of the particular taxpayer. Accordingly, STAR VALLEY
Shareholders are encouraged to consult their tax advisors if they are or might
be subject to such taxes.

RIGHTS OF DISSENTING STAR VALLEY SHAREHOLDERS

Under Wyoming law, a Shareholder who has perfected his or her
dissenter's rights will be entitled to receive in cash the value of the shares
of STAR VALLEY Common Stock or FSB WYOMING Common Stock held by the Shareholder,
if and when the Merger is consummated. The Shareholder must comply with the
requirements included in Section 13-4-110 of the Wyoming Bank Act to perfect his
or her dissenters' rights.

The following is a summary of steps that FSB WYOMING and STAR VALLEY
believe must be taken for effective exercise of dissenters' rights. This
statement is qualified in its entirety by reference to the provisions of Wyoming
law, a copy of which is included as Appendix "C" to this Prospectus/Proxy
Statement. Any Shareholder contemplating the exercise of dissenters' rights is
urged to review Appendix "C" carefully.

1. ACTION AT OR PRIOR TO SPECIAL MEETINGS. A Shareholder wishing
to assert dissenters' rights must vote against the Merger Agreement, OR the
Shareholder must send or deliver a notice of dissent to FSB WYOMING or STAR
VALLEY, respectively, prior to or at the Special Meetings.

2. WRITTEN NOTICE OF INTENT TO DEMAND PAYMENT. Within 30 days
after the Special Meetings, any Shareholder who dissented to the Merger
Agreement and who desires to receive cash payment for his or her shares must
make written demand upon STAR VALLEY or FSB WYOMING, respectively, accompanied
by the Shareholders' stock certificates, properly endorsed.

3. OFFER TO BE SUBMITTED BY FSB WYOMING. Within 30 days after
the effective time, FSB WYOMING must give written notice to each
dissenting Shareholder who made demand and must make a written offer to those
Shareholders to pay for their shares at a specified price in cash. That price
must be the price determined by FSB WYOMING to be the fair value of the shares
as of the date of the SPECIAL MEETINGS. The offer from FSB WYOMING will be
accompanied by specified financial information.

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4. ACCEPTANCE OF OFFER; PAYMENT FOR SHARES. Any Shareholder who
accepts FSB WYOMING's offer within 30 days after the offer is mailed must be
paid within 30 days after acceptance. Upon payment, the dissenting Shareholder
ceases to have any interest in the STAR VALLEY or FSB WYOMING Common Stock.

5. SHAREHOLDER'S REJECTION OF OFFER. If any dissenting
Shareholders do not accept FSB WYOMING's offer within 30 days after the offer is
mailed, a special panel of three appraisers will decide the price of the shares
of such Shareholders. One appraiser will be selected by a vote of two-thirds of
the shares involved. Another appraiser will be selected by the Board of
Directors of FSB WYOMING, and the third will be selected by the other two
appraisers. The valuation agreed upon by any two appraisers will govern, and all
the dissenting Shareholders involved will be bound by the amount determined. If
the appraisal is not completed within 90 days after the Merger becomes
effective, the Commissioner will cause an appraisal to be made.

The costs of the appraisal will be paid by FSB WYOMING.

Each Shareholder who makes demand for payment retains all the rights of
a Shareholder, except the right to transfer his or her shares, until the
Effective Time and, after the Effective Time, has only the right to receive
payment.

If a Dissenting Shareholder votes against the Merger but otherwise
fails to perfect a dissent or shall have effectively lost his or her right to
appraisal of and payment for the fair value of his or her shares, such
Dissenting Shareholder shall be treated identically to a nondissenting
Shareholder.

ANY SHAREHOLDER CONTEMPLATING THE EXERCISE OF
DISSENTERS' RIGHTS WITH RESPECT TO HIS OR HER SHARES IS
URGED TO REVIEW CAREFULLY THE PROVISIONS OF APPENDIX C
INASMUCH AS DISSENTERS' RIGHTS MAY BE LOST IF THE
REQUIREMENTS OF WYOMING LAW ARE NOT FULLY AND PRECISELY
SATISFIED.

For a discussion of certain tax consequences in connection with
dissenting, SEE "Certain Federal Income Tax Consequences", above.

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SELECTED COMPARATIVE AND PRO FORMA FINANCIAL DATA

The following table presents selected historical and pro forma combined
financial information for FSC and STAR VALLEY which has been derived from
year-end 1991, 1992 and 1993 consolidated financial statements of FSC, certain
of which are incorporated herein by reference, and of STAR VALLEY, certain of
which are included elsewhere in this Prospectus / Proxy Statement; and from the
March 31, 1994 and 1993 results of operations of each of FSC and STAR VALLEY.

All FSC results have been restated to reflect FSC's pooling-of-interest
acquisition of First National Financial Corporation in 1993. In addition, FSC's
results were restated to reflect adoption of SFAS No. 109, "Accounting for
Income Taxes" retroactive to 1988.

All FSC per share amounts have been adjusted to reflect the result of
50% stock dividends distributed by FSC in May 1992, and June 1991, which had the
effect of 3-for-2 stock splits. The average balance sheet data is calculated on
an average daily balance basis.

All of this financial information should be read in conjunction with
such financial statements and notes thereto, and the information hereinafter set
forth under the captions "INFORMATION ABOUT FSC" and "INFORMATION ABOUT STAR
VALLEY," below which discusses, among other things, first three months of 1994
financial results.

[THIS SPACE LEFT BLANK INTENTIONALLY}

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FIRST SECURITY CORPORATION

THREE MONTHS ENDED YEAR ENDED
MARCH 31, DECEMBER 31,
- ------------------------------------------------------------------------------------------------------------------------------------
(Dollars in thousands, except per share amounts and ratios)
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
1994 1993 1993 1992 1991 1990 1989
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME:
- ------------------------------------------------------------------------------------------------------------------------------------
Net interest income $110,267 $ 95,853 $403,938 $375,949 $322,809 $302,140 $282,872
Provision for loan losses (172) 1,976 11,684 30,277 66,393 94,899 45,949
Noninterest income 42,655 40,867 167,159 144,036 137,822 115,823 94,968
Noninterest expenses 101,368 85,226 386,146 339,456 306,504 285,095 252,289
Net income 33,162 30,712 114,056 100,343 59,412 29,001 55,941
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
COMMON STOCK DATA (A):
- ------------------------------------------------------------------------------------------------------------------------------------
Earnings per common share $ 0.67 $ 0.65 2.38 $ 2.16 $1.36 $0.67 $1.32
Dividends paid per common share 0.26 0.19 0.88 0.68 0.60 0.57 0.55
Book value EOP 17.44 16.31 17.24 15.81 14.44 13.74 13.59
Market price EOP/book value EOP 159.12% 174.79% 149.36% 172.36% 131.58% 78.46% 103.83%
Dividend payout ratio: dividend/EPS 38.81% 29.23% 36.92% 31.55% 41.56% 77.69% 38.69%
Price/earnings ratio: mkt price/4 qtrs earn. 11.6x 12.1x 10.80x 12.58x 13.16x 14.72x 9.91x
Common shares outstanding (EOP) 48,216 45,792 48,437 45,642 43,937 39,629 39,182
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
AVERAGE BALANCE SHEET (A):
- ------------------------------------------------------------------------------------------------------------------------------------
Investment securities $2,066,065 $1,756,738 $1,792,591 $1,708,038 $1,433,406 $1,385,158 $1,133,765
Loans, net of unearned income 6,547,493 5,563,702 5,917,816 5,463,283 5,352,308 5,248,155 4,803,458
Reserve for loan losses (135,122) (127,636) (128,801) (130,548) (125,198) (86,342) (72,390)
Total interest-earning assets 9,131,644 7,896,287 8,319,615 7,680,167 7,261,560 7,073,226 6,353,475
Total assets 10,060,915 8,725,616 9,214,260 8,490,487 8,045,754 7,896,145 7,084,695
Interest-bearing deposits 5,859,165 5,423,080 5,527,474 5,353,698 5,163,236 4,777,451 4,315,351
Short-term borrowed funds 1,360,105 1,035,021 1,121,250 982,448 1,013,532 1,297,477 1,086,873
Long-term debt 276,130 121,801 204,129 103,659 104,300 143,747 152,244
Total interest-bearing liabilities 7,495,400 6,579,902 6,852,853 6,439,805 6,281,068 6,218,675 5,554,468
Total deposits 7,381,661 6,677,149 6,956,114 6,567,776 6,205,821 5,751,292 5,186,499
Stockholders' equity 854,677 739,149 784,658 686,159 578,920 551,901 517,998
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
END OF PERIOD BALANCE SHEET (A):
- ------------------------------------------------------------------------------------------------------------------------------------
Investment securities $2,230,114 $1,970,338 $1,762,783 $1,750,180 $1,547,088 $1,376,827 $1,308,612
Loans, net of unearned income 6,674,067 5,596,166 6,561,021 5,616,624 5,432,951 5,423,190 5,091,075
Reserve for loan losses (134,216) (127,329) (134,848) (127,847) (126,887) (117,192) (78,694)
Total interest-earning assets 9,816,274 8,447,960 9,329,273 8,054,059 7,452,158 7,058,609 6,816,974
Total assets 10,745,283 9,158,974 10,211,689 8,895,673 8,290,168 7,893,903 7,553,831
Interest-bearing deposits 5,953,168 5,460,770 5,806,020 5,439,139 5,270,453 5,071,252 4,412,442
Short-term borrowed funds 1,848,100 1,245,394 1,486,905 995,790 899,294 918,566 1,314,265
Long-term debt 297,538 119,062 224,836 127,203 87,516 98,851 147,331
Total interest-bearing liabilities 8,098,806 6,825,226 7,517,761 6,562,132 6,257,263 6,088,669 5,874,038
Total deposits 7,509,666 6,744,977 7,503,707 6,868,453 6,514,692 6,188,735 5,413,165
Stockholders' equity 841,647 747,379 835,731 722,447 635,173 545,295 533,330
Total Nonperforming assets 42,610 98,655 52,819 107,455 150,699 150,485 121,345
Accruing loans past due 90 days or more 10,318 10,309 7,155 11,766 17,200 16,643 18,611
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
SELECTED RATIOS (A):
- ------------------------------------------------------------------------------------------------------------------------------------
Return on average assets 1.34% 1.43% 1.24% 1.18% 0.74% 0.37% 0.79%
Return on average stockholders' equity 15.74 16.85 14.54 14.62 10.26 5.25 10.80
Stockholders' equity to assets 7.83 8.16 8.18 8.12 7.66 6.91 7.06
Risk-based capital ratios (B):
Tier 1 (minimum: 4.0%) 11.51 11.45 11.82 11.32 10.61 9.32
Tier 1 + Tier 2 13.79 13.90 14.15 13.78 11.84 11.27
(minimum: 8.0%)
Leverage (minimum: 4.0% - 5.0%) 7.81 7.91 8.08 7.99 7.53 6.75
Reserve for loan losses at December 31 to:
Total loans 2.01 2.28 2.06 2.28 2.34 2.16 1.55
Nonaccruing and renegotiated loans 352.40 164.04 309.93 139.37 97.92 101.13 100.51
and accruing loans past due
90 days or more
Nonperforming assets at December 31 to:
Total loans and ORE 0.64 1.75 0.80 1.90 2.75 2.75 2.35
Total assets 0.40 1.08 0.52 1.21 1.82 1.91 1.61
Total equity 5.06 13.20 6.32 14.87 23.73 27.60 22.75
Total equity plus reserve for loan losses 4.37 11.28 5.44 12.64 19.78 22.72 19.83
Net loans charged off to average loans 0.04 0.18 0.20 0.60 1.09 1.11 0.80
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------

<FN>

(A) Figures have been restated where applicable to reflect 3-for-2 stock splits in the form of 50% stock dividends paid in May 1992
and June 1991, and theretroactive adoption of SFAS 109 - "Accounting for Income Taxes" and the November 1993 Merger with First
National Financial Corporation.

(B) Risk-based capital ratios were not calculated prior to 1989. Ratios shown were calculated based on 1992 requirements.

</TABLE>

<PAGE>

-33-

STAR VALLEY
THREE MONTHS ENDED YEAR ENDED DECEMBER 31,
MARCH 31, ------------------------------------

1994 1993 1993 1992 1991 1990 1989
- ------------------------------------------------------------------------------------------------------------------------
Dollars in thousands, except per share amounts and ratios

- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME:
- ------------------------------------------------------------------------------------------------------------------------

Interest Income $ 1,065 $ 1,059 $ 4,386 $ 4,661 $ 5,042 $ 5,209 $ 4,954
Interest Expense 365 410 1,581 1,962 2,559 2,839 2,772
Net Interest Income 700 649 2,805 2,699 2,483 2,370 2,182

Provision for Loan Losses 18 17 193 78 7 175 541
Net Interest Income after
Provision for Loan Losses 682 632 2,612 2,621 2,476 2,195 1,641

Non-Interest Income 121 181 571 363 353 365 446
Non-Interest Expense 364 347 1,474 1,477 1,638 1,393 1,590
Income Before Securities
Transactions 439 466 1,709 1,507 1,191 1,167 497
and Income Taxes

Securities Gains and (Losses) - Net 0 0 0 0 0 0 0
Income Before Taxes 439 466 1,709 1,507 1,191 1,167 497
Provision for Income Taxes 162 158 573 522 373 386 14

Net Income 277 308 1,136 985 818 781 483
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------

COMMON STOCK DATA:
- ------------------------------------------------------------------------------------------------------------------------
Net Income per common share $739.92 $821.33 $3,029.22 $2,628.51 $2,179.40 $2,082.67 $1,288.00

Cash Dividends Declared/Paid per 2,000 2,000 1,000 500 0
Share

Book Value at period end 21,824 21,304 21,084 20,055 19,427 18,248 16,664

Common Shares Outstanding 375 375 375 375 375 375 375
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------

YEAR END BALANCE SHEET:
- ------------------------------------------------------------------------------------------------------------------------

Total Assets $62,271 $58,985 $65,107 $61,476 $58,244 $59,270 $59,367
Earning Assets 58,820 54,713 60,903 56,445 53,551 51,124 52,464
Total Deposits 53,694 50,783 56,582 53,277 50,208 51,443 52,522

Total Shareholders' Equity 8,184 7,989 7,907 7,521 7,285 6,843 6,249
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------

KEY RATIOS
- ------------------------------------------------------------------------------------------------------------------------
Return on average assets 1.74% 2.05% 1.82% 1.65% 1.39% 1.32% 0.80%

Return on average stockholders' 13.77 15.89 14.48 13.31 11.58 11.93 7.83
equity

Risk-based capital ratios: (A)

Tier 1 (1992 minimum: 4.0%) 21.99 25.20 20.58 24.29 23.96 23.55 21.91
Tier 1 + Tier 2 (minimum: 8.0%) 23.24 26.46 21.80 25.55 25.47 25.06 23.42
Leverage (minimum: 4.0%-5.0%) 12.89 13.22 11.97 11.92 12.21 11.02 10.87
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------

<FN>

(A) Ratios are based on 1992 requirements.

</TABLE>

<PAGE>

-34-

UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS

PRO FORMA COMBINED CONDENSED BALANCE SHEET.

The unaudited PRO FORMA Condensed Combined Balance Sheet shown on the next
page presents the combined financial position of FSC and STAR VALLEY as of March
31, 1994 assuming that the Merger had occurred as of March 31, 1994. Such PRO
FORMA information is based on historical balance sheet data of FSC and STAR
VALLEY as of that date. This PRO FORMA Combined Condensed Balance Sheet should
be read in conjunction with the PRO FORMA Condensed Combined Statements of
Income that follow, and the historical financial statements and notes thereto of
FSC, which are incorporated by reference in this Prospectus / Proxy Statement,
and of STAR VALLEY, which appear as Appendix B attached to this Prospectus /
Proxy Statement. The PRO FORMA Combined Condensed Balance Sheet is presented
for informational purposes only. This information is not necessarily indicative
of the combined financial position that would have occurred if the Merger had
been consummated on March 31, 1994 or at the beginning of the period indicated
or which may be obtained in the future.

[THIS SPACE LEFT BLANK INTENTIONALLY]

<PAGE>

-35-

FSC AND STAR VALLEY
PRO FORMA CONDENSED COMBINED BALANCE SHEET
(UNAUDITED)

MARCH 31, 1994
(DOLLARS IN THOUSANDS)

PRO FORMA PRO FORMA
FSC STAR VALLEY ADJUSTMENTS COMBINED
--- ----------- ----------- --------
<S> <C> <C> <C> <C>
ASSETS:

Cash and due from banks $ 622,042 $ 2,554 $ 624,596
Interest-bearing deposits in other banks 1,842 1,842
Federal funds sold & securities purchased
under resale agreements 112,997 2,500 (6,000) 109,497
Trading account securities 797,254 797,254
Investment securities: available for sale 1,960,075 20,828 (6,069) 1,974,834
Investment securities: held to maturity 270,039 75 270,114

Loans, net of unearned income 6,674,067 35,417 6,709,484
Reserve for loan losses (134,216) (482) (134,698)
----------- ---------- ------- -----------
Total loans, net 6,539,851 34,935 6,574,786

Premises and equipment, net 151,099 229 151,328
Other assets 290,084 1,150 3,885 295,119
----------- ---------- ------- -----------

TOTAL ASSETS $10,745,283 $ 62,271 ($8,184) $10,799,370
----------- ---------- ------- -----------
----------- ---------- ------- -----------

LIABILITIES:
Deposits: noninterest-bearing
$ 1,556,498 $ 6,406 $ 1,562,904
Deposits: interest-bearing 5,953,168 47,288 6,000,456
----------- ---------- ------- -----------

Total deposits 7,509,666 53,694 7,563,360

Short-term borrowings 1,848,100 1,848,100
Other liabilities 248,332 393 248,725
Long-term debt 297,538 297,538
----------- ---------- ------- -----------

TOTAL LIABILITIES 9,903,636 54,087 9,957,723
----------- ---------- ------- -----------
Stockholders' Equity:
Preferred stock 685 685
Common stockholders' equity 840,962 8,184 ($8,184) 840,962
----------- ---------- ------- -----------

TOTAL STOCKHOLDERS' EQUITY 841,647 8,184 (8,184) 841,647
----------- ---------- ------- -----------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $10,745,283 $ 62,271 ($8,184) $10,799,370
----------- ---------- ------- -----------
----------- ---------- ------- -----------

</TABLE>

SEE notes to PRO FORMA condensed combined financial statements.

<PAGE>

-36-

PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME

The PRO FORMA Condensed Combined Statements of Income on the following
pages give effect to the Merger by combining the results of operations of FSC
for the three months ended March 31, 1994, and the year ended December 31,
1993, with the results of operations of STAR VALLEY for the three months
ended March 31, 1994, and the year ended December 31, 1993. Income per
common share and weighted average common shares outstanding are based on the
Conversion Ratio as specified in the Merger Agreement. These PRO FORMA Combined
Condensed Statements of Income should be read in conjunction with the PRO FORMA
Combined Condensed Balance Sheet, above, and the historical financial statements
and notes thereto of FSC, which are incorporated by reference in this Prospectus
/ Proxy Statement, and of STAR VALLEY, which appear as Appendix B to this
Prospectus / Proxy Statement. The PRO FORMA Combined Condensed Statement of
Income is presented for informational purposes only. This information is not
necessarily indicative of the combined results of operations that would have
occurred if the Merger had been consummated on March 31, 1994 or at the
beginning of the periods indicated or which may be obtained in the future. The
Merger Agreement provides that, prior to consummation of the Merger but after
all other conditions to consummation have been satisfied, STAR VALLEY will,
consistent with GAAP, modify and change its loan, litigation and real estate
valuation policies and practices (including loan classifications and levels of
reserves) so as to be applied consistently on a mutually satisfactory basis with
those of FSC. In connection with the foregoing, a special review will be
conducted jointly by STAR VALLEY and FSC shortly prior to the Effective Time.
The data in the financial tables and statements in this Prospectus / Proxy
Statement do not reflect the amounts of such accruals and reserves because such
amounts will depend on the results of such special review and the financial and
economic conditions and other relevant factors in existence at that time, nor
does the table reflect possible adjustments for restructuring charges and other
expenses related to the Merger. Accordingly, the PRO FORMA combined financial
condition and results of operations of FSC as of the Effective Time may be
different from that reflected in the PRO FORMA information below.

[THIS SPACE LEFT BLANK INTENTIONALLY]

<PAGE>

-37-

FSC AND STAR VALLEY
PRO FORMA CONDENSED COMBINED STATEMENTS OF INCOME
For the three months ended March 31, 1994
(in thousands, except per share data, unaudited)

<TABLE>
<CAPTION>
Pro Forma Pro Forma
FSC STAR VALLEY Adjustments Combined
-------- ----------- ----------- ---------
<S> <C> <C> <C> <C>
Interest Income:
Interest and fees on loans $136,003 $796 $136,799
Interest and dividends on
investment securities 26,172 254 26,426
Trading account interest 9,526 0 9,526
Other interest income 737 15 752
-------- ------ ------ -------
TOTAL INTEREST INCOME 172,438 1,065 0 173,503
-------- ------ ------ -------

Interest Expense:
Interest on deposits 47,193 365 47,558
Interest on short-term borrowings 10,666 0 10,666
Interest on long-term debt 4,312 0 4,312
-------- ------ ------ -------
TOTAL INTEREST EXPENSE 62,171 365 0 62,536
-------- ------ ------ -------

NET INTEREST INCOME 110,267 700 0 110,967
Provision for loan losses (172) 18 (154)
-------- ------ ------ -------
NET INTEREST INCOME AFTER PROVISION FOR
LOAN LOSSES 110,439 682 0 111,121
-------- ------ ------ -------

Noninterest income 42,655 121 42,776
Noninterest expenses 101,368 364 $ 65 101,797
-------- ------ ------ -------

INCOME BEFORE INCOME TAX PROVISION 51,726 439 (65) 52,100
Provision for income taxes 18,564 162 18,726
-------- ------ ------ -------

NET INCOME 33,162 277 (65) 33,374
Dividend requirement preferred stock 10 0 10
-------- ------ ------ -------

NET INCOME APPLICABLE TO COMMON STOCK $33,152 $277 ($65) $33,364
-------- ------ ------ -------
-------- ------ ------ -------

Earnings per common share:
Assuming no dilution $0.67 $739.92 $0.67
Assuming full dilution 0.67 739.92 0.67
-------- ------ ------ -------
-------- ------ ------ -------

Cash Dividends Paid or Accrued Per Share:
Preferred Stock ($3.15 annual rate) $0.79 $0.79
Common Stock 0.26 0.26
-------- ------ ------ -------
-------- ------ ------ -------

Average common shares outstanding:
Assuming no dilution 49,316 0.375 480 49,796
Assuming full dilution 49,478 0.375 480 49,958
-------- ------ ------ -------
-------- ------ ------ -------

</TABLE>

See notes to PRO FORMA condensed combined financial statements.

<PAGE>

-38-

FSC AND STAR VALLEY
PRO FORMA CONDENSED COMBINED STATEMENTS OF INCOME
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1993
(IN THOUSANDS, EXCEPT PER SHARE DATA, UNAUDITED)

PRO FORMA PRO FORMA
FSC STAR VALLEY ADJUSTMENTS COMBINED
--- ----------- ----------- --------
<S> <C> <C> <C> <C>
Interest Income:
Interest and fees on loans $513,810 $3,012 $516,822
Interest and dividends on
investment securities 100,464 1,251 101,715
Trading account interest 20,811 20,811
Other interest income 9,647 123 9,770
-------- --------- ----- --------

TOTAL INTEREST INCOME 644,732 4,386 649,118
-------- --------- ----- --------

Interest Expense:
Interest on deposits 192,992 1,581 194,573
Interest on short-term borrowings 33,979 33,979
Interest on long-term debt 13,823 13,823
-------- --------- ----- --------

TOTAL INTEREST EXPENSE 240,794 1,581 242,375
-------- --------- ----- --------

NET INTEREST INCOME 403,938 2,805 406,743
Provision for loan losses 11,684 193 11,877
-------- --------- ----- --------

NET INTEREST INCOME AFTER PROVISION FOR LOAN
LOSSES 392,254 2,612 394,866
-------- --------- ----- --------

Noninterest income 167,159 571 167,730
Noninterest expenses 386,146 1,474 $259 387,879
-------- --------- ----- --------

INCOME BEFORE INCOME TAX PROVISION 173,267 1,709 (259) 174,717
Provision for income taxes 59,211 573 59,784
-------- --------- ----- --------
NET INCOME 114,056 1,136 (259) 114,933
Dividend requirement preferred stock 43 43
-------- --------- ----- --------

NET INCOME APPLICABLE TO COMMON STOCK $114,013 $1,136 ($259) $114,890
-------- --------- ----- --------
-------- --------- ----- --------
Earnings per common share:
Assuming no dilution $2.38 $3,029.22 $2.38
Assuming full dilution 2.38 3,029.22 2.37
-------- --------- ----- --------
-------- --------- ----- --------

Cash Dividends Paid or Accrued Per Share:
Preferred Stock ($3.15 annual rate) $3.15 $3.15
Common Stock 0.88 0.88
-------- --------- ----- --------
-------- --------- ----- --------

Average common shares outstanding:
Assuming no dilution 47,852 0.375 480 48,332
Assuming full dilution 48,020 0.375 480 48,500
-------- --------- ----- --------
-------- --------- ----- --------

</TABLE>

SEE notes to PRO FORMA condensed combined financial statements.

<PAGE>

-39-

NOTES TO PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

1. The accompanying unaudited PRO FORMA Condensed Combined Financial
Statements were prepared according to "purchase" accounting rules and
contain all adjustments (consisting of normal recurring accruals)
necessary to present fairly the financial position as of March 31, 1994,
and the results of operations for the three months in the periods ended
March 31, 1994 and 1993, and the year ended December 31, 1993.

2. The PRO FORMA results of operations for the three (3) month periods
ended March 31, 1994 are not necessarily indicative of the results to be
expected for the full year, nor are they necessarily indicative of the
results that will occur after the Merger is completed.

3. Financial statements incorporate fair market valuations for balances
added, as well as earnings since the acquisition, from nine other
financial institutions acquired by FSC during 1993 and one during 1994.

4. Certain reclassifications of STAR VALLEY amounts have been made to
conform with FSC classifications.

5. Information as to preferred and common shares as of March 31, 1994
(in thousands):

<TABLE>

<S> <C>
FSC Preferred shares outstanding 13
FSC Common shares issued 48,896
FSC Common shares to be
exchanged for STAR VALLEY
shares 480
FSC Common Treasury shares 680
PRO FORMA FSC Common shares,
net of treasury 48,696

</TABLE>

In May 1992 and June 1991, FSC paid 50% stock dividends having the
effect of three-for two stock splits. All share-related amounts in this
report have been restated for these splits.

6. Earnings per share have been calculated based on the following
average number of shares outstanding, as restated for FSC's stock splits
and assuming 480,000 shares issued in the Merger for 375 outstanding
STAR VALLEY shares:

THREE MONTHS ENDED MARCH 31, YEAR ENDED DECEMBER 31,
(in thousands) 1994 1993 1993 1992 1991
<S> <C> <C> <C> <C> <C>
Average shares assuming:
No dilution 49,796 47,418 48,332 46,810 41,635
Full dilution 49,958 47,592 48,500 47,000 44,195

</TABLE>

Per share amounts assuming no dilution are computed after deducting the
dividend requirement of FSC's preferred stock. Per share amounts assuming
full dilution are computed assuming that all of FSC's outstanding preferred
stock and 9.50% convertible subordinated debentures due 2006 (which were
all converted in 1991) are converted into common shares on the basis of
12.15 shares of FSC Common for each share of preferred and at the
debenture's conversion price of $12.56 per common share, with the
elimination of dividends on the preferred stock and of interest expense net
of tax effect on the debentures.

7. The PRO FORMA adjustments reflected on the PRO FORMA Condensed Combined
Balance Sheet represent an estimated $12 million purchase price plus
estimated decreases in STAR VALLEY assets and liabilities to reflect their
fair value as of March 31, 1994. The PRO FORMA Condensed Combined
Statement of Income includes adjustments to reflect the effects of
amortization of the Fair Value adjustments made to the Balance Sheet as if
the merger had occurred as of the beginning of the periods shown.

<PAGE>

-40-

SELECTED COMPARATIVE HISTORICAL, PRO FORMA
AND EQUIVALENT PRO FORMA PER SHARE DATA

The following table, which shows comparative historical per common share
data for FSC and STAR VALLEY (separately and PRO FORMA combined), and equivalent
PRO FORMA per share data for STAR VALLEY, should be read in conjunction with the
financial information appearing elsewhere in this Prospectus / Proxy Statement,
attached as Appendix B hereto, or incorporated herein by reference to other
documents. The table assumes that STAR VALLEY Shareholders are to receive a
total of up to 480,000 shares of FSC Common Stock. (SEE "THE MERGER --
Conversion Ratio.") The PRO FORMA data in the tables are presented for
comparative purposes only and are not necessarily indicative of the combined
financial position or results of operations of the combined companies in the
future or what the combined financial position or results of operations would
have been had the acquisition been consummated during the periods shown or as of
the date for which the tables are presented.

HISTORICAL PRO FORMA
--------------------- -------------------------------

FSC AND
STAR VALLEY STAR VALLEY
PRO FORMA EQUIVALENT
FSC STAR COMBINED PRO FORMA (4)
--- VALLEY -------- ---------------
------
<S> <C> <C> <C> <C>

NET INCOME PER SHARE:(1)

For The Year Ended
- ------------------
December 31, 1993 $2.38 $3,029.22 $2.38 $3,046.40
December 31, 1992 2.16 2,628.51 2.16 2,764.80
December 31, 1991 1.36 2,179.40 1.36 1,740.80

For The Three Months Ended
- --------------------------
March 31, 1994 0.67 739.92 0.67 857.60
March 31, 1993 0.65 821.33 0.65 832.00

CASH DIVIDENDS PER
SHARE:(2)

For The Year Ended
- ------------------
December 31, 1993 $0.88 $2,000.00 $0.88 $1,126.40
December 31, 1992 0.68 2,000.00 0.68 870.40
December 31, 1991 0.60 1,000.00 0.60 768.00

For The Three Months Ended
- --------------------------
March 31, 1994 0.26 0.00 0.26 332.80
March 31, 1993 0.19 0.00 0.19 243.20

BOOK VALUE PER SHARE:(3)

As Of
- ----
December 31, 1993 $17.24 $21,084.30 $17.23 $22,054.20
December 31, 1992 15.81 20,055.00 15.65 20,032.00
December 31, 1991 14.44 19,427.00 14.28 18,278.40
March 31, 1994 17.44 21,824.00 17.44 22,323.20
March 31, 1993 16.31 21,304.00 16.14 20,659.20

<FN>

(1) Net Income per common share is based on weighted average shares of FSC Common
Stock outstanding, fully diluted. Adjustments were made to take into account
3-for-2 stock splits effected by FSC in 1992 and 1991 and the November 1993
pooling of interests merger with FNFC.
(2) PRO FORMA cash dividends represent only historical cash dividends of FSC.
(3) Book value per common share is based on total period-end shareholders' equity
and, for FSC, less preferred equity of $703,000 (at 12/31/93); $783,00 (at
12/31/92); $849,000 (at 12/31/91); $685,000 (at 3/31/94); and $733,000 (at
3/31/93).
(4) PRO FORMA equivalent amounts on this table are computed by multiplying the PRO
FORMA combined amounts by the Conversion Ratio of 1,280.

</TABLE>

<PAGE>

-41-

COMPARATIVE AND PRO FORMA CAPITALIZATION

The following table presents the historical capitalization of both FSC and
STAR VALLEY as of March 31, 1994. The information presented is drawn from
unaudited financial reports of the companies. Also shown is the PRO FORMA
capitalization of the combined companies as a result of the Merger:

PRO FORMA PRO FORMA
FSC STAR VALLEY ADJUSTMENTS COMBINED
(IN THOUSANDS) ---- ----------- ----------- --------

<S> <C> <C> <C> <C>
Common Equity $ 840,962 $ 8,184 ($ 8,184)(1) $ 840,962

Preferred Equity 685 none 685

Long Term Debt 297,538 none 297,538

Short Term Debt 1,848,100 none 1,848,100

<FN>

(1) Elimination of STAR VALLEY equity as of 3/31/94, as
required by purchase accounting rules.

</TABLE>

INFORMATION ABOUT FSC

GENERAL

FSC is a Delaware incorporated multi-bank holding company headquartered
in Salt Lake City, Utah. At March 31, 1994, FSC and its subsidiaries had total
consolidated assets, deposits, and shareholders' equity of $10.75 billion, $7.51
billion and $842 million, respectively.

FSC maintains its executive offices at 79 South Main Street, Salt Lake
City, Utah 84111, telephone 801-246-6000.

The principal assets of FSC are the capital stock of First Security
Bank of Utah N.A. ("FSB UTAH") (approximately 99.9% owned), First Security Bank
of Idaho, N.A. ("FSB IDAHO") (100% owned), and First Security Bank of New Mexico
("FSB NEW MEXICO") (100% owned), all of which are national banks providing a
broad range of banking, fiduciary, financial and other services. (SEE "--
Competition," below.)

FSC also owns 99.9% of the outstanding capital stock of FSB WYOMING, a
Wyoming state bank, 100% of the outstanding capital stock of First Security Bank
of Oregon ("FSB OREGON"), an Oregon savings bank, and 100% of the capital stock
of First Security Bank of Nevada ("FSB NEVADA"), a Nevada state chartered bank.

<PAGE>

-42-

All of FSC's banking subsidiaries together will be referred to
hereafter in this section of the Prospectus / Proxy Statement as "the Banks".

Nonbank subsidiaries owned by FSC include a leasing company, a mortgage
company, a securities broker-dealer, an investment adviser, an insurance agency,
a credit life insurance company, a management and services subsidiary, and a
small business investment company. The securities subsidiaries are subject to
regulation and supervision by the Commission and applicable state securities
authorities. The insurance agency and credit life insurance company are
regulated by applicable state insurance regulators. The business investment
company is licensed by the Small Business Administration.

In addition to its equity investment in its subsidiaries, FSC directly
or indirectly raises funds principally to finance the operations of its nonbank
subsidiaries. A substantial portion of FSC's cash flow is typically derived
from dividends directly from its bank and nonbank subsidiaries, and from
interest on loans to FSC's nonbank subsidiaries.

RECENT OPERATING RESULTS

For the three months ended March 31, 1994, First Security earned net
after tax income of $33.16 million, up 8.0% from the $30.71 million earned after
taxes in the same period of 1993. This continued the record-setting trend of
1993, which was the most profitable year in the Corporation's 65-year history.
The gain in net income from the same period last year was due primarily to a
15.6% growth in interest-earning assets, plus a significant reduction in the
provision for loan losses combined with a lower overall average funding cost and
higher noninterest income.

Net income for the first three months of 1994 generated a 1.34% return
on average assets (ROAA) and a 15.74% return on average stockholders' equity
(ROAE). These returns compare with a 1.43% ROAA and a 16.85% ROAE for the year-
ago period.

Net income per share for the first quarter of 1994 was $0.67, up 3.1%
from one year ago.

Management of FSC appreciates the hard work of its employee team and
the loyalty of its customers in producing the improving and impressive results
over the recent several years. Lower expenses and loan loss provisions
associated with a decreasing level of non-performing loans, coupled with a
stable or increasing customer demand for its financial products and services
within its market areas, has resulted in increasing income, assets and
shareholder equity. Management is aware, however, that uncertainties inherent
in today's highly competitive national and international financial markets
require constant vigilance by managers and a willingness by shareholders to
accept the presence of investment risk.

RECENT DEVELOPMENTS

National and global economic uncertainties lead FSC to be conservative
in the management of its RESERVE FOR LOAN LOSSES. Accordingly, the reserve was
maintained at $134.22 million or 2.01% of total loans at March 31, 1994,
compared to $127.33 million on March 31, 1993, which was equal to 2.28% of total
loans. FSC uses extensive and

<PAGE>

-43-

sophisticated credit monitoring mechanisms, and the credit quality of assets
held by FSC's banking subsidiaries is subject to periodic review by federal and
state bank regulatory agencies. While FSC believes that its present reserves
for loan losses are at appropriate levels in light of prevailing economic
conditions, there can be no assurance that FSC will not make adjustments to its
reserves and charge-off policies in response to changing economic conditions or
future changes in regulatory requirements.

Total PROBLEM ASSETS, which include nonaccruing and renegotiated loans,
accruing loans past due 90 days or more, and other real estate owned (ORE) were
$52.93 million at March 31, 1994, down 51.4% from the level on March 31,
1993. Nonaccruing and renegotiated loans were $27.77 million at March 31,
1994, down 58.7% from one year ago. The ratio of the reserve for loan losses to
the total of nonaccruing and renegotiated loans was 483.35% at March 31, 1994
compared with 189.16% one year ago. Total ORE and other foreclosed assets
amounted to $14.84 million at March 31, 1994, down 52.6% from the $31.34 million
on March 31, 1993. Accruing loans past due 90 days or more were $10.32 million
at March 31, 1994, essentially unchanged from a year ago, but up $3.16 million
from December 31, 1993. The increase over year end is largely associated with
acquisitions.

FSC's ongoing internal loan review process classifies as "potential
problem loans" (under Commission definitions) those loans which cause management
serious doubt as to the ability of the borrowers to comply with the present
repayment terms, but which loans are currently less than 90 days delinquent, are
well-secured and in the process of collection, and thus are not nonperforming
assets. As of March 31, 1994, "potential problem loans" were $19.46 million.
This does not compare with the $18.74 million reported at March 31, 1993 because
of the intervening acquisition of FNFC, which did not account for potential
problem loans. "Potential problem loans" and nonperforming assets will continue
to be closely monitored and carefully managed.

In early 1994, the United States Senate passed legislation that would
allow INTERSTATE BRANCHING FOR BANKS. The House of Representatives had already
passed a similar bill, and a final version wil now be worked out in a Conference
Committee. The effect of this legislation will be that a bank will be able to
operate in another state by means of a branch of the main bank rather than as a
separate bank, as is the case today. The efficiencies allowed by branching will
likely stimulate the opening of a number of branches of larger Eastern.
Midwestern and California banks in FSC's market areas. Because of FSC's
historical commitment to operating locally headquartered stand-alone banks, the
advent of interstate branch banking could have a noticeable competitive impact
on FSC.

In August 1993, FSC announced the closing of its acquisition of DESERT
SOUTHWEST COMMUNITY BANCORP and its wholly-owned subsidiary, Nevada Community
Bank, a one-branch Nevada state chartered bank. Nevada Community Bank had
deposits of approximately $43 million. Based on the market value of FSC Common
Stock at the time as compared with the book values of the acquired entities, the
value of this transaction to shareholders of Desert Southwest Community Bancorp
as of the signing of the merger agreement on January 22, 1993 was approximately
1.8 times the book value of Desert Southwest Community Bancorp.

<PAGE>

-44-

In October 1993, FSC announced the closing of its ACQUISITION OF STATE
BANK OF GREEN RIVER, a one-branch Wyoming state chartered bank. State Bank had
deposits of approximately $28 million. Based on the market value of FSC Common
Stock at the time as compared with the book value of the acquired entity, the
value of this transaction to shareholders of State Bank as of the signing of the
merger agreement on February 23, 1993 was approximately 1.2 times the book value
of State Bank of Green River.

In November 1993, FSC announced the closing of the ACQUISITION OF
CONTINENTAL BANCORPORATION and its wholly-owned subsidiaries, Continental
National Bank and Continental Trust Company, a Nevada trust company.
Continental had four (4) branches and deposits of approximately $198 million.
Based on the market value of FSC Common Stock at the time as compared with the
book values of the acquired entities, the value of this transaction to
Continental Bancorporation shareholders as of the signing of the merger
agreement on May 3, 1993 was approximately 2.5 times the book value of
Continental Bancorporation. In February 1994, Nevada Community Bank and
Continental National Bank were merged to become First Security Bank of Nevada, a
state chartered bank.

Also in November 1993, FSC ACQUIRED FIRST NATIONAL FINANCIAL
CORPORATION and its wholly owned First National Bank in Albuquerque, N.A..
First National Bank in Albuquerque had 26 branches and deposits of approximately
$1.15 billion at June 30, 1993. Based on the market value of FSC Common Stock
at the time as compared with the book value of the acquired entity, the value of
this transaction to shareholders of First National Financial Corporation as of
the signing of the merger agreement on May 18, 1993 was approximately 2.3 times
the book value of First National Financial Corporation. Early in 1994, First
National Bank was renamed First Security Bank of New Mexico, N.A.

Also in November 1993, FSC subsidiary First Security Bank of Utah, N.A.
acquired the core banking ASSETS AND DEPOSITS OF FIRST PROFESSIONAL BANK, a
subsidiary of Fiscorp, Inc., located in Salt Lake City, Utah. The acquisition
involved deposits of approximately $6 million.

In February 1994, FSC subsidiary FSB Wyoming closed its ACQUISITION OF
TWO BRANCHES OF EQUALITY STATE BANK, Cheyenne, Wyoming, having total deposits of
approximately $31 million.

FSC subsidiary FSB Utah closed its ACQUISITION OF COMMUNITY FIRST BANK
in Clearfield, Utah during May, 1994. Community First Bank had deposits of
approximately $67 million and 5 branches at September 30, 1993. Based on the
market value of FSC Common Stock at the time as compared with the book value of
the acquired entity, the value of this transaction to shareholders of Community
First Bank as of the signing of the merger agreement on October 22, 1993 was
approximately 2 times the book value of Community First Bank.

FSC has also announced a letter of intent for the ACQUISITION OF
AMERICAN BANCORPORATION, and its subsidiary American Bank of Commerce, by First
Security Bank of Idaho. American Bank of Commerce has four (4) branches with
$55.4 million in deposits at September 30, 1993. This transaction is expected
to close in the second half of 1994.

<PAGE>

-45-

COMPETITION

Based on deposits of approximately $3.36 billion at December 31, 1993,
FSB UTAH was the largest bank in the State of Utah. It currently has 114
branches. Based on deposits of nearly $2.34 billion at December 31, 1993, FSB
IDAHO was the second largest bank in the State of Idaho. It currently has 87
branches. FSC's new subsidiary, FSB NEW MEXICO, is the second largest bank in
New Mexico, with deposits of $1.18 billion at December 31, 1993.

In Wyoming, Nevada and Oregon, FSC's banks are smaller, more localized
competitors, with competition coming from a variety of larger banks and credit
unions. First Security Bank of Oregon, at the last measurement date was the
12th largest bank in Oregon. First Security Bank of Wyoming, at the most recent
measurement date, was the 8th largest bank in Wyoming. FSC's new subsidiary,
FSB NEVADA, has a presence in the Clark County, Nevada market of approximately
1.9% market share in deposits.

FSC's banks compete with other banking organizations in the states in
which they operate on the basis of price, service and convenience. Other types
of financial institutions, such as savings banks, savings and loan associations,
and credit unions offer a wide range of deposit and loan services (including
commercial loans) and, in some instances, fiduciary services. The likely advent
of interstate bank branching by larger banks in other parts of the country will
increase competition with FSC's banks and other financial services
subsidiaries. (SEE "--Recent Developments", above)

FSC's banks and other financial services subsidiaries also compete with
brokerage firms and mutual funds which provide the substantial equivalent of
checking accounts, credit cards and similar devices which strongly resemble
deposit products. Major retailers compete for loans by offering credit cards
and retail installment contracts. It is anticipated that competition from
nonbank organizations will continue to grow.

[THIS SPACE LEFT BLANK INTENTIONALLY]

<PAGE>

-46-

CAPITALIZATION

The following table sets forth the historical capitalization of FSC as
of March 31, 1994 (dollars in thousands):

<S> <C>
LONG-TERM DEBT
Floating Rate Notes Due 1999 $ 7,687
Medium Term Notes Due 1994-1998 50,000
Subordinated Notes Due 2002 75,000

SUBSIDIARIES: (1)
Advances from Federal Home Loan Bank (2) 162,806
Mortgages Payable and Other Debt 2,045
-----------

TOTAL LONG-TERM DEBT 297,538
-----------

STOCKHOLDERS' EQUITY
Preferred Stock:
Series "A", $3.15 cumulative convertible 685

FSC Common Stock (par value $1.25, 61,120
Authorized 150,000,000 shares,
Issued and Outstanding 40,255,000
shares)
Paid-in Surplus 125,044
Retained Earnings 677,954
Net unrealized loss on securities available for sale (8,001)
-----------

SUB-TOTAL OF COMMON STOCKHOLDERS' EQUITY 856,117
(BEFORE TREASURY STOCK)

Common Treasury Stock at cost (15,155)
(359,000 shares) -----------

TOTAL FSC COMMON STOCKHOLDERS' EQUITY 840,962
-----------
TOTAL STOCKHOLDERS' EQUITY 841,647
-----------

TOTAL LONG-TERM DEBT AND $ 1,139,185
STOCKHOLDERS' EQUITY -----------
-----------

<FN>

--------------------
(1) These obligations are direct obligations of FSC
subsidiaries, and as such, constitute claims
against such subsidiaries prior to FSC's equity
therein.
(2) These advances mature in 1994 through 1998.

</TABLE>

[THIS SPACE LEFT BLANK INTENTIONALLY]

<PAGE>

-47-

SUPERVISION AND REGULATION

REFERENCES IN THIS SECTION TO APPLICABLE STATUTES AND REGULATIONS ARE BRIEF
SUMMARIES ONLY, AND DO NOT PURPORT TO BE COMPLETE. THE READER SHOULD CONSULT
SUCH STATUTES AND REGULATIONS THEMSELVES FOR A FULL UNDERSTANDING OF THE DETAILS
OF THEIR OPERATION.

FSC is a bank holding company registered under the BHC Act, and is subject
to supervision and regulation by the Federal Reserve Board. Federal laws
subject bank holding companies to particular restrictions on the types of
activities in which they may engage, and to a range of supervisory requirements
and activities, including regulatory enforcement actions for violation of laws
and policies. In addition, Utah law authorizes the state bank regulators to
supervise and regulate under limited circumstances a holding company controlling
a Utah domiciled bank.

- ACTIVITIES "CLOSELY RELATED" TO BANKING. The BHC Act prohibits a bank
holding company, with certain limited exceptions, from acquiring direct or
indirect ownership or control of any voting shares of any company which is not a
bank or from engaging in any activities other than those of banking, managing or
controlling banks and certain other subsidiaries, or furnishing services to or
performing services for its subsidiaries. One principal exception to these
prohibitions allows the acquisition of interests in companies whose activities
are found by the Federal Reserve Board, by order or regulation, to be so closely
related to banking, managing, or controlling banks as to be a proper incident
thereto. Some of the activities that have been determined by regulation to be
closely related to banking are making or servicing loans, performing certain
data processing services, acting as an investment or financial advisor to
certain investment trusts and investment companies, and providing securities
brokerage services. Other activities approved by the Federal Reserve Board
include consumer financial counseling, tax planning and tax preparation, futures
and options advisory services, check guaranty services, collection agency and
credit bureau services, and personal property appraisals. In approving
acquisitions by FSC of companies engaged in banking-related activities, the
Federal Reserve Board considers a number of factors, including the expected
benefits to the public, such as greater convenience and increased competition or
gains in efficiency, which are weighed against the risks of possible adverse
effects, such as undue concentration of resources, decreased or unfair
competition, conflicts of interest, or unsound banking practices. The Federal
Reserve Board is also empowered to differentiate between activities commenced DE
NOVO and activities commenced through acquisition of a going concern.

- SECURITIES ACTIVITIES. The Federal Reserve Board has approved
applications by bank holding companies to engage, through nonbank subsidiaries,
in certain securities-related activities (underwriting of municipal revenue
bonds, commercial paper, consumer-receivable-related securities and one-to-four
family mortgage-backed securities), provided that the affiliates would not be
"principally engaged" in such activities for purposes of Section 20 of the
Glass-Steagall Act. In very limited situations, holding companies have been
permitted to underwrite and deal in corporate debt and equity securities through
such subsidiaries.

- SAFE AND SOUND BANKING PRACTICES. Bank holding companies are not
permitted to engage in unsafe and unsound banking practices. The Federal
Reserve Board may order a bank holding company to terminate an activity or
control of a nonbank subsidiary if such activity or control constitutes a
significant risk to the financial safety, soundness or stability of a subsidiary
bank and is inconsistent with sound banking principles. Regulation Y also

<PAGE>

-48-

requires a holding company to give the Federal Reserve Board prior notice of any
redemption or repurchase of its own equity securities, if the consideration to
be paid, together with the consideration paid for any repurchases or redemptions
in the preceding year, is equal to 10% or more of the company's consolidated net
worth.

The Financial Institutions Reform, Recovery and Enforcement Act of 1989
("FIRREA") expanded the Federal Reserve Board's authority to prohibit activities
of bank holding companies and their nonbanking subsidiaries which represent
unsafe and unsound banking practices or which constitute violations of laws or
regulations. Notably, FIRREA increased the amount of civil money penalties
which the Federal Reserve Board can assess for such practices or violations. The
penalties can be as high as $1 million per day. FIRREA also expanded the scope
of individuals and entities against which such penalties may be assessed.

- ANTI-TYING RESTRICTIONS. Bank holding companies and their bank and
nonbank affiliates are prohibited from tying the provision of certain services,
such as extensions of credit, to other services offered by a holding company or
its affiliates.

- ANNUAL REPORTING; EXAMINATIONS. FSC is required to file an annual report
with the Federal Reserve Board, and such additional information as the Federal
Reserve Board may require pursuant to the BHC Act. The Federal Reserve Board
may examine a bank holding company or any of its subsidiaries, and charge the
company for the cost of such an examination. FSC also will be subject to
reporting and disclosure requirements under the state and federal securities
laws subsequent to the offering contemplated by these materials.

- BANK HOLDING COMPANY CAPITAL ADEQUACY REQUIREMENTS. The Federal Reserve
Board monitors the capital adequacy of bank holding companies. The Federal
Reserve Board uses a combination of risk-based guidelines and leverage ratios to
evaluate capital adequacy. The Federal Reserve Board has adopted a system using
internationally consistent risk-based capital adequacy guidelines to evaluate
the capital adequacy of bank holding companies. Under the risk-based capital
guidelines, different categories of assets are assigned different risk weights,
based generally on the perceived credit risk of the asset. These risk weights
are multiplied by corresponding asset balances to determine a "risk-weighted"
asset base. Certain off-balance sheet items, which previously were not
expressly considered in capital adequacy computations, are added to the
risk-weighted asset base by converting them to a balance sheet equivalent and
assigning to them the appropriate risk weight. Total capital is defined as the
sum of "Tier 1" and "Tier 2" capital elements, with "Tier 2" being limited to
100% of "Tier 1." For bank holding companies, "Tier 1" capital includes, with
certain restrictions, common stockholders' equity, perpetual preferred stock and
minority interests in consolidated subsidiaries less certain intangibles. "Tier
2" capital includes, with certain limitations, certain forms of perpetual
preferred stock, as well as maturing capital instruments and the reserve for
possible loan losses and specified levels of certain intangibles.

In addition to the risk-based capital guidelines, the Federal Reserve Board
has adopted the use of a leverage ratio as an additional tool to evaluate the
capital adequacy of banks and bank holding companies. The leverage ratio is
defined to be a company's "Tier 1" capital divided by its adjusted total assets.
The leverage ratio adopted by the federal banking agencies requires a 3.0% "Tier
1" capital to adjusted total assets ratio for institutions with a CAMEL rating
of 1. Institutions which are not CAMEL 1 rated will be expected to maintain a
100 to 200 basis point cushion; i.e., these institutions will be expected to
maintain a

<PAGE>

-49-

leverage ratio of 4.0% to 5.0%, and institutions planning acquisitions are
expected to maintain higher ratios.

The following table sets forth the current regulatory requirements for capital
ratios of bank holding companies as compared with FSC's capital ratios at March
31, 1994:

-------------------------------------------------
TIER 1 TOTAL
CAPITAL TO CAPITAL TO
LEVERAGE RISK-WEIGHTED RISK-WEIGHTED
RATIO(1) ASSETS(2) ASSETS(3)
<S> <C> <C> <C>
--------------------------------------------------------------------------
REGULATORY MINIMUM 4.00-5.00% 4.00% 8.00%
--------------------------------------------------------------------------
FSC ACTUAL 7.81% 11.51% 13.90%
--------------------------------------------------------------------------

</TABLE>

(1) THE LEVERAGE RATIO IS DEFINED AS THE RATIO OF TIER 1 CAPITAL
(USING FINAL 1992 RISK-BASED CAPITAL GUIDELINES TO DEFINE TIER 1
CAPITAL) TO AVERAGE ASSETS, NET OF GOODWILL. FEDERAL RESERVE
BOARD GUIDELINES PROVIDE THAT ALL BANK HOLDING COMPANIES (OTHER
THAN THOSE THAT MEET CERTAIN CRITERIA) MAINTAIN A MINIMUM
LEVERAGE RATIO OF 3%, PLUS AN ADDITIONAL CUSHION OF 100 TO 200
BASIS POINTS. THE GUIDELINES ALSO STATE THAT BANKING
ORGANIZATIONS EXPERIENCING INTERNAL GROWTH OR MAKING ACQUISITIONS
WILL BE EXPECTED TO MAINTAIN "STRONG CAPITAL POSITIONS"
SUBSTANTIALLY ABOVE THE MINIMUM SUPERVISORY LEVELS WITHOUT
SIGNIFICANT RELIANCE ON INTANGIBLE ASSETS.

(2) SHAREHOLDERS' EQUITY LESS GOODWILL (TIER 1 CAPITAL) DIVIDED
BY RISK-WEIGHTED ASSETS.

(3) TIER 1 CAPITAL PLUS RESERVE FOR POSSIBLE LOAN LOSSES (LIMITED
TO 1.25% OF TOTAL RISK-WEIGHTED ASSETS) PLUS QUALIFIED
SUBORDINATED AND CONVERTIBLE DEBT (TIER 2 CAPITAL) DIVIDED BY
RISK-WEIGHTED ASSETS.

Bank regulators continue to indicate their desire to raise capital
requirements applicable to banking organizations beyond their current levels.
However management is unable to predict whether and when higher capital
requirements would be imposed and, if so, at what levels and on what schedule.

- IMPOSITION OF LIABILITY FOR UNDERCAPITALIZED SUBSIDIARIES. The Federal
Deposit Insurance Corporation Improvement Act of 1991 ("FDICIA") requires each
federal banking agency to revise its risk-based capital standards within
eighteen months of enactment of FDICIA to ensure that those standards take
adequate account of interest rate risk, concentration of credit risk and the
risks of non-traditional activities, as well as reflect the actual performance
and expected risk of loss on multi-family mortgages. The new law also requires
each federal banking agency to specify within nine months after the date of the
enactment of the statute, by regulation, the levels at which an insured
institution would be considered "well capitalized," "adequately capitalized,"
"undercapitalized," "significantly undercapitalized" and "critically
undercapitalized." Under the regulations adopted by the banking agencies, all
of FSC's subsidiary banks would be deemed to be "well capitalized."

FDICIA requires bank regulators to take "prompt corrective action" to
resolve problems associated with insured depository institutions. In the event
an institution becomes "undercapitalized," it must submit a capital restoration
plan. If an institution becomes "significantly undercapitalized" or "critically
undercapitalized," additional and significant limitations are placed on the
institution. The capital restoration plan of an undercapitalized institution
will not be accepted by the regulators unless each company "having control of"
the undercapitalized institution "guarantees" the subsidiary's compliance with
the capital restoration plan until it becomes "adequately capitalized." FSC has
control of all of its subsidiaries for purposes of this statute.

<PAGE>

-50-

Under FDICIA, the aggregate liability of all companies controlling a
particular institution is limited to the lesser of 5% of the institution's
assets at the time it became undercapitalized or the amount necessary to bring
the institution into compliance with applicable capital standards. FDICIA
grants greater powers to the bank regulators in situations where an institution
becomes "significantly" or "critically" undercapitalized or fails to submit a
capital restoration plan. For example, a bank holding company controlling such
an institution can be required to obtain prior Federal Reserve Board approval of
proposed dividends, or might be required to consent to a merger or to divest the
troubled institution or other affiliates.

Additionally, Federal Reserve Board policy discourages the payment of
dividends by a bank holding company from borrowed funds as well as payments that
would adversely affect capital adequacy. Failure to meet the capital guidelines
may result in institution by the Federal Reserve Board of appropriate
supervisory or enforcement actions.

The "PROMPT CORRECTIVE ACTION" provisions of FDICIA reflect the same
concerns which gave rise to a position adopted by the Federal Reserve Board
known as the "source of strength doctrine," which is based on the Federal
Reserve Board's Regulation Y. Regulation Y directs bank holding companies to
"serve as a source of financial and managerial strength" to their subsidiary
banks, and bars them from engaging in unsafe and unsound practices.

- AUDIT REPORTS. Beginning January 1, 1994, FDICIA requires insured
institutions with $500 million or more in total assets to submit annual audit
reports prepared by independent auditors to federal and state regulators. In
most cases, the audit report of the institution's holding company can be used to
satisfy this requirement. The annual audit report shall include financial
statements prepared in accordance with generally accepted accounting principles,
statements concerning management's responsibility for the financial statements,
internal controls and compliance with legal requirements designated by the FDIC,
and an attestation by the auditor regarding the statements of management.
FDICIA requires that independent audit committees be formed, consisting of
outside directors only. The committees of institutions with assets of $3
billion or more must include members with experience in banking or financial
management, must have access to outside counsel, and must not include
representatives of large customers.

- ACQUISITIONS BY BANK HOLDING COMPANIES. The BHC Act requires every bank
holding company to obtain the prior approval of the Federal Reserve Board before
it may acquire all or substantially all of the assets of any bank, or ownership
or control of any voting shares of any bank, if after such acquisition it would
own or control, directly or indirectly, more than 5% of the voting shares of
such bank. In approving bank acquisitions by bank holding companies, the
Federal Reserve Board is required to consider the financial and managerial
resources and future prospects of the bank holding company and the banks
concerned, the convenience and needs of the communities to be served, and
various competitive factors. The Attorney General of the United States may,
within 30 days after approval of an acquisition by the Federal Reserve Board,
bring an action challenging such acquisition under the federal antitrust laws,
in which case the effectiveness of such approval is stayed pending a final
ruling by the courts.

- INTERSTATE ACQUISITIONS. The Federal Reserve Board will only allow the
acquisition by a bank holding company of an interest in any bank located in
another state if the statutory laws of the state in which the target bank is
located expressly authorize such acquisition.

<PAGE>

-51-

Utah banking laws permit, in certain circumstances, out-of-state bank holding
companies to acquire certain existing banks and bank holding companies in Utah.

- MERGERS OF BANKS AND THRIFTS. FDICIA has eased restrictions on cross-
industry mergers. Members of the BIF and the Savings Association Insurance Fund
are generally allowed to merge, assume each other's deposits, and transfer
assets in exchange for an assumption of deposit liabilities. A formula applies
to treat insurance assessments relating to acquired deposits as if they were
still insured through the acquired institution's insurance fund. The
transaction must be approved by the appropriate federal banking regulator. In
considering such approval, the regulators take into account applicable capital
requirements, certain interstate banking restrictions, and other factors.

- BANK REGULATION. Three of FSC's bank subsidiaries are national banks,
which are subject to regulation and supervision by the Comptroller. The other
banks are a state-chartered bank in Wyoming, subject to regulation and
supervision by the State of Wyoming and by the FDIC; a state-chartered savings
bank in Oregon, which is regulated by the State of Oregon and by the FDIC; and a
state-chartered bank in Nevada, subject to regulation and supervision by the
State of Nevada and by the FDIC. Bank regulations on both the federal and state
levels are broad in their scope and materially affect the business of FSC and
its banks.

All of FSC's subsidiary banks are subject to the requirements and
restrictions under federal and state law, including requirements to maintain
reserves against deposits, restrictions on the types and amounts of loans that
may be granted and the interest that may be charged thereon, and limitations on
the types of investments that may be made and the types of services that may be
offered. Various consumer laws and regulations also affect the operations of
the banks. In addition to the impact of regulation, commercial banks are
affected significantly by actions of the Federal Reserve Board as it attempts to
control the money supply and credit availability in order to influence the
economy.

- PERMISSIBLE ACTIVITIES FOR STATE-CHARTERED INSTITUTIONS/EQUIVALENCE TO
NATIONAL BANK POWERS. FDICIA provides that, effective December 19, 1992,
no state bank or subsidiary thereof may engage as principal in any activity
not permitted for national banks, unless the institution complies with
applicable capital requirements and the FDIC determines that the activity
poses no significant risk to the insurance fund. In general, statutory
restrictions on the activities of banks are aimed at protecting the safety
and soundness of depository institutions. Many of the statutory
restrictions limit the participation of such institutions in the securities
and insurance product markets. Each of the state-chartered banking
subsidiaries of FSC are in compliance with the restrictions imposed by
FDICIA.

- EQUITY INVESTMENTS. In general, FDICIA prohibits state banks from
directly or indirectly acquiring or retaining any equity investment of a
type, or in an amount, not permitted for national banks. This prohibition
does not apply to (1) investments in majority-owned subsidiaries; (2)
qualified lower-income housing projects; (3) certain investments in shares
listed on a national exchange or shares of a registered investment company;
(4) investments in providers of directors' and officers' liability
insurance; and (5) shares of state-examined institutions engaging only in
activities permissible for a national bank. Other restrictions may apply
to such investments. FDICIA requires the divestiture of impermissible
equity

<PAGE>

-52-

investments held prior to December 19, 1991, as quickly as is prudent, but
not later than December 19, 1996. In addition, during each of the three
years following the enactment of FDICIA, each state bank must reduce by at
least one-third the amount of impermissible publicly traded shares owned as
of December 19, 1991, that exceeds the amount of the bank's capital. Each
of FSC's state-chartered subsidiary banks has implemented a plan for
aligning its investment portfolio with the requirements of FDICIA, and is
presently in compliance with FDICIA's equity divestiture requirements.

- RESTRICTIONS ON TRANSACTIONS WITH AFFILIATES. One set of restrictions is
found in Section 23A of the Federal Reserve Act, which affects loans to and
investments in FSC and any of its subsidiaries. Section 23A imposes
quantitative and qualitative limits on transactions between a bank and any
affiliate, and also requires certain levels of collateral for such loans.
It also limits the amount of advances to third parties which are
collateralized by the securities or obligations of FSC or its subsidiaries.

Another set of restrictions is found in Section 23B of the Federal Reserve
Act. Among other things, Section 23B requires that certain transactions
between FSC's subsidiary banks and their affiliates must be on terms
substantially the same, or at least as favorable to FSC or its
subsidiaries, as those prevailing at the time for comparable transactions
with or involving other nonaffiliated companies. In the absence of such
comparable transactions, any transaction between FSC and its affiliates
must be on terms and under circumstances, including credit standards, that
in good faith would be offered to or would apply to nonaffiliated
companies. FSC is also subject to certain prohibitions against advertising
which suggests that FSC is responsible for the obligations of its
affiliates.

The restrictions on loans to insiders contained in the Federal Reserve Act
and Regulation O now apply to all insured institutions and their
subsidiaries and holding companies. The aggregate amount of an
institution's loans to insiders is limited to the amount of its unimpaired
capital and surplus, unless the FDIC determines that a lesser amount is
appropriate. Insiders are subject to enforcement actions for knowingly
accepting loans in violation of applicable restrictions. Loans made prior
to the enactment of FDICIA are not subject to the restrictions.

- RESTRICTIONS ON SUBSIDIARY BANK DIVIDENDS. The Federal Reserve Board,
the Comptroller and the FDIC have each issued policy statements to the
effect that bank holding companies and member banks, national banks and
state banks should generally only pay dividends out of current operating
earnings. The prior approval of the Comptroller is required if the total
of all dividends declared by the board of directors of a national bank in
any calendar year will exceed the aggregate of the bank's net profits (as
defined by regulatory authorities) for that year and its retained net
profits for the preceding two years. Similar restrictions govern the other
banking subsidiaries of FSC. In addition, national banks can pay dividends
only to the extent that retained net profits exceed "bad debts", which are
generally defined to include the principal amount of loans that are in
arrears as to interest by nine months or more and that are not secured and
that are not in the process of collection. As of March 31, 1994, FSC's
subsidiary banks could have declared additional dividends to FSC totalling
approximately $103.53 million

<PAGE>

-53-

without regulatory approval or restriction. Federal banking regulators
also may prohibit federally insured banks from paying dividends if the
payment of such dividend would leave the bank "undercapitalized" as defined
in FDICIA and the implementing regulations, or the payment of dividends
would, in light of the financial condition of such bank, constitute an
unsafe or unsound practice. Applicable Nevada, Wyoming and Oregon law
place similar restrictions on the payment of dividends by banks organized
under the laws of those states.

- BRANCH CLOSING REQUIREMENTS. FDICIA requires FSC's banks to notify the
FDIC and branch customers 90 days prior to a branch closing, including a
detailed statement regarding the reasons for the closing. Notice of the
closing must be posted at the facility 30 days prior to the closing.

- TRUTH IN SAVINGS DISCLOSURES. FDICIA subjects FSC's banks to information
requirements concerning advertisements and solicitations for deposits. The
FDIC requires such advertisements and solicitations to disclose the
following: (1) annual percentage yield and the period for which it is in
effect; (2) minimum balance and initial deposit requirements; (3) a
statement that fees could reduce the yield; and (4) interest penalty for
early withdrawal. Misleading advertisements are prohibited. Schedules of
rates, fees, and other terms must be distributed to customers, and notice
of any changes must be mailed 30 days before they go into effect.
Violations of these restrictions are subject to enforcement actions by
regulators, civil suits by depositors, and could result in the payment of
penalties and attorneys' fees. FDICIA requires depository institutions to
disclose fees, interest rates and other terms concerning deposit accounts
to consumers before they open accounts. FDICIA requires depository
institutions that provide periodic statements to consumers to include
information about fees imposed, interest earned and the annual percentage
yield on those statements. FDICIA imposes substantive limitations on the
methods by which institutions determine the balance on which interest is
calculated. Rules dealing with advertisements for deposit accounts are
also included in the law.

- EXAMINATIONS. The FDIC periodically examines and evaluates insured
banks. Based upon such an evaluation, the FDIC may revalue the assets of
an insured institution and require that it establish specific reserves to
compensate for the difference between the FDIC-determined value and the
book value of such assets. FDICIA requires that these on-site examinations
be conducted every 12 months, except that certain well capitalized banks
may be examined every 18 months. FDICIA authorizes the FDIC to assess the
institution for its costs of conducting the examinations. The rules and
regulations of the Comptroller, which regulates FSC's national banks, and
the various state banking authorities regulating FSC's state-chartered
banks, also provide for periodic examinations by those agencies.

- STANDARDS FOR SAFETY AND SOUNDNESS. As part of FDICIA's efforts to
promote the safety and soundness of depository institutions and their
holding companies, the appropriate federal banking regulators are required
to promulgate by December 1, 1993 regulations specifying operational and
management standards (addressing internal controls, loan documentation,
credit underwriting and interest rate risk) and asset quality, earnings and
stock valuation standards (including a minimum ratio of market value to
book value of the publicly traded shares of such

<PAGE>

-54-

depository institutions and holding companies). The Federal Reserve Board
issued on April 19, 1993 proposed regulations on standards for safety and
soundness, and is seeking public comment on this proposal. The impact of
these regulations is difficult to determine until final regulations are
issued. The proposed regulations did not address standards for a minimum
ratio of market value to book value because the Board found that market
value is affected by factors unrelated to safety and soundness.

- REAL ESTATE LENDING EVALUATIONS. FDICIA requires uniform standards for
evaluations by the regulators of loans secured by real estate or made to
finance improvements to real estate that take into consideration the risk
posed to the insurance funds by real estate loans, the availability of
credit, and the need for safe and sound operation of insured depository
institutions. FDICIA also prohibits the regulators from adversely
evaluating a real estate loan or investment solely on the grounds that the
investment involves commercial, residential or industrial property, unless
the safety and soundness of an institution may be affected.

In order to implement these provisions, on December 31, 1992, the agencies
adopted regulations establishing loan-to-value (LTV) ratio limitations on
real estate lending by insured depository institutions. The Federal
Reserve Board also established loan-to-value ratio limitations on real
estate lending by bank holding companies and their nonbank subsidiaries.
Certain transactions are excluded from the LTV ratio limitations.
Specifically, these limits do not apply to: loans guaranteed or insured by
the U.S. Government or an agency thereof, or backed by the full faith and
credit of a state government; loans facilitating the sale of real estate
acquired by the lending institution in the ordinary course of collecting a
debt previously contracted; loans where real estate is taken as additional
collateral solely through an abundance of caution by the lender; loans
renewed, refinanced, or restructured by the original lender(s) to the same
borrower(s), without the advancement of new funds; or loans originated
prior to the effective date of the regulation.

- DEPOSIT INSURANCE ASSESSMENTS. FDICIA requires the FDIC to make
effective, no later than January 1, 1994, regulations setting up a risk-
based deposit insurance system. In addition, the FDIC can impose special
assessments to cover the cost of borrowings from the U.S. Treasury, the
Federal Financing Bank, and BIF member banks. The semiannual assessment
must be based on: (1) the probability of a loss to the BIF; (2) the
potential magnitude of the loss; and (3) the revenue and reserve needs of
the fund.

On October 1, 1992, the FDIC issued rules revising its assessments
regulations to provide for the transition from the existing flat-rate
system for deposit insurance assessments (or "premiums") to a new, risk-
based assessment system. Under the transitional system for the six-month
period beginning July 1, 1993, and in semiannual periods thereafter, FDIC-
insured depository institutions that are members of the BIF must pay
insurance premiums at rates between 23 and 31 basis points depending on the
bank's capital category and bank regulators' supervisory category.
Institutions assigned to higher-risk categories--that is, institutions that
pose a greater risk of loss to their respective deposit insurance funds--
would pay assessments at higher rates than would institutions that pose

<PAGE>

-55-

a lower risk. The FDIC on June 25, 1993 issued final rules which make
permanent, with some technical modifications, the risk based assessment
system set forth in the transitional rules, commencing with the January 1,
1994 assessment period. The FDIC may consider at a later date expanding
the range of the premiums assessed. As required by FDICIA, the FDIC has
implemented the rules governing assessments of BIF members to enable BIF to
recapitalize to the designated reserve ratio of 1.25% within fifteen years.

- BROKERED DEPOSIT RESTRICTIONS. FIRREA and FDICIA generally bar
institutions which are not well capitalized from accepting brokered
deposits. The FDIC has issued rules which prohibit undercapitalized
institutions from soliciting or accepting such deposits. Adequately
capitalized institutions would be allowed to solicit such deposits, but
could only accept them if a waiver is obtained from the FDIC.

- REAL ESTATE APPRAISAL REQUIREMENTS. The federal banking agencies have
issued final regulations requiring, after December 31, 1992, insured
institutions to obtain appraisals by certified or licensed appraisers for
transactions having a value over $100,000.

- FIRREA'S IMPACT. FIRREA's primary purpose was to restructure the
statutory and regulatory framework applicable to savings associations, and
establish a mechanism for resolving insolvent thrift institution cases.
Certain provisions of FIRREA, however, affect the bank subsidiaries of
holding companies, including FSC. Among the most significant of these
provisions are those which: (1) clarify the powers and duties of the FDIC
as receiver or conservator of a bank; (2) enhance the enforcement powers of
the federal banking regulators; (3) establish new reporting requirements
under the Home Mortgage Disclosure Act designed to prevent discriminatory
lending practices; (4) require the federal banking agencies to make public
a rating of a bank's performance under the Community Reinvestment Act; and
(5) prohibit banks from entering into contracts with persons providing
goods, products or services if the performance of such contracts would
adversely affect the bank's safety and soundness. FIRREA's primary impact
on commercial banks has been to increase the enforcement authority of
federal regulators and to expand the scope of potential targets of
enforcement actions.

FIRREA also contains a "cross-guarantee" provision which makes commonly
controlled insured depository institutions liable to the FDIC for any
losses incurred in connection with the failure of an affiliated insured
depository institution.

- EXPANDING ENFORCEMENT AUTHORITY. One of the major additional burdens
imposed on the banking industry by FDICIA is the increased ability of banking
regulators to monitor the activities of banks and their holding companies. In
addition, the Federal Reserve Board, Comptroller and FDIC are possessed of
extensive authority to police unsafe or unsound practices and violations of
applicable laws and regulations by depository institutions and their holding
companies. For example, the FDIC may terminate the deposit insurance of any
institution which it determines has engaged in an unsafe or unsound practice.
The agencies can also assess civil money penalties of up to $1 million per day,
issue cease and desist or removal orders, seek injunctions, and publicly
disclose such actions. FDICIA, FIRREA and

<PAGE>

-56-

other laws have expanded the agencies' authority in recent years, and the
agencies have not yet fully tested the limits of their powers.

- INSTABILITY OF REGULATORY STRUCTURE. The laws and regulations affecting
banks and bank holding companies are in a state of flux. The rules and the
regulatory agencies in this area have changed significantly over recent years,
and there is reason to expect that similar changes will continue in the future.
It is difficult to predict the outcome of these changes.

DESCRIPTION OF FSC'S CAPITAL STOCK

The following statements are brief summaries of the material provisions
relating to FSC's Preferred Stock and FSC Common Stock and are qualified in
their entirety by the provisions of FSC's Certificate of Incorporation, which
has been filed with the Commission.

- PREFERRED STOCK. The Certificate of Incorporation authorizes the
issuance of 400,000 shares of preferred stock with no par value. On March 31,
1994, there were 13,050 shares of $3.15 Cumulative Convertible Preferred Stock,
Series "A" (the "Series A Preferred Stock") outstanding. Holders of Series A
Preferred Stock have the right to receive semi-annual dividends at the annual
rate of $3.15 per share. Such right is cumulative and such dividends are
payable before dividends may be paid on the FSC Common Stock. The Series A
Preferred Stock is convertible into the FSC Common Stock at a ratio of 12.15
shares of FSC Common Stock for each share of Series A Preferred Stock. This
conversion right is subject to adjustment in certain events to protect against
dilution of the conversion rights attached to the Series A Preferred Stock. In
the event of a liquidation, dissolution or winding up of FSC, the holders of
Series A Preferred Stock are entitled to receive cash value of $52.50 per share
plus unpaid accumulated preferred dividends before any distribution is made to
holders of the FSC Common Stock. FSC may, at the option of the Board of
Directors, redeem all or any part of the outstanding Series A Preferred Stock at
the redemption price of $52.50 per share plus unpaid accumulated preferred
dividends.

Holders of FSC's Series A Preferred Stock are entitled to one vote per
share on all matters submitted to a vote of stockholders. Voting for the
election of directors is not cumulative. If at any time four or more
semi-annual dividends on the Series A Preferred Stock are in default, in whole
or in part, the holders of the Series A Preferred Stock as a class will be
entitled to elect four directors and the holders of the FSC Common Stock will be
entitled to elect the remaining directors. Holders of any additional Preferred
Stock hereafter issued may have such full or limited voting rights as are
provided by the Board of Directors.

The Board of Directors of FSC is authorized by the Certificate of
Incorporation to provide, without further shareholder action, for the issuance
of one or more series of preferred stock. The Board of Directors has the power
to fix various terms with respect to each series, including voting powers,
designations, preferences and relative, participating, optional or other special
rights, qualifications, limitations, restrictions and redemption, conversion or
exchangeability provisions. Holders of preferred stock have no pre-emptive
rights. The Series A Preferred Stock is not publicly traded.

- FSC COMMON STOCK. FSC is currently authorized to issue 150,000,000
shares of FSC Common Stock with a par value of $1.25 per share. As of March 31,
1994, there were outstanding 48,216,000 (net of Treasury Stock) shares of FSC
Common Stock. At such

<PAGE>

-57-

date, there were: 19,660 shares reserved for issuance under FSC's Comprehensive
Management Incentive Plan as stock bonuses and other awards (Note: at its
annual meeting in April 1994, FSC stockholders increased this by 2,500,000
shares.); 334,439 shares reserved for issuance under FSC's Dividend Reinvestment
Plan; 158,558 shares reserved for issuance upon the conversion of FSC's Series A
Preferred Stock, and 2,446,593 shares reserved for issuance upon exercise of
outstanding stock options. Payment of dividends on the FSC Common Stock is also
subject to the prior rights of FSC's outstanding Preferred Stock.

The holders of FSC Common Stock are entitled to voting rights for the
election of directors and for other purposes, subject to the voting rights of
the holders of Preferred Stock conferred by law and to the specific voting
rights granted to each series of Preferred Stock and to voting rights which may
in the future be granted to subsequently created series of Preferred Stock.

Dividends will be determined by FSC's Board of Directors in light of
circumstances existing at the time, including the earnings and financial
condition of FSC, and there is no assurance that dividends will continue to be
paid at current levels. No material restrictions have been imposed on FSC's
ability to pay dividends from its earned surplus by bank regulations or
applicable law. As of December 31, 1993, approximately $369 million could be
applied to dividend payments to its shareholders and certain other payments.

FSC Common Stock has no pre-emptive or conversion rights.

As of August 28, 1989, FSC adopted a Shareholder Rights Agreement (the
"Plan") and the Board of Directors of FSC on that date (a) declared a dividend
of one "Right" for each share of FSC Common Stock held of record as of the close
of business on September 8, 1989, and (b) authorized the issuance of one Right
in respect of each share of FSC Common Stock issued after September 8, 1989 and
prior to the occurrence of certain events described in the Plan, primarily
involving the acquisition of target levels of FSC shares by persons not then
holding such amounts. Each Right entitles the registered holder to purchase
from FSC a unit consisting of one-thousandth of a share of Junior Series B
Preferred Stock at a purchase price of $44.44 per unit. The Rights are attached
to all shares of FSC Common Stock that were outstanding on September 8, 1989 or
have been issued since that date, and no separate Rights Certificates have been
or will be distributed until the occurrence of certain events described in the
Rights Agreement. Until the occurrence of such events, no Right may be
exercised or traded separately from the FSC Common Stock. Following separation,
the Rights may, depending upon the occurrence of certain events described in the
Rights Agreement, entitle the holders thereof to either purchase or receive
additional shares of FSC Common Stock. The Rights will expire at the close of
business on August 28, 1999, unless earlier redeemed by FSC, which may be done
at $0.01 per Right, in accordance with the terms of the Plan.

The Plan is designed to protect FSC's stockholders' interests in the event
of an unsolicited attempt to acquire FSC, including a gradual accumulation of
shares in the open market. FSC believes that the Plan provides protection
against a partial or two-tier tender offer that does not treat all stockholders
equally and against other coercive takeover tactics which could impair FSC's
Board of Directors' ability to represent FSC's stockholders fully. Management
believes that the Rights should also deter any attempt by a controlling
stockholder to take advantage of FSC through self-dealing transactions. The
Plan is not

<PAGE>

-58-

intended to prevent a takeover of FSC. Issuing the Rights has no dilutive
effect, does not affect reported earnings per share, and does not change the way
in which FSC's shares are traded. However, the exercise of Rights by some but
not all of FSC's stockholders would have a dilutive effect on nonexercising
stockholders. Moreover, some may argue that the Plan has the potential for
"entrenching" current management by allowing current voting stockholders to
increase their voting shares, thus making a tender offer more difficult and
costly.

FSC Common Stock is not subject to redemption by FSC, and there is no
restriction on the repurchase by FSC of shares of FSC Common Stock except for
certain regulatory limits.

FSC's Certificate of Incorporation provides that, in general, an
affirmative vote of not less than 80% of the outstanding shares of FSC Common
Stock is required to approve or authorize certain major corporate transactions
involving FSC and holders of more than 15% of the FSC Common Stock (including
certain mergers, substantial dispositions of assets, liquidation or dissolution,
or recapitalization). The 80% vote is not required in some such circumstances,
including certain transactions which have been approved in advance by a majority
of the Board of Directors, or where holders of FSC Common Stock receive a price
per share that satisfies the fairness criteria set forth in the Certificate of
Incorporation.

HISTORICAL SHARE PRICES AND DIVIDENDS

FSC Common Stock is quoted on the NASDAQ / NMS under the symbol "FSCO".

The following table sets forth by quarter the high and low closing bid
price of FSC Common Stock as reported on the NASDAQ / NMS, and the cash
dividends declared per share for the calendar periods indicated. All stock
prices and dividends per share reported below have been adjusted for the 50%
stock dividends effected by FSC on May 18, 1992 and on June 3, 1991, which had
the effect of 3-for-2 stock splits.
<PAGE>

-59-

CASH DIVIDENDS
DECLARED PER
HIGH LOW SHARE
---- --- ------------------
<S> <C> <C> <C>
1994

Second Quarter $0.26
First Quarter 29.00 25.75 0.26

1993
Fourth Quarter $30.00 $24.00 $0.23
Third Quarter 28.50 26.50 0.23
Second Quarter 30.00 25.50 0.23
First Quarter 30.25 25.50 0.19

1992
Fourth Quarter $27.50 $22.00 $0.19
Third Quarter 26.25 21.50 0.17
Second Quarter 25.25 20.17 0.17
First Quarter 23.33 18.17 0.15

1991
Fourth Quarter $19.00 $16.17 $0.15
Third Quarter 17.33 13.67 0.15
Second Quarter 16.50 12.45 0.15
First Quarter 13.00 10.00 0.14

</TABLE>

The closing bid price of FSC Common Stock as reported on the NASDAQ / NMS
on March 29, 1994, the last trading day prior to the public announcement of the
Merger Agreement was $28.75 per share. On , 1994, the closing bid
price for FSC Common Stock was $ per share.

The approximately 480,000 acquired or treasury shares of FSC Common Stock
to be issued in connection with the Merger will not result in any material
increase in the number of shares of FSC Common Stock outstanding and available
for trading in the public share markets.

The STAR VALLEY Shareholders are advised to obtain current market
quotations for the FSC Common Stock. No assurances can be given concerning the
market price of the FSC Common Stock before or after the date on which the
Merger is consummated. The market price of the FSC Common Stock will fluctuate
between the date of this Prospectus/Proxy Statement and the date on which the
Merger is consummated and thereafter. Because the Conversion Ratio is fixed and
because the market price of the FSC Common Stock is subject to fluctuation, the
value of the shares of FSC Common Stock that

<PAGE>

-60-

holders of STAR VALLEY Common Stock will receive in the Merger may increase or
decrease prior to and following the Merger.

INFORMATION ABOUT STAR VALLEY

GENERAL

STAR VALLEY is a Wyoming state-chartered bank whose deposits are insured by
the FDIC. STAR VALLEY is a member of the Federal Reserve System. Accordingly,
STAR VALLEY is primarily regulated by the Commissioner and by the Federal
Reserve System.

The principal business of STAR VALLEY is to obtain deposits from the
general public and to combine such deposits with other available sources of
funding to make residential and commercial real estate loans; secured and
unsecured commercial, corporate and business loans; and consumer loans. STAR
VALLEY also purchases investment securities, including United States Government,
Federal Agency, and State and Municipal obligations. STAR VALLEY provides a
variety of other banking services, including safe deposit boxes, night deposit
facilities, wire transfers and various domestic exchange services. STAR VALLEY
does not provide trust services.

The table below lists the major classifications of STAR VALLEY's income and
the percentage contribution of each classification (dollar amounts in
thousands):

1993 1992 1991
----------------- ----------------- -----------------
AMOUNT PERCENT AMOUNT PERCENT AMOUNT PERCENT
------ ------- ------ ------- ------ -------
(%) (%) (%)
<S> <C> <C> <C> <C> <C> <C>
Interest and Fees on Loans $3,012 60.76 $2,833 56.39 $2,941 54.51
Interest on Investment Securities 1,251 25.24 1,613 32.10 1,876 34.77
Interest on Federal Funds Sold 123 2.48 215 4.28 225 4.17
Non-Interest Income 571 11.52 363 7.23 353 6.55
------ ------- ------ ------- ------ -------
Total $4,957 100.00 $5,024 100.00 $5,395 100.00
------ ------- ------ ------- ------ -------
------ ------- ------ ------- ------ -------

</TABLE>

<PAGE>
-61-

STAR VALLEY's operations are conducted through its Main Office located in
downtown Afton, Wyoming, and it will soon open a new branch office in Thayne,
Wyoming. At December 31, 1993, STAR VALLEY had 25 full-time equivalent
employees. None of the employees are represented by labor unions.

THE MARKET FOR STAR VALLEY COMMON STOCK

No broker or dealer makes a market in the STAR VALLEY Common Stock.
Historically, transactions in STAR VALLEY Common Stock have been negotiated
directly between buyers and sellers. Information regarding the stock
transactions presented below reflects trading and transfers in STAR VALLEY
Common Stock. STAR VALLEY's stock transfer records and other information
available to STAR VALLEY management indicate that there have been only a few
transfers of STAR VALLEY Common Stock, and these apparently were without
consideration and effected for estate planning and other purposes. These
transfers can be summarized as follows:

<TABLE>
<CAPTION>
Number
of Shares
Time Period Traded or Transferred
----------- ---------------------
<S> <C>
1989 1
1990 1
1991 3
1992 61.11
1993 26.94

</TABLE>

In 1991, 1992 and 1993, STAR VALLEY declared annual dividends of $1,000.00
per share, $2,000.00 per share and $2,000.00 per share, respectively. Depending
on the Closing Date, STAR VALLEY may declare and pay a dividend of up to $1,000
per share (based on 375 shares) in June and in December, 1994.

COMPETITION

STAR VALLEY competes with commercial banks, savings and loan associations,
and credit unions in attracting deposits and originating loans. The primary
factors in competing for deposits are interest rates, fees, the range and
quality of services offered, the convenience of offices and hours of operation.
The primary factors in competing for loans are interest rates, loan fees, and
the quality and range of lending services offered. Additional competition comes
from money market funds, mortgage banking firms, insurance companies, and other
corporate and government lenders.

STAR VALLEY's market area is primarily northern Lincoln County, Wyoming,
although it also serves small portions of adjacent Caribou and Bonneville
Counties in Idaho. No other financial institution is located within 45 miles of
STAR VALLEY's Afton, Wyoming office. The relative market shares, based on
deposits, for all depository institutions in Lincoln County as of June 30, 1993,
which is the most recent information reliably available to the parties to the
Merger, are shown in the following table (dollar amounts in thousands):

<PAGE>

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INSTITUTION DEPOSITS MARKET SHARE
- ----------- -------- ------------
<S> <C> <C>
First National Bank - Kemmerer $11,350 12.0%
Key Bank of Wyoming (Kemmerer) 34,564 36.6
STAR VALLEY 48,575 51.4

</TABLE>

REGULATION

The information contained in this section summarizes portions of certain
laws and regulations that apply to STAR VALLEY. This summary does not purport
to be complete and is qualified in its entirety by reference to the described
statutes and regulations.

STAR VALLEY is a Wyoming state-chartered bank and as such is subject to
supervision and regulation by the Commissioner and by the Board of Governors.
Certain requirements and restrictions are imposed on STAR VALLEY by these
regulators, including restrictions on the nature and amount of loans that it may
make and restrictions relating to investments, facilities and other activities.

Laws passed in the 1980's and early 1990's have, among other things, served
to substantially increase competition between commercial banks and thrift
institutions by reducing or eliminating certain deposit and lending
restrictions; required all depository institutions to maintain reserves with the
Federal Reserve System; required increased Community Reinvestment Act
disclosures; and increased FDIC insurance premiums (now .23% of deposits).

The Federal Deposit Insurance Corporation Improvement Act of 1991 was
signed into law on December 19, 1991, and its provisions are being phased in
over a period of four years. Provisions include "Truth in Savings," which
requires uniform disclosures for interest rates and terms on interest-bearing
accounts; a risk-based insurance assessment for FDIC; uniform regulations on
real estate lending; and a variety of supervisory and accounting reforms. All
banks will be substantially impacted by these new regulatory requirements.

CAPITAL ADEQUACY REQUIREMENTS. The FDIC has adopted regulations
establishing minimum requirements for the capital adequacy of insured
institutions. The requirements address both risk-based capital and leverage
capital. The FDIC may establish higher minimum requirements if, for example, a
bank has previously received special attention or has a high susceptibility to
interest rate risk. Banks with capital ratios below the required minimum are
subject to certain administrative actions, including the termination of deposit
insurance upon notice and hearing, or a temporary suspension of insurance
without a hearing in the event the institution has no tangible capital.

The FDIC's risk-based capital guidelines require state banks to have a
ratio of Tier 1 or core capital-to-total risk-weighted assets of 4% and a ratio
of total capital-to-total risk-weighted assets of 8%. As of December 31, 1993,
STAR VALLEY's ratio of Tier 1 capital to total risk-weighted assets was 20.58%
and its ratio of total capital to total risk-weighted assets was 21.80%. The
FDIC's leverage capital guidelines require that state banks maintain Tier 1
capital of no less than 5% of total adjusted assets, except in the case of
certain highly rated banks for which the requirement is 3% of total adjusted
assets. As of December 31, 1993, Star Valley's ratio of Tier 1 capital to total
adjusted assets was 11.97%.

<PAGE>

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FDICIA mandates that risk-based capital standards take account of the
concentrations of credit risk, interest rate risk, risks involved in
nontraditional activities, and the expected risk of loss and the actual
performance of multifamily mortgages. Bank regulators also have regulations
providing for each capital measure the levels at which an institution is
"critically undercapitalized", "significantly undercapitalized",
"undercapitalized", "adequately capitalized", or "well capitalized". Under the
current regulatory scheme, STAR VALLEY should be deemed "well capitalized".

With certain exceptions (including money on deposit), Wyoming law prohibits
a state bank from incurring indebtedness or liabilities in excess of its capital
(defined as common stock) and certified surplus, without the prior approval of
the Commissioner.

INTEREST RATE LIMITS. Wyoming usury laws limit the rate of interest that
may be charged by STAR VALLEY. Certain federal laws provide a limited
preemption of Wyoming usury laws. While there is no limit on the interest that
can be charged on business loans, the maximum rate of interest that STAR VALLEY
may charge on consumer and other loans under Wyoming law varies between 36% per
annum for loans of $300.00 or less to 21% per annum for other loans over
$1,000.00. A 1980 federal statute removes interest ceiling under usury laws for
loans by STAR VALLEY which are secured by first liens on residential real
property.

BRANCHING. Wyoming banking laws allow a Wyoming-chartered bank to
establish a branch anywhere in Wyoming provided that the branch is approved in
advance by the Commissioner. The branch must also be approved by the Board of
Governors, which considers a number of factors, including financial history,
capital adequacy, earnings prospects, character of management, needs of the
community and consistency with corporate powers. There are no federal
limitations on the ability of insured nonmember state banks to branch across
state lines; however, such branching would be subject to applicable state
restrictions.

(For additional information about the banking regulatory environment, SEE
"INFORMATION ABOUT FSC -- Supervision and Regulation").

<PAGE>

-64-

PROPERTIES

The following table shows information concerning the locations and adjusted
book value of STAR VALLEY's offices as of March 31, 1994:

- --------------------------------------------------------------------------------------------------
OFFICE/PROPERTY LOCATION NET BOOK VALUE [1] OWNED DATE LEASE CONDITION OF
OR EXPIRES; PROPERTY
LEASED LEASE TERMS
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Main Office $228,524.24 Owned n/a Average to
485 Washington Street Excellent
Afton, Wyoming 83110 Condition
- --------------------------------------------------------------------------------------------------
Lower Valley Office in process of being Land n/a Expected to
116 South Main Street completed Owned; be in New
Thayne, Wyoming building and Excellent
leased Condition
- --------------------------------------------------------------------------------------------------

<FN>

[1] Net book value includes land and building (if owned), together with furniture and equipment.

</TABLE>

Each of the above properties is covered by insurance and, in the judgment
of STAR VALLEY's management, are adequately insured. The total taxable value
of these properties, as estimated by STAR VALLEY's management, is
approximately $530,000.

DIRECTORS AND EXECUTIVE OFFICERS

Information relating to STAR VALLEY's Directors and Executive Officers is
set forth below:

NAME AND POSITION WITH AGE PRINCIPAL OCCUPATION DURING DIRECTOR OR
STAR VALLEY LAST 5 YEARS OFFICER SINCE
- ---------------------- --- ---------------------------------- -----------
<S> <C> <C> <C>
Elmo H. Newswander(Dirctor) 78 Retired Accountant 1975
W. Tom Davis(Director) 52 Real Estate/Insurance 1982
Rowan M. Anderson(Director) 48 Insurance/Rancher 1984
Don L. Robinson(Director) 59 Retired Banker 1993
Hal R. Robinson(Officer and Director) 46 President & Sr. VP, STAR VALLEY Officer 1975
Director 1988
Rod R. Jensen(Officer) 36 Vice President 1984
Exec. VP/Credit Admin, STAR VALLEY 1992

</TABLE>

All Directors of STAR VALLEY are elected to serve until the next annual
meeting of STAR VALLEY Shareholders and until their successors are elected and
qualified. Executive Officers are elected annually by the Board of Directors
and serve at the will of the Board.

<PAGE>

-65-

BOARD OF DIRECTORS, COMMITTEES AND MEETINGS

The Board of Directors held 12 meetings during 1993 and 5 meetings so far
during 1994. Each Director has attended at least 90% of all of these meetings
of the Board of Directors.

The Board of Directors has appointed an Examination Committee consisting of
at least three Directors who are not officers or employees of STAR VALLEY. The
Examination Committee reviews STAR VALLEY's regulatory reports, audit
confirmation reports from outside accounting firms, and reports the results to
the full Board.

The Board of Directors has established a Bank Officers Loan Committee
authorized to approve loans in excess of established officer loan limits up to
$ 125,000. The Board of Directors itself from time to time convenes as a Loan
Committee and is required to approve loans over $125,000 and reviews and
ratifies actions of the Bank Officers Loan Committee. The Board reviews new and
closed loans, non-performing and watch list loans, and performs such other
duties necessary to carry out STAR VALLEY's written loan policy. The Board is
also responsible for a review of STAR VALLEY's Community Reinvestment Act policy
on at least an annual basis.

COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS

The following table shows the total salary, bonus and fee compensation with
respect to the President and CEO, and for all Executive Officers and Directors
as a group in the years shown:

<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE

1991 1992 1993
<S> <C> <C> <C>
Hal R. Robinson $76,400 $76,400 $81,000
President, CEO & Director

Kay L. Robinson 97,504 51,752 1,750
Retired President
CEO and Director

All Executive Officers and 191,904 177,675 186,553
Directors as a Group

</TABLE>

Non-employee Directors are paid $500.00 for each regular Board of Directors
meeting. No additional fees were paid to directors for Committee meetings
attended. Each non-employee Director also was paid a bonus of $3,000 in
December of 1993.

Salary levels of Senior Officers are determined by the Board of Directors.
There are no salary continuation agreements with any officers of STAR VALLEY.

TRANSACTIONS WITH MANAGEMENT

Some of the Directors and Executive officers of STAR VALLEY, and companies
with which they are associated, are customers of, and have had banking
transactions with, STAR

<PAGE>

-66-

VALLEY. STAR VALLEY also has purchased services and products from some of the
companies with which Directors are associated. All existing loans and
commitments to loan included in such transactions were made in compliance with
applicable laws and on the same terms, including interest rate and collateral,
as those prevailing at STAR VALLEY at the time for comparable transactions with
other persons, and, in the opinion of management, did not involve more than the
normal risk of collectability or present any other unfavorable features. As of
March 31, 1994, loans outstanding to all Directors and Executive Officers and
their affiliates totaled $319,000, or 3.9% of the equity capital of STAR VALLEY.

LEGAL PROCEEDINGS

Because STAR VALLEY is engaged in the business of furnishing financial
services, including providing credit and collecting secured and unsecured
indebtedness, STAR VALLEY generally has pending routine collection litigation.
As of the date of this Prospectus/Proxy Statement, in the opinion of STAR
VALLEY's management, any pending or threatened legal proceedings would not have
a material effect on STAR VALLEY's results of operations or financial position.
A former employee, Carolyn Johnson, has filed a wrongful termination suit
against STAR VALLEY in Wyoming's Third District Court. Counsel for STAR VALLEY
is filing a motion for summary judgement based on the discovery conducted in the
case. At present, the opinion of counsel is that the probability of a recovery
against STAR VALLEY is neither likely nor remote.
<PAGE>

-67-

STAR VALLEY'S MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion of STAR VALLEY's financial condition and results
of operations should be read in conjunction with the financial statements and
notes included as Appendix B to this Prospectus/Proxy Statement.

SUMMARY

At March 31, 1994, Star Valley's total assets were $62,271,000 compared to
$58,985,000 at March 31, 1993. Net loans increased from $27,289,000 at March 31,
1993 to $34,935,000 at March 31, 1994. This growth in assets and loans reflects
the improved economic condition of STAR VALLEY's service area, increased
interest in the area for retirement and recreational purposes, and general
economic growth overflowing from the Jackson Hole area. On a year-to-year basis,
December 31, 1993 assets were 5.9% higher than at year end 1992, and 11.8%
higher than at year end 1991. The year to year growth was the result of the same
factors just discussed.

Total deposits at March 31, 1994 were $53,694,000 compared to $50,783,000
at March 31, 1993. On a year-to-year basis deposits were $56,582,000 at December
31, 1993, 6.2% higher than at the same date in 1992, and 12.7% higher than at
the end of 1991. STAR VALLEY introduced a Star Club Account at the end of 1992
and initiated an active marketing campaign to promote this account and cross
sell other products. As a result, now accounts, which include the club account,
more than doubled to $5,143,000 at December 31, 1993. Even with many depositors
shifting to the club account, supernow accounts increased 10.8% and money market
accounts increased 5.1% over the same period. However, time certificates of
deposit actually decreased 6.5% from yearend 1992 to yearend 1993 as depositors
shifted to the more liquid investments because of the low interest rates.

Net income increased $151,000 in 1993 to $1,136,000. 1992 income of
$985,000 was an increase of $167,000 over 1991. Even though interest rates were
dropping during 1993, net interest income for the year was $106,000 greater than
in 1992. This growth is explained primarily by the greater loan volume during
the year. The net gain on the sale of property held in OREO made up most of the
$208,000 increase in non-interest income. However, a greater provision for loan
losses taken in 1993 over 1992 negated $115,000 of the gains. The following
table summarizes STAR VALLEY's significant income and expense results for all
these periods (in thousands):

THREE MONTHS ENDED
MARCH 31 YEAR ENDED DECEMBER 31
------------------ ----------------------
1994 1993 1993 1992 1991
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net Interest Income $ 700 $ 649 $2,805 $2,699 $2,483

Provision for Loan Losses 18 17 193 78 7

Non-Interest Income 121 181 571 363 353

Non-Interest Expense 364 347 1,474 1,477 1,638

Provision for Income Taxes 162 158 573 522 373
------ ------ ------ ------ -----
Net Income $ 277 $ 308 $1,136 $ 985 $ 818
------ ------ ------ ------ -----
------ ------ ------ ------ -----
</TABLE>

<PAGE>

-68-
RESERVE FOR LOAN LOSSES

STAR VALLEY maintains its reserve for loan losses at a level that its Board
of Directors believes is adequate to provide for potential losses in its loan
portfolio. STAR VALLEY uses an outside consultant as part of its loan review
process. The adequacy of the reserve is analyzed and calculated monthly by the
consultant and management and presented to the Board of Directors at its monthly
meeting. Adjustments to the reserve are made on a quarterly basis.

STAR VALLEY maintains a "watch" list, which includes all loans that have
been adversely classified by regulators, as well as those loans about which
management has serious doubts concerning the borrowers' ability to pay in
accordance with the original terms of the loans. The outside consultant reviews
new loans on a monthly basis for loan quality, compliance and documentation. He
also reviews past due and nonperforming loans and recommends grade changes. A
reserve for potential loss is assigned to each loan on the "watch" list. The
amount of reserve for each loan can either be a percentage or a specific dollar
amount based on evaluation of collateral and is determined by management and the
outside consultant after discussion with the officer of the account.

The adequacy of the reserve for loan losses is then determined by
considering these potential losses, the average loan loss rate over the past
five years, current and anticipated economic conditions, changes in the volume
and type of loans granted, and any other factors that management believes may
have an impact on the volume of future losses. A quarterly provision for loan
losses to be charged against earnings in order to maintain the desired level in
the reserve is then determined.

The following table summarizes changes in the loan loss reserve (in
thousands):

THREE MONTHS
ENDED MARCH 31 YEAR ENDED DECEMBER 31

1994 1993 1993 1992 1991
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Beginning Loan Loss $469 $497 $497 $509 $567
Reserve

Provision for Loan 18 17 193 78 7
Losses

Loans Charged-off 7 4 (279) (103) (87)

Loan Recoveries 3 1 58 13 22
--- --- --- --- ---

Ending Loan Loss $482 $511 $469 $497 $509
Reserve ---- ---- ---- ---- ----
---- ---- ---- ---- ----

Reserve as a Percent
of Total Loans 1.36% 1.84% 1.35% 1.92% 2.01%

Net Charge-offs as a
Percent of Total Loans .01% --% 0.63% 0.35% 0.26%

</TABLE>

<PAGE>

-69-

INVESTMENTS

Investments decreased $2,991,000 from December 31, 1992 to December 31,
1993. STAR VALLEY holds short-term investments in order to fund loan demand and
provide adequate liquidity. With the loan growth experienced in 1993, the
investment portfolio as well as federal funds sold decreased to fund the growth
in loans. The following tables show STAR VALLEY's investment portfolio at March
31, 1994 and 1993 and December 31, 1993, 1992 and 1991, and the maturity
distribution of the portfolio at March 31, 1994 (dollar amounts in thousands):

Book Value at

March 31 December 31
---------------- ---------------------------
1994 1993 1993 1992 1991
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
U.S. Treasury Securities $12,546 $14,137 $12,563 $13,090 $9,056

Federal Agency Securities 6,495 10,843 8,205 11,849 13,622

Municipal Securities 1,787 390 1,570 390 390

Federal Reserve Stock 75 75 75 75 75
------- ------- ------- ------- -------
Total Investment Securities $20,903 $25,445 $22,413 $25,404 $23,143
------- ------- ------- ------- -------
------- ------- ------- ------- -------

March 31, 1994
--------------------------------------------------------------------
Maturity Maturity Maturity
One Year 1 to 5 Over 5
or Less Years Years Total
-------- -------- -------- -----
<S> <C> <C> <C> <C>
U.S. Treasury $ 8,544 $ 4,002 $ 0 $12,546
Securities

Federal Agency 3,506 2,500 489 6,495
Securities

Municipal Securities 820 967 0 1,787

Federal Reserve Stock 0 0 75 75
------- ------- ------- -------
$13,609 $ 7,219 $ 75 $20,903
------- ------- ------- -------
------- ------- ------- -------

</TABLE>

ASSET AND LIABILITY MANAGEMENT

The difference between the amount of interest-rate sensitive assets and
interest-rate sensitive liabilities is referred to as the interest-rate
sensitivity "GAP" for any given time period. This measurement is sometimes used
as an indicator of risk of declines in net interest margin due to changes in
interest rates. The greater the difference between the aggregate amount of
interest-bearing assets and the aggregate amount of interest-bearing liabilities
in a short time frame, the greater the effect changes in interest rates will
have on the bank's net interest margin.

<PAGE>

-70-

Volatile interest rates have made managing interest-rate sensitivity of
asset and liability portfolios increasingly important. The stated objective of
STAR VALLEY's written asset-liability management policy is profit management. It
is intended to protect bank profits from undue exposure to interest rate risk.

STAR VALLEY considers assets and liabilities maturing or repriceable within
three months to be rate sensitive. STAR VALLEY also recognizes that NOW accounts
and savings accounts can be repriced within three months. STAR VALLEY expects
its rate-sensitive liabilities to exceed its rate-sensitive assets, and
recognizes that a negative GAP would not be unusual.

STAR VALLEY attempts to make a substantial portion of its loans repriceable
in one year or less, but recognizes that a mix of fixed rate and variable rate
loans will provide some stability in its net interest income whether rates are
rising or falling.

Variable rate loans repriceable at intervals of one year or less amounted
to 27.5% of total loans at December 31, 1993, and 15.9% of total loans at
December 31, 1992. The following table summarizes STAR VALLEY's "GAP position"
as of December 31, 1993 (in thousands):

The following table summarizes STAR VALLEY's "GAP position" as of March 31,
1994 (in thousands):

March 31, 1994
Amounts Maturing or Repricing Within
---------------------------------------------------------------------------
0-3 4-12 1-5 Over
Months Months Years 5 Years Total
------ ------ ----- ------- -----
<S> <C> <C> <C> <C> <C>
Earning Assets:

Investment Securities $ 1,997 $11,612 $ 7,219 $ 75 $20,903

Federal Funds Sold 2,500 0 0 0 2,500

Loans 14,173 6,709 12,566 1,508 34,956
------ ------ ------ ------ ------
Total Earning Assets $18,670 $18,321 $19,785 $1,583 $58,359
------- ------- ------- ------ -------
------- ------- ------- ------ -------

Liabilities:

Savings and NOW $30,558 $ 0 $ 0 $ 0 $30,558
Accounts

Money Market 6,145 0 0 0 6,145
Accounts

Time Deposits 4,380 6,205 0 0 10,585
------ ------ ----- ----- ------
Total Liabilities $41,083 $ 6,205 $ 0 $ 0 $47,288
------- ------- ----- ----- -------
------- ------- ----- ----- -------

GAP (22,413) 12,116 19,785 1,583 11,071
-------- ------- ------- ------ -------
-------- ------- ------- ------ -------
GAP as a Percent of
Earning Assets (38.40)% (20.76)% 33.90% 2.71% 18.97%
-------- -------- ------- ------ -------
-------- -------- ------- ------ -------

</TABLE>

<PAGE>

-71-

LIQUIDITY AND CAPITAL RESOURCES

Maintaining liquidity at adequate levels is an essential element of proper
funds management for financial institutions. STAR VALLEY's primary sources of
liquidity are cash, deposits with other institutions, overnight Federal Funds
sold, investment securities due within one year, and loans maturing within one
year, all of which totaled $30,008,000 at December 31, 1993. STAR VALLEY does
not accept brokered deposits. Time deposits of $100,000 or more totaled
$1,190,000 at December 31, 1993. There were no repurchase agreements outstanding
at December 31, 1993.

STAR VALLEY endeavors to manage its assets and liabilities to provide
sufficient liquidity to meet deposit withdrawal and loan demands of its
customers. STAR VALLEY's base of core deposits is quite stable, and loans
recently represent approximately 50% of total assets.

STAR VALLEY has maintained a stable capital base, with a capital-to-assets
ratio of 12.14% at December 31, 1993 compared with 12.23% at year end 1992. STAR
VALLEY has determined that it can pay out approximately 60% of net income in the
form of dividends and retain sufficient earnings to support an annual total
asset growth rate of approximately 5-7.00% and maintain a capital-to-assets
ratio of approximately 11-12%.

LOANS
Various national and regional economic conditions affect the volume and
credit quality of loans and investments by STAR VALLEY. In view of changing
conditions in the national and regional economies and money markets, federal
deficits, legislative changes, and the effect of actions by monetary and fiscal
authorities, no prediction can be made as to possible future changes in interest
rates, deposit levels or loan demands on the business and earnings of STAR
VALLEY.

STAR VALLEY's net loan portfolio of $34,332,000 at December 31, 1993
represented 52.7% of its total assets, compared to $25,344,000 or 41.2% of total
assets at December 31, 1992 and $24,825,000 or 42.6% at the end of 1991. The
composition of STAR VALLEY's loan portfolio by type of loan at such dates was as
follows (in thousands):

December 31
--------------------------------------------------------
1993 1992 1991
----------------- ---------------- -----------------
Amount % Amount % Amount %
------- ----- ------- ----- ------- -----
<S> <C> <C> <C> <C> <C> <C>
Real Estate Loans $ 9,670 28.2 $7,159 28.2 $7,912 31.9

Commercial Loans 11,133 32.4 8,173 32.2 7,531 30.3

Consumer Loans 6,804 19.8 5,092 20.1 4,770 19.2

Agricultural Production Loans 7,164 20.9 5,400 21.3 5,114 20.6

Overdrafts 30 0.1 17 0.1 7 .
---- ---- ---- ---- ---- ---
Total Loans 34,801 101.4 25,844 101.9 25,334 102.0

Less Reserve for Loan Losses 469 1.4 497 1.9 509 2.0
------ ----- ------ ----- ------ -----
Net Loans $34,332 100.0 $25,344 100.0 $24,825 100.0
------- ----- ------- ----- ------- -----
------- ----- ------- ----- ------- -----

</TABLE>

<PAGE>

-72-

In the normal course of business, STAR VALLEY enters into financial
instruments which subject STAR VALLEY to some risk of disbursing funds at a
future date. These instruments include unadvanced agricultural operating lines,
overdraft protection lines, unadvanced construction loan commitments,
commitments to extend credit and stand-by letters of credit. Many of these
instruments have fixed expiration dates and do not necessarily represent future
cash requirements since they may expire without being drawn upon. These
commitments are summarized in the following table (in thousands):

December 31
---------------------------------
1993 1992 1991
---- ---- ----
<S> <C> <C> <C>
Loan Commitments $ 3,564 $ 3,260 $ 1,761

Standby Letters of Credit 373 494 392

Overdraft Protection Lines 112 102 95

</TABLE>

A majority of commercial loans and other real estate loans are to small
businesses or are secured by small business properties. STAR VALLEY does not
have any concentrations of loans or commitments with any industry or geographic
area experiencing unusual financial difficulty.

NONPERFORMING ASSETS

Nonperforming assets, which consist of nonaccrual loans and accruing loans
90 days or more past due, totaled $272,000 at December 31, 1993 and $402,000 at
December 31, 1992. This was 0.78% and 1.56%, respectively, of total loans and
leases. This reduction is a result of structured work-outs or foreclosures
pursued in these periods.

DEPOSITS

Total deposits increased 6.2% to $56,582,000 at December 31, 1993, compared
to a 6.1% increase at December 31, 1992 over year end 1991. Deposits at year end
can be somewhat volatile and average deposits for the year are a much better
indicator of growth trends. Average deposits increased 6.1% in 1993, and 2.1% in
1992, which STAR VALLEY believes indicates the stability of its market area and
its success in attracting new deposits. STAR VALLEY does not accept "brokered"
deposits and does not actively solicit deposits from cities, school districts,
or other public bodies. However, STAR VALLEY is the only bank in Northern
Lincoln County. Therefore, public deposits average approximately 9% of total
deposits. The following table shows average deposits (dollar amounts in
thousands) for the years 1993 and 1992:

<PAGE>

-73-

Year Ended December 31
--------------------------------------------------------------
1993 1992
---- ----
Average Average Average Average
Deposits Rate % Deposits Rate %
-------- ------- -------- -------
<S> <C> <C> <C> <C>
Non-Interest Bearing:

Demand Deposits $ 6,778 $ 6,427

Interest Bearing:

Money Market
Accounts 5,869 2.98 5,620 3.59

Other Savings 9,617 3.14 7,048 3.93

NOW and Supernow 14,286 2.17 11,585 2.95
Accounts

Time Deposit 17,908 4.44 20,627 5.53
------ ------
Total Deposits $54,458 $51,307
------- -------
------- -------

</TABLE>

The bulk of STAR VALLEY's deposit growth has been in now accounts and
passbook savings. STAR VALLEY introduced a package account, called the Star Club
Account, at the end of 1992. Average NOW and Supernow accounts, which includes
the Star Club Account, grew 23.3% in 1993 compared to 7.4% in 1992 even though
many depositors shifted from another account into the Star Club Account. Average
passbook savings increased 36.5% in 1993 and 43.9% in 1992 as depositors shifted
to more liquid investments because of low interest rates. Average time deposits
decreased 13.2% in 1993 and decreased 13.5% in 1992 as interest rates came down.

Historically, STAR VALLEY's time deposits are most sensitive to changes in
interest rates, and flow into and out of the bank as investment opportunities
change. STAR VALLEY's policy has been to set its rates at a level that will
allow profitable investment of the deposited funds.

The following table shows the maturity distribution of time deposits as of
December 31, 1993 (in thousands):

Over 3
3 Months Through Over
or Less 12 Months 12 Months Total
------- --------- --------- -----
<S> <C> <C> <C> <C>
Under $100,000 $3,903 $6,306 $6,153 $16,362

$100,000 or more 417 204 0 621
------ ------ ---- -----
Total $4,320 $6,510 $6,153 $16,983
------ ------ ------ -------
------ ------ ------ -------

</TABLE>

<PAGE>

-74-

RESULTS OF OPERATIONS

Net income of $1,136,000 in 1993 represented an increase of 15.3% over
1992. Net income in 1992 increased 20.4% compared to 1991.

Net interest income increased 3.9% to $2,805,000 in 1993 after increasing
8.7% in 1992. Interest income of $4,386,000 in 1993 represented a decrease of
5.9% from 1992 after decreasing 7.6% from 1991 to 1992. Interest expense
declined 19.4% to $1,581,000 in 1993 after decreasing 23.3% in 1992.

Non-interest income increased $208,000 or 57.3% in 1993 due to net gains in
sale of OREO, compared with an increase of $10,000 or 2.8% in 1992. Total
overhead expense decreased $3,000 or 0.2% in 1993, compared with a decrease of
$161,000 or 9.8% in 1992.

NET INTEREST INCOME

Net interest income, the most significant component of earnings, represents
the difference between the interest earned on loan and investment portfolios and
loan fees, and the interest paid on interest-bearing deposits and borrowings.
This interest spread can be affected by economic factors influencing general
interest rates, loan demand, and deposit flows, as well as the effects of
competition for deposits and loans. Nonpayment of loans by customers and the
perceived creditworthiness of a customer can also affect the interest spread.

STAR VALLEY'S net interest income increased from $2,483,000 in 1991 to
$2,699,000 in 1992 and increased to $2,805,000 in 1993. The growth of $106,000
in net interest income between 1992 and 1993 was due primarily to increased loan
volume during a low interest rate period.

Net interest income (tax effected) to average earning assets is determined
by subtracting the interest expense to average earning assets from interest
incomes (tax effected) to average earning assets. The difference results in the
net interest income (tax effected) to average earning assets. STAR VALLEY'S net
interest results (or spread) was 4.12% in 1992 and increasing to 4.19% for 1993.

Interest and fees on loans increased $179,000 to $3,012,000 in 1993 when
compared to the 1992 total of $2,833,000. The 1992 total represents a decrease
of $108,000 compared to year end 1991 which was 2,941,000. While total loans
outstanding increased each year end, from $25,334,000 in 1991 to $25,841,000 in
1992 and $34,801,000 in 1993, the average yield on loans declined to 9.96% in
1993 from 10.99% in 1992.

Interest expense declined $380,000 at year end 1993 to $1,582,000 when
compared to year-end 1992 which was $1,962,000. Interest Expense at year-end
1992 was down $597,000 compared to year end 1991 which was $2,559,000. Interest
expense to average earning assets declined from 3.57% in 1992 and 2.71% in 1993.

<PAGE>

-75-

An analysis of net interest income is shown in the following table (in
thousands):

Analysis of Net Interest Income
Year Ended December 31
-------------------------------------------------------------------------------
1993 1992
------------------------------- -------------------------------

Average Income/ Yield/ Average Income/ Yield/
Balance Expense Cost Balance Expense Cost
------- ------- ------ ------- ------- ------
<S> <C> <C> <C> <C> <C> <C>
Loans - net of unearned $30,250 $ 3,012 9.96% $25,774 $ 2,833 10.99%

Investments 23,880 1,251 5.24 22,789 1,613 7.08

Federal Funds Sold 4,274 123 2.88 6,336 215 3.39
------ ------ ----- ------ ------ -----
Total Earning Assets $58,404 $ 4,386 7.51% $54,899 $ 4,661 8.49%
------- ------- ----- ------- ------- -----
------- ------- ----- ------- ------- -----
Interest-Bearing Transaction $14,286 $ 310 2.17% $11,585 $ 342 2.95%

Savings & Money Market 15,486 477 3.08 12,668 479 3.78

Time Deposits 17,908 795 4.44 20,627 1,141 5.53
------ ------ ----- ------ ------ -----
Total Interest-Bearing $47,680 $ 1,582 3.32% $44,880 $ 1,962 4.37%
Liabilities ------- ------- ----- ------- ------- -----
------- ------- ----- ------- ------- -----
Non-Interest-Bearing
Demand Deposits $ 6,778 $ 6,427
------- -------
------- -------

NET INTEREST INCOME $ 2,804 $ 2,699
------- -------
------- -------

NET INTEREST SPREAD 4.19% 4.12%
----- -----
----- -----
INTEREST EXPENSE/
EARNING ASSETS 2.71% 3.57%
----- -----
----- -----
NET INTEREST INCOME/
EARNING ASSETS 4.80% 4.92%
----- -----
----- -----

</TABLE>

NON-INTEREST INCOME

Service charge and fee income is the most significant item of non-interest
income, amounting to $395,000 in 1993, and $260,000 in 1992. In 1993 other
non-interest income was $176,000 of which $163,000 came from net gain on sale of
OREO properties.

NON-INTEREST EXPENSE

Non-interest expense was $1,474,000 in 1993 and $1,466,000 in 1992.
Salaries decreased during 1993 primarily because of the retirement of STAR
VALLEY's President and two other long time employees. Occupancy expense
increased because of a remodeling project and maintenance done during the year.
Other major components of non-interest expense are postage, $67,000 in 1993, and
supervisory fees, $138,000 in 1993. The major components of non-interest expense
are as follows (in thousands):

<PAGE>

-76-

Year Ended December 31 Percentage Change
----------------------------- -----------------------
1993 1992 1993/1992 1992/1991
---- ---- --------- ---------
<S> <C> <C> <C> <C>
Salaries and Employee Benefits $ 767 $ 825 (7.0) (4.8)

Occupancy 118 87 35.6 (7.4)

Other Non-Interest 589 553 6.5 (16.5)
----- -----
Total Non-Interest Expense $1,474 $1,477
------ ------
------ ------

</TABLE>

INCOME TAXES

STAR VALLEY recorded a provision for income taxes of $573,000 in 1993, and
$522,000 in 1992. The effective tax rates were 33.5%, and 34.6% in 1993 and
1992, respectively. The effective tax rate is affected primarily by the federal
statutory rates, and tax exempt income, but was also affected by the non-
deductibility of some of the provision for loan losses which the IRS would not
allow based on STAR VALLEY's loan loss experience over the last five years.

RETURN ON EQUITY AND ASSETS

STAR VALLEY's returns earned on assets and its equity increased
consistently over the last several years. The following table shows return on
STAR VALLEY's average assets, return on average equity, and various other ratios
over the past three years:

Year Ended December 31
-------------------------------------
1993 1992 1991
---- ---- ----
<S> <C> <C> <C>
Return on Assets (1) 1.82% 1.65% 1.39%

Return on Equity (2) 14.48% 13.31% 11.58%

Dividend Payout Rate(3) 66.02% 76.04% 45.97%

Equity to Assets Ratio(4) 12.14% 12.23% 12.51%

----------------------------
<FN>
(1) Net income divided by average total assets.
(2) Net income divided by average equity.
(3) Dividend declared per share divided by net income per
share.
(4) Average equity divided by average assets.

</TABLE>

IMPACT OF INFLATION AND CHANGING PRICES

Virtually all of the assets and liabilities of a financial institution are
monetary in nature and, as a result, interest rates generally have a more
significant impact on a financial institution's performance than does inflation.
However, inflation does affect STAR VALLEY's operating expenses. The effects of
inflation on premises and equipment, and non-interest expenses have not been
significant for periods being reviewed.

<PAGE>

-77-

PRINCIPAL SHAREHOLDERS OF STAR VALLEY

As of the Record Date, the only outstanding equity securities of STAR
VALLEY were 375 shares of STAR VALLEY Common Stock held by 45 shareholders of
record. The following table shows the ownership as of the Record Date by each
person who was known by STAR VALLEY to own beneficially 5% or more of the Common
Stock, by each Director and by all Directors and Executive Officers as a group:

SHARES NUMBER OF SHARES PERCENT OF
NAME AND ADDRESS (1)(2)(3) BENEFICIALLY OWNED(1) OUTSTANDING
<S> <C> <C>
Max C. Robinson 14.435%
133 Westview Drive 54.133
Orem, UT 84058

Kay L. Robinson 52.113 13.987%
6510 W. English Meadows
Apt I 205
Greenfield, WI 53220

Elmo H. Newswander 44.100 11.760%
Box 127
Afton, WY 83110

Roger B. Porter 33.934 9.049%
101 Douglas Road
Belmont, MA 02178

Jed R. Robinson 33.933 9.049%
544 Scottsbluff
Claremont, CA 91711

Hal R. Robinson 33.933 9.049%
Box 698
Afton, WY 83110

Don L. Robinson 33.934 9.049%
249 East 2100 South
Bountiful, UT 84010

W. Tom Davis .100 .027%
Box 249
Afton, WY 83110

Rowan M. Anderson .500 .133%
Route 1
Afton, WY 83110

ALL DIRECTORS & EXECUTIVE OFFICERS 112.867 30.098%
AS GROUP

<FN>

(1) Under the rules of the Securities and Exchange Commission, a person is
deemed to be a beneficial owner of a security if he has or shares the power to
vote or direct the voting of such security or the power to dispose or to direct
the disposition of such security. Accordingly, more than one person may be
deemed to be a beneficial owner of the same securities. A person is also deemed
to be a beneficial owner of any securities of which that person has the right to
acquire beneficial ownership within 60 days. Unless otherwise indicated by
footnote, the named individuals have sole voting and investment power with
respect to the shares held by them.

(2) Beneficial ownership includes shares owned directly as well as shares owned
by spouse, minor children, trusts of which the person is a trustee or
beneficiary, partnerships or corporations as to which the person is a major
shareholder, officer or director, or other similar relationships.

(3) 375 shares outstanding at the Record Date.

</TABLE>

<PAGE>

-78-

INFORMATION ABOUT FSB WYOMING

FSB WYOMING is a Wyoming state-chartered stock savings bank and a wholly-
owned subsidiary of FSC. At March 31, 1994, FSB WYOMING had assets of
approximately $132.23 million and shareholders' equity of approximately $12.73
million. The principal business of FSB WYOMING is to obtain deposits from the
general public and to combine such deposits with other available sources of
funding to make residential and commercial real estate loans; secured and
unsecured commercial, corporate, and business loans; and installment consumer
loans.

COMPARATIVE RIGHTS OF SHAREHOLDERS

The current rights of the STAR VALLEY Shareholders are governed by the
Wyoming Bank Act and the Articles of Incorporation and Bylaws of STAR VALLEY.
Upon consummation of the Merger, STAR VALLEY Shareholders will become
stockholders of FSC, a Delaware corporation. As stockholders of FSC, their
rights will be governed by the Delaware Statute and by FSC's Certificate of
Incorporation and Bylaws. The Wyoming Bank Act and the Articles of
Incorporation and Bylaws of STAR VALLEY differ from the Delaware Statute and the
Certificate of Incorporation and Bylaws of FSC in certain respects. Although it
is not practical to compare all such differences, the following is a summary of
certain of the more significant differences.

AUTHORIZED CAPITAL STOCK

STAR VALLEY. Under Star Valley's Articles of Incorporation, the aggregate
number of shares of capital stock which it is authorized to issue is 375 shares
of Common Stock, $100.00 par value per share. All shares of Star Valley Common
Stock are identical in rights and have one vote per share. The holders of Star
Valley Common Stock are entitled to such dividends as may be declared from time
to time by the Board of Directors of Star Valley from funds available therefor,
subject to certain statutory restrictions described below, and upon liquidation
are entitled to receive PRO RATA all assets of Star Valley remaining after
provision for liabilities.

FSC. Under FSC's Certificate of Incorporation, FSC is authorized to issue
150,000,000 shares of common stock and 400,000 shares of Preferred Stock. All
shares of FSC Common Stock are identical in rights and have one vote.

The FSC Common Stock which will be issuable in the Merger will be newly
issued from authorized and unissued FSC Common Stock. The FSC Common Stock,
when delivered pursuant to the Merger Agreement, will be duly authorized and
validly issued, fully paid and non-assessable, which status will be supported by
an opinion of FSC's counsel.

FSC's Certificate of Incorporation provides that its Board of Directors can
issue Preferred Stock in one or more series and with such terms and at such
times and for such consideration as the FSC Board of Directors may determine.
The authority of the FSC Board of Directors includes the determination or fixing
of the following with respect to shares of any

<PAGE>

-79-

series thereof: (a) the number of shares and designation or title thereof;
(b) rights as to dividends; (c) whether and upon what terms the shares are to be
redeemable; (d) rights and preferences of the holders upon the liquidation,
dissolution or winding up of FSC; (e) whether the shares are to be subject to a
retirement or sinking fund; (f) whether and upon what terms the shares are
convertible; (g) the voting rights, if any; (h) whether the issuance of any
additional shares of a series shall be subject to restrictions as to issuance or
as to the powers, preferences or rights of any other series; and (i) any other
preferences, privileges, powers or relative rights specified by the Board of
Directors. FSC has designated, and has remaining outstanding, 18,052 shares of
its Preferred Stock as Class A Cumulative Convertible Preferred Stock, all of
the currently outstanding shares of which have voting rights, and are
convertible at the option of the holders into 12.15 shares of FSC Common Stock
for each share of Cumulative Convertible Preferred Stock.

On August 28, 1989, FSC's directors adopted a Shareholder Rights Plan
whereby each FSC shareholder is issued rights to acquire a new class of junior
preferred stock, which rights could also be expanded by the FSC Board of
Directors to allow the purchase of additional shares of FSC under certain
circumstances involving the acquisition of certain amounts of FSC stock by a
third party. (See "INFORMATION ABOUT FSC -- Description of FSC's Capital Stock
- -- Common Stock.")

DIRECTORS
NUMBER. STAR VALLEY's Bylaws provide for five Directors. Currently five
directors are serving for one-year terms.

FSC's Bylaws provide that the number of its directors shall be not
less than 6 nor more than 30, with the exact number to be established from time
to time by resolution of the Board of Directors. Currently FSC has 21
directors, who serve for one-year terms. Based upon the number of outstanding
shares of FSC Common Stock, STAR VALLEY Shareholders, even if they all voted for
the same candidate, would not have enough shares of FSC Common Stock to elect a
director to serve on the FSC Board.

- ELECTION. Both the Wyoming Bank Act and the Delaware Statute provide
that members of the board of directors are elected by a vote of the shareholders
or stockholders, with each share being entitled to one vote. The STAR VALLEY
Shareholders are entitled to cumulative voting with respect to the election of
directors, but the FSC stockholders are not.

- REMOVAL. The Wyoming Bank Act requires that a director who during his or
her tenure becomes insolvent, makes a general assignment of his or her property
for the benefit of creditors, files bankruptcy or ceases to be the owner of the
requisite amount of stock, shall vacate his or her office. The Wyoming Bank Act
does not empower stockholders to remove directors during their tenure, but does
permit stockholders to reduce the number of directors that make up the board of
directors effective the end of the year in which such action is taken.

Under the Delaware Statute any director or the entire board of directors
may be removed, with or without cause, by the holders of a majority of the
shares entitled to vote at an election of directors. The Delaware Statute also
provides additional requirements for the removal of a member of a board which is
classified as to term or elected by a single class

<PAGE>

-80-

or elected by classes possessing cumulative voting rights. However, these
additional requirements do not apply to FSC, as the Board of Directors of FSC is
not classified and none of FSC's shares of capital stock possess any cumulative
voting rights.

- INDEMNIFICATION. The Delaware Statutes provides that a director,
employee, officer or agent of a corporation may be indemnified against liability
(other than in an action by or in the right of the corporation) and other costs
incurred by such person in connection with such proceeding, provided such person
acted in good faith and in a manner such person reasonably believed to be in, or
at least not opposed to, the best interests of the corporation, and, with
respect to any criminal proceeding, had no reason to believe the conduct was
unlawful. For actions or suits brought by or in the name of the corporation,
the Delaware Statutes provides that a director, employee, officer or agent of a
corporation may be indemnified against expenses incurred by such person in
connection with such proceeding if such person acted in good faith and in a
manner such person reasonably believed to be in, or at least not opposed to, the
best interests of the corporation, except that if such person is adjudged to be
liable to the corporation, such person can be indemnified if and only to the
extent that a court determines that despite the adjudication of liability, in
view of all the circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses as the court shall deem proper. On the
other hand, if he or she prevails, indemnification is mandatory.

Under the Delaware Statute, the determination of whether an officer or
director is entitled to indemnification (that is, whether or not the person has
met the statutory standard of conduct required for indemnification) is to be
made (1) by the board of directors by a majority vote of a quorum consisting of
directors who are not parties to the action, suit or proceeding in question, or
(2) if such a quorum is not obtainable or if a quorum of disinterested directors
so directs, by independent legal counsel in a written opinion, or (3) by the
stockholders.

The Wyoming Bank Act does not address the indemnification of officers or
directors.

FSC's Certificate of Incorporation, as amended, provides for
indemnification of officers and directors to the full extent allowed by
applicable law.

- DIRECTOR LIABILITY. The Delaware Statutes allows a corporation to
provide, in its articles or certificate of incorporation a provision which
limits or eliminates the personal liability of a director to the corporation and
its shareholders or stockholders for monetary damages for such person's conduct
as a director, provided that such provision may not so limit a director's
liability (i) for a breach of his or her duty of loyalty to the corporation;
(ii) for acts or omissions not in good faith or involving intentional misconduct
or a knowing violation of law; (iii) for unlawful payments of dividends, certain
stock repurchases or redemptions; or (iv) for any transaction from which the
director derived an improper personal benefit.

These provisions have the effect of protecting a corporation's directors
against personal monetary liability from breaches of their duty of care. FSC,
with the approval of its stockholders, amended its Certificate of Incorporation
to include such provisions in 1989.

The Wyoming Bank Act does not have a similar provision.

<PAGE>

-81-

INSOFAR AS INDEMNIFICATION FOR LIABILITIES ARISING UNDER THE
SECURITIES ACT MAY BE PERMITTED TO DIRECTORS, OFFICERS AND CONTROLLING
PERSONS OF FSC, FSC HAS BEEN ADVISED THAT IN THE OPINION OF THE
COMMISSION SUCH INDEMNIFICATION IS AGAINST PUBLIC POLICY AS EXPRESSED
IN THE SECURITIES ACT AND IS, THEREFORE, UNENFORCEABLE. IN THE EVENT
THAT A CLAIM FOR INDEMNIFICATION AGAINST SUCH LIABILITIES (OTHER THAN
THE PAYMENT BY FSC OF EXPENSES INCURRED OR PAID BY A DIRECTOR, OFFICER
OR CONTROLLING PERSON OF THE REGISTRANT IN A SUCCESSFUL DEFENSE OF ANY
ACTION, SUIT OR PROCEEDING) IS ASSERTED BY SUCH DIRECTOR, OFFICER OR
CONTROLLING PERSON IN CONNECTION WITH THE SECURITIES BEING
REGISTERED, FSC WILL, UNLESS IN THE OPINION OF ITS COUNSEL THE MATTER
HAS BEEN SETTLED BY CONTROLLING PRECEDENT, SUBMIT TO A COURT OF
APPROPRIATE JURISDICTION THE QUESTION OF WHETHER SUCH INDEMNIFICATION
BY IT IS AGAINST PUBLIC POLICY AS EXPRESSED IN THE SECURITIES ACT AND
WILL BE GOVERNED BY THE FINAL ADJUDICATION OF SUCH ISSUE.

REPURCHASE AND REDEMPTION OF SHARES
The Wyoming Bank Act prohibits repurchase of a bank's own capital stock
except as necessary to prevent loss upon a debt previously contracted in good
faith. Therefore STAR VALLEY may not redeem or repurchase shares of the STAR
VALLEY Common Stock, except in limited circumstances to prevent a loss from
indebtedness previously contracted in good faith. The Delaware Statute permits
a corporation to redeem or repurchase any of its shares for cash, other property
or a promissory note except when the capital of the corporation is impaired, or
when such repurchase or redemption would impair the capital of the corporation.

PAYMENT OF DIVIDENDS TO SHAREHOLDERS
Holders of STAR VALLEY Common Stock are entitled to share ratably in such
cash dividends as may be declared from time to time by STAR VALLEY's Board of
Directors out of funds legally available therefor, subject to certain
restrictions. Under the Wyoming Bank Act, STAR VALLEY may only declare
dividends on its capital stock to the extent of net undivided profits, subject
to certain further restrictions. STAR VALLEY may not declare or pay a dividend
whenever its surplus fund does not equal at least 100% of its common capital
account, unless certain amounts of net profits in previous periods have been
carried to surplus.

The Delaware Statute allows a corporation, subject to any restrictions in
its certificate of incorporation, to declare and pay dividends upon its shares
of capital stock either out of its surplus (as determined under the statute) or,
in the event there is no such surplus, out of its net profits for the fiscal
year in which the dividend is declared and/or the preceding fiscal year.
Further restrictions on dividends apply in the event a corporation has issued
shares possessing a preference upon the distribution of assets. The ability of
a Delaware corporation to pay dividends on, or to make repurchases or
redemptions of, its shares is dependent on the financial status of the
corporation standing alone and not on a consolidated

<PAGE>

-82-

basis. FSC's Certificate of Incorporation grants to the Board of Directors the
power to declare dividends on its Common Stock, subject to any dividend or
sinking fund requirements pertaining to its Preferred Stock. FSC is also
subject to restrictions on its dividend paying ability under banking laws. (SEE
"INFORMATION ABOUT FSC.")

ASSESSMENTS
All outstanding shares of STAR VALLEY, FSC and FSB WYOMING are fully paid
and nonassessable, except to the extent STAR VALLEY Common Stock and FSB WYOMING
Common Stock are assessable under the Wyoming Bank Act.

PREEMPTIVE RIGHTS
Neither STAR VALLEY nor FSC Shareholders have preemptive rights.

AMENDMENTS TO ARTICLES OR CERTIFICATE OF INCORPORATION
The Delaware Statute permits the board of directors of a Delaware
corporation to adopt a resolution of its own volition setting forth a proposed
amendment to the corporation's certificate of incorporation and directing that
such proposed amendments be submitted to a vote at a meeting of stockholders.
Upon the written request of the holders of not less than 10% of the shares
entitled to vote upon a proposed amendment, the board of directors is required
to adopt a resolution setting forth the requested amendment and directing that
the amendment be submitted to a vote at a meeting of stockholders.

The Wyoming Bank Act similarly permits the board of directors of a Wyoming
Bank to adopt a resolution proposing changes to the corporation's articles of
incorporation and directing that such proposed amendments be submitted to a vote
at a shareholders meeting but does not provide a procedure permitting
shareholders to initiate such a proposal.

The voting requirements for shareholder approval of proposed amendments
under the Wyoming Bank Act and the requirements for stockholder approval under
the Delaware Statute both generally require a majority vote of the shares
entitled to vote on such amendments. However, changes to the authorized capital
of a Wyoming bank requires approval of the holders of two-thirds of the
outstanding shares.

AMENDMENTS TO BYLAWS
The Wyoming Bank Act provides that the bylaws may be amended by the Board
of Directors or the stockholders.

The Delaware Statute provides that stockholders may amend the bylaws of a
corporation, provided that the corporation may, in its articles of
incorporation, also confer such power upon the board of directors. FSC's
Certificate of Incorporation expressly authorizes its Board of Directors to
amend its Bylaws.

SHAREHOLDER APPROVAL OF MERGER AND OTHER BUSINESS COMBINATIONS
The Wyoming Bank Act requires that any proposed exchange, merger or
consolidation of a corporation must be approved by the holders of at least
two-thirds of the outstanding shares entitled to vote.

<PAGE>

-83-

The Delaware Statute provides that a merger, consolidation, sale, lease or
exchange of all or substantially all of its assets may be effected upon a vote
of the holders of a majority of a corporation's outstanding shares. Delaware
law does not require a stockholder vote of the surviving corporation in a merger
if (a) the merger does not amend the existing certificate of incorporation,
(b) each outstanding share of the surviving corporation before the merger is
unchanged or becomes a treasury share of the surviving corporation, and (c) the
number of shares to be issued by the surviving corporation in the merger does
not exceed 20% of the shares outstanding immediately prior to such issuance.

In February 1989, the Delaware Statute was amended to prohibit certain
business combinations (generally mergers, consolidations and sales of 10% or
more of a corporation's assets) between Delaware corporations and "Interested
Stockholders." As defined under the Delaware Statute, Interested Stockholders
are persons who alone, or together with their affiliates, beneficially own 15%
or more of the outstanding stock of a corporation. The Delaware Statute bars
business combinations between an Interested Stockholder and the corporation for
a period of three years after any such person or group has become an Interested
Stockholder. The Delaware Statute contains exceptions to the prohibition which
allows such combinations if, as a result of the transaction which causes a
person to become an Interested Stockholder, such person owns 85% or more of the
outstanding voting stock (with certain exceptions). Another provision exempts
from the coverage of the Delaware Statute any transaction approved by the
corporation's board of directors and two-thirds of the outstanding voting stock
not held by the Interested Stockholder. FSC's Certificate of Incorporation
provides for super-majority voting requirements in certain cases of non-
consensual merger votes. (SEE "INFORMATION ABOUT FSC.")

The Wyoming Bank Act has no provisions similar to the provisions described
above.

RIGHTS OF DISSENTING SHAREHOLDERS
The Wyoming Bank Act provides statutory appraisal rights to shareholders
who may dissent from certain corporate reorganizations such as mergers or sales
of all or substantially all of the institution's assets. STAR VALLEY
Shareholders are entitled to dissent from the Merger. (SEE "RIGHTS OF
DISSENTING SHAREHOLDERS" and Appendix C.)

The Delaware Statute provides appraisal rights in the case of a statutory
merger, consolidation or sale of substantially all the assets of a corporation,
except that such rights are not available in cases in which the corporation is
to be the surviving corporation and no vote of its stockholders is required for
such transaction or, unless otherwise provided in the certificate of
incorporation, in cases in which the consideration for such transaction is
shares of stock listed on a national securities exchange or held of record by
more than 2,000 stockholders, unless such stockholders are required by the terms
of the merger, consolidation or sale to accept anything other than shares of
stock of the surviving corporation, shares of stock of another corporation which
are all listed or held by such number of record holders, cash in lieu of
fractional shares of such stock, or any combination thereof. The Certificate of
Incorporation of FSC does not provide for greater appraisal rights than those
set forth in the Delaware Statute.

<PAGE>

-84-

SPECIAL MEETINGS OF SHAREHOLDERS
STAR VALLEY's Bylaws provide that special meetings of its shareholders may
be called by the board of directors or by shareholders holding in the aggregate
not less than one-third of the outstanding capital stock.

Under the Delaware Statute, special meetings of stockholders of a
corporation may be called by the board of directors or by such persons as are
authorized by the corporation's certificate of incorporation or bylaws. FSC's
Bylaws provide that such meetings may also be called by the President, and shall
be called by the President or the Secretary at the written request of
stockholders owning not less than a majority of all shares issued and
outstanding and entitled to vote on any proposal to be submitted to the meeting.

SHAREHOLDER CONSENT TO ACTION WITHOUT A MEETING
The Delaware Statute provides that, unless otherwise provided in the
certificate of incorporation, any action which may be taken at any meeting of
stockholders may be taken without a meeting, prior notice or a vote, if written
consents setting forth the action taken are signed by the holders of outstanding
stock having not less than the minimum number of votes that would be necessary
to take such action if the action were taken at a meeting. FSC's Certificate of
Incorporation does not prohibit such actions by written consent.

The Wyoming Bank Act has no provision permitting actions by written
consent.

LEGAL MATTERS

The legality of the FSC Common Stock offered hereby and certain other
matters with respect to the Merger will be passed upon for FSC by Ray, Quinney &
Nebeker P.C. As of March 31, 1994, attorneys at Ray, Quinney & Nebeker, as a
group, were beneficial owners of no more than approximately 4.0% of the total
outstanding FSC Common Stock, and held no shares of STAR VALLEY Common Stock.

Gerald L. Goulding, Esq. of Afton, Wyoming, will pass upon certain matters
in connection with the Merger for STAR VALLEY. As of March 31, 1994, Mr.
Goulding and his associates, as a group, owned no shares of STAR VALLEY Common
Stock and no shares of FSC Common Stock.

EXPERTS

The consolidated financial statements of FSC, as of December 31, 1993 and
1992, and for each of the three years in the period ended December 31, 1993
incorporated in this Prospectus/Proxy Statement by reference from FSC's Annual
Report on Form 10-K have been audited by Deloitte & Touche, independent
certified public accountants, as stated in their report, which is incorporated
herein by reference, except for the financial statements of First National
Financial Corporation (FNFC) as of December 31, 1992 and for the years ended
December 31, 1992 and 1991 which was merged with FSC during 1993 and was
accounted for as a pooling of interest. The financial statements of FNFC as of
December 31, 1992 and for the years ended December 31, 1992 and 1991 have been
audited by other auditors, as stated in their report incorporated herein by
reference. Such financial statements of FSC and FNFC have been so incorporated
in reliance upon such reports given upon the authority of those firms as
experts in accounting and auditing.

<PAGE>

-85-

STAR VALLEY'S ANNUAL SHAREHOLDER MEETING

If the Merger is not consummated prior to the scheduled date of the 1995
annual meeting of Shareholders, such meeting may be held. Shareholder proposals
submitted for inclusion in the 1995 Annual Meeting proxy materials and for
consideration at such meeting (if any) must be received by STAR VALLEY on or
before September 30, 1994. Proposals should be sent to STAR VALLEY, Attn:
Secretary, 485 Washington Street, Afton, Wyoming 83110.

DEADLINE FOR FSC SHAREHOLDER PROPOSALS

Any FSC shareholder who wishes to present a proposal for action at the
APRIL 1995 ANNUAL MEETING of the FSC shareholders, must submit his or her
proposal in writing by certified Mail -- Return Receipt Requested, to First
Security Corporation, Attention: Secretary of the Corporation, 79 South Main
Street, Salt Lake City, Utah 84111, on or before December 31, 1994.

<PAGE>

APPENDIX A

AGREEMENT OF MERGER

<PAGE>

AGREEMENT OF MERGER

This Agreement of Merger, dated as of the 30th day of March, 1994
("Agreement"), is made and entered into by and among FIRST SECURITY BANK OF
WYOMING ("FSB"), a bank organized under the laws of Wyoming, FIRST SECURITY
CORPORATION ("FSC"), a Delaware corporation, and the STAR VALLEY STATE BANK, a
bank organized under the laws of Wyoming ("Bank").

R E C I T A L S:

A. FSB is a bank duly organized under the laws of Wyoming with its
principal place of business located at Rock Springs, Wyoming. FSB is authorized
by its Articles of Incorporation to issue 200,000 shares of Common Stock, $10.00
par value, of which as of the date of this Agreement, there were [12,500] shares
issued and outstanding.

B. FSC is a Delaware corporation, having authorized capital stock of
150,400,000 (150,000,000 shares of Common Stock, par value $1.25, and 400,000
shares of Preferred Stock, no par value of which 18,052 are designated Series A)
of which, as of December 31, 1993, there were 48,436,565 (net of treasury)
shares of Common Stock issued and outstanding and 13,396 shares of Series A
preferred stock issued and outstanding. FSC owns approximately 99% of the
issued and outstanding stock of FSB.

C. Bank is a bank organized under the laws of Wyoming with its head
office located at Afton, Wyoming. Bank is authorized by its Articles of
Incorporation to issue 375 shares of capital stock, $100.00 par value ("Bank
Common Stock"), of which as of the date of this Agreement, there were 375 shares
issued and outstanding.

D. FSB and Bank desire to merge the Bank with and into FSB upon the
terms and subject to the conditions set forth herein (the "Merger").

E. The Boards of Directors of Bank and FSB and the Executive
Committee of FSC, each by resolutions duly adopted pursuant to the authority
given by and in accordance with the laws governing them, have approved this
Agreement and authorized the execution hereof.

<PAGE>

A G R E E M E N T:

NOW, THEREFORE, in consideration of the premises, and the mutual
covenants and conditions herein the parties hereto covenant and agree to effect
the merger in accordance with the terms and conditions set forth as follows:

ARTICLE ONE

THE MERGER

1.1 MERGER. Pursuant to the laws of the State of Wyoming and subject
to and in accordance with the terms and conditions of this Agreement of Merger,
Bank shall be merged with and into FSB, to form a single banking corporation,
and FSB shall be the surviving entity to be governed by the laws of Wyoming.
Bank and FSB shall execute any "Articles of Merger" for filing, as may be
required by applicable law. The Merger of Bank with and into FSB shall become
effective on such date as the Secretary of State of the State of Wyoming under
regulations and procedures governing said office deems the Merger effective.
The time when the Merger shall become effective is herein called the "Effective
Time."

1.2 EFFECT OF MERGER. At the Effective Time, Bank shall be merged
with and into FSB in the manner and with the effect provided by the laws of
Wyoming and the separate legal existence of Bank shall cease and thereupon FSB
and Bank (hereinafter sometimes referred to as the "Merging Banks") shall be a
single corporation (the "Surviving Bank") subject to the Articles of
Incorporation of FSB. The Surviving Bank shall possess all the rights,
privileges, powers and franchises of a public as well as of a private nature,
and shall be subject to all restrictions, disabilities and duties of the Merging
Banks; and all the rights, privileges, powers and franchises of the Merging
Banks and all property, real, personal and mixed and all debts due to the
Merging Banks on whatever account, as well as for stock subscriptions and all
other things in action or belonging to the Merging Banks shall be vested in the
Surviving Bank; and all property, rights, privileges, powers and franchises, and
all and every other interest shall hereafter effectively be the property of the
Surviving Bank as they were of the Bank and all rights of creditors and all
liens upon any property of the Bank shall be preserved unimpaired, and all

-2-
<PAGE>

debts, liabilities and duties of the Bank shall thereafter attach to the
Surviving Bank, and may be enforced against it to the same extent as if such
debts, liabilities and duties had been incurred or contracted by it.

The outstanding shares of capital stock of Bank shall be converted on
the basis, terms, and conditions described in Section 1.4.

1.3 ARTICLES OF INCORPORATION; BYLAWS; DIRECTORS. The Articles of
Incorporation and Bylaws of FSB in effect immediately prior to the Merger shall
govern the Surviving Bank after the Merger without amendment. The directors and
officers of the Surviving Bank shall be the directors and officers of FSB
holding such positions immediately prior to the Merger.

1.4 CONVERSION OF SHARES. The manner and basis of converting the
shares of the Merging Banks shall be as follows:

1.4.1 BANK COMMON STOCK. Each share of Bank Common Stock which
is outstanding immediately prior to the Effective Time, other than shares as to
which dissenters' rights are perfected, and all rights in respect thereof, shall
be converted, IPSO FACTO, and without any action on the part of the holder
thereof, into and exchangeable for 1,280 shares (the "Exchange Ratio") of FSC
Common Stock, par value $1.25 per share.

1.4.2 FSB COMMON STOCK. The issued and outstanding stock of FSB
shall be unchanged by the Merger, except that FSB shall issue additional shares
of its stock to FSC equal to the value of the FSC shares issued pursuant to the
Merger to compensate FSC for the FSC shares used to effect the Merger.

1.4.3 SURRENDER OF CERTIFICATES. After the Effective Time, each
holder of shares of Bank Common Stock outstanding immediately prior to the
Effective Time (other than shares as to which dissenters' rights have been
perfected) shall, upon surrender for cancellation of a certificate or
certificates representing such shares to FSC or its agent designated for such
purpose, be entitled to forthwith receive a certificate or certificates
representing the number of shares of FSC Common Stock into which such shares of
Bank Common Stock shall have been converted pursuant to the provisions of this
Article. Until so surrendered, the certificates which prior to the Merger
represented shares of

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<PAGE>

Bank Common Stock, shall be deemed for all corporate purposes, to evidence
ownership of the shares of FSC Common Stock into which such shares of Bank
Common Stock shall have been converted; provided, however, that no dividends
with respect to shares of Bank Common Stock shall be paid until the holder shall
have surrendered certificates therefor, at which time the holder shall be paid
the amount of dividends, if any, without interest which shall theretofore have
become payable with respect to the shares of FSC Common Stock into which such
shares shall have been converted.

If any certificate for shares of FSC Common Stock is to be issued
in a name other than that in which the certificate surrendered in exchange
therefor is registered, it shall be a condition of the issuance thereof that the
certificate so surrendered shall be properly endorsed and otherwise in proper
form for transfer, and that the person requesting such exchange pay to FSC or
its agent designated for such purpose any transfer or other taxes required by
reason of the issuance of a certificate for shares of FSC Common Stock in any
name other than that of the registered holder of the certificate surrendered, or
establish to the satisfaction of FSC or its agent that such tax has been paid or
is not payable.

No fractional shares of FSC Common Stock shall be issued in the
Merger but, in lieu of any such fractional shares, each holder of shares of Bank
Common Stock who would otherwise have been entitled to a fraction of a share of
FSC Common Stock upon surrender of stock certificates as provided in this
Section 1.4.3 will upon such surrender be paid an amount of cash (without
interest) determined by multiplying (a) the FSC Common Stock price determined as
the average of the bid and ask price of FSC Common Stock as quoted on the
NASDAQ, National Market System, at closing on the day preceding the Effective
Time by (b) the fractional share interest in FSC Common Stock to which the
holder would otherwise be entitled.

Within ten (10) business days after the Effective Time, FSB will
send a notice and transmittal form to each Bank shareholder (other than holders
of shares as to which dissenters' rights are perfected), advising such
shareholder of the terms of the exchange effected by the Merger and the
procedure for surrendering to FSC (who may appoint forwarding or exchange
agents) such certificate for exchange into FSC Common Stock.

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<PAGE>

1.5 SHARES OF DISSENTING HOLDERS. If holders of Bank Common Stock
dissent from the Merger and demand appraisal of their shares, any issued and
outstanding shares of Bank Common Stock held by a dissenting holder shall not be
converted as described in Section 1.4.1, but shall from and after the Effective
Time represent only the right to receive such consideration as may be determined
to be due to such dissenting holder pursuant to Wyoming Statutes 13-4-110, ET
SEQ.; provided, however, that each share of Bank Common Stock outstanding
immediately prior to the Effective Time, and held by a dissenting holder who
shall, after the Effective Time, withdraw his or her demand for appraisal or
lose his or her right of appraisal shall be deemed to be converted, as of the
Effective Time, into FSC Common Stock in accordance with Section 1.4.1 and the
certificates representing such Bank Common Stock shall be surrendered in
accordance with Section 1.4.3.

1.6 SUBSEQUENT ACTIONS. If, at any time after the Effective Time,
the Surviving Bank shall consider or be advised that any deeds, bills of sale,
assignments, assurances, or any other actions or things are necessary or
desirable to vest, perfect, or confirm of record or otherwise in the Surviving
Bank its right, title, or interest in, to, or under any of the rights,
properties, or assets of Bank acquired or to be acquired by the Surviving Bank
as a result of or in connection with, the Merger or otherwise to carry out this
Agreement, the officers and directors of the Surviving Bank shall be authorized
to execute and deliver, in the name and on behalf of Bank or otherwise, all such
deeds, bills of sale, assignments, and assurances, and to make and do, in the
name and on behalf of Bank or otherwise, all such other actions and things as
may be necessary or desirable to vest, perfect, or confirm any right, title, and
interest in, to, and under such rights, properties, or assets in the Surviving
Bank or otherwise to carry out this Agreement.

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<PAGE>

ARTICLE TWO

COVENANTS OF BANK

2.1 COVENANTS OF BANK. Except as otherwise contemplated hereby,
between the date hereof and the Effective Time (as defined in paragraph 7.2,
below) or the time when this Agreement terminates as provided herein, Bank shall
not, without the prior written authorization of the President of FSB:

2.1.1 CHANGE IN CAPITAL STOCK; ISSUANCE OF SHARES. Make any
change in its authorized capital stock, or issue, agree to issue or permit Bank
to become obligated to issue any shares of its capital stock, or securities
convertible into its capital stock;

2.1.2 OPTIONS, WARRANTS, AND RIGHTS. Grant or issue any
options, warrants or other rights of any kind relating to the purchase of shares
of its capital stock, or securities convertible into its capital stock;

2.1.3 DIVIDENDS. Except for the regular semi-annual dividend of
$1,000 per share typically declared by Bank in December and in June of each
year, declare or pay any dividends or other distributions on any shares of its
capital stock; provided, that each of said semi-annual dividends shall not
exceed $1,000 per share based on 375 shares outstanding.

2.1.4 PURCHASE OF SHARES. Purchase or otherwise acquire, or
agree to acquire, any shares of its stock, other than in a fiduciary capacity;

2.1.5 BENEFIT PLANS. Except as set forth on Schedule 3.1.16 and
except as required by law, enter into or amend any pension, retirement, stock
option, profit sharing, deferred compensation, consultant, bonus, group
insurance or similar benefit plan in respect of any of its directors, officers
or other employees; provided, however, that notwithstanding the above, Bank
shall terminate its Defined Benefit Plan (the "Defined Benefit Plan") and cause
it to be funded in accordance with the actuarial determination and in the amount
set forth on Schedule 2.1.5.

2.1.6 CONDUCT OF BUSINESS. Except as contemplated by this
Agreement, knowingly take or omit to take any action which (i) causes Bank not
to conduct its businesses in a manner consistent with normal business practices
(Bank shall use its best efforts to manage its

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<PAGE>

deposits, including rates and mix, and its securities portfolios in a manner
consistent with past practices), (ii) has a material and adverse effect on the
financial condition (present or prospective), businesses, properties, assets or
operations of Bank (the parties hereto recognize that the operation of Bank
until the Effective Time is the responsibility of Bank, and its Board of
Directors and officers; nevertheless, Bank shall keep FSB advised of all
important changes in the financial condition (present or prospective),
businesses, properties, assets or operations of Bank);

2.1.7 ACQUISITIONS AND MERGERS; DIVESTITURE. Acquire or merge
with any other company or acquire any branch or other significant part of the
assets of any other company, or divest any material portion of its assets (on or
off balance sheet), deposits or its business relationships;

2.1.8 LIENS; INDEBTEDNESS; INCREASE IN COMPENSATION, ETC.
Except as set forth on Schedule 2.1.8 and except in the ordinary course of
business, mortgage, pledge or subject to a lien or any other encumbrance any of
its assets, dispose of any of its assets, incur or cancel any indebtedness or
claims, purchase or lease any assets having a purchase price or lease cost, in
the aggregate, of more than $10,000.00 or increase any compensation or benefits
payable to its officers or employees, except routine merit or cost of living
increases in accordance with past practices;

2.1.9 AMENDMENTS TO ARTICLES OF INCORPORATION, ETC. Amend its
Articles of Incorporation, or make any material amendments to its Bylaws which
would interfere in any manner with the transactions contemplated by this
Agreement.

2.2 INVESTIGATION; ACCESS. Bank shall use its best efforts to take
or cause to be taken all action required under this Agreement on its part to be
taken as promptly as practicable so as to permit the consummation of the
transactions contemplated by this Agreement at the earliest possible date and
cooperate fully with FSB to that end, including, without limitation, providing
to FSB, and its agents, employees, accountants and counsel, access to Bank's
books, records, reports, tax returns and facilities and to its employees,
accountants, and counsel; provided, however, that such investigation to be
conducted by FSB shall be performed in such a manner which will not unreasonably
interfere with the normal operations, customers or employee relations of Bank,
and shall be in accordance with procedures established by the parties having due
regard for the foregoing.

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<PAGE>

Bank has delivered to FSB (i) a list setting forth all of the
classified, criticized and nonperforming assets of Bank ("Classified Assets") as
identified by the most recent examination by Bank's federal or state bank
examiner, and by Bank's internal credit examination along with an explanation of
management's response for dealing with such assets, (ii) a list of all loans
which are more than thirty (30) days past due ("Past Due Loans"), (iii) Bank
management's analysis of expected losses to be incurred with respect to the
loans (assets) identified in items (i) and (ii), and (iv) Bank's Reports of
Examination as conducted by the Federal Reserve Bank of Kansas City and/or
Division of Banking of the Department of Audit of the State of Wyoming (the
"Division of Banking") for the last three years.

From execution of this Agreement until Closing, Bank shall deliver to
FSB (i) monthly reports which summarize the loans and lease and the deposit
activity of the Bank for the previous month, and (ii) a report detailing any
changes to the Classified Assets or Past Due Loans.

2.3 REGULATORY APPROVALS. Bank shall (i) use its best efforts in
good faith to assist FSB and FSC in obtaining all necessary regulatory
approvals and to take or cause to be taken all other action required under this
Agreement on its part to be taken as promptly as practicable so as to permit the
consummation of the transactions contemplated by this Agreement at the earliest
possible date, and cooperate fully with FSB and FSC to that end, and
(ii) furnish all necessary information for inclusion in any applications
relating to the consents, approvals, and permissions of regulatory authorities
referred to in Article SIX. Bank shall have the right to review all
applications to such regulatory authorities before the filing thereof and to
comment upon the form of such applications and the information contained
therein.

2.4 NOTIFICATION OF ACTIONS. Bank covenants and agrees to notify FSB
as soon as reasonably practicable in the event of the breach of any of the
covenants set forth in this Article TWO.

2.5 ENVIRONMENTAL REPORTS. Within twenty (20) days of execution of
this Agreement, Bank shall cause to be prepared, by firms reasonably acceptable
to FSB, Phase I Environmental Reports with respect to real property owned by
Bank, including Bank's branch facilities and assets held by Bank as other
assets, other real estate owned or as insubstance foreclosure. In the event a
Phase I report

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<PAGE>

indicates that Bank may be a potentially liable party for remedial action under
CERCLA, FRCRA (as such terms are defined hereinbelow) or comparable federal or
state environmental type statutes, then Bank shall cause Phase II Environmental
Reports to be prepared detailing any possible exposure under such laws. The
cost of said Phases I and II Environmental Reports and the cost of any remedial
action determined to be necessary by such reports shall be borne by Bank.

ARTICLE THREE

COVENANTS, REPRESENTATIONS AND WARRANTIES OF BANK

3.1 COVENANTS, REPRESENTATIONS AND WARRANTIES OF BANK. Subject to
those matters set forth in Schedules to this Agreement, Bank covenants,
represents and warrants to and agrees with FSB as of the date of this Agreement
and as of the Closing Date (as defined in paragraph 7.1, below) as follows:

3.1.1 ORGANIZATION, CONDUCT OF BUSINESS, ETC. Bank (i) is duly
organized and validly existing and in good standing under the laws of the State
of Wyoming, (ii) has all requisite power and authority (corporate and other) to
own its properties and conduct its businesses as now being conducted, (iii) is
duly qualified to do business and is in good standing in each jurisdiction in
which the character of the properties owned or leased by it therein or in which
the transaction of its businesses makes such qualification necessary, except
where failure to so qualify would not have a material adverse effect on Bank or
its businesses, operations, properties, assets or condition (financial or
otherwise), and (iv) is not transacting business, or operating any properties
owned or leased by it, in violation of any provision of federal or state law or
any rule or regulation promulgated thereunder, which violation would have a
material adverse effect on Bank or its respective businesses, operations,
properties, assets or condition (financial or otherwise).

3.1.2 OPTIONS, WARRANTS, ETC. There are no outstanding options,
warrants, calls, units or commitments of any kind relating to the issuance,
sale, purchase or redemption of, or securities convertible into, capital stock
of Bank.

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<PAGE>

3.1.3 AUTHORIZATION OF CAPITAL STOCK. All of the outstanding
shares of capital stock of Bank have been duly authorized and are validly
issued, fully paid and nonassessable. Bank does not own any equity interest in
any other business organization.

3.1.4 AUTHORIZATION; VALIDITY OF AGREEMENT. Bank has the
corporate power and authority to execute and deliver this Agreement. This
Agreement has been duly and validly approved by the Board of Directors of Bank,
has been duly executed and delivered on Bank's behalf, and, subject to approval
by the shareholders of Bank and applicable regulatory authorities, including the
FDIC and the Commissioner of the Division of Banking, constitutes a valid and
binding agreement of such corporation, enforceable in accordance with its terms.

3.1.5 BANK REPORTS. To the best of Bank's knowledge, since
January 1, 1992, Bank has filed all reports, registrations and statements,
together with any amendments required to be made with respect thereto, that were
required to be filed with (i) the Federal Reserve Bank of Kansas City (the
"FRKC"), and (ii) the Division of Banking. (All such reports and statements
filed by Bank with the FRKC and the Division of Banking, and other applicable
state securities or banking authorities, are collectively referred to herein as
the "Bank Reports.") As of their respective dates, the Bank Reports complied in
all material respects with all the statutes, rules and regulations enforced or
promulgated by the regulatory authority with which they were filed and did not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading.

3.1.6 BANK FINANCIAL STATEMENTS AND TAX RETURNS. Bank's Call
Reports for the years ending December 31, 1992 and 1991 (the "Financial
Statements") were prepared in accordance with accounting principles governing
regulatory reports consistently applied and present fairly Bank's financial
condition as of such dates except as specifically identified in Schedule 3.1.6.
During the period from execution of this Agreement until Closing, Bank will
provide FSB within ten (10) business days of their availability, all financial
statements prepared by Bank.

Bank has delivered (or will deliver within five (5) days of
execution of this Agreement) true and correct copies of all federal and state
income tax returns filed for the years ending

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<PAGE>

1990, 1991 and 1992. To the best of Bank's knowledge, Bank has filed all
federal, state and local tax returns and forms (including but not limited to
forms 1099), which are required by law to be filed or delivered as of the date
hereof and has paid all taxes which have become due, and it has timely filed all
currency transaction reports required by the Bank Secrecy Act, as amended; has
timely filed all information returns required by Sections 6041, 6041A, 6042,
6045, 6049, 6050H, and 6050J of the Internal Revenue Code of 1986, as amended
(the "Code"); and has exercised due diligence in obtaining certified taxpayer
identification numbers as required pursuant to Treasury Regulation 35a.9999.
Where payment of such taxes is not required to be made as of the date hereof,
Bank has set up an adequate reserve or accrual for the payment of all taxes
required to be paid in respect of the periods covered by such returns.

There are not in force (i) any extensions of time with respect to
the dates on which any return was or is due to be filed by Bank, or (ii) any
waivers or agreements by Bank for the extension of time for the assessment or
payment of any tax.

3.1.7 OTHER LIABILITIES; ENVIRONMENTAL MATTERS. Except as and
to the extent stated in the Financial Statements delivered or to be delivered
pursuant to Section 3.1.6 and in Schedule 3.1.7, and except for those
liabilities incurred in the normal course of the Bank's business, Bank does not
have any material liabilities or obligations, secured or unsecured (whether
accrued, absolute, contingent or otherwise).

With respect to the real property owned or leased by Bank
(including other real estate), except as set forth on Schedule 3.1.7 and to the
best knowledge of Bank, neither Bank or any predecessor owner to Bank has
stored, disposed of or arranged for the disposal of any hazardous substance at
any facility, location or site, or permitted others to do so, so as to be or
become a potentially liable party for remedial action or response costs in
connection with such facility, location or site under the Federal Comprehensive
Conservation Response, Compensation and Liability Act ("CERCLA"), as amended,
the Federal Resource Conservation and Recovery Act ("FRCRA"), as amended,
Federal Water Pollution Control Act, the Toxic Substances Control Act, any
Wyoming underground storage tank act and other federal or state environmental
law or regulation, and Bank has

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<PAGE>

not received any notice of any potential claim under any such statutes. Except
as set forth on Schedule 3.1.7, after due inquiry and investigation, the real
property owned or leased by Bank has never contained or had located thereon, or
been used by previous owners and/or operators or Bank, for storage of, or
construction with asbestos, PCB or other hazardous or toxic materials. For
purposes of this Section, "hazardous substance" shall include all petroleum
products as well as any toxic or hazardous material, hazardous waste or other
hazardous or regulated substance defined in or regulated by any environmental
law.

3.1.8. LOAN LOSS RESERVES. The Reserve for Possible Loan Losses
and Net Loan Charge-Offs of Bank as established from time to time by Bank are
adequate as determined by the standards applied to Bank by the applicable bank
regulatory agencies and pursuant to generally accepted regulatory accounting
principles.

3.1.9 TITLE TO PROPERTIES. Except as set forth on Schedule
3.1.9 and except as reflected in the Financial Statements delivered or to be
delivered pursuant to Section 3.1.6, Bank owns, free and clear of any liens,
claims, charges, options, or other encumbrances, all of the property, real,
personal or mixed, reflected in the Financial Statements of Bank and all
property acquired since such date, except such property sold or otherwise
disposed of since such date in the ordinary course of Bank's business. In
Bank's opinion, all such properties which are material to the business or
operations of Bank are in a good state of maintenance and repair (ordinary wear
and tear excepted) and are adequate for their current uses and purposes. During
each of the past three calendar years, Bank and its properties have been insured
for customary risks with customary limits, deductibles, and exclusions,
including but not limited to Bankers Blanket Bond, and such insurance protection
continues in effect as of the date hereof. Bank has delivered to FSB true and
correct copies of all deeds, title insurance policies and surveys it has with
respect to the real property owned by it and copies of all leases with respect
to real property leased by it.

3.1.10 ABSENCE OF DEFAULTS. Except as set forth in Schedule
3.1.10, the execution of this Agreement does not and performance of the
transactions contemplated by this Agreement will not (assuming Bank shareholder
approval and applicable regulatory approval) (a) violate

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<PAGE>

the provisions of the Articles of Incorporation or Bylaws of Bank, or
(b) violate the provisions of or place Bank in default under any agreement,
indenture, mortgage, lien, lease, contract, instrument, order, judgment, decree,
ordinance, statute, or regulation to which Bank is subject, to which any
property of Bank is subject, or to which Bank is a party, which violations or
defaults would in the aggregate have a material adverse effect on the business,
operations, properties, assets, or condition (financial or otherwise) of Bank.

3.1.11 ABSENCE OF MATERIAL ADVERSE CHANGES. Except as
contemplated by this Agreement, since December 31, 1993, there has been no
material adverse change, and no development involving a reasonably foreseeable
prospective material adverse change, in or affecting the financial condition
(present or prospective), businesses, properties, assets or operations (present
or prospective) of Bank.

3.1.12 ACTIONS, PROCEEDINGS AND INVESTIGATIONS. Set forth on
Schedule 3.1.12 hereto is a complete and accurate listing of all litigation,
administrative or other proceedings to which Bank is a party, except for such
proceedings in which Bank is seeking to collect on a loan or lease transaction
and no counterclaim or similar claim has been filed against Bank. There are no
actions, proceedings or investigations pending, or to the knowledge of the
executive officers of Bank threatened or contemplated, against or relating to
Bank or any of its properties or assets (and said officers are not aware of any
facts that would give rise to any such claim), which would materially and
adversely affect the financial condition (present or prospective), businesses,
properties, assets or operations (present or prospective) of Bank, or the
ability of Bank to consummate the Merger contemplated hereby.

3.1.13 ABSENCE OF BROKERAGE COMMISSIONS, ETC. All negotiations
relative to this Agreement and the transactions contemplated hereby have been
carried on by Bank or its legal counsel directly with FSB without the
participation or intervention of any other person, firm or corporation employed
or engaged by or on behalf of Bank in such a manner as to give rise to any valid
claim against Bank or FSB for a brokerage commission, finder's fee or like
payment.

3.1.14 MATERIAL CONTRACTS. Except for those documents listed on
Schedule 3.1.14 hereto, copies of which documents have been provided by Bank to
FSB, Bank is not a party to

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<PAGE>

any material contract or agreement, including but not limited to any lease,
service contract, employment agreement or any pension, retirement, stock option,
profit sharing, deferred compensation, consultant, bonus, group insurance or
similar plan. To the best of Bank's knowledge, all of the contracts and
agreements of Bank, including those set forth in Schedule 3.1.14 are valid,
binding and in full force and effect and there is no existing default
thereunder.

3.1.15 COMPLIANCE WITH LAWS; DOCUMENTATION.

(a) Except as set forth on Schedule 3.1.15 or as disclosed
in Bank's Reports of Examination as conducted by the FRKC and the Division of
Banking, to the best of Bank's knowledge, the conduct by Bank of its business
does not violate or infringe any domestic or foreign laws, statutes, ordinances,
rules or regulations, the enforcement of which, individually or in the
aggregate, would materially and adversely affect the business, operations,
properties, assets or condition (financial or otherwise) of Bank. Except as set
forth in Schedule 3.1.15, Bank has complied in all material respects with every
local, state or federal law or ordinance, and every regulation or order issued
thereunder, now in effect and applicable to Bank governing or pertaining to
fair housing, anti-redlining, equal credit opportunity, truth-in-lending, real
estate settlement procedures, fair credit reporting and every other prohibition
against unlawful discrimination in residential lending, or governing consumer
credit, including, but not limited to, the Consumer Credit Protection Act,
Truth-in-Lending Law, and in particular Regulation Z promulgated by the Federal
Reserve Board, and the Real Estate Settlement Procedures Act of 1974. Except as
set forth in Schedule 3.1.15: (i) All loans, leases, contracts and accounts
receivable (billed and unbilled), security agreements, guarantees and recourse
agreements, of Bank as held in its portfolio, or as sold into the secondary
market, represent and are valid and binding obligations of their respective
parties and debtors, enforceable in accordance with their respective terms, each
is based on a valid, binding and enforceable contract(s) or commitment(s), each
of which has been executed and delivered in full compliance, in form and
substance, with any and all federal, state or local laws applicable to the Bank,
or to the other party or parties to the contract(s) or commitment(s), including
without limitation the Truth-in-Lending Act, Regulations Z and U of the Federal
Reserve Board, laws and regulations providing for non-discriminatory practices
in the granting

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<PAGE>

of loans or credit, applicable usury laws, laws imposing lending limits, and
each has been administered in full compliance with all applicable federal, state
or local laws or regulations; and (ii) except as set forth on Schedule 3.1.15,
all Uniform Commercial Code filings, or filings of trust deeds, or of lien or
other security interest documentation that are required by any applicable
federal, state or local government laws and regulations to perfect the security
interests referred to in any and all of such documents or other security
agreements have been made, and all security interests under such deeds,
documents or security agreements have been perfected, and all contracts have
been entered into or assumed in full compliance with all applicable material
legal or regulatory requirements.

(b) All loan files of Bank are complete and accurate in all
material respects and have been maintained in accordance with good banking
practice.

(c) All notices of default, foreclosure proceedings or
repossession proceedings against any real or personal property collateral have
been issued, initiated and conducted by Bank in full formal and substantive
compliance with all applicable federal, state or local laws and regulations, and
no loss or impairment of any security interest, or exposure to meritorious
lawsuits or other proceedings against Bank, has been or will be suffered or
incurred by Bank.

(d) Bank is not in violation of any applicable servicer or
other requirement of the FHA, VA, FNMA, GNMA, FHLMC or any private mortgage
insurer which insures any loans owned by Bank or as to which Bank has sold to
other investors, the effect of which violation would materially and adversely
affect the business, operations, properties, assets or condition (financial or
other) of Bank, and with respect to such mortgage loans Bank has not done or
failed to do, or caused to be done or omitted to be done, any act the effect of
which act or omission impairs or invalidates (i) any FHA insurance or
commitments of the FHA to insure, (ii) any VA guarantee or commitment of the VA
to guarantee, (iii) any private mortgage insurance or commitment of any private
mortgage insurer to insure, (iv) any title insurance policy, (v) any hazard
insurance policy, or (vi) any flood insurance policy required by the National
Flood Insurance Act of 1968, as amended, to the material detriment of the Bank.

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<PAGE>

(e) Bank is not engaged principally, or as one of its
important activities, in the business of extending credit for the purpose of
purchasing or carrying any margin stock.

3.1.16 BANK'S EMPLOYEE BENEFITS.

(a) BENEFIT PLANS. All "employee benefit plans" (as
defined at Section 3(3) of the Employee Retirement Income Security Act of 1974
("ERISA")) sponsored or maintained by Bank are set forth in Schedule 3.1.16
(hereinafter collectively referred to as the "Benefit Plans"), and such plans
are legally valid and binding and in full force and effect. Such list includes
all "employee welfare benefit plans" (as defined in section 3(1) of ERISA) and
all "employee pension benefit plans" as that term is defined in section 3(2) of
ERISA. Except as set forth in Schedule 3.1.16, Bank represents that it does not
have, nor does it sponsor, any other plan, fund or program providing retirement
income, deferred income for periods extending to the termination of employment
or beyond, medical, surgical, or hospital care or benefits, severance benefits,
benefits in the event of sickness, accident, disability, death or unemployment,
vacation benefits, apprenticeship or other training programs, day care centers,
scholarship funds or prepaid legal services.

(b) EMPLOYEE AGREEMENTS. Except as set forth in Schedule
3.1.16, Bank is not presently a party to any employment contract, compensation
or bonus agreement, collective bargaining agreement, or any incentive, deferred
compensation, severance or separation agreement, policy or arrangement of any
kind, covering employees or former employees of Bank.

(c) LIABILITIES FOR PENSION CONTRIBUTIONS. Except as set
forth on Schedule 3.1.16, (i) Bank has not maintained nor contributed to a plan
subject to the minimum funding requirements of Section 302 of ERISA, (ii) Bank
has no liability for contributions to any benefit plan, including but not
limited to Bank's Defined Benefit Plan, and (iii) there are no material
liabilities of Bank that would be incurred as a result of any termination of the
Defined Benefit Plan.

(d) COMPLIANCE WITH LAWS. Bank and, to the knowledge of
the executive officers of Bank, all persons having fiduciary or other
responsibilities or duties with respect to any Benefit Plan, are, and have since
inception been, in compliance in all material respects with, and each such
Benefit Plan is and has been operated in all material respects in accordance
with, its

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<PAGE>

provisions and in compliance with applicable laws, rules and regulations
governing such plans, including without limitation, the rules and regulations
promulgated by the Department of Labor and the Internal Revenue Service under
ERISA and the Code and the health care continuation requirements of federal law.

(e) CLAIMS ADMINISTRATION AND LIABILITIES. Each Benefit
Plan has been administered to date in material compliance with the requirements
of the claims procedure of the Code and ERISA. All reports required by any
government agency and disclosures to participants with respect to each Benefit
Plan subject to Section 104 of ERISA have been timely made or filed. Other than
as required by federal law for health continuation benefits ("COBRA"), Bank does
not now have any obligation to former employees to furnish health, or other
similar benefits under any Benefit Plan after retirement or other severance of
employment. The termination of any Benefit Plan shall not cause material
liability other than a current contribution under such Benefit Plan, unless the
liability is specifically listed in Schedule 3.1.16. No claim arising in
connection with the Benefit Plans has been made or asserted against the Bank or
the Benefit Plans, other than for benefits as provided under the terms of the
Benefits Plans, and Bank knows of no basis for any such claim.

(f) PROHIBITED TRANSACTIONS. Bank has not, nor to its
knowledge, has any fiduciary of any Benefit Plan, engaged in any transaction in
violation of Section 406(a) or (b) of ERISA or Section 4975(c)(1) of the Code
(for which no exemption exists under applicable law or regulations). The
financial information furnished by Bank on any Benefit Plan present an accurate
and fair representation of the assets and liabilities of such Benefit Plan.

(g) LIABILITIES TO PBGC. Except as set forth on Schedule
3.1.16, Bank has never, nor has any other trade or business under "common
control" with Bank (as defined under Section 414(c) of the Code), maintained or
contributed to any plan insured by the Pension Benefit Guaranty Corporation or
subject to minimum funding standards of ERISA.

(h) COPIES OF RELEVANT DOCUMENTS. Complete and correct
copies of the following documents have been furnished to FSB or will be
furnished to FSB within 20 days following the signing of this Agreement:

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(i) The Benefit Plans and related trust agreements;

(ii) The most recent summary plan description of each
Benefit Plan subject to Section 104 of ERISA; and

(iii) The most recent Internal Revenue Service
determination letter for the Defined Benefit Plan;

(iv) Annual reports (on Form 5500 series) required to
be filed with respect to the Benefit Plans with the Internal Revenue
Service.

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3.1.17 REPURCHASE AGREEMENTS. Bank has, as of the date hereof,
and as of the Closing Date will have, valid and perfected first position
security interests in all government securities subject to repurchase
agreements, and, to the knowledge of the Bank, as of the date hereof, the value
of the collateral securing each such repurchase agreement equals or exceeds the
amount of the debt secured by such collateral under such agreement.

ARTICLE FOUR

COVENANTS, REPRESENTATIONS AND WARRANTIES OF FSC AND FSB

4.1 COVENANTS, REPRESENTATIONS AND WARRANTIES OF FSC AND FSB. FSC
and FSB jointly and severally represent and warrant to and agree with Bank as of
the date of this Agreement and as of the Closing Date as follows:

4.1.1 ORGANIZATION, CONDUCT OF BUSINESS, ETC. FSC and FSB
(i) are each duly organized and validly existing and in good standing under the
laws of Delaware (in the case of FSC), or the laws of Wyoming (in the case of
FSB), (ii) have all requisite power and authority (corporate and other) to own
their respective properties and conduct their respective businesses as now being
conducted, (iii) are each duly qualified to do business and are in good standing
in each jurisdiction in which the character of the properties owned or leased by
them therein or in which the transaction of their respective businesses makes
such qualification necessary, except when failure to so qualify would not have a
material adverse effect on FSC and its consolidated subsidiaries, and (iv) are
not transacting business, or operating any properties owned or leased by any of
them, in violation of any provision of federal or state law or any rule or
regulation promulgated thereunder, which violation would have a material adverse
effect on FSC and its consolidated subsidiaries.

4.1.2 AUTHORIZATION AND VALIDITY OF AGREEMENT. FSC and FSB have
the corporate power and authority to execute and deliver this Agreement. This
Agreement has been duly and validly approved by their respective Boards of
Directors (or Executive Committee in the case of FSC), has been duly executed
and delivered on their behalf, and constitutes a valid and binding

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agreement of each of FSC and FSB, enforceable in accordance with its terms,
subject to approval of the shareholders of FSB and applicable regulatory
authorities.

4.1.3 FSC REPORTS. Since January 1, 1992, FSC and its
consolidated subsidiaries have filed all reports, registrations and statements,
together with any amendments required to be made with respect thereto, that were
required to be filed with (i) the United States Securities and Exchange
Commission (the "SEC") including, but not limited to, Form 10-K, Form 10-Q, Form
8-K and proxy statements, (ii) the Federal Reserve Board, (iii) the Division of
Banking, and (iv) the FDIC. All such reports and statements filed with the SEC,
the Federal Reserve Board, the FDIC, the Division of Banking, and other
applicable state securities or banking authorities are collectively referred to
herein as the "FSC Reports." As of their respective dates, the FSC Reports
complied in all material respects with all the statutes, rules and regulations
enforced or promulgated by the regulatory authority with which they were filed
and did not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they are made, not
misleading. From execution of this Agreement until the Closing Date, FSC (and
FSB as applicable) shall provide to Bank copies of all filings made by FSC
pursuant to the Securities Act of 1933 and the Securities Exchange Act of 1934
and the Call Reports filed by FSB.

4.1.4 FSC FINANCIAL STATEMENTS. FSC's Consolidated Balance
Sheets as of December 31, 1992 and December 31, 1991, and its Consolidated
Statements of Income and Consolidated Statements of Changes in Financial
Position (or Statement of Cash Flow) for the years then ended, and FSC's
unaudited Balance Sheet as of September 30, 1993, heretofore delivered to Bank
were prepared in accordance with generally accepted accounting principles
consistently applied and present fairly its consolidated financial condition,
results of operations and changes in financial position as of such dates and for
such periods; provided, however, that the September 30, 1993 interim statement
is subject to typical year-end adjustments. FSB's Call Reports for the years
ending December 31, 1992 and 1991 were prepared in accordance with accounting
principles governing regulatory reports consistently applied and present fairly
FSB's financial condition as of such dates.

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Except as reflected in the FSC Financial Statements provided by FSC to Bank and
except for those liabilities incurred in the normal course of FSC's or any of
its subsidiaries' respective business, FSC and its consolidated subsidiaries do
not have any material liabilities or obligations, secured or unsecured (whether
accrued, absolute, contingent or otherwise).

4.1.5 ABSENCE OF MATERIAL ADVERSE CHANGES. Since September 30,
1993, there has been no material adverse change in or affecting the financial
condition, businesses, properties or operations of FSC and its consolidated
subsidiaries or of FSB.

4.1.6 ABSENCE OF DEFAULTS UNDER AGREEMENTS. Neither the
execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby will conflict with or result in a breach of or
constitute a default under any provision of FSC's or FSB's respective Articles
of Incorporation, Articles of Association, or Bylaws, or any agreement to which
FSC or FSB is a party or by which either of them is bound or to which any of
their respective properties is subject or result in the creation of any liens or
encumbrances upon any of their respective assets, and no consents or waivers
thereunder are required to be obtained in connection with the transactions
contemplated hereby, except for the approval of the FDIC, the Commissioner of
the Division of Banking and the Board of Governors of the Federal Reserve System
and of the shareholders of FSB and Bank.

4.1.7 ACTIONS, PROCEEDINGS, AND INVESTIGATIONS. Except as set
forth in FSC's filings with the SEC, there are no actions, proceedings or
investigations pending, or to the best knowledge of the executive officers of
FSC and FSB, threatened or contemplated, against or relating to FSC or any of
its consolidated subsidiaries, or any of their respective properties, which, if
determined adversely, would materially and adversely affect the financial
condition, businesses, properties or operations of FSC and its consolidated
subsidiaries or of FSB, or the ability of FSC and FSB to consummate the Merger
contemplated hereby.

4.1.8 REGULATORY APPROVALS. FSC and FSB shall (i) file, within
a reasonable time following execution of this Agreement, applications for, and
shall use their best efforts in good faith to obtain all necessary regulatory
approvals and to take or cause to be taken all other action required under this
Agreement on their part to be taken as promptly as practicable so as to permit
the

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<PAGE>

consummation of the transactions contemplated by this Agreement at the earliest
possible date, and cooperate fully with Bank to that end, and (ii) furnish all
necessary information for inclusion in any applications relating to the
consents, approvals, and permissions of regulatory authorities referred to in
Article SIX.

4.1.9 FSC COMMON STOCK. All of the outstanding Common Stock of
FSC as set forth in the Recitals hereto is duly authorized and validly issued,
fully paid and nonassessable. The Common Stock of FSC to be issued and
delivered pursuant to the Merger, when issued as contemplated hereby, shall be
duly authorized, validly issued, fully paid and nonassessable. Except as set
forth in the consolidated financial statements of FSC (including the footnotes
and schedules thereto), (subject to the adjustment provided below), there are no
outstanding options, warrants, calls, units or commitments of any kind relating
to the issuance, sale, purchase, or redemption of, or securities convertible
into, capital stock of FSC or any of its subsidiaries.

4.1.10 REGISTRATION OF SHARES. FSC will use its best efforts to
cause a Registration Statement on Form S-4 or other appropriate form to be filed
and declared effective and the effectiveness maintained through the Closing Date
under the Securities Act of 1933, as amended (the "1933 Act"), with respect to
the FSC Common Stock which is to be issued in connection with the transactions
contemplated by this Agreement, which Registration Statement, at the time it
becomes effective, and at the Effective Time, shall in all material respects
conform to the requirements of the 1933 Act and the General Rules and
Regulations of the SEC under said Act (the "1933 Rules"), and the FSC Common
Stock to be issued by FSC in connection with the Merger shall be duly qualified
or exempted, as the case may be, under applicable state Blue Sky securities
laws, in those states in which Bank has informed FSC that its shareholders
reside.

4.1.11 ABSENCE OF BROKERAGE COMMISSIONS, ETC. All negotiations
relative to this Agreement and the transactions contemplated hereby have been
carried on by FSC and FSB or their legal counsel directly with Bank without the
participation or intervention of any other person, firm or corporation employed
or engaged by or on behalf of FSC or FSB in such a manner as to give rise to any
valid claim against Bank or FSC or FSB for a brokerage commission, finder's fee
or like payment.

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ARTICLE FIVE

PROXY STATEMENT; SHAREHOLDER MEETING

5.1 PROXY STATEMENT. FSC shall prepare the Registration Statement,
as provided in Paragraph 4.1.10 above, which Registration Statement will include
a Proxy Statement to be used with respect to providing the shareholders notice
of the shareholder meeting for Bank. Bank covenants and agrees to provide to
FSC all information, including accounting statements and reports, required for
the Registration Statement, and represents and warrants that the information it
so provides in writing specifically for use in the Proxy Statement, will comply
in all material respects with the requirements of the Securities Exchange Act of
1934 (the "1934 Act") and the applicable rules and regulations promulgated by
the SEC under such Act (the "1934 Rules"), and will not contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements contained therein not
misleading, except that Bank makes no representation with respect to information
furnished by FSC or FSB expressly for inclusion in the Proxy Statement.

FSC and FSB represent and warrant that the Proxy Statement will comply
in all material respects with the requirements of the 1934 Act and the
applicable 1934 Rules, and will not contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements contained therein not misleading, except that FSC and FSB
make no representation with respect to information furnished in writing by Bank
expressly for inclusion in the Proxy Statement.

5.2 BANK MEETING. This Agreement shall be submitted for approval,
ratification and confirmation by the shareholders of Bank at a meeting thereof
to be called in accordance with the applicable provisions of law and held as
promptly as practicable after the execution of this Agreement. Bank will mail
the Proxy Statement prepared by FSC as part of the Registration Statement to its
shareholders for purposes of the meeting of its shareholders.

5.3 FSB MEETING. This Agreement shall be submitted for approval,
ratification and confirmation by the shareholders of FSB at a meeting thereof to
be called in accordance with the applicable provisions of law and held as
promptly as practicable after the execution of this Agreement.

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FSB will mail the Proxy Statement prepared by FSC as part of the Registration
Statement to its shareholders for purposes of the meeting of its shareholders.
FSC, as the holder of in excess of 99% of the issued and outstanding stock of
FSB agrees to vote the FSB shares in favor of the Merger.

ARTICLE SIX

CONDITIONS OF CLOSING

6.1 CONDITIONS OF CLOSING.

6.1.1 CONDITIONS OF CLOSING FOR ALL PARTIES. The consummation
of the transactions contemplated by this Agreement is conditioned upon the
following:

6.1.1(a) REGULATORY APPROVAL. All consents, approvals and
permissions and the satisfaction of all of the requirements prescribed by law,
including but not limited to, the consents, approvals and permissions of all
applicable regulatory authorities, which are necessary to the carrying out of
the Merger as described in this Agreement, shall have been procured; provided,
however, the approvals referred to in this subparagraph 6.1.1(a) shall not have
imposed any significant conditions which FSB on the one hand, or Bank, on the
other, reasonably deem to be materially disadvantageous or burdensome.

6.1.1(b) NO INJUNCTION, ETC. There shall not have been
instituted any litigation, regulatory proceeding or other matter which
challenges the legality or effectiveness of the transactions contemplated hereby
or seeks an order, decree or injunction enjoining or prohibiting the
consummation of the Merger.

6.1.1(c) SHAREHOLDER APPROVAL. Holders of not less than
sixty-six and 2/3 percent (66-2/3%) of the Bank Common Stock and of the FSB
Common Stock outstanding shall have approved and confirmed this Agreement and
the Merger contemplated hereby.

6.1.1(d) REGISTRATION STATEMENT. The Registration
statement shall have become effective under the 1933 Act and shall not be the
subject of any stop order or proceedings seeking a stop order.

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<PAGE>

6.1.1(e) TAX MATTERS. Bank and FSB and FSC shall have
received an opinion from legal counsel to FSC to the effect (i) that the Merger
will constitute a nontaxable reorganization in accordance with Sections
368(a)(1)(A) and 368(a)(2)(D) of the Code, and (ii) that any other matters
agreed to by the parties will be favorably treated for tax purposes.

6.1.2 CONDITIONS OF CLOSING FOR FSC AND FSB. The obligation of
FSC and FSB, respectively, to consummate the transactions contemplated by this
Agreement is conditioned upon the following (unless waived by FSC or FSB,
respectively):

6.1.2(a) BANK RESOLUTIONS; CORPORATE DOCUMENTS. Bank shall
have delivered to FSB certified copies of resolutions duly adopted by the Board
of Directors of Bank approving this Agreement and the Merger, all as
contemplated hereby, and directing the submission thereof to a vote of the
shareholders of Bank, and certified copies of resolutions duly adopted by the
shareholders of Bank (owning the outstanding shares as required by 6.1.1(c)
above) approving this Agreement and the Merger, all as contemplated hereby.
Bank shall deliver to FSB (i) copies certified by the Secretary of State of
Wyoming of its Articles of Incorporation; (ii) copies certified by its Corporate
Secretary of its Bylaws; and (iii) certificate of good standing as to Bank,
dated as of a recent date to the Closing Date, issued by the appropriate
governmental agencies.

6.1.2(b) BANK REPRESENTATIONS AND WARRANTIES. Unless
waived in writing by FSB, the representations and warranties of Bank contained
in this Agreement shall be correct on and as of the Closing Date with the same
effect as though made on and as of such date, except for changes which are not,
in the aggregate, material and adverse to the financial condition, businesses,
properties or operations of the Bank. Except as otherwise contemplated by this
Agreement, Bank shall have performed in all material respects all of its
obligations and agreements hereunder theretofore to be performed by it,
including but not limited to the covenants set forth in Articles TWO and THREE
hereof. FSB shall have received at the Closing a certificate to the foregoing
effect dated the Closing Date and executed on behalf of Bank by one of its duly
authorized executive officers.

6.1.2(c) OPINION OF BANK COUNSEL. Unless waived in writing
by FSB, FSB shall have received at the Closing from Gerald L. Goulding, counsel
to Bank, a written opinion,

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<PAGE>

dated the Closing Date, addressing those matters set forth in Schedule 6.1.2(c)
hereto and in form reasonably acceptable to legal counsel for FSB.

6.1.2(d) CONDITION OF BANK. FSB shall have determined,
based on an audit and review by its officers, accountants and legal counsel,
conducted shortly before the Closing Date, that (i) the assets, books, records
and operations of Bank are in reasonably satisfactory condition and will not
adversely impact FSB after consummation of the Merger; (ii) based on the review
of the assets, books, records and operations of Bank by FSB, there are no
liabilities (existing, threatened or contingent) which FSB, in its discretion,
determines to be unacceptable; (iii) based upon the update of the credit review,
there has been no material adverse change in the loan portfolio of Bank since
December 12, 1993 and the allowance for loan and lease losses of the Bank is
adequate in all material respects; and (iv) as of the Closing Date, the net
worth of Bank, calculated in accordance with generally accepted accounting
principles, and after accrual or payment of the expenses incurred by Bank with
respect to the termination of employee plans, will be not less than $8,000,000,
which amount shall be determined prior to accrual or payment of accounting and
legal fees and environmental investigation expenses incurred with respect to the
Merger.

Bank agrees to make such accruals for expenses or charge-offs or
additions to the allowance for loan loss at or prior to the Closing made at the
request, in writing, of FSC and FSB, to conform Bank's accounting reserve
practices and methods (including credit loss practices and methods) to those of
FSB (as such practices and methods are to be applied to Bank from and after the
Closing) and FSB's plan with respect to the conduct of Bank's business following
the Merger; PROVIDED, HOWEVER, (a) said accruals and charge-offs shall not
reduce net worth for purposes of satisfaction of the net worth condition set
forth in this paragraph, and (b) such accruals or charge-offs shall not
constitute a breach of any representation or warranty of Bank set forth in this
Agreement.

6.1.2(e) ACCOUNTANT'S LETTER. Brough and Associates,
independent certified public accountants, shall have performed the procedures
set forth in Schedule 6.1.2(e) hereto (1) as of the Effective Date of the
Registration Statement, and (2) as of the month-end most closely preceding the
Closing Date and shall have furnished to FSC and FSB their written report.

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6.1.2(f) AFFILIATES LETTER. Unless waived in writing by
FSC, FSC shall have received a letter from each person listed on Schedule
6.1.2(f) hereto and each person who, in the reasonable opinion of Bank is an
"affiliate" (as that term is defined in Rule 405 promulgated by the SEC under
the 1933 Act) of Bank in the form attached hereto as Schedule 6.1.2(f). Such
"affiliates" letter shall include covenants with respect to the continued
ownership of the FSC Stock to be received pursuant to the Merger.

6.1.2(g) DEPOSITS. The deposits of Bank shall not be less
than $50 million, and Bank shall have managed its deposits in the ordinary
course of business and consistent with past practices and as required by Section
2.1.6 of this Agreement.

6.1.2(h) EMPLOYMENT AGREEMENT, AGREEMENT NOT TO COMPETE AND
SUPPLEMENTAL COMPENSATION AGREEMENT. Hal R. Robinson shall have executed an
Employment Agreement and an Agreement Not to Compete with FSB and a Supplemental
Compensation Agreement with FSB and FSC, all in substantially the same form as
set forth in Schedule 6.1.2(h) hereto and by reference made a part hereof.

6.1.2(i) ENVIRONMENTAL MATTERS. Bank has identified the
existence of (i) underground storage tanks on other real estate owned by the
Bank in Etna, Wyoming (the "J. P. Robinson Service Station Property") and (ii)
an underground leech line on its property at 485 Washington, Afton, Wyoming (the
"Bank Property"), for which Bank shall have caused to be prepared Phase I
Environmental Reports, and Phase II Environmental Reports if required by the
results of the Phase I Reports, pursuant to Section 2.5 of this Agreement. It
shall be a condition to closing that the remedial actions required pursuant to
the findings of the Phase I and Phase II reports, if any, for both the J. P.
Robinson Service Station Property and the Bank Property be completed, at the
expense of Bank, in a manner satisfactory to FSC and FSB, in their sole
discretion.

6.1.3 CONDITIONS OF CLOSING FOR BANK. The obligation of Bank to
consummate the transactions contemplated by this Agreement is conditioned upon
the following (unless waived by Bank):

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<PAGE>

6.1.3(a) FSB AND FSC REPRESENTATIONS AND WARRANTIES.
Unless waived in writing by Bank, the representations and warranties of FSB and
FSC contained in this Agreement shall be correct on and as of the Closing Date
with the same effect as though made on and as of such date, except for changes
which are not, in the aggregate, material and adverse to the financial
condition, businesses, properties or operations of FSB or FSC and, except as
otherwise contemplated by this Agreement, FSB and FSC shall have performed in
all material respects all of their obligations and agreements hereunder
theretofore to be performed by them. Bank shall have received at the Closing a
certificate to the foregoing effect dated the Closing Date and executed on
behalf of FSB and FSC, respectively, by one of their duly authorized executive
officers.

6.1.3(b) OPINION OF FSC COUNSEL. Unless waived in writing
by Bank, Bank shall have received at the Closing from Ray, Quinney & Nebeker,
counsel to FSC, a written opinion, dated the Closing Date, substantially in the
form of Schedule 6.1.3(b) attached hereto and by reference made a part hereof.

6.1.3(c) FSC AND FSB RESOLUTIONS. FSC and FSB shall have
delivered to Bank certified copies of resolutions duly adopted by the Board of
Directors (or Executive Committee) of each approving this Agreement and the
Merger contemplated hereby and directing the submission thereof to a vote of the
shareholder of FSB, and certified copies of resolutions duly adopted by the
shareholders of FSB approving the Agreement and the Merger contemplated hereby.

6.1.3(d) EMPLOYMENT AGREEMENT, AGREEMENT NOT TO COMPETE AND
SUPPLEMENTAL COMPENSATION AGREEMENT. Hal R. Robinson shall have executed an
Employment Agreement and an Agreement Not to Compete with FSB and a Supplemental
Compensation Agreement with FSB and FSC, all in substantially the same form as
set forth in Schedule 6.1.2(h) hereto and by reference made a part hereof.

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ARTICLE SEVEN

CLOSING OF THE MERGER

7.1 CLOSING. Unless this Agreement is earlier terminated in
accordance with Article EIGHT, Bank shall be merged with and into FSB, with FSB
being the surviving entity, as contemplated by this Agreement, at a closing (the
"Closing") to be held at the offices of First Security Corporation, 79 South
Main Street, Salt Lake City, Utah 84111, at 2:00 P.M., local time, on a date
(the "Closing Date") mutually agreed upon by the parties as soon as practicable
after satisfaction of the conditions precedent set forth in Article SIX and the
expiration of the required waiting period following approval of FSB's
application to the FDIC relating to the Merger, but in no event later than 30
days after the expiration of such period.

7.2 EFFECTIVE TIME OF MERGER. The Merger shall take effect on the
date of the filing with the Secretary of the State of Wyoming on the Closing
Date or as soon thereafter as practicable of the documents specified in Wyoming
Statutes 13-4-108. The time when the Merger shall become effective is herein
called the "Effective Time."

ARTICLE EIGHT

TERMINATION

8.1 TERMINATION. This Agreement may be terminated at any time prior
to the Effective Time:

(a) by mutual consent of the Boards of Directors of FSB and FSC
and the Board of Directors of Bank; or

(b) by the Boards of Directors of FSB and FSC or the Board of
Directors of Bank at any time after the expiration of twelve (12) months from
the date hereof, if the Merger shall not theretofore have been consummated by
the failure to satisfy the conditions to Closing not within the control of the
electing party; or

(c) by Bank, upon written notice to FSB and FSC at any time if
any representation or warranty of FSB or FSC contained in this Agreement was
materially incorrect when

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<PAGE>

made or becomes materially incorrect on or prior to the Closing Date, or if FSB
or FSC, as applicable, fails to comply with any of its covenants contained in
this Agreement, and the same is not cured within thirty (30) days after notice
of such inaccuracy or noncompliance;

(d) by FSB and FSC upon written notice to Bank at any time if
any representation or warranty of Bank contained in this Agreement was
materially incorrect when made or becomes materially incorrect on or prior to
the Closing Date, or if Bank fails to comply with any of its covenants contained
in this Agreement, and the same is not cured within thirty (30) days after
notice of such inaccuracy or noncompliance;

(e) by FSB and FSC, upon written notice to Bank at any time
after the meeting of shareholders of the Bank regarding the Merger is held if
Bank's shareholders owning not less than 66-2/3% of the outstanding shares of
Bank Common Stock do not approve the Merger contemplated hereby, or if such
Merger is disapproved by any governmental authority whose approval is necessary.

8.2 EFFECT OF TERMINATION. In the event of termination and
abandonment hereof pursuant to the provisions of Section 8.1, this Agreement
shall become void and have no force or effect and no party hereto shall have any
liability or obligation hereunder to any other party, except that provisions of
this Agreement relating to confidentiality or payment of expenses and this
Section shall survive the termination. Such termination shall not relieve any
party of liability for any default prior to such termination.

ARTICLE NINE

ADDITIONAL COVENANTS

9.1 STATE LAW INFORMATION.

9.1.1 PRINCIPAL OFFICE OF MERGING BANKS. The principal office
of FSB is 1400 Dewar Drive, Rock Springs, Wyoming. The principal office of Bank
is 485 Washington, Afton, Wyoming.

9.1.2 DIRECTORS OF FSB. The name and residence of each director
of FSB to serve until the next annual meeting of the stockholders of FSB are as
follows:

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James H. Magagna Dave Wood
20 Wardell Court 1917 Parkview Avenue
Rock Springs, WY 82901 Rock Springs, WY 82901

Charles E. Richardson Robert Dalton
1322 Virginia 1265 East 5375 South
Rock Springs, WY 82901 Ogden, UT 84403

C. Keith West Thomas Laskowski
P. O. Box 609 555 Lombard
Rock Springs, WY 82902 Green River, WY 82935

Robert A. Hatch
3123 South 200 East
Bountiful, UT 84010

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<PAGE>

9.1.3 OFFICERS OF FSB. The name and residence of each officer
of FSB is as follows:

Robert A. Hatch Val Wilcox
Chairman of the Board Vice President
3123 South 200 East 236 Tyler
Bountiful, UT 84010 Rock Springs, WY 82901

David Wood Paul F. Rheaume
President and CEO Vice President
1917 Parkview Avenue 618 Barlow Circle
Rock Springs, WY 82901 Rock Springs, WY 82901

Holly A. Michaelis Rosemary Maldonado
Vice President and Cashier Vice President
2911 Colima Drive 1052 Oakway
Rock Springs, WY 82901 Rock Springs, WY 82901

Peter Delaurante
Vice President
517 Lewis
Rock Springs, WY 82901

9.1.4 PREFERRED STOCK. No preferred stock of FSB will be issued
as part of the Merger.

9.1.5 SHARES OF DISSENTING HOLDERS OF FSB SHARES. If holders of
shares of FSB common stock dissent from the Merger and demand appraisal of their
shares, then the FSB shares held by such dissenting holder shall from and after
the Effective Time represent only the right to receive such consideration as may
be determined to be due to such dissenting holder pursuant to Wyoming Statutes
13-4-110, ET SEQ.

9.2 COSTS. Each of the parties to this Agreement shall pay its own
charges and costs incurred or to be incurred in connection with the execution
and performance of this Agreement. In the event of a willful breach of a
material agreement or covenant contained herein by either Bank, on the one hand,
or FSB, on the other, which breach either directly or indirectly results or
would result in a failure to consummate the Merger and which breach cannot be
cured or is not cured within thirty (30) days after written notice of such
breach is given to the party committing such breach, the party causing such
breach shall be liable to the other party for damages; provided, however, that
either party may elect to forego the receipt of such payment, and pursue its
right to the specific performance or enforcement of the terms and provisions of
this Agreement.

9.3 INSTRUMENTS OF TRANSFER, ETC. Each of the parties hereto shall
cooperate with the other in every way in carrying out the transactions
contemplated herein, in delivering instruments to

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perfect the conveyances, assignments and transfers contemplated herein, and in
delivering all documents and instruments reasonably deemed necessary or useful
by counsel for any party hereto.

9.4 NOTICES. All notices, requests, consents and demands shall be
given to or made upon the parties at its addresses set forth below, or at such
other address as a party may designate in writing delivered to the other
parties. Unless otherwise agreed in this Agreement, all notices, requests,
consents and demands shall be given or made by personal delivery, by confirmed
air courier, by facsimile transmission ("fax"), or by certified first class
mail, return receipt requested, postage prepaid, to the party or parties
addressed as aforesaid. If sent by confirmed air courier, such notice shall be
deemed to be given upon the earlier to occur of the date upon which it is
actually received by the addressee or the business day upon which delivery is
made at such address as confirmed by the air courier (or if the date of such
confirmed delivery is not a business day, the next succeeding business day). If
mailed, such notice shall be deemed to be given upon the earlier to occur of the
date upon which it is actually received by the addressee or the second business
day following the date upon which it is deposited in a first-class
postage-prepaid envelope in the United States mail addressed as aforesaid. If
given by fax, such notice shall be deemed to be given upon the date it is
actually received by the addressee.

(a) If to FSB and/or FSC, to:

First Security Bank of Wyoming
1400 Dewar Drive
Rock Springs, Wyoming 82902
Attn: Dave Wood
Fax Number: (307) 362-3807

With a copy to:

Robert A. Hatch
First Security Bank of Utah, N.A.
79 South Main Street
Salt Lake City, Utah 84111
Fax Number: (801) 322-2905

With a copy to:

First Security Corporation
79 South Main Street
Salt Lake City, Utah 84111
Attn: Morgan J. Evans
Fax Number: (801) 359-6928

-33-

<PAGE>

With a copy to:

Brad D. Hardy, of
Ray, Quinney & Nebeker
400 Deseret Building
79 South Main Street
Salt Lake City, Utah 84111
Fax Number: (801) 532-7543

(b) If to Bank, to:

Star Valley State Bank
P. O. Box 8
Afton, Wyoming 83110
Attn: Hal R. Robinson
Fax Number: (307) 886-9488

With a copy to:

Gerald L. Goulding
P. O. Box 968
Afton, Wyoming 83110
Fax Number: (307) 886-9590

Each party hereto shall notify promptly the other in writing of the
occurrence of any event which will or may result in the failure to satisfy the
conditions specified in Article SIX hereof. Between the date of this Agreement
and the Effective Time, each party hereto will advise the other of the
satisfaction of such conditions as they occur.

9.5 AMENDMENTS. Prior to the Effective Time, any provision of this
Agreement, except for Section 1.4.1 hereof, which establishes the conversion
ratio, may be amended or modified at any time, either before or after its
approval by the shareholders of either party to this Agreement, by an agreement
in writing between the parties hereto approved by its Boards of Directors and
executed in the same manner as this Agreement.

9.6 ENTIRE AGREEMENT. This Agreement and all exhibits and schedules
hereto and other documents incorporated or referred to herein, contain the
entire agreement of the parties and there are no representations, inducements or
other provisions other than those expressed in writing. No modification, waiver
or discharge of any provision of or breach of this Agreement shall (i) be
effective unless it is executed in writing by the party effecting such
modification, waiver or discharge, or (ii) affect the right of either party
hereto thereafter to enforce any other provision or to exercise any right or
remedy in the event of a breach by a party hereto, whether or not similar.

9.7 ASSIGNMENT. This Agreement may not be assigned by any party
hereto except with the prior written consent of the other parties.

-34-

<PAGE>

9.8 COUNTERPARTS. Any number of counterparts of this Agreement may
be signed and delivered and each shall be considered an original and together
they shall constitute one agreement.

9.9 EXCLUSIVE MERGER AGREEMENT. Bank, the Board of Directors of Bank
and the shareholders of Bank executing this Agreement below, covenant and agree
that, between the date hereof and the date of the meeting of the shareholders of
Bank described in Article FIVE hereof, they will not, either directly or
indirectly, solicit or attempt to procure offers relating to the Merger or
acquisition of Bank with or by any entity not a party to this Agreement, or
negotiate or enter into any agreements relating to the Merger or acquisition of
Bank with or by any such third party, and such persons further agree to use his
or her best efforts to obtain the approval of the merger by the shareholders of
Bank.

9.10 PUBLIC STATEMENTS. No party to this Agreement shall issue any
press release or other public statement concerning the transactions contemplated
by this Agreement without first providing the other parties hereto with a
written copy of the text of such release or statement and obtaining the consent
of the other parties respecting such release or statement, which consent will
not be unreasonably withheld. The consent provided for in this Section shall
not be required if the delay necessary to obtain such consent would preclude the
timely issuance of a press release or public statement as required by law. The
provisions of this Section 9.9 shall not be construed as prohibiting the filing
of copies of this Agreement or descriptions of this Agreement with regulatory
agencies as to which regulatory approvals are contemplated by this Agreement.

9.11 CONFIDENTIALITY. Each party shall use all information that it
obtains from the others pursuant to this Agreement solely for the effectuation
of the transactions contemplated by this Agreement or for other purposes
consistent with the intent of this Agreement and shall not use any of such
information for any other purpose, including, without limitation, the
competitive detriment of the other parties. Each party shall maintain as
strictly confidential all information it learns from the others and shall upon
expiration or termination of this Agreement, return promptly to the other
parties all documentation provided by them or made available by third parties.
Each party may disclose such information to its respective affiliates, counsel,
accountants, tax advisors and consultants, provided that each party shall cause
its respective directors, officers, agents, consultants and advisors to agree to
be bound by the provisions of this Section. This provision shall not prohibit
the use or disclosure of confidential information pursuant to court order or
which has otherwise become publicly available.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first set forth above.

FIRST SECURITY BANK OF FIRST SECURITY CORPORATION

-35-

<PAGE>

WYOMING
By: /s/ David Wood By: /s/ Scott C. Ulbrich
Its: President Its: Executive Vice President and
Chief Financial Officer

STAR VALLEY STATE BANK
By: /s/ Hal R. Robinson
Its: President

/ss/ CERTAIN SHAREHOLDERS OF STAR
VALLEY STATE BANK

-36-

<PAGE>

APPENDIX B

STAR VALLEY'S FINANCIAL STATEMENTS

<PAGE>

STAR VALLEY STATE BANK
FINANCIAL STATEMENTS
(unaudited)

THREE MONTHS ENDED YEAR ENDED
INCOME STATEMENT MARCH 31 DECEMBER 31
---------------- ------------- ------------------------
1994 1993 1993 1992 1991
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Interest & Fees on Loans 796 665 3012 2833 2941
Income from Lease Financing Receivables 0 0 0 0 0
Total Interest on Balances with Banks 0 0 0 0 0
Domestic Offices 0 0 0 0 0
Foreign Offices 0 0 0 0 0
Total Interest & Dividends on Securities 254 357 1251 1613 1876
U.S. Treasury & Agency Obligations *** *** *** *** ***
Securities Issued by States & Pol. Subs 19 5 48 20 2
Taxable Securities 13 0 28 0 0
Tax-Exempt Securities 6 5 20 20 2
Other Domestic Securities *** *** *** *** ***
Foreign Securities *** *** *** *** ***
Equity Securities 2 2 5 0 5
Interest Income from Trading Accounts 0 0 0 0 0
Income on Federal Funds Sold 15 37 123 215 225
TOTAL INTEREST INCOME 1065 1059 4386 4661 5042

Total Interest Expense on Deposits 365 410 1581 1962 2559
NOW, ATS & Other Transfer Accounts 74 74 310 342 460
Money Market Deposit Accounts 41 44 175 202 262
Other Savings Deposits 78 78 301 276 246
Time CD's of $100,000 or More 6 5 23 37 122
All Other Time Deposits 166 209 772 1105 1469
Interest on Foreign Office Deposits 0 0 0 0 0
Expense of Federal Funds Purchased 0 0 0 0 0
Interest on US Notes & Other Borrowings 0 0 0 0 0
Interest on Mortgage Indebtedness 0 0 0 0 0
Interest on Subordinated Notes & Debs 0 0 0 0 0
TOTAL INTEREST EXPENSE 365 410 1581 1962 2559

NET INTEREST MARGIN 700 649 2805 2699 2483
NET INTEREST MARGIN (TAX ADJ) 703 652 2815 2709 2484
Provision for Loan & Lease Losses 18 17 193 78 7
Provision for Allocated Transfer Risk 0 0 0 0 0

Service Charges on Deposit Accounts 77 60 313 192 170
Income from Fiduciary Activities *** *** *** *** ***
Trading Gain(Loss) on Foreign Exchange *** *** *** *** ***
Other Foreign Transaction Gains(Losses) *** *** *** *** ***
Gains, Losses, Fees from Trading Account *** *** *** *** ***
Other Noninterest Income 44 121 258 171 183
Other Fee Income 0 15 82 49 45
All Other Noninterest Income 44 106 176 122 138
TOTAL NONINTEREST INCOME 121 181 571 363 353

Gains(Losses) on Securities(Excl. Trade) 0 0 0 0 0

Salaries & Employee Benefits 200 190 767 825 867
Expenses of Premises & Fixed Assets, Net 28 26 118 87 94
Other Noninterest Expense 136 131 589 565 677
TOTAL NONINTEREST EXPENSE 364 347 1474 1477 1638

Income Before Taxes & Extraordinary 439 466 1709 1507 1191
Applicable Income Taxes -162 -158 -573 -522 -373
INCOME BEFORE EXTRAORDINARY ITEMS 277 308 1136 985 818

Extraordinary Items, Gross 0 0 0 0 0
Applicable Income Taxes on Extra. Items 0 0 0 0 0
Extraordinary Items, Net of Taxes 0 0 0 0 0
NET INCOME (LOSS) 277 308 1136 985 818

</TABLE>

<PAGE>

STAR VALLEY STATE BANK
FINANCIAL STATEMENTS
(unaudited)

BALANCE SHEET MARCH 31 DECEMBER 31
------------- ------------- ------------------------
ASSETS 1994 1993 1993 1992 1991
------ ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Cash & Due from Depository Institutions:
Noninterest-Bearing, Currency & Coin 2554 2212 3068 2743 2298
Interest-Bearing Balances 0 0 0 0 0
Securities 20903 25445 22413 25404 23143
Fed Funds Sold & Secs. Purchased 2500 1700 3950 5600 5400
Federal Funds Sold 2500 1700 3950 5600 5400
Secs. Purch Under Agreements to Resell 0 0 0 0 0
Loans & Lease Financing Receivables:
Total, Net of Unearned Income 35417 27800 34801 25841 25334
Less: Allowance for Losses -482 -511 -469 -497 -509
Less: Allocated Transfer Risk Reserve 0 0 0 0 0
Loans & Leases, Net 34935 27289 34332 25344 24825

Assets Held in Trading Accounts 0 0 0 0 0
Premises & Fixed Assets 229 204 237 212 202
Other Real Estate Owned 397 1312 373 1334 1526
Investments in Unconsolidated Subs 0 0 0 0 0
Acceptances (Customer's Liabilty) 0 0 0 0 0
Intangible Assets 0 0 0 0 0
Other Assets 753 823 734 839 850
TOTAL ASSETS 62271 58985 65107 61476 58244

LIABILITIES
-----------

Total Deposits 53694 50783 56582 53277 50208
Held in Domestic Offices:
Domestic Noninterest-Bearing 6406 5371 8112 8015 5337
Domestic Interest-Bearing 47288 45412 48470 45262 44871
Held in Foreign Offices:
Foreign Noninterest-Bearing 0 0 0 0 0
Foreign Interest-Bearing 0 0 0 0 0

Fed Funds Purchased & Secs. Sold 0 0 0 0 0
Federal Funds Purchased 0 0 0 0 0
Secs. Sold Under Agreements to Repurch 0 0 0 0 0
Demand Notes Issued to U.S. Treasury 0 0 0 0 0
Other Borrowed Money 0 0 0 0 0
Mtg. Indebtedness, Capitalized Leases 0 0 0 0 0
Acceptances (Bank's Liability) 0 0 0 0 0
Subordinated Notes & Debentures 0 0 0 0 0
Other Liabilities 393 213 618 678 751
TOTAL LIABILITIES 54087 50996 57200 53955 50959

Limited Life Preferred Stock 0 0 0 0 0

EQUITY CAPITAL
--------------

Perpetual Preferred Stk & Rel. Surplus 0 0 0 0 0
Common Stock 38 38 38 38 38
Surplus (Excl. Surplus Rel. to Pref. Stk) 2462 2463 2462 2463 2463
Undivided Profits & Capital Reser. Gross 5684 5488 5407 5020 4784
Less: Unrealized Loss Mktable Eqt. Sec. 0 0 0 0 0
Undivided Profits & Capital Reser., Net 5684 5488 5407 5020 4784
Foreign Currency Translation Adjustment *** *** *** *** ***
TOTAL EQUITY CAPITAL 8184 7989 7907 7521 7285
TOTAL LIABILITIES & EQUITY CAPITAL 62271 58985 65107 61476 58244

</TABLE>

<PAGE>

APPENDIX C

STATUTES GOVERNING RIGHTS OF DISSENTING SHAREHOLDERS

<PAGE>

SECTION 13-4-110 REORGANIZATION OF BANKS SECTION 13-4-110

SECTION 13-4-110. DISSENTING SHAREHOLDERS.

(a) The owner of shares of a state bank which were voted against a merger
to result in a state bank, or against the conversion of a state bank into a
national bank, are entitled to receive their fair market value in cash, if and
when the merger or conversion becomes effective, upon written demand, made to
the resulting state or national bank at any time within thirty (30) days after
the effective date of the merger or conversion accompanied by the surrender of
the stock certificates. The value of the shares shall be determined, as of the
date of the stockholders' meeting approving the merger or conversion, by three
(3) appraisers, one (1) to be selected by the owners of two-thirds (2/3) of the
dissenting shares involved, one (1) by the board of directors of the resulting
state or national bank, and the third by the two (2) so chosen. The valuation
agreed upon by any two (2) appraisers shall govern. If the appraisal is not
completed within ninety (90) days after the merger or conversion becomes
effective the state banking commissioner shall cause an appraisal to be made.

(b) The expenses of appraisal shall be paid by the resulting bank.

(c) The resulting state or national bank may fix an amount which it
considers to be not more than the fair market value of the shares of a merging
or the converting bank at the time of the stockholders' meeting approving the
merger or conversion, which it will pay dissenting shareholders of the bank
entitled to payment in cash. The amount due under the accepted offer or under
the appraisal shall constitute a debt of the resulting bank. (Laws 1955, ch. 65,
Section 9; W.S. 1957, Section 13-192; Laws 1977, ch. 67, Section 1; 1991,
ch. 240, Section 1.)

<PAGE>

PART II. INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS

Section 145 of the General Corporation Law of Delaware contains detailed
provisions on indemnification of directors and officers of a Delaware
corporation against expenses, judgments, fines and amounts paid in settlement,
actually and reasonably incurred in connection with litigation.

The Certificate of Incorporation of First Security Corporation provides for
indemnification of directors and officers to the full extent permitted or
allowed by the laws of the State of Delaware, as such laws exist or may
hereafter be amended (but, in the case of any such amendment, only to the extent
that such amendment permits the registrant to provide broader indemnification
rights than permitted or allowed by Section 145). The registrant also insures
its officers and directors to the full extent permitted by Section 145.

ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) EXHIBITS. The Registration Statement includes the following Exhibits:

EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT

2. Agreement of Merger, dated as of March 30, 1994, by and among First
Security Corporation ("FSC"), First Security Bank of Wyoming ("FSB
WYOMING"), and Star Valley State Bank ("STAR VALLEY"). (Included as
Appendix A to the Prospectus/Proxy Statement.)

3(1). Certificate of Incorporation, as amended, of FSC (Exhibit 2 to FSC's
Registration Statement on Form S-7, Registration Number 2-61892, as
filed on June 16, 1978 and Exhibit 3(1) to FSC's Registration
Statement on Form S-4, Registration Number 33-30045, as filed on
July 24, 1989, hereby incorporated herein by reference).

3(2). Bylaws of FSC, as amended (Exhibit 2 to FSC's Registration Statement
on Form S-7, Registration Number 2-61892, as filed on June 16, 1978,
and Exhibit 3(2) to FSC's Registration Statement on Form S-4,
Registration Number 33-30045, as filed on July 24, 1989, hereby
incorporated herein by reference).

4(1). No instruments defining the Rights of holders of long-term debt of FSC
and its subsidiaries have been included as exhibits because the total
amount of indebtedness authorized under any such instrument does not
exceed 10% of the total assets of FSC and its subsidiaries on a
consolidated basis. FSC hereby agrees to furnish supplementally to the
Commission, upon request, a copy of any omitted long-term debt
instrument.

<PAGE>

4(2). Rights Agreement dated as of August 28, 1989, between First Security
Corporation and First Security Bank of Utah, N.A., which includes the
form of Rights Certificate (together with the Form of Election of
Exercise) as Exhibit A; the form of Certificate of Designation of the
series of Junior Series B Preferred Stock, no par value per share, of
FSC as Exhibit B; and the Summary of Rights as Exhibit C. (Filed as
Exhibit 4 to FSC's Current Report on Form 8-K dated August 28, 1989,
as filed with the Commission on September 1, 1989, [File No. 1-6906]
and hereby incorporated herein by this reference.)

4(3). Amendment Agreement dated as of September 26, 1989, by and between
First Security Corporation and First Security Bank of Utah, N.A.,
amending the Rights Agreement dated as of August 28, 1989, between the
same parties. (Filed as Exhibit 1 to Amendment No. 1 on Form 8, dated
October 10, 1989, as filed with the Commission on October 16, 1989,
amending FSC's Current Report on Form 8-K dated August 28, 1989, as
filed with the Commission on September 1, 1989, [File No. 1-6906] and
hereby incorporated herein by this reference.)

5. Opinion of Ray, Quinney & Nebeker as to the legality of the shares
being registered.

8. Opinion of Ray, Quinney & Nebeker re: Tax Matters.

10(1). First Security Corporation Comprehensive Management Incentive Plan
(Exhibit A to Prospectus in Registration Statement No. 33-21556 on
Form S-8 filed April 29, 1988, hereby incorporated by reference).

10(2). First Security Corporation Supplemental Executive Retirement Plan.
(Exhibit to FSC's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1989, hereby incorporated by reference. [File No. 1-6906])

10(3). Employment Agreement between First Security Corporation and Spencer F.
Eccles. (Exhibit to FSC's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1991, hereby incorporated by reference.
[File No. 1-6906])

10(4). Employment Agreement between First Security Corporation and Morgan J.
Evans, as amended. (Exhibit to FSC's Quarterly Report on Form 10-Q for
the quarter ended September 30, 1991, hereby incorporated by
reference. [File No. 1-6906])

10(5). Employment Agreement between First Security Corporation and L. Scott
Nelson. (Exhibit to FSC's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1991, hereby incorporated by reference.
[File No. 1-6906])

10(6). Employment Agreement between First Security Corporation and T. Eugene
King. (Exhibit to FSC's Quarterly Report on Form 10-Q for the quarter
ended September 30, 1991, hereby incorporated by reference. [File No.
1-6906])

<PAGE>

10(7). Employment Agreement between First Security Corporation and J. Patrick
McMurray (Exhibit to FSC's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1991, hereby incorporated by reference.
[File No. 1-6906])

10(8). Employment Agreement between First Security Corporation and Scott C.
Ulbrich (Exhibit to FSC's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1992, hereby incorporated by reference.
[File No. 1-6906])

13(1). FSC's Annual Report on Form 10-K for the year ended December 31, 1993,
hereby incorporated by reference [File No. 1-6906].

13(2). FSC's Quarterly Report on Form 10-Q for Quarter ended March 31, 1994,
hereby incorporated by reference [File No. 1-6906].

22. FSC's Subsidiaries (included in FSC's Annual 10-K Report for the year
ended December 31, 1993 [File No. 1-6906], and incorporated by
reference).

23(1). Consent of Deloitte & Touche.

23(2). Consent of Ray, Quinney & Nebeker (filed as part of Exhibit 5 and
Exhibit 8).

25. Power of Attorney (included in signature pages of original filing of
Registration Statement).

28. Form of Proxy for Star Valley State Bank Special Meetings.

<PAGE>

ITEM 22. UNDERTAKINGS.

FSC hereby undertakes that, for purposes of determining any liability under
the Securities Act of 1933, as amended (the "1933 Act"), each filing of FSC's
annual report pursuant to Section 13(a) or Section 15(d) of the Securities
Exchange Act of 1934, as amended (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934, as amended), that is incorporated by reference
in the registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.

FSC hereby undertakes that, prior to any public reoffering of the
securities registered hereunder through use of a prospectus which is a part of
this registration statement by any person or party who is deemed to be an
underwriter within the meaning of Rule 145(c), such reoffering prospectus will
contain the information called for by the applicable registration form with
respect to reofferings by persons who may be deemed underwriters, in addition to
the information called for by the other items of the applicable form.

THE UNDERTAKING AS TO INDEMNIFICATION OF OFFICERS AND DIRECTORS REQUIRED TO
BE DISCLOSED BY ITEM 512(i) OF REGULATION S-K IS FOUND IN "COMPARATIVE RIGHTS OF
SHAREHOLDERS--DIRECTORS--DIRECTOR LIABILITY" IN THE PROSPECTUS / PROXY
STATEMENT.

FSC hereby undertakes that every prospectus (i) that is filed pursuant to
the paragraph immediately preceding, or (ii) that purports to meet the
requirements of Section 10(a)(3) of the 1933 Act and is used in connection with
an offering of securities subject to Rule 415, will be filed as a part of an
amendment to the registration statement and will not be used until such
amendment is effective; and that, for purposes of determining any liability
under the 1933 Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.

FSC hereby undertakes to respond to requests for information that is
incorporated by reference into the prospectus pursuant to Items 10(b), 11 or 13
of this Form, within one business day of receipt of such request, and to send
the incorporated documents by first class mail or other equally prompt means.
This includes information contained in documents filed subsequent to the
effective date of the registration statement through the date of responding to
the request.

FSC hereby undertakes to supply by means of a post-effective amendment all
information concerning a transaction, and the company being acquired, that was
not the subject of and included in the registration statement when it became
effective.

<PAGE>

FSC hereby undertakes:

(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:

(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;

(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or
in the aggregate, represent a fundamental change in the
information set forth in the registration statement;

(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement.

Provided, however, that paragraphs (1)(i) and (1)(ii), above, do not apply if
the registration statement is on Form S-3 or Form S-8, and the information
required to be included in a post-effective amendment by those paragraphs is
contained in periodic reports filed by the registrant pursuant to section 13 or
section 15(d) of the Securities Exchange Act of 1934 that are incorporated by
reference in the registration statement.

(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.

(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the
termination of the offering.

(4) If the registrant is a foreign private issuer, to file a post-
effective amendment to the registration statement to include any
financial statements required by 3-19 of Regulation S-X at the start
of any delayed offering or throughout a continuous offering.

<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, First Security
Corporation has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in Salt Lake City, Utah,
on the 16th day of June, 1994.

FIRST SECURITY CORPORATION

By: /s/ Morgan J. Evans
-------------------
Morgan J. Evans
President and Chief Operating Officer

POWER OF ATTORNEY

Each person whose signature appears below hereby constitutes and appoints
A. Robert Thorup, Esq. and Brad D. Hardy, Esq. and each of them, his true and
lawful attorney-in-fact and agent, with full powers of substitution, for him and
in his name, place and stead, in any and all capacities, to sign and to file any
and all amendments, including pre- and/or post-effective amendments to this
Registration Statement, with the Securities and Exchange Commission, granting to
said attorney-in-fact full power and authority to perform any other act on
behalf of the undersigned required to be done in connection therewith.

Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities and on the date or dates indicated.

SIGNATURE TITLE DATE
<S> <C> <C>

/s/ Spencer F. Eccles Chairman and Chief June 16, 1994
- ------------------------------- Executive Officer, Director
Spencer F. Eccles

/s/ Morgan J. Evans President and Chief June 16, 1994
- ------------------------------- Operating Officer, Director
Morgan J. Evans

<PAGE>

/s/ Scott C. Ulbrich Executive Vice President and June 16, 1994
- ------------------------------- Chief Financial Officer
Scott C. Ulbrich (Principal Financial and
Accounting Officer)

/s/ James C. Beardall Director June 16, 1994
- -------------------------------
James C. Beardall

/s/ Rodney H. Brady Director June 16, 1994
- -------------------------------
Rodney H. Brady

/s/ James E. Bruce Director June 16, 1994
- -------------------------------
James E. Bruce

/s/ Thomas D. Dee Director June 16, 1994
- -------------------------------
Thomas D. Dee II

/s/ Dr. David P. Gardner Director June 16, 1994
- -------------------------------
Dr. David P. Gardner

/s/ Kendall D. Garff Director June 16, 1994
- -------------------------------
Kendall D. Garff

/s/ U. Edwin Garrison Director June 16, 1994
- -------------------------------
U. Edwin Garrison

/s/ David B. Haight Director June 16, 1994
- -------------------------------
David B. Haight

/s/ Jay Dee Harris Director June 16, 1994
- -------------------------------
Jay Dee Harris

/s/ Robert T. Heiner Director June 16, 1994
- -------------------------------
Robert T. Heiner

/s/ Howard W. Hunter Director June 16, 1994
- -------------------------------
Howard W. Hunter

<PAGE>

/s/ Karen H. Huntsman Director June 16, 1994
- -------------------------------
Karen H. Huntsman

/s/ G. Frank Joklik Director June 16, 1994
- -------------------------------
G. Frank Joklik

/s/ B.Z. Kastler Director June 16, 1994
- -------------------------------
B. Z. Kastler

/s/ Joseph G. Maloof Director June 16, 1994
- -------------------------------
Joseph G. Maloof

/s/ Scott S. Parker Director June 16, 1994
- -------------------------------
Scott S. Parker

/s/ Dr. Arthur K. Smith Director June 16, 1994
- -------------------------------
Dr. Arthur K. Smith

/s/ James L. Sorenson Director June 16, 1994
- -------------------------------
James L. Sorenson

/s/ Harold J. Steele Director June 16, 1994
- -------------------------------
Harold J. Steele

</TABLE>

<PAGE>

EXHIBIT INDEX
-------------

EXHIBIT SEQUENTIAL
NUMBER DESCRIPTION OF EXHIBIT PAGE NO.
- ------- ---------------------- ----------
<S> <C> <C>
2 Agreement of Merger, dated as of March 30, 1994,
by and among First Security Corporation, First
Security Bank of Wyoming, and Star Valley State Bank.

3(1) Certificate of Incorporation, as amended of FSC ***
Exhibit 3(1) to FSC's Registration Statement on Form
S-4, Registration Number 33-30045, as filed on
July 24, 1989, hereby incorporated herein by reference).

3(2) Bylaws of FSC, as amended (Exhibit 2 to FSC's Registration ***
Statement on Form S-7, Registration No. 2-61892, as filed
on June 16, 1978, and Exhibit 3(2) to FSC's Registration
Statement on Form S-4, Registration No. 33-30045, as filed
on July 24, 1989, hereby incorporated herein by reference).

4(1) No instruments defining the Rights of holders of long-term ***
debt of FSC and its subsidiaries have been included as
exhibits because the total amount of indebtedness authorized
under any such instrument does not exceed 10% of the total
assets of FSC and its subsidiaries on a consolidated basis.
FSC hereby agrees to furnish supplementally to the Commission,
upon request, a copy of any omitted long-term debt instrument.

4(2) Rights Agreement dated as of August 28, 1989, between First ***
Security Corporation and First Security Bank of Utah, N.A.,
which includes the form of Rights Certificate (together with
the Form of Election of Exercise) as Exhibit A; the form of
Certificate of Designation of the series of Junior Series B
Preferred Stock, no par value per share, of FSC as Exhibit B;
and the Summary of Rights as Exhibit C. (Filed as Exhibit 4
to FSC's Current Report on Form 8-K dated August 28, 1989, as
filed with the Commission on September 1, 1989, [File No.
1-6906] and hereby incorporated herein by this reference.)

<PAGE>

4(3) Amendment Agreement dated as of September 26, 1989, by and ***
between First Security Corporation and First Security Bank of
Utah, N.A., amending the Rights Agreement dated as of
August 28, 1989, between the same parties. (Filed as Exhibit 1
to Amendment No. 1 on Form 8, dated October 10, 1989, as filed
with the Commission on October 16, 1989, amending FSC's Current
Report on Form 8-K dated August 28, 1989, as filed with the
Commission on September 1, 1989, [File No. 1-6906] and hereby
incorporated herein by this reference.)

5 Opinion of Ray, Quinney & Nebeker as to the legality of the Document 2
shares being registered.

8 Opinion of Ray, Quinney & Nebeker re: Tax Matters. Document 3

10(1) First Security Comprehensive Management Incentive Plan (Exhibit ***
A to Prospectus in Registration Statement No. 33-21556 on Form
S-8 filed April 29, 1988, hereby incorporated by reference).

10(2) First Security Corporation Supplemental Executive Retirement Plan. ***
(Exhibit to FSC's Quarterly Report on Form 10-Q dated May 12, 1989,
hereby incorporated by reference. [File No. 1-6906])

10(3). Employment Agreement between First Security Corporation and ***
Spencer F. Eccles. (Exhibit to FSC's Quarterly Report on Form
10-Q for the quarter ended September 30, 1991, hereby incorporated
by reference. [File No. 1-6906])

10(4). Employment Agreement between First Security Corporation and ***
Morgan J. Evans, as amended. (Exhibit to FSC's Quarterly Report
on Form 10-Q for the quarter ended September 30, 1991, hereby
incorporated by reference. [File No. 1-6906])

10(5). Employment Agreement between First Security Corporation and ***
L. Scott Nelson. (Exhibit to FSC's Quarterly Report on Form 10-Q
for the quarter ended September 30, 1991, hereby incorporated by
reference. [File No. 1-6906])

10(6). Employment Agreement between First Security Corporation and ***
T. Eugene King. (Exhibit to FSC's Quarterly Report on Form 10-Q
for the quarter ended September 30, 1991, hereby incorporated by
reference. [File No. 1-6906])
<PAGE>

10(7). Employment Agreement between First Security Corporation and ***
J. Patrick McMurray. (Exhibit to FSC's Quarterly Report on
Form 10-Q for the quarter ended September 30, 1991, hereby
incorporated by reference. [File No. 1-6906])

10(8). Employment Agreement between First Security Corporation and ***
Scott C. Ulbrich. (Exhibit to FSC's Quarterly Report on Form
10-Q for the quarter ended September 30, 1992, hereby incorporated
by reference. [File No. 1-6906])

13(1). FSC's Annual Report on Form 10-K for year ended December 31, 1993 ***
(incorporated by reference) [File No. 1-6906].

13(2). FSC's Quarterly Report on Form 10-Q for Quarter ended
March 31, 1994 hereby incorporated by reference. [File No. 1-6906].

22. FSC's Subsidiaries (included in FSC's Annual Report on Form 10-K ***
for the year ended December 31, 1993 [File No. 1-6906], and
incorporated by reference therefrom).

23(1). Consent of Deloitte & Touche. Document 4

23(2) Consent of Ray, Quinney & Nebeker (filed as part of Exhibit 5 ***
and Exhibit 8).

25 Power of Attorney (included in signature pages of original filing ***
of Registration Statement).

28 Form of Notice and Proxy Card for Star Valley State Bank Special Document 5
Meetings.

<FN>

__________________

*** Incorporated by reference.

</TABLE>

<PAGE>

June 20, 1994

First Security Corporation Star Valley State Bank
Attn: Morgan J. Evans, President Attn: Hal R. Robinson, President
79 South Main Street P.O. Box 8
Salt Lake City, Utah 84111 Afton, Wyoming 83110

Re: REGISTRATION AND ISSUANCE OF FIRST SECURITY CORPORATION
COMMON STOCK TO SHAREHOLDERS OF STAR VALLEY STATE BANK
-------------------------------------------------------

Dear Messrs. Evans and Robinson:

This Firm has acted as counsel to First Security Corporation, a
Delaware corporation ("the Company"), in connection with its registration of
480,000 shares of its common stock, par value $1.25 ("the Shares") for use in
the Merger (as defined in the Prospectus/Proxy Statement included in the
Company's Registration Statement on Form S-4 as filed with the Securities and
Exchange Commission on February , 1994.

In connection with this representation, we have examined the
originals, or copies identified to our satisfaction, of such minutes,
agreements, corporate records and filings and other documents necessary to our
opinion contained in this letter. We have also relied as to certain matters of
fact upon representations made to us by officers and agents of the Company

<PAGE>

Morgan J. Evans
Hal R. Robinson
June 20, 1994
Page 2

and of Star Valley State Bank. Based upon and in reliance on the foregoing, it
is our opinion that:

1. The Company has been duly incorporated and is validly existing and
in good standing as a corporation under the laws of the State of
Delaware; and has full corporate power and authority to own its
properties and conduct its business as described in the
Prospectus/Proxy Statement referred to above.

2. When issued and distributed to the Shareholders of Star Valley
State Bank under the terms of the Merger Agreement, the Shares will be
duly and validly issued and will be fully paid and nonassessable.

3. The shareholders of the Company have no pre-emptive rights to acquire
additional shares of First Security Common Stock in respect of the Shares.

We hereby consent to the use of our name in the Prospectus/Proxy
Statement and therein being disclosed as counsel to the Company in this matter.

Very truly yours,

RAY, QUINNEY & NEBEKER

A. Robert Thorup

<PAGE>

__________________, 19____
Page 1

________________, l994

First Security Corporation Star Valley State Bank
79 So. Main Street 440 East 3rd Avenue
Salt Lake City, Utah 84lll Afton, Wyoming 83ll0
Attn: Morgan J. Evans Attn: Harold Robinson

First Security Bank of Wyoming
l400 Dewar Drive
Rock Springs, Wyoming 82902
Attn: Dave Wood

Gentlemen:

We have acted as counsel to First Security Corporation, a Delaware
corporation ("FSC") and First Security Bank of Wyoming ("FSB Wyoming"), a
subsidiary of FSC, in connection with the negotiation, preparation and
execution of the Agreement of Merger dated as of March 30, l994 (the
"Agreement") by and among FSC, FSB Wyoming and Star Valley State Bank, a Wyoming
banking corporation ("Star Valley"). The Agreement provides for the merger of
Star Valley with and into FSB Wyoming (the "Merger"). This opinion is delivered
to you pursuant to Section 6.1.1(e) of the Agreement. Unless otherwise defined
herein, capitalized terms shall have the meanings given them in the Agreement.
Further, all references to the Code are to the Internal Revenue Code of 1986, as
amended.

In connection with this opinion, we have reviewed a signed copy of the
Agreement, together with all exhibits thereto, the Registration Statement on
Form S-4 filed by FSC

<PAGE>

______________________, 19____
Page 2

with the Securities and Exchange Commission in connection with the Merger on
June 20, 1994 (the "Registration Statement"), as well as all other
documents as we have deemed necessary or appropriate for purposes of this
opinion. In addition, we expressly rely upon the representations and facts set
forth in the Agreement, the Registration Statement, and in certificates of
responsible officers of FSC and FSB, and of Star Valley concerning matters
within the respective areas of responsibility of such officers, dated
______________, 1994, and _____________, 1994, respectively (the
"Certificates"). If any of the representations and facts set forth in the
Agreement, the Registration Statement or the Certificates upon which this
opinion is based are not true and accurate, both on the date of this letter and
at the effective date of the Merger, then we express no opinion. Further, our
opinion assumes that the Merger will occur fully in accordance with the terms
and provisions of the Agreement and the Registration Statement insofar as they
are pertinent to this opinion. If it does not, then we express no opinion.

Based on the foregoing, and subject to the qualifications and
exceptions heretofore and hereafter set forth, it is our opinion that for
Federal income tax purposes:

1. The Merger as outlined in the Agreement will constitute a
reorganization within the meaning of Code Section 368(a)(1)(A) and
368(a)(2)(D).

2. FSC, FSB Wyoming and Star Valley will each be "a party to the
reorganization," within the meaning of Code Section 368(b), with
respect to the Merger.

3. No gain or loss will be recognized by Star Valley on the
transfer of substantially all of its assets, subject to all of its
liabilities, to FSB Wyoming.

4. No gain or loss will be recognized by FSB Wyoming or FSC upon
the acquisition by FSB Wyoming of substantially all of the assets of
Star Valley, in exchange for FSC Common Stock and the assumption by
FSB Wyoming of the liabilities of Star Valley.

5. No gain or loss will be recognized by the holders of Star
Valley Common Stock who exchange such stock for FSC Common Stock
(including the Stock Rights attached thereto, as defined in the
Registration Statement) pursuant to the Merger.

<PAGE>

__________________, 19____
Page 3

6. Any cash received by the holders of Star Valley Common Stock,
whether pursuant to the exercise of dissenters' rights or in lieu of a
fractional share of FSC Common Stock, will be treated as having been
received in redemption of the shares so cashed out and will result in
taxable gain or loss. The amount of such gain or loss will be the
difference between the cash received and the basis of the shares or
the fractional share interest surrendered in exchange therefor.
Provided the shares or the fractional share interest was held as a
capital asset at the time of redemption, such gain or loss will
constitute capital gain or loss.

7. The basis of FSC Common Stock received by the holders of Star
Valley Common Stock in the Merger will be the same as the basis of the
Star Valley Common Stock surrendered in exchange therefor, after
appropriate reduction for the basis of fractional shares for which
cash is received.

8. The basis of Star Valley's assets acquired by FSB Wyoming
will be the same as the basis of those assets in the hands of Star
Valley immediately before the exchange.

9. The holding period of the FSC Common Stock received by the
holders of Star Valley Common Stock pursuant to the Merger will
include the holding period of the Star Valley Common Stock surrendered
in exchange therefor, provided that the Star Valley Common Stock
surrendered was held as a capital asset at the time of the exchange.

10. The holding period of Star Valley's assets in the hands of
FSB Wyoming will include the period during which such assets were held
by Star Valley.

The opinions set forth above are predicated upon and are limited by
the assumptions set forth herein and are further subject to the qualifications,
assumptions, exceptions, and limitations set forth below:

(a) The opinions and conclusions set forth herein are based upon the
Federal income tax laws of the United States, including the Code, Treasury
Regulations and judicial and administrative interpretations thereof, as they
exist on the date of this letter. There can be no assurance that the legal
authorities upon which our opinion is based will not be

<PAGE>

______________________, 19____
Page 4

modified, revoked, supplemented or otherwise changed. To the extent of any such
changes, our opinion is not applicable. Furthermore, we undertake no obligation
to reexamine or in any way revise our opinion in the light of any such changes.

(b) The opinions set forth herein are limited to those Federal income
tax consequences of the Merger which are specifically addressed in the ten
numbered paragraphs above. In particular, no opinion is expressed with respect
to the tax consequences of the Merger under Code Sections 55 through 59 and the
Regulations thereunder (providing for alternative minimum tax). We also express
no opinion or conclusion with regard to state or local income tax consequences.

(c) In rendering the opinions set forth above, we have relied on
representations in the Certificates to the effect that, to the best knowledge of
the management of Star Valley, the holders of Star Valley Common Stock have no
plan or intention to sell, exchange or otherwise dispose of an amount of shares
of FSC Common Stock to be received in the Merger that would reduce their
aggregate ownership of FSC Common Stock to a number of shares having in the
aggregate a value as of the effective date of the Merger of less than fifty
percent (50%) of the total value of all Common Stock of Star Valley outstanding
immediately prior to the Merger. For purposes of this assumption, Star Valley
Common Stock exchanged for cash or other property, exchanged for cash in lieu of
fractional shares of FSC Common Stock, or surrendered by dissenters will be
treated as Star Valley Common Stock outstanding immediately prior to the Merger.

(d) In rendering the opinions set forth above, we have also relied on
representations in the Certificates to the effect that FSB Wyoming will acquire
at least ninety percent (90%) of the fair market value of the net assets and at
least seventy percent (70%) of the fair market value of the gross assets of Star
Valley immediately prior to the Merger. For purposes of this assumption,
amounts paid by Star Valley for reorganization expenses, and all redemptions and
distributions (except for regular, normal dividends) made by Star Valley
immediately prior to the Merger, will be included as assets of Star Valley
immediately prior to the Merger.

(e) The opinions set forth herein are given only as of the date
hereof. We undertake no obligation to advise you of changes of law or fact that
occur after the date of this opinion letter.

<PAGE>

______________________, 19____
Page 5

(f) The opinions set forth herein are given solely to the persons to
whom they are addressed and are given solely in connection with the Merger and
shall not be deemed binding for any other purpose, and you shall not have the
right to rely thereon for any other purpose.

We hereby consent to the filing of this opinion as an Exhibit to the
Registration Statement and to the reference to us under the heading "Certain
Federal Income Tax Considerations" in the Registration Statement. In so
consenting, we do not thereby admit that we are within the category of persons
whose consent is required under Section 7 of the Securities Act.

Very truly yours,

RAY, QUINNEY & NEBEKER

<PAGE>

INDEPENDENT AUDITORS' CONSENT

We consent to the incorporation by reference in this Registration Statement of
First Security Corporation on Form S-4 of our report dated February 25, 1994,
incorporated in the Annual Report on Form 10-K of First Security Corporation for
the year ended December 31, 1993 and to the reference to us under the heading
"Experts" in the Prospectus, which is part of this Registration Statement.

Deloitte & Touche

Salt Lake City, Utah
June 15, 1994

<PAGE>

_________________, 1994
Dear Shareholder:

You are cordially invited to attend a special meeting ("Special Meeting")
of the shareholders of Star Valley State Bank ("STAR VALLEY") to be held at STAR
VALLEY's main banking office located at 485 Washington Street, Afton, Wyoming on
, 1994, at 7:00 p.m., Mountain Time. At that Special Meeting, you
will be asked to consider and vote on an Agreement of Merger dated as of March
30, 1994 ("Merger Agreement"), pursuant to which STAR VALLEY will be acquired by
First Security Corporation ("FSC") by means of a merger ("Merger") of STAR
VALLEY with and into First Security Bank of Wyoming ("FSB WYOMING").

The Merger Agreement provides for the conversion and exchange of all
outstanding shares of STAR VALLEY common stock into 480,000 shares of FSC common
stock. Based upon the market price of FSC Common Stock on , 1994, the
Merger will result in a value of $_____ for each share of STAR VALLEY common
stock. This is approximately times the book value of each STAR VALLEY share
at March 31, 1994.

In addition to describing the terms and conditions of the Merger Agreement,
the enclosed Prospectus/Proxy Statement sets forth information, including
financial data, about STAR VALLEY and FSC. The complete text of the Merger
Agreement appears as Appendix A to the Prospectus/Proxy Statement. Please
carefully review all of these materials and consider the information contained
in them. Your vote on the Merger is important. APPROVAL OF THE MERGER AGREEMENT
REQUIRES THE AFFIRMATIVE VOTE OF THE HOLDERS OF TWO-THIRDS OF THE OUTSTANDING
SHARES OF STAR VALLEY COMMON STOCK.

YOUR BOARD OF DIRECTORS BELIEVES THE MERGER IS IN THE BEST INTERESTS OF
STAR VALLEY'S SHAREHOLDERS AND UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE FOR
THE APPROVAL OF THE MERGER AGREEMENT.

Regardless of the size of your holdings, it is important that your shares
be voted at the Special Meetings. Whether or not you plan to attend the Special
Meetings, please complete, sign, date, and mail, as soon as possible, the
enclosed proxy in the postage-paid envelope provided. We appreciate the
continued support of our shareholders and look forward to seeing you at the
Special Meeting.

Sincerely,

Hal R. Robinson
President and Chief Executive Officer

<PAGE>

Star Valley State Bank
485 Washington Street
Afton, Wyoming 83110

----------

NOTICE OF Special Meetings OF SHAREHOLDERS
TO BE HELD ON , 1994

---------

Notice is hereby given that a Special Meeting of Shareholders (the
"Special Meeting") of Star Valley State Bank ("STAR VALLEY") will be held at
STAR VALLEY'S main banking office located as 485 Washington Street, Afton,
Wyoming, on , 1994 at 7:00 p.m., Mountain Time.

The Special Meeting is for the following purposes:

(1) The approval of an Agreement of Merger dated as of
March 30, 1994, ("Merger Agreement"), pursuant to which STAR VALLEY
will be acquired by First Security Corporation ("FSC") by means of a
merger ("Merger") of STAR VALLEY with and into First Security Bank of
Wyoming ("FSB WYOMING"), as more fully described in the accompanying
Prospectus/Proxy Statement. Upon consummation of the Merger, each
outstanding share of STAR VALLEY common stock will be converted into
shares of FSC Common Stock and cash for fractional shares, as more fully
described in the accompanying Prospectus/Proxy Statement.

(2) To consider and vote upon any other matters that may lawfully
come before the Special Meeting.

Star Valley has fixed the close of business on , 1994 as the record
date for the Special Meeting. Only STAR VALLEY Shareholders of record on such
date are entitled to notice of and to vote at the Special Meeting and any
adjournments thereof.

The affirmative vote of two-thirds of STAR VALLEY common stock is
required to approve the Merger Agreement. A copy of the provisions of Wyoming
law that establish the rights of STAR VALLEY Shareholders to dissent from such
approval is included in the Prospectus/Proxy Statement as Appendix C.

Please sign and date the enclosed form of proxy, which is solicited by
the Board of Directors, and mail it promptly in the enclosed envelope. The
proxy may be revoked in the manner described in the Prospectus/Proxy Statement
at any time before it is voted at the Special Meeting.

By Order of the Board of Directors

Hal R. Robinson
President and Chief Executive Officer

Afton, Wyoming
_________________, 1994

IMPORTANT: APPROVAL OF THE MERGER AGREEMENT REQUIRES THE
AFFIRMATIVE VOTE OF THE HOLDERS OF TWO-THIRDS OF THE
OUTSTANDING SHARES OF STAR VALLEY STATE BANK. IN ORDER TO
ENSURE THAT THE REQUISITE VOTE IS OBTAINED, AND IN ORDER TO
ENSURE A QUORUM, WE URGE YOU TO SIGN, DATE AND RETURN THE
ENCLOSED PROXY. AN ADDRESSED ENVELOPE IS INCLOSED FOR YOUR
CONVENIENCE. NO POSTAGE IS REQUIRED IF MAILED IN THE
UNITED STATES. VOTING BY PROXY WILL NOT AFFECT YOUR RIGHT
TO VOTE IN PERSON AT THE SPECIAL MEETING IF YOU SO DESIRE.

<PAGE>

Star Valley State Bank
485 Washington Street
Afton, Wyoming 83110

P R O X Y

This Proxy is Solicited on Behalf of the Board of Directors

The undersigned herby appoints Hal R. Robinson and , and each of
them, with full power of substitution, to vote as designated below, all shares
of Star Valley State Bank common stock owned of record by the undersigned at
the Special Meeting of Shareholders of Star Valley State Bank to be held on
, 1994 at 7:00 P.M. (Mountain Time) at STAR VALLEY's Main Office at
485 Washington Street, Afton, Wyoming, or at any adjournment thereof, on the
proposal to merge Star Valley State Bank with and into First Security Bank of
Wyoming, and on all other matters that may properly come before the Special
Meeting. {Each Shareholder of Record should have received a Prospectus/Proxy
Statement with this Proxy Designation and Instruction Card describing the
proposed Merger.}

IN THE ABSENCE OF DIRECTIONS TO THE CONTRARY, THE DESIGNATED PROXIES WILL VOTE
FOR THE PROPOSED MERGERS.

On the proposal to merge Star Valley State Bank with and into First
Security Bank of Wyoming For Against
/ / / /

(THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE MERGER)
---

DATE OF
THIS PROXY
DESIGNATION
AND INSTRUCTION:__________________, 1994 ---------------------------
Signature

----------------------------
Print Name

----------------------------
Joint Tenant (if any)

----------------------------
Print Name

(When signing as a Trustee, Executor Corporate Office, or General Partner,
please give FULL TITLE on the "joint tenant" line.)

THIS PROXY DESIGNATION AND INSTRUCTION MAY BE REVOKED BY A MORE RECENTLY DATED
PROXY DESIGNATION AND INSTRUCTION, OR BY WRITTEN NOTICE TO THE SECRETARY OF
STAR VALLEY STATE BANK PRIOR TO THE SPECIAL MEETING, OR BY APPEARING AT THE
SPECIAL MEETING AND VOTING IN PERSON