<PAGE>
FILED PURSUANT TO RULE 424(b)(2)
REGISTRATION NO. 33-52609
PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED APRIL 13, 1994.
[LOGO OF FIRST SECURITY CORPORATION]
$125,000,000
7% Subordinated Notes due July 15, 2005
Interest payable January 15 and July 15
------------
The Subordinated Notes will not be redeemable or repayable prior to maturity
and will not be subject to any sinking fund. The Subordinated Notes will
be issued only in fully registered form in denominations of $1,000 and
integral multiples thereof. See "Description of Subordinated Notes."
The Subordinated Notes will be issued only in book-entry form represented by
one or more Global Notes, registered in the name of the nominee of The
Depository Trust Company, as depositary (the "Depositary"). Beneficial
interests in the Subordinated Notes will be shown on, and transfers thereof
will be effected only through, records maintained by the Depositary and
its participants. Except as described under "Description of Subordinated
Notes--Book-Entry Notes", Notes in certificated form will not be issued
in exchange for the Global Notes. Settlement for the Notes will be made
in immediately available funds. The Subordinated Notes will trade in
the Depositary's Same-Day Funds Settlement System until maturity, and
secondary market trading activity in the Subordinated Notes will
therefore settle in immediately available funds. See "Description of
Subordinated Notes--Book-Entry Notes."
------------
THE SUBORDINATED NOTES OFFERED HEREBY ARE NOT DEPOSITS, SAVINGS ACCOUNTS OR
OTHER OBLIGATIONS OF ANY INSURED DEPOSITORY INSTITUTION OR OTHER SUBSIDIARY
OF THE COMPANY AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION OR ANY OTHER GOVERNMENT AGENCY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR
THE PROSPECTUS. ANY REPRE- SENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
<TABLE>
<CAPTION>
Underwriting
Price to Discounts and Proceeds to
Public(1) Commissions Company(1)(2)
------------- ------------- -------------
<S> <C> <C> <C>
Per Subordinated Note...................... 99.787% .650% 99.137%
Total...................................... $124,733,750 $812,500 $123,921,250
</TABLE>
(1) Plus accrued interest, if any, from July 17, 1995.
(2) Before deducting offering expenses payable by the Company, estimated at
$85,000.
------------
The Subordinated Notes are offered by the several Underwriters when, as and
if issued by the Company, delivered to and accepted by the Underwriters and
subject to their right to reject orders in whole or in part. It is expected
that delivery of the Subordinated Notes, in book-entry form, will be made
through the facilities of The Depository Trust Company on or about July 17,
1995, against payment in immediately available funds.
CS First Boston J.P. Morgan Securities Inc.
The date of this Prospectus Supplement is July 12, 1995.
<PAGE>
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SECURITIES
OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
RECENT DEVELOPMENTS
Corporate Redesign Effort Announced
On July 11, 1995, First Security Corporation (the "Company") announced the
start of "VISION", a corporate redesign effort aimed at enhancing the
Company's operating results and efficiency. During the five-month program, the
Company will explore methods to boost revenue and improve operating processes
through eliminating redundancies, duplication, inefficiencies and outdated
processes, while identifying new revenue sources and better operating
procedures. The full scope of the redesign will be known by year end, 1995. To
assist in the VISION redesign, the Company has engaged Aston Limited Partners
of New York. Aston is recognized within the banking industry for their
expertise in corporate redesign strategy.
RECENT OPERATING RESULTS
The Company earned net income totaling $35.60 million for the first quarter
of 1995, an increase of $2.44 million (7.4%) from $33.16 million earned in the
first quarter of 1994. These earnings generated a 1.19% return on average
assets ("ROAA") and a 15.71% return on average equity ("ROAE") for the
quarter, compared with a 1.34% ROAA and a 15.74% ROAE for the year-ago
quarter. Fully diluted earnings per share were $0.70 for the quarter, up $0.03
(4.5%) from $0.67 for the year-ago quarter.
Net Interest Income
Net interest income on a fully-taxable equivalent ("FTE") basis was $111.09
million for the first quarter of 1995, down $1.14 million (1.0%) from the
year-ago quarter. The FTE net interest margin was 4.06% for the first quarter
of 1995, down from 4.92% for the year-ago quarter. These decreases reflected
the Company's increased reliance on interest-bearing liabilities to support
the strong loan originations throughout the Company's market areas which
generated a 24.2% growth in average loans and a 19.9% growth in average
earning assets from the first quarter of 1994 to the first quarter of 1995.
This growth exceeded the 1.5% increase in average noninterest-bearing deposits
and the 8.0% increase in average total deposits that occurred during the same
period. During the first quarter of 1995, deposit costs increased as
transactional and savings account balances declined and were replaced with
certificates of deposit, and as the Company took aggressive steps to add CDs
to its funding structure in order to extend maturities, moderate interest rate
risk, and increase general liquidity.
Noninterest Income and Expenses
The Company's noninterest income and expenses have been impacted by recent
acquisitions. Noninterest income was $70.87 million for the first quarter of
1995, up $30.00 million (73.4%) from the year-ago quarter. The increases in
most noninterest income categories were due to volume-related growth and
acquisitions, including the impact of CrossLand Mortgage on real estate
lending activities. The increase in gain on sales of loans and servicing
rights occurred as CrossLand Mortgage took advantage of an exceptionally
strong loan servicing market and sold loan servicing rights in a bulk sale,
generating a $7.50 million pre-tax gain. The increases in the gains on
investment and trading account securities were due to the Company's active
securities management strategies and improvements in the securities markets.
S-2
<PAGE>
Noninterest expenses were $120.73 million for the first quarter of 1995, up
$21.15 million (21.2%) from the year-ago quarter. These increases were due to
volume-related growth and acquisitions. After excluding the noninterest
expenses of CrossLand Mortgage, the Company's noninterest expenses were
$106.98 million for the first quarter of 1995, up $7.40 million (7.4%) from
the year-ago quarter.
Assets and Liabilities
The Company's assets totaled $12.19 billion at March 31, 1995, up $1.44
billion (13.4%) from March 31, 1994, but remained essentially unchanged from
December 31, 1994. Total earning assets were $11.12 billion at quarter end, up
$1.30 billion (13.3%) from one year ago, and up $100 million (0.9%) from the
year end. Growth in the loan portfolio was the primary factor for the
increases. Fluctuations in other assets and other liabilities were in part due
to accounts receivable and accounts payable related to unsettled transactions
arising from the purchase and sale of securities. Intangible assets were
$149.83 million at March 31, 1995, up $137.13 million (1,079.9%) from March
31, 1994, but down $16.37 million (9.9%) from December 31, 1994. The increase
from one year ago was due to the intangible assets created by the acquisition
of CrossLand Mortgage, while the decrease from the year end was due to the
effects of ongoing amortization plus the sale of mortgage servicing rights.
The Company's liabilities totaled $11.24 billion at March 31, 1995, up $1.34
billion (13.5%) from March 31, 1994, but essentially unchanged from December
31, 1994. Total interest-bearing liabilities were $9.38 billion at quarter
end, up $1.28 billion (15.8%) from one year ago, also essentially unchanged
from the year end. Interest-bearing liabilities were increased to support loan
growth.
Problem Assets
Problem assets were reduced to $33.06 million at March 31, 1995, down $19.87
million (37.5%) from March 31, 1994, and down $6.16 million (15.7%) from
December 31, 1994. The ratio of total problem assets to total loans and ORE
was 0.40% at quarter end, down from 0.79% one year ago and 0.48% at year end.
These decreases were due to a healthy regional economy and continued high loan
underwriting standards. Despite a general downward trend in problem assets
over the past two years, it has been the Company's experience that economic
cycles and loan-specific events beyond its control cause cyclical fluctuations
in problem assets, sometimes with little or no warning.
Reserve for Loan Losses
The reserve for loan losses was $131.60 million at March 31, 1995, down
$2.61 million (1.9%) from March 31, 1994, and down $2.25 million (1.7%) from
December 31, 1994. These slight reductions in the reserve were made possible
due to improved asset quality, and the acquisition of CrossLand Mortgage,
which had loans held for resale that did not require corresponding reserves
for loan losses. The resulting ratio of the reserve for loan losses to total
loans was 1.61% at quarter end, down from 2.01% one year ago and 1.64% at year
end. At the same time, the 'coverage' ratio of the reserve for loan losses to
nonaccruing loans increased to 685.25% at quarter end, up from 483.35% one
year ago and 560.81% at year end. Merger transactions added reserves of $5.07
million since one year ago but none since year end.
The Company charges loan losses against the reserve for loan losses when
such losses become probable and subject to reasonable estimation. Net loans
charged off were $5.10 million for the first quarter of 1995, up $4.43 million
(665.8%) from the year-ago quarter. This was due primarily to increased
consumer loan losses. However, the Company continued to maintain very strong
asset quality and to benefit from the positive effects of a healthy regional
economy. The ratio of net loan chargeoffs to average loans was 0.25% for the
quarter, up from 0.04% for the year-ago quarter.
Deposits
The Company's deposits totaled $8.27 billion at March 31, 1995, up $763
million (10.2%) from March 31, 1994, and up $219 million (2.7%) from December
31, 1994. These increases were due to deposits generated
S-3
<PAGE>
from the Company's widespread branch network and the positive impact of recent
acquisitions. The mix of deposits at quarter end shifted slightly as interest-
bearing deposits increased to 80.0% of total deposits, up from 79.3% one year
ago and 78.7% at year end. This occurred as the Company took aggressive steps
to add CDs to its funding structure in order to extend maturities, moderate
interest rate risk, and increase general liquidity.
Borrowed Funds
Borrowed funds totaled $2.76 billion at March 31, 1995, up $615 million
(28.7%) from March 31, 1994, but down $270 million (8.9%) from December 31,
1994. Borrowed funds were increased during 1994 to support strong loan growth
that exceeded deposit growth throughout the Company's market areas. Since year
end, loan sales and repayments largely offset continued strong loan
originations so that deposit growth exceeded net loan growth and supported a
reduction of short-term borrowings.
Capital Adequacy
Total stockholders' equity in the Company increased to a record $946.66
million at March 31, 1995, up $105.01 million (12.5%) from March 31, 1994, and
up $57.19 million (6.4%) from December 31, 1994. This growth was due primarily
to record earnings in 1994 combined with the effects of pooling-of-interest
mergers and the effects of capital fluctuations due to SFAS 115.
The Company's risk-based capital ratios at March 31, 1995, compared with
March 31, 1994, andDecember 31, 1994, respectively, were:
* Tier 1 (well capitalized: 6.0% or above) at 10.00%, compared with 11.51%
one year ago, and 9.84% at year end.
* Total Capital (well capitalized: 10.0% or above) at 12.12%, compared
with 13.79% one year ago, and 11.98% at year end.
* Leverage (well capitalized: 5.0% or above) at 7.11%, compared with 7.81%
one year ago, and 6.88% at year end.
As with its equity ratios, the changes in the Company's risk-based capital
ratios were due in part to the Company's acquisition of CrossLand Mortgage and
the resulting growth in total assets and intangible assets.
USE OF PROCEEDS
The net proceeds from the sale of the Subordinated Notes offered hereby will
be added to the Company's general corporate funds and may be used for any
lawful corporate purpose.
S-4
<PAGE>
CONSOLIDATED SUMMARY FINANCIAL DATA
The following consolidated summary historical financial data should be read
in conjunction with and is qualified in its entirety by the detailed financial
and other information included in the documents incorporated herein by
reference. See "Incorporation of Certain Documents by Reference" in the
Prospectus, including the Company's Annual Report on Form 10-K for the year
ended December 31, 1994, and the Company's Quarterly Report on Form 10-Q for
the three months ended March 31, 1995.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31, YEAR ENDED DECEMBER 31,
------------------------ ------------------------------------------------------------
1995 1994 1994 1993 1992 1991 1990
----------- ----------- ----------- ----------- ---------- ---------- ----------
(UNAUDITED) (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
SUMMARY OF OPERATIONS
Interest Income......... $ 220,550 $ 172,438 $ 773,517 $ 644,732 $ 656,448 $ 710,831 $ 749,701
Interest Expense........ 111,488 62,171 315,415 240,794 280,499 388,022 447,561
Net Interest Income..... 109,06 110,267 458,102 403,938 375,949 322,809 302,140
Provision for Possible
Loan Losses............ 2,848 (172) 825 11,684 30,277 66,393 94,899
Noninterest Income...... 70,872 40,869 206,621 167,159 144,036 137,822 115,823
Noninterest Expense..... 120,731 99,582 442,721 386,146 339,456 306,504 285,095
Income Before Taxes..... 56,355 51,726 221,177 173,267 150,252 87,734 37,969
Applicable Income Taxes. 20,755 18,564 81,043 59,211 49,909 28,322 8,968
Net Income.............. 35,600 33,162 140,134 114,056 100,343 59,412 29,001
PER COMMON SHARE DATA
Net Income (primary).... $ 0.70 $ 0.67 $ 2.81 $ 2.38 $ 2.17 $ 1.44 $ 0.73
Net Income (fully
diluted)............... 0.70 0.67 2.80 2.38 2.16 1.36 0.67
Cash Dividends Declared. 0.28 0.26 1.04 0.88 0.68 0.60 0.57
Book Value per Common
Share.................. 18.96 17.44 17.92 17.24 15.81 14.44 13.74
BALANCE SHEET ITEMS--
PERIOD END
Loans, Net of Unearned
Income................. 8,183,306 6,674,067 8,173,678 6,561,021 5,616,624 5,432,951 5,423,137
Reserve for Possible
Loan Losses............ (131,603) (134,216) (133,855) (134,848) (127,847) (126,887) (117,192)
Total Assets............ 12,189,310 10,745,283 12,148,982 10,211,689 8,895,673 8,290,168 7,893,903
Deposits................ 8,272,714 7,509,666 8,053,344 7,503,707 6,868,453 6,514,692 6,188,735
Long-Term Debt.......... 683,785 297,538 685,426 224,836 127,203 87,516 98,851
Shareholders' Equity.... 946,661 841,647 889,474 835,731 722,447 635,173 545,295
</TABLE>
- --------
Note: Figures have been restated where applicable to reflect 3-for-2 stock
splits in the form of 50% stock dividends paid in June 1991 and May 1992, the
November 19, 1993 pooling-of-interests merger with First National Financial
Corporation (New Mexico), and the retroactive adoption of SFAS 109--
"Accounting for Income Taxes."
S-5
<PAGE>
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31, YEAR ENDED DECEMBER 31,
-------------------- --------------------------------------
1995 1994 1994 1993 1992 1991 1990
--------- --------- ------ ------ ------ ------ ------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
PROFITABILITY RATIOS:
Return on average
assets................. 1.19% 1.34% 1.26% 1.24% 1.18% 0.74% 0.37%
Return on average
stockholders' equity... 15.71 15.74 16.13 14.54 14.62 10.26 5.25
Net interest margin FTE. 4.06 4.92 4.64 4.95 5.02 4.59 4.43
Net interest spread,
FTE.................... 3.41 4.32 4.05 4.33 4.31 3.75 3.56
EFFICIENCY RATIO:
(noninterest
expenses/FTE net
interest income
plus noninterest
income)............... 66.35 65.04 65.82 66.72 64.10 65.07 66.41
PRODUCTIVITY RATIO:
(noninterest
expenses/average
assets)............... 4.04 4.01 3.97 4.19 4.00 3.81 3.61
CAPITAL RATIOS:
Stockholders' equity to
assets................. 7.77% 7.83% 7.32% 8.18% 8.12% 7.66% 6.91%
Tangible common equity
ratio.................. 6.61 7.72 6.03 8.07 7.96 7.51 6.71
Risk-based capital
ratios:
Tier 1................. 10.00 11.51 9.84 11.82 11.32 10.61 9.32
Tier 1 + Tier 2........ 12.12 13.79 11.98 14.15 13.78 11.84 11.27
Leverage................ 7.11 7.81 6.88 8.08 7.99 7.53 6.75
ASSET QUALITY RATIOS:
Reserve for loan losses
at end of period to:
Total loans............ 1.61% 2.01% 1.64% 2.06% 2.28% 2.34% 2.16%
Nonaccruing and
renegotiated loans.... 685.25 483.35 560.81 370.93 159.87 112.91 118.09
NONPERFORMING ASSETS AT
END OF PERIOD TO:
Total loans and ORE.... 0.26 0.64 0.33 0.80 1.90 2.75 2.75
Total assets........... 0.18 0.40 0.22 0.52 1.21 1.82 1.91
Total equity........... 2.28 5.06 3.06 6.32 14.87 23.73 27.60
Total equity + loan-
loss reserve.......... 2.00 4.37 2.66 5.44 12.64 19.78 22.72
Net loans charged off to
average loans.......... 0.25 0.04 0.10 0.20 0.60 1.09 1.11
RATIO OF EARNINGS TO
FIXED CHARGES:
Excluding interest on
deposits............... 2.24x 4.45x 3.02x 4.62x 4.55x 2.28x 1.33x
Including interest on
deposits............... 1.51x 1.83x 1.70x 1.72x 1.54x 1.23x 1.08x
</TABLE>
- --------
"FTE"--Fully Taxable Equivalent.
S-6
<PAGE>
CAPITALIZATION
The following table sets forth the unaudited historical capitalization of
the Company as of March 31, 1995, and as adjusted to give effect to the
issuance of the Subordinated Notes offered hereby.
<TABLE>
<CAPTION>
MARCH 31, 1995
------------------------------------------
ACTUAL ADJUSTMENTS(1) AS ADJUSTED (1)
---------- -------------- ---------------
(IN THOUSANDS)
<S> <C> <C> <C>
LONG-TERM DEBT
Parent Company:
7.5% Subordinated Notes due 2002.. $ 75,000 $ 75,000
Floating Rate Notes due 1999...... 7,346 7,346
Medium Term Notes due 1996-2003... 50,000 50,000
7.875% Senior Notes due 1999...... 100,000 100,000
Subordinated Notes Offered Hereby. $125,000 125,000
Subsidiaries:
Bank Notes & FHLB Borrowings
(2,3)............................ 449,723 449,723
Non-Bank.......................... 1,716 1,716
---------- -------- ----------
Total long-term debt................ 683,785 125,000 808,785
---------- -------- ----------
STOCKHOLDERS' EQUITY
Series "A," $3.15 Cumulative
Convertible Preferred Stock:
(11,636 shares outstanding)........ 610 610
Common Stock (par value $1.25,
authorized 150,000,000 shares,
issued and outstanding 50,279,823
shares)(4)......................... 62,850 62,850
Paid-in surplus................... 147,331 147,331
Retained earnings................. 768,064 768,064
Net unrealized loss on securities
available for sale............... (23,158) (23,158)
---------- ----------
Subtotal.......................... 955,087 955,087
Less: common treasury stock at
cost (372,630 shares)............ (9,036) (9,036)
---------- ----------
Total common stockholders' equity. 946,051 946,051
---------- ----------
Total stockholders' equity.......... 946,661 946,661
---------- -------- ----------
Total long-term debt and
stockholders' equity............... $1,630,446 $125,000 $1,755,446
========== ======== ==========
</TABLE>
- --------
(1) Reflects the issuance of $125 million of Subordinated Notes offered
hereby.
(2) These obligations are direct obligations of subsidiaries of the Company,
and as such, constitute claims against such subsidiaries ranking prior to
the Company's equity therein.
(3) Federal Home Loan Bank advances mature in 1996-2000.
(4) Shares issued and outstanding and as adjusted exclude 2,598,754 shares
reserved for issuance upon exercise of outstanding employee stock options,
141,377 shares reserved for issuance upon exercise of conversion rights of
preferred stock, 252,752 shares reserved for issuance under the dividend
reinvestment and stock purchase plan, 2,215,965 shares reserved for
issuance under the Company's Comprehensive Management Incentive Plan, and
838,462 shares reserved for issuance under the 1994 Employee Stock
Purchase Plan.
In addition to the capitalization described in the above table, the Company
and its subsidiaries employ a variety of other sources of funds in the
operation of their businesses. At March 31, 1995 funding sources for the
subsidiary banks included demand deposits of $1.66 billion, interest bearing
deposits of $6.62 billion (including $640 million of certificates of deposit
over $100,000), Federal funds purchased and securities sold under agreements
to repurchase of $1.96 billion and U.S. Treasury demand notes of $21 million.
S-7
<PAGE>
DESCRIPTION OF SUBORDINATED NOTES
The following description of the terms of the Subordinated Notes offered
hereby (referred to in the accompanying Prospectus as the "Subordinated Debt
Securities") supplements the description of the general terms of Debt
Securities set forth in the Prospectus, to which description reference is
hereby made. The following summary of the Subordinated Notes is qualified in
its entirety by reference thereto and to the Indenture referred to therein.
The 7% Subordinated Notes due July 15, 2005 ("Subordinated Notes") will be
limited to $125,000,000 aggregate principal amount. They will be unsecured and
junior in right to repayment to all senior debt obligations of the Company,
and to any future subordinated obligations which, by their terms, are made
senior in right to the Subordinated Notes offered hereby. The Subordinated
Notes will bear interest from July 17, 1995, at the annual rate set forth on
the cover page of this Prospectus Supplement and will mature on July 15, 2005.
Interest will be payable semi-annually on each January 15 or July 15,
beginning January 15, 1996, to the persons in whose names the Subordinated
Notes are registered at the close of business on January 1 or July 1, as the
case may be, next preceding such January 15 or July 15.
For a description of the material terms regarding the subordination of the
Subordinated Notes to Senior Indebtedness of the Company see "Subordination of
Subordinated Debt Securities" in the Prospectus. As of March 31, 1995, there
was $608.79 million of Senior Indebtedness that is superior in right of
payment of principal and interest, as and when due, to the Subordinated Notes
offered hereby.
The Subordinated Notes are not redeemable prior to Stated Maturity.
Book-Entry Notes
Upon issuance, all Subordinated Notes will be represented by one or more
global securities (the "Global Notes"). Each Global Note representing the
Subordinated Notes will be deposited with, or on behalf of, the Depositary,
and will be registered only in the name of the Depositary or a nominee of the
Depositary.
Ownership of the Subordinated Notes will be limited to institutions that
have accounts with such Depositary or its nominee (each, a "participant" and
collectively the "participants") or persons that may hold interests through
participants. In addition, ownership of the Subordinated Notes by participants
will only be evidenced by, and transfers of such ownership interest will be
effected only through, records maintained by the Depositary (or its successor
or nominee) and its participants. Ownership of the Subordinated Notes by
persons that hold through participants will only be evidenced by, and
transfers of such ownership interest within such participants will be effected
only through, records maintained by such participants. The laws of some
jurisdictions require that certain purchasers of securities take physical
delivery of such securities in definitive form. Such laws may impair the
ability to transfer the Subordinated Notes.
The Company has been advised by the Depositary that upon the issuance of a
Global Note representing the Subordinated Notes, and the deposit of such
Global Note with the Depositary, the Depositary will immediately credit, on
its book-entry registration and transfer system, the respective principal
amounts of the Subordinated Notes represented by such Global Note to the
accounts of participants. The accounts to be credited will be designated by
the Underwriters.
Payment of principal of, and any premium and interest on the Subordinated
Notes represented by any Global Note registered in the name of or held by the
Depositary or its nominee will be made to the Depositary or its nominee, as
the case may be, as the registered owner and holder of the Global Note
representing such Subordinated Notes. None of the Company, the Subordinated
Trustee or any agent of the Company or the Subordinated Trustee will have any
responsibility or liability for any aspect of the Depositary's records or any
participant's records relating to, or payments made on account of, the
Subordinated Notes or for maintaining, supervising or reviewing any of the
Depositary's records or any participant's records relating to such
Subordinated Notes.
S-8
<PAGE>
The Company has been advised by the Depositary that upon receipt of any
payment of principal, premium or interest in respect of a Global Note, the
Depositary will immediately credit, on its book-entry registration and
transfer system, accounts of participants with payments in the amounts
proportionate to their respective beneficial interest in the principal amount
of such Global Note or as shown on the records of the Depositary. Payments by
participants to owners of Subordinated Notes held through such participants
will be governed by standing instructions and customary practices, as is now
the case with securities held for the accounts of customers registered in
"street name", and will be the responsibility of such participants.
No Global Note described above may be transferred except as a whole by the
Depositary for such Global Note to a nominee of the Depositary or by a nominee
of the Depositary to another nominee of the Depositary.
Subordinated Notes represented by a Global Note are exchangeable for
definitive Subordinated Notes in registered form, of like tenor and of an
equal aggregate principal amount, only if (x) the Depositary notifies the
Company that it is unwilling or unable to continue as Depositary for such
Global Note or if at any time the Depositary ceases to be a clearing agency
registered under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and a successor depositary is not appointed by the Company
within 60 days, (y) the Company in its sole discretion determines that such
Subordinated Notes shall be exchangeable for definitive Subordinated Notes in
registered form or (z) any event shall have happened and be continuing which,
after notice or lapse of time, or both, would become an Event of Default with
respect to the Subordinated Notes. Any Global Note representing the
Subordinated Notes that is exchangeable pursuant to the preceding sentence
shall be exchangeable in whole for definitive Subordinated Notes in registered
form, of like tenor and of an equal aggregate principal amount, in
denominations of $1,000 and integral multiples thereof. Such definitive
Subordinated Notes shall be registered in the name or names of such person or
persons as the Depositary shall instruct the Senior Trustee. It is expected
that such instructions may be based upon directions received by the Depositary
from its participants with respect to ownership of the Subordinated Notes.
Except as provided above, owners of the Subordinated Notes will not be
entitled to receive physical delivery of Subordinated Notes in definitive form
and no Global Note representing the Subordinated Notes shall be exchangeable,
except for another Global Note of like denomination and tenor to be registered
in the name of the Depositary or its nominee. Accordingly, each person owning
a Note must rely on the procedures of the Depositary and, if such person is
not a participant, on the procedures of the participant through which such
person owns its beneficial interest, to exercise any rights of a holder under
the Subordinated Notes. The Company understands that under existing industry
practices, in the event that the Company requests any action of holders or an
owner of a Note desires to give or take any action a holder is entitled to
give or take under the Subordinated Notes, the Depositary would authorize the
participants owning the relevant Subordinated Notes to give or take such
action, and such participants would authorize beneficial owners owning through
such participants to give or take such action or would otherwise act upon the
instructions of beneficial owners owning through them.
The Depositary has advised the Company that the Depositary is a limited-
purpose trust company organized under the laws of the State of New York, a
member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code, and a "clearing agency"
registered pursuant to Section 17A of the Exchange Act. The Depositary was
created to hold securities of its participants and to facilitate the clearance
and settlement of securities transactions among its participants through
electronic book-entry changes in accounts of the participants, thereby
eliminating the need for physical movements of securities certificates. The
Depositary's participants include securities brokers and dealers (including
the Underwriters), banks, trust companies, clearing corporations and certain
other organizations, some of whom (and/or their representatives) own the
Depositary. Access to the Depositary's book-entry system is also available to
others, such as banks, brokers, dealers and trust companies that clear through
or maintain a custodial relationship with a participant, either directly or
indirectly.
S-9
<PAGE>
UNDERWRITING
Under the terms and subject to the conditions contained in an Underwriting
Agreement, dated July 12, 1995, the Underwriters named below (the
"Underwriters") have severally but not jointly agreed to purchase from the
Company the following respective principal amounts of Subordinated Notes:
<TABLE>
<CAPTION>
UNDERWRITER PRINCIPAL AMOUNT
----------- ----------------
<S> <C>
CS First Boston Corporation............................ $ 62,500,000
J.P. Morgan Securities Inc. ........................... 62,500,000
------------
Total.................................................. $125,000,000
============
</TABLE>
The Underwriting Agreement provides that the obligations of the Underwriters
are subject to certain conditions precedent, and that the Underwriters will be
obligated to purchase all of the Subordinated Notes offered hereby if any are
purchased. The Company has been advised by the Underwriters that the
Underwriters propose to offer the Subordinated Notes to the public initially
at the public offering price set forth on the cover page of this Prospectus
Supplement and to certain dealers at such price less a concession of .4% of
the principal amount of such Subordinated Notes and that the Underwriters and
such dealers may allow a discount of .25% of such principal amount of the
Subordinated Notes on sales to other dealers. After the initial public
offering, the public offering price and concession and discount to dealers may
be changed by the Underwriters.
The Company has agreed to indemnify the Underwriters against certain
liabilities, including civil liabilities under the Securities Act of 1933, or
to contribute payments which the Underwriters may be required to make in
respect thereof.
The Subordinated Notes are a new issue of securities with no established
trading market. The Company has been advised by the Underwriters that they
initially intend to make a market in the Subordinated Notes, but are not
obligated to do so and may discontinue such market-making at any time without
notice. No assurance can be given as to the liquidity of the trading market
for the Subordinated Notes.
Certain of the Underwriters are customers of, engage in transactions with or
perform services for the Company and certain of its subsidiaries in the
ordinary course of business.
VALIDITY OF THE SUBORDINATED NOTES
The validity of the Subordinated Notes offered hereby will be passed upon
for the Company by Ray, Quinney & Nebeker, 79 South Main Street, Salt Lake
City, Utah 84111, and for the Underwriters by Sullivan & Cromwell, Los
Angeles, California. With respect to matters of New York law, Ray, Quinney &
Nebeker will rely on the opinions of Sullivan & Cromwell. Sullivan & Cromwell
performs legal services for the Company from time to time.
Alonzo W. Watson, who is Secretary of the Company, is a member of the firm
of Ray, Quinney & Nebeker. A daughter of the Chairman and Chief Executive
Officer of the Company is an associate attorney at Ray, Quinney & Nebeker. At
March 31, 1995, attorneys at Ray, Quinney & Nebeker, together with their
immediate families, beneficially owned less than 5% of the outstanding shares
of Common Stock of the Company.
S-10
<PAGE>
PROSPECTUS
[LOGO OF FIRST SECURITY CORPORATION]
DEBT SECURITIES, PREFERRED STOCK, COMMON STOCK AND WARRANTS
TO PURCHASE COMMON STOCK
First Security Corporation (the "Company") may from time to time issue and of-
fer (a) its notes, debentures or other unsecured evidences of indebtedness in
one or more series ("Debt Securities"), which may be either senior ("Senior
Debt Securities") or subordinated ("Subordinated Debt Securities") in priority
of payment; (b) shares of one or more series of its Preferred Stock ("Preferred
Stock"); (c) shares of its Common Stock (par value $1.25) ("Common Stock"); and
(d) warrants to acquire Common Stock ("Common Stock Warrants") either directly
or in conversion or exchange for other securities. (When appropriate, all of
the foregoing types of securities are referred to herein as "the Securities".)
THE SECURITIES ARE NOT SAVINGS ACCOUNTS, DEPOSITS OR OTHER OBLIGATIONS OF ANY
BANK OR NONBANK SUBSIDIARY OF THE COMPANY AND ARE NOT INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, BANK INSURANCE FUND OR ANY OTHER GOVERNMENT
AGENCY.
The Senior Debt Securities will rank equally with all other unsubordinated and
unsecured indebtedness of the Company. The Subordinated Debt Securities will be
subordinated to all of the Company's existing and future Senior Debt, as de-
fined. See "Description of Debt Securities."
The Company may offer the Securities up to an aggregate initial offering price
not to exceed US$300,000,000 or, as to Debt Securities, its equivalent based on
the applicable exchange rate at the time of offering in such foreign currencies
or units of two or more currencies thereof as may be designated by the Company
at the time of such an offering. Debt Securities or Preferred Stock of each se-
ries will be offered on terms determined at the time of sale. When any of the
Securities is offered, a supplement to this Prospectus (the "Prospectus Supple-
ment") setting forth certain terms of the offered Securities will be delivered
together with this Prospectus. With regard to Debt Securities or Preferred
Stock in respect of which this Prospectus is being delivered, the Prospectus
Supplement will set forth, if applicable, the specific designation, aggregate
principal amount or redemption value, rate (or method of calculation) or divi-
dend and time of payment of any interest or dividend, maturity, initial public
offering price, place or places of payment of interest or dividends, redemption
terms and other terms of such Securities.
The Securities may be sold to underwriters for public offering pursuant to the
terms of offering fixed at the time of sale. Such underwriters may include J.P.
Morgan Securities Inc. and CS First Boston Corporation, or may be a group of
underwriters represented by such firms. In addition, any of the Securities may
be sold to the public by the Company directly or through agents or dealers.
J.P. Morgan Securities Inc. and CS First Boston Corporation may also act as
agent. If any underwriters or agents are involved in the sale of any Securi-
ties, their names and any applicable fee, commission, purchase price or dis-
count arrangements with them will be set forth, or will be calculated from the
information set forth, in a Prospectus Supplement. See "Plan of Distribution."
THIS PROSPECTUS MAY NOT BE USED TO CONSUMMATE SALES OF ANY SECURITIES UNLESS
ACCOMPANIED BY A PROSPECTUS SUPPLEMENT.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
J.P. MORGAN SECURITIES INC. CS FIRST BOSTON
April 13, 1994.
<PAGE>
NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION
OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS OR ANY PROSPEC-
TUS SUPPLEMENT IN CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS AND ANY
SUCH PROSPECTUS SUPPLEMENT AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESEN-
TATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY
UNDERWRITER. NEITHER THIS PROSPECTUS NOR ANY PROSPECTUS SUPPLEMENT CONSTITUTES
AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES OF-
FERED HEREBY IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE
SUCH OFFER IN SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS PROSPECTUS OR ANY
PROSPECTUS SUPPLEMENT NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANC-
ES, CREATE AN IMPLICATION THAT THE INFORMATION HEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO THE DATE HEREOF OR THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS
OF THE COMPANY SINCE SUCH DATE.
FOR NORTH CAROLINA RESIDENTS:
THE COMMISSIONER OF INSURANCE OF THE STATE OF NORTH CAROLINA HAS NOT APPROVED
OR DISAPPROVED THIS OFFERING, NOR HAS THE COMMISSIONER PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities Ex-
change Act of 1934 (the "Exchange Act") and, in accordance therewith, files re-
ports, proxy statements and other information with the Securities and Exchange
Commission (the "Commission"). Such reports, proxy statements, and other infor-
mation can be inspected and copies obtained at the offices of the Commission at
Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549; at Public Reference
Facilities at the Chicago Regional Office, Northwestern Atrium Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661; and at the New York Re-
gional Office, Seven World Trade Center, 13th Floor, New York, New York 10048.
Copies of such material can be obtained from the Public Reference Section of
the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed
rates.
The Company has filed with the Commission in Washington, D.C. a Registration
Statement under the Securities Act of 1933 (the "Securities Act") with respect
to the Securities. As permitted by the rules and regulations of the Commission,
this Prospectus does not contain all the information set forth in the Registra-
tion Statement, including the exhibits thereto, which may be obtained from the
Public Reference Section of the Commission at 450 Fifth Street, N.W., Washing-
ton, D.C. 20549, upon payment of the prescribed fees.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
There are incorporated herein by reference the following documents of the Com-
pany heretofore filed by it with the Commission:
(a) Annual Report on Form 10-K for the year ended December 31, 1994;
(b) Quarterly Report for the quarter ended March 31, 1995; and
(c) Current Report on Form 8-K dated January 31, 1995.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior
to the termination of the offering of the Securities made hereby are incorpo-
rated 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 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 to the ex-
tent that a statement contained herein or in any other subsequently filed docu-
ment 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.
The Company will provide without charge to each person to whom this Prospectus
is delivered, upon request of any such person, a copy of any or all of the
foregoing documents incorporated herein by reference (other than the exhibits
to such documents). Written requests should be directed to: Scott C. Ulbrich,
Executive Vice President, First Security Corporation, 79 South Main Street,
Salt Lake City, Utah 84111. Telephone requests may be directed to (801) 246-
5706.
2
<PAGE>
FIRST SECURITY CORPORATION
GENERAL
The Company is a Delaware incorporated multi-bank holding company headquartered
in Salt Lake City, Utah. At December 31, 1993, the Company and its subsidiaries
had total consolidated assets and shareholders' equity of $10.21 billion and
$836 million, respectively.
The principal banking subsidiaries of the Company are First Security Bank of
Utah N.A. ("First Security Utah"), First Security Bank of Idaho, N.A. ("First
Security Idaho"), and First Security Bank of New Mexico, N.A. ("First Security
New Mexico"), all of which are commercial banking institutions providing a
broad range of banking, fiduciary, financial and other services. The Company
also operates banks in Wyoming ("First Security Wyoming"), Oregon ("First Secu-
rity Oregon") and Nevada ("First Security Nevada") (all of the Company's bank-
ing subsidiaries will be referred to hereafter as "the Banks"). Nonbank subsid-
iaries owned by the Company include a leasing company, a mortgage company, a
securities broker-dealer, an investment adviser, an insurance agency, a credit
life insurance company and a management and services company.
In addition to its equity investments in its subsidiaries, the Company directly
or indirectly raises funds principally to finance the operations of its nonbank
subsidiaries. A substantial portion of the Company's cash flow is typically de-
rived from dividends directly from its bank and nonbank subsidiaries, and from
interest on loans to the Company's nonbank subsidiaries. Various statutory pro-
visions limit the amount of dividends subsidiary Banks and certain nonbank sub-
sidiaries can pay to the Company without regulatory approval. In addition, be-
cause any obligations issued by the Company hereunder will only be obligations
of the Company, not of any of its subsidiary Banks or nonbanking operations,
the holders of obligations issued by the Company hereunder will be subordinated
to certain prior claims by creditors of the Company's subsidiaries. See "Super-
vision and Regulation."
The Company maintains its executive offices at 79 South Main Street, Salt Lake
City, Utah 84111, telephone 801-246-6000.
COMPETITION
Based on deposits, at December 31, 1993, First Security Utah was the largest
bank in the State of Utah. Based on deposits, at December 31, 1993, First Secu-
rity Idaho was the second largest bank in the State of Idaho. In Wyoming and
Oregon, FSC's banks are smaller, more localized competitors. First Security Or-
egon, at March 31, 1993, was the 12th largest bank in Oregon. First Security
Wyoming, at December 31, 1993, was the 18th largest bank in Wyoming.
Of the Company's new subsidiaries, First Security New Mexico is the second
largest bank in the Albuquerque area and the third largest bank in New Mexico.
The Company'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 Company's
banks also compete with brokerage firms, insurance companies and mutual funds
which provide investment products and, in many cases, the substantial equiva-
lent of checking accounts, credit cards and similar products traditionally pro-
vided by commercial banks. Major retailers compete with the Company's lending
operations by offering credit cards and retail installment contracts. It is an-
ticipated that competition from nonbank organizations will continue to grow.
RATIO OF EARNINGS TO FIXED CHARGES AND RATIO OF EARNINGS TO COMBINED FIXED
CHARGES AND PREFERRED STOCK DIVIDENDS
For the fiscal years ended December 31, 1993, 1992, 1991, 1990 and 1989 the
Company's consolidated ratios of earnings to combined fixed charges and pre-
ferred stock dividends, and its ratio of earnings to fixed charges,
3
<PAGE>
excluding interest on deposits were 4.62, 4.54, 2.28, 1.33, and 1.72, respec-
tively; and such ratios including interest on deposits were 1.71, 1.54, 1.23,
1.08, and 1.19, respectively. For purposes of computing the consolidated ratio
of earnings to combined fixed charges and preferred stock dividends, earnings
represent net income plus income taxes and fixed charges. Fixed charges, ex-
cluding interest on deposits, include interest expense (except interest paid on
deposits), capitalized interest, an amount equal to the pretax earnings re-
quired to meet applicable preferred stock dividend requirements and the inter-
est factor included in rents. Fixed charges, including interest on deposits,
include all interest expense, capitalized interest, an amount equal to the pre-
tax earnings required to meet applicable preferred stock dividend requirements
and the interest factor included in rents.
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 de-
tails of their operation.
Bank Holding Company Regulation
The Company is a bank holding company registered under Bank Holding Company of
1956 (the "BHC Act"), and is subject to supervision and regulation by the Fed-
eral 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 enforce-
ment actions for violation of laws and policies. In addition, Utah law autho-
rizes the state bank regulators to supervise and regulate under limited circum-
stances 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 con-
trolling banks and certain other subsidiaries, or furnishing services to or
performing services for its subsidiaries. One principal exception to these pro-
hibitions allows the acquisition of interests in companies whose activities are
found by the Federal Reserve Board to be so closely related to banking, manag-
ing, or controlling banks as to be a proper incident thereto. Such activities
include 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.
Securities Activities. The Federal Reserve Board has approved applications by
bank holding companies to engage, through nonbank subsidiaries, in certain se-
curities underwriting activities, 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 inconsis-
tent with sound banking principles.
The Financial Institutions Reform, Recovery, and Enforcement Act of 1989
("FIRREA") expanded the Federal Reserve Board's authority to prohibit activi-
ties of bank holding companies and their nonbanking subsidiaries which repre-
sent unsafe and unsound banking practices or which constitute violations of
laws or regulations. Notably, FIRREA increased the amount of monetary penalties
which the Federal Reserve Board can assess for such practices or violations to
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 af-
filiates are prohibited from tying the provision of certain services, such as
extensions of credit, to other services offered by a holding company or its af-
filiates.
4
<PAGE>
Annual Reporting; Examinations. The Company is required to file an annual re-
port with the Federal Reserve Board and such additional information as the Fed-
eral 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.
Capital Adequacy Requirements. The Federal Reserve Board monitors the capital
adequacy of bank holding companies. The Federal Reserve Board uses a combina-
tion of risk-based guidelines and leverage ratios to evaluate capital adequacy.
The Federal Reserve Board has adopted a system based upon the Basle Accord, an
international standard for risk-based capital guidelines, to evaluate the capi-
tal adequacy of bank holding companies. Under the risk-based capital guide-
lines, 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 ex-
pressly considered in capital adequacy computations, are added to the risk-
weighted asset base by converting them to a balance sheet equivalent and as-
signing 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, retained earnings, non-cumu-
lative perpetual preferred stock and minority interests in consolidated subsid-
iaries less certain intangibles. "Tier 2" capital includes, with certain limi-
tations, certain forms of non-qualifying perpetual preferred stock, maturing
capital instruments (such as qualifying convertible and/or subordinated debt),
the reserve for possible loan losses and specified levels of certain intangi-
bles.
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 capi-
tal adequacy of banks and bank holding companies. The leverage ratio is a
company's "Tier 1" capital divided by its adjusted total assets. This leverage
ratio must be at least 3.0% for institutions with the Federal Reserve's highest
asset rating, called "CAMEL 1". Institutions which are not CAMEL 1 rated are
expected to maintain a leverage ratio of 4.0% to 5.0%, and institutions plan-
ning 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 the Company's capital ratios
at December 31, 1993:
<TABLE>
<CAPTION>
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%
The Company's Actual................ 8.08% 11.82% 14.15%
</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 as-
sets, net of goodwill. Federal Reserve Board Guidelines provide that all
bank holding companies (other than those that meet certain criteria) main-
tain a minimum leverage ratio of 3%, plus an additional cushion of 100 to
200 basis points. The guidelines also state that banking organizations ex-
periencing internal growth or making acquisitions will be expected to main-
tain "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. Management
cannot predict whether these capital requirements will change or whether they
will materially affect the Company's financial position or operating ability.
5
<PAGE>
Imposition of Liability for Undercapitalized Subsidiaries. The Federal Deposit
Insurance Corporation Improvement Act of 1991 ("FDICIA") requires each federal
banking agency to revise its capital standards to reflect the risk-weighting
discussed above. The new law also requires each federal banking agency to spec-
ify the levels at which an insured institution would be considered "well capi-
talized," "adequately capitalized," "undercapitalized," "significantly under-
capitalized" and "critically undercapitalized." Under the regulations adopted
by the banking agencies, each of the Company's subsidiary banks was "well capi-
talized" as of December 31, 1993.
FDICIA requires bank regulators to take "prompt corrective action" to resolve
problems associated with insured depository institutions. In the event an in-
stitution 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 in-
stitution. 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." The Company
controls each of its subsidiaries for purposes of this statute and therefore is
required to ensure that each subsidiary remains adequately capitalized.
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.
In addition, 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 deposi-
tory institution.
Audit Reports. Beginning January 1, 1994, FDICIA requires insured depository
institutions with $500 million or more in total assets, such as the Company and
each of its First Security Utah, First Security Idaho and First Security New
Mexico subsidiaries, to submit annual audit reports prepared by independent au-
ditors 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 an-
nual audit report shall include financial statements prepared in accordance
with generally accepted accounting principles, statements concerning manage-
ment's responsibility for the financial statements, internal controls and com-
pliance with legal requirements designated by the FDIC, and an attestation by
the auditor regarding the statements of management. FDICIA requires that inde-
pendent audit committees be formed, consisting of outside directors only. The
committees of institutions with assets of $3 billion or more, such as the Com-
pany, must include members with experience in banking or financial management,
must have access to outside counsel, and must not include representatives of
large customers. The Company's Board of Directors includes an independent audit
committee which complies with these requirements.
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.
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 state in
which the target bank is located expressly authorizes such acquisition. Utah
banking laws permit, in certain circumstances, out-of-state bank holding compa-
nies to acquire certain existing banks and bank holding companies in Utah.
In addition, FDICIA has eased restrictions on cross-industry mergers between
commercial banks and savings institutions. Members of the Bank Insurance Fund
("BIF"), such as the Company, and the Savings Association
6
<PAGE>
Insurance Fund are generally allowed to merge, assume each other's deposits,
and transfer assets in exchange for an assumption of deposit liabilities.
Subsidiary Bank Regulation
Three of the Company's bank subsidiaries are national banks, which are subject
to regulation and supervision by the Office of the Comptroller of the Currency
(the "Comptroller"). The other banks are each subject to regulation by regula-
tors in their respective states and the FDIC. Bank regulations on both the fed-
eral and state levels are broad in their scope and materially affect the busi-
ness of the Company and its banks.
All of the Company's subsidiary banks are subject to the requirements and re-
strictions under federal and state law, including requirements to maintain re-
serves 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 af-
fected significantly by actions of the Federal Reserve Board as it attempts to
control the money supply and credit availability.
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 re-
quirements 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 institu-
tions. Many of the statutory restrictions limit the participation of such in-
stitutions in the securities and insurance product markets. Each of the state-
chartered banking subsidiaries of the Company is in compliance with the re-
strictions imposed by FDICIA.
Restrictions on Transactions With Affiliates. Section 23A of the Federal Re-
serve Act imposes quantitative and qualitative limits on loan transactions be-
tween a bank and its affiliates, 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 the Company or its sub-
sidiaries. Section 23B of the Federal Reserve Act requires that certain trans-
actions between the Company's subsidiary banks and their affiliates must be on
terms at least as favorable to the Company or its subsidiaries as those pre-
vailing for comparable transactions with other nonaffiliated companies. In the
absence of such comparable transactions, any transaction between the Company
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. The Company is currently in material compliance with
the requirements of Sections 23A and 23B.
Restrictions on Subsidiary Bank Dividends. The Federal Reserve Board, the Comp-
troller and the FDIC have each issued policy statements to the effect that bank
holding companies and member banks, national banks and state banks should gen-
erally 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, such as First Security Utah, First Secu-
rity Idaho and First Security New Mexico, 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 re-
strictions govern the other banking subsidiaries of the Company. 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 December 31,
1993, the Company's banks could have declared additional dividends to the Com-
pany of approximately $119.97 million without regulatory approval or restric-
tion. Federal banking regulators also may prohibit federally insured banks from
paying dividends if the payment of such dividend would leave the bank "under-
capitalized" as defined in FDICIA and the implementing regulations, or the pay-
ment of dividends would, in light of the financial condition of such bank, con-
stitute an unsafe or unsound practice. Applicable Nevada, Wyoming
7
<PAGE>
and Oregon law place similar restrictions on the payment of dividends by the
Company's banks organized under the laws of those states.
Examinations. The FDIC periodically examines and evaluates insured banks. Based
upon such an evaluation, the FDIC may revalue the assets of an insured institu-
tion and require that it establish specific reserves to compensate for the dif-
ference 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. The
rules and regulations of the Comptroller, which regulates the Company's na-
tional banks, and the various state banking authorities regulating the
Company'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 Federal Reserve Board issued for public comment on April 19, 1993, proposed
regulations on standards of safety and soundness which specify operational and
management standards (addressing internal controls, loan documentation, credit
underwriting and interest rate risk), asset quality and earnings. The impact of
these regulations cannot be determined until final regulations are issued.
Deposit Insurance Assessments. FDIC-insured depository institutions that are
members of the BIF must pay insurance premiums at rates between 23 and 31 basis
points on insured deposits depending on the bank's capital category and bank
regulators' supervisory category. Institutions assigned to higher-risk catego-
ries--that is, institutions that pose a greater risk of loss to their respec-
tive deposit insurance funds--would pay assessments at higher rates than would
institutions that pose a lower risk. The FDIC can impose special assessments on
member institutions, such as each of the Company's Bank subsidiaries, to cover
the cost of borrowings from the U.S. Treasury, the Federal Financing Bank, and
BIF member banks. The semiannual assessment is 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.
FIRREA's Impact. FIRREA's primary purpose was to restructure the statutory and
regulatory framework applicable to savings associations, and establish a mecha-
nism for resolving insolvent thrift institution cases. Certain provisions of
FIRREA, however, affect the bank subsidiaries of holding companies, including
the Company. 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 de-
signed to prevent discriminatory lending practices; (4) require the federal
banking agencies to make public a rating of a bank's performance under the Com-
munity 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 pri-
mary impact on commercial banks has been to increase the enforcement authority
of federal regulators and to expand the scope of potential targets of enforce-
ment actions.
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 given extensive authority
to police unsafe or unsound practices and violations of applicable laws and
regulations by depository institutions and their holding companies. For exam-
ple, 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 de-
sist or removal orders, seek injunctions, and publicly disclose such actions.
FDICIA, FIRREA and other laws have expanded the agencies' authority in recent
years, and the agencies have not yet fully tested the limits of their powers.
Current Regulatory Structure. The laws and regulations affecting banks and bank
holding companies are under continual review. For example, recent federal leg-
islative proposals include bills which would consolidate all banking regulators
into one or two regulatory agencies and others which would permit interstate
branching
8
<PAGE>
to various degrees. The rules and the regulatory agencies in this area have
changed significantly over recent years, and there is reason to expect that
similar changes, including changes which may materially affect the Company's
operations, will continue in the future.
USE OF PROCEEDS
Unless otherwise set forth in the Prospectus Supplement, the net proceeds from
the sale of the Securities will be applied to the Company's general funds to be
utilized for such corporate purposes as may be determined by management, in-
cluding payment of cash amounts due upon completion of acquisitions, funding of
investments in or extensions of credit to the Company's subsidiaries, and re-
payment of borrowings. Except as otherwise described in the Prospectus Supple-
ment, specific allocations of the proceeds to such purposes will not have been
made at the date of the Prospectus Supplement, although management of the Com-
pany will have determined that funds should be raised at that time in anticipa-
tion of future funding requirements. The precise amounts and timing of payments
due upon completion of acquisitions, of investments in and extensions of credit
to the subsidiaries, and the repayment of borrowings will depend upon funding
requirements and the availability of other funds. Pending such application, net
proceeds may be temporarily invested or applied to the reduction of short-term
indebtedness.
DESCRIPTION OF DEBT SECURITIES
The following description of the terms of the Debt Securities sets forth cer-
tain general terms and provisions of the Debt Securities to which any Prospec-
tus Supplement may relate. The particular terms of the Debt Securities offered
by a Prospectus Supplement and the extent, if any, to which such general provi-
sions may not apply thereto will be described in the Prospectus Supplement re-
lating to such Debt Securities.
The Debt Securities may be Senior Debt Securities or Subordinated Debt Securi-
ties (both including but not limited to Medium-Term Notes). The Senior Debt Se-
curities will be issued under an Indenture to be dated as of March 1, 1994 (the
"Senior Indenture") between the Company and The First National Bank of Chicago,
as Trustee (together with its successor trustee, if any, the "Senior Trustee"),
and the Subordinated Debt Securities will be issued under an Indenture to be
dated as of March 1, 1994 (the "Subordinated Indenture") between the Company
and The First National Bank of Chicago, as Trustee (together with its successor
trustee, if any, the "Subordinated Trustee"). The Senior Indenture and the Sub-
ordinated Indenture are collectively referred to herein as the "Indentures,"
copies of the forms of which are filed as exhibits to the Registration State-
ment of which this Prospectus is a part. References to the "Trustee" below
shall mean the Senior Trustee or the Subordinated Trustee. The following summa-
ries of certain provisions of the Indenture do not purport to be complete and
are subject to, and are qualified in their entirety by reference to, all the
provisions of the Indenture applicable to a particular series of Debt Securi-
ties (the "Applicable Indenture"), including the definitions therein of certain
terms. Wherever particular sections, articles or defined terms of the Inden-
tures are referred to, it is intended that such sections, articles or defined
terms shall be incorporated herein by reference. Section and article references
used herein are references to the Applicable Indenture. Capitalized terms not
otherwise defined herein shall have the meaning given them in the Applicable
Indenture.
GENERAL
Neither Indenture limits the amount of Debt Securities which may be issued
thereunder, and Debt Securities of any series may be issued thereunder up to
the aggregate principal amount which may be authorized from time to time by the
Company. Neither the Indentures nor the Debt Securities will limit or otherwise
restrict the amount of other indebtedness which may be incurred or the other
securities which may be issued by the Company or any of its Subsidiaries. The
Debt Securities will be unsecured direct obligations of the Company.
9
<PAGE>
Because the Company is a holding company, its rights and the rights of its
creditors, including the holders of the Debt Securities, to participate in the
assets of any Subsidiary upon the latter's liquidation or recapitalization
would be subject to the prior claims of such Subsidiary's creditors except to
the extent that the Company may itself be a creditor with claims against the
Subsidiary that are recognized by a court having jurisdiction over such claims.
Unless otherwise indicated in the Prospectus Supplement, principal of and any
premium and interest on the Debt Securities will be payable, and the transfer
of the Debt Securities will be registrable, at the currently designated office
of the Trustee at One First National Plaza, Chicago, Illinois 60670. In addi-
tion, payment of interest on Debt Securities may, at the option of the Company,
be made by check mailed to the address of the person entitled thereto as it ap-
pears on the Security Register. (Sections 301, 305 and 1002). Acting in accor-
dance with each Indenture, the Company intends also to designate the principal
office of First Security Utah as an office where principal, premium, and inter-
est may be paid and the transfer of the Debt Securities may be registered.
(Sections 301, 305 and 1002)
Unless otherwise indicated in the Prospectus Supplement, the Debt Securities
will be issued only in fully registered form, without coupons, in denominations
of $1,000 and any integral multiple thereof. (Section 302) No service charge
will be made for any registration of transfer or exchange of the Debt Securi-
ties, but the Company may require payment of a sum sufficient to cover any tax
or other governmental charge payable in connection therewith. (Section 302) The
Indentures also provide that the Debt Securities of any series, if so specified
with respect to a particular series, may be issued in permanent global form.
See "Global Debt Securities."
Reference is made to the Prospectus Supplement for a description of the follow-
ing terms, where applicable, of each series of Debt Securities in respect of
which this Prospectus is being delivered: (1) the title of the Debt Securities
of the series; (2) any limit on the aggregate principal amount of the Debt Se-
curities of the series; (3) the date or dates on which the principal of the
Debt Securities of the series will be payable; (4) the rate or rates (which may
be fixed or variable) at which the Debt Securities of the series will bear in-
terest, if any, the date or dates from which such interest shall accrue, the
Interest Payment Dates on which such interest will be payable, and the Regular
Record Dates for such Interest Payment Dates; (5) the place or places where the
principal of, premium, if any, and interest on the Debt Securities of the se-
ries shall be payable; (6) the period or periods within which, the price or
prices at which and the terms and conditions upon which the series of Debt Se-
curities may be redeemed, in whole or in part, at the option of the Company;
(7) the obligation, if any, of the Company to redeem or purchase the Debt Secu-
rities of the series pursuant to any sinking fund or analogous provision or at
the option of the Holders thereof and the period or periods within which, the
price or prices at which and the terms and conditions upon which Debt Securi-
ties of the series shall be redeemed or purchased, in whole or in part, pursu-
ant to such obligation; (8) the denomination or denominations in which such
Debt Securities are authorized to be issued; (9) the currency of payment of
principal of, premium, if any, and interest on the Debt Securities of the se-
ries; (10) any index or formula used to determine the amount of payment of
principal of, premium, if any, and interest on the Debt Securities of the se-
ries; (11) if other than the principal amount thereof, the portion of the prin-
cipal amount of Debt Securities of the series which shall be payable upon dec-
laration of acceleration of the Maturity thereof; (12) whether the Debt Securi-
ties of the series shall be issued in whole or in part in the form of one or
more Global Securities and, if so, the Depositary for such Global Security or
Securities; (13) the portion of the principal amount of such Debt Securities
which will be payable upon declaration of acceleration of the Maturity thereof,
if other than the principal thereof; (14) any additional Events of Default or,
in the case of Subordinated Debt Securities, Default, solely with respect to
the Debt Securities; (15) whether the provisions of the applicable Indenture
described under "Defeasance and Covenant Defeasance" will be applicable to such
Debt Securities; (16) any additional restrictive covenants included solely for
the benefit of the Debt Securities; (17) if the Debt Securities are Subordi-
nated Debt Securities, whether the provisions in the Subordinated Indenture de-
scribed under "Subordination of Subordinated Debt Securities" or other subordi-
nation provisions will be applicable to such Subordinated Debt Securities; and
(18) any other terms of the series of Debt Securities not inconsistent with the
provisions of the Applicable Indenture.
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<PAGE>
The Debt Securities may be issued as Original Issue Discount Debt Securities,
to be offered and sold at a discount below their stated principal amount. Any
such Original Issue Discount Debt Securities will be described in the Prospec-
tus Supplement related thereto, which description will include a discussion of
the material federal income tax consequences and other special considerations
applicable to any such Original Issue Discount Debt Securities. An "Original
Issue Discount Security" is generally a Debt Security which provides for an
amount less than the principal amount thereof to be due and payable upon the
declaration of acceleration of the Maturity thereof upon the occurrence of an
Event of Default and the continuation thereof.
CONVERSION AND EXCHANGE
The terms, if any, on which Debt Securities of any series are convertible into
or exchangeable for shares of Common Stock, Preferred Stock or Warrants will be
set forth in the Prospectus Supplement related thereto. Such terms may include
provisions for conversion or exchange, either mandatory, at the option of the
holder, or at the option of the Company, in which the number of shares of Com-
mon Stock, Preferred Stock or Warrants to be received by the holders of Debt
Securities would be calculated according to the market price of Common Stock,
Preferred Stock or Warrants as of a time stated in the Prospectus Supplement.
SUBORDINATION OF SUBORDINATED DEBT SECURITIES
The payment of the principal of and interest on the Subordinated Debt Securi-
ties will, to the extent set forth in the Subordinated Indenture, be subordi-
nated in right of payment to the prior payment in full of all Senior Indebted-
ness (as defined in the Subordinated Indenture). In certain events of insolven-
cy, the payment of the principal of and interest on the Subordinated Debt Secu-
rities will, to the extent set forth in the Subordinated Indenture, also be ef-
fectively subordinated in right of payment to the prior payment in full of all
Other Financial Obligations (as defined in the Subordinated Indenture and de-
fined below). Upon any payment or distribution of assets to creditors upon any
liquidation, dissolution, winding up, reorganization, assignment for the bene-
fit of creditors, marshalling of assets or any bankruptcy, insolvency or simi-
lar proceedings of the Company, the holders of all Senior Indebtedness will
first be entitled to receive payment in full of all amounts due or to become
due thereon before the Holders of the Subordinated Debt Securities will be en-
titled to receive any payment in respect of the principal of or interest on the
Subordinated Debt Securities. If upon any such payment or distribution of as-
sets to creditors, there remain, after giving effect to such subordination pro-
visions in favor of the holders of Senior Indebtedness, any amounts of cash,
property or securities available for payment or distribution in respect of Sub-
ordinated Debt Securities (as defined in the Subordinated Indenture and defined
below, "Excess Proceeds") and if, at such time, any Entitled Persons in respect
of Other Financial Obligations have not received payment in full of all amounts
due or to become due on or in respect of such Other Financial Obligations, then
such Excess Proceeds shall first be applied to pay or provide for the payment
in full of such Other Financial Obligations before any payment or distribution
may be made in respect of the Subordinated Debt Securities. In the event of the
acceleration of the maturity of any Debt Securities, the holders of all Senior
Indebtedness will first be entitled to receive payment in full of all amounts
due thereon before the Holders of the Subordinated Debt Securities will be en-
titled to receive any payment upon the principal of or interest on the Subordi-
nated Debt Securities. No payments on account of principal of or interest on
the Subordinated Debt Securities or on account of the purchase or acquisition
of Subordinated Debt Securities may be made if there shall have occurred and be
continuing a default in any payment with respect to Senior Indebtedness, or if
any judicial proceeding shall be pending with respect to any such default. (Ar-
ticle Thirteen of the Subordinated Indenture)
By reason of such subordination in favor of the holders of Senior Indebtedness,
in the event of insolvency, creditors of the Company who are not holders of Se-
nior Indebtedness or of the Subordinated Debt Securities may recover less, rat-
ably, than Holders of Senior Indebtedness and may recover more, ratably, than
the Holders of the Subordinated Debt Securities. By reason of the obligation of
the Holders of Subordinated Debt Securities to pay over any Excess Proceeds to
Entitled Persons in respect of Other Financial Obligations, in the event of in-
solvency, holders of Existing Subordinated Indebtedness (as defined in the Sub-
ordinated Indenture and defined below) may recover less, ratably, than Entitled
Persons in respect of Other Financial Obligations and may recover more, rata-
bly, than the Holders of Subordinated Debt Securities.
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<PAGE>
Unless otherwise specified in the Prospectus Supplement relating to the partic-
ular series of Subordinated Debt Securities offered thereby, Senior Indebted-
ness is defined in the Subordinated Indenture as (a) the principal of (and pre-
mium, if any), and interest on all indebtedness of the Company for money bor-
rowed, whether outstanding on the date of execution of the Subordinated Inden-
ture or thereafter created, assumed or incurred, except (i) such indebtedness
as is by its terms expressly stated to be junior in right of payment to the
Subordinated Debt Securities and (ii) such indebtedness as is by its terms ex-
pressly stated to rank pari passu with the Subordinated Debt Securities and (b)
any deferrals, renewals or extensions of any such Senior Indebtedness; provid-
ed, however, that Senior Indebtedness shall not include Existing Subordinated
Indebtedness. (Section 101 of the Subordinated Indenture) The term "indebted-
ness for money borrowed" when used with respect to the Company is defined to
mean any obligation of, or any obligation guaranteed by, the Company for the
repayment of borrowed money, whether or not evidenced by bonds, debentures,
notes or other written instruments, and any deferred obligation of, or any such
obligation guaranteed by, the Company for the payment of the purchase price of
property or assets. (Section 101 of the Subordinated Indenture)
Unless otherwise specified in the Prospectus Supplement relating to the partic-
ular series of Subordinated Debt Securities offered thereby, Existing Subordi-
nated Indebtedness means the Company's 7.50% Subordinated Notes due 2002 issued
under an Indenture, dated as of August 1, 1991, between the Company and Norwest
Bank Minnesota, N.A., as trustee.
Unless otherwise specified in the Prospectus Supplement relating to the partic-
ular series of Subordinated Debt Securities offered thereby, Other Financial
Obligations means (a) obligations of the Company under direct credit substi-
tutes, (b) obligations of, or any such obligation directly or indirectly guar-
anteed by, the Company for purchased money or funds, (c) any deferred obliga-
tion of, or any such obligation directly or indirectly guaranteed by, the Com-
pany for the payment of the purchase price of property or assets, (d) any obli-
gation of, or any such obligation directly or indirectly guaranteed by, the
Company for the payment of rent or other amounts under a lease of property or
assets which obligation is required to be classified and accounted for as a
capitalized lease on the balance sheet of the Company under generally accepted
accounting principles, and (e) all obligations of the Company to make payment
pursuant to the terms of financial instruments, such as (i) securities con-
tracts and foreign currency exchange contracts, (ii) derivative instruments,
such as swap agreements (including interest rate and foreign exchange rate swap
agreements), cap agreements, floor agreements, collar agreements, interest rate
agreements, foreign exchange rate agreements, options, commodity futures con-
tracts, commodity option contracts and (iii) in the case of both (i) and (ii)
above, similar financial instruments, other than (A) obligations on account of
Senior Indebtedness and (B) obligations on account of indebtedness for money
borrowed ranking pari passu with or subordinate to the Subordinated Debt Secu-
rities. Unless otherwise specified in the Prospectus Supplement relating to the
particular series of Subordinated Debt offered thereby, Entitled Persons means
any person who is entitled to payment pursuant to the terms of Other Financial
Obligations. (Section 101 of the Subordinated Indenture)
Indebtedness of the Company senior to the Subordinated Debt Securities, at
March 1, 1994, totalled approximately $319 million ($244 million if the cur-
rently outstanding subordinated debt securities are ranked pari passu with the
new Subordinated Debt Securities).
The Company's obligations under the Subordinated Debt Securities shall rank
pari passu in right of payment with each other and with the Existing Subordi-
nated Indebtedness, subject to the obligations of the Holders of Subordinated
Debt Securities to pay over any Excess Proceeds to Entitled Persons in respect
of Other Financial Obligations as provided in the Subordinated Indenture.
The Subordinated Indenture does not limit or prohibit the incurrence of addi-
tional Senior Indebtedness, which may include indebtedness that is senior to
the Subordinated Debt Securities, but subordinate to other obligations of the
Company, including obligations of the Company in respect of Other Financial Ob-
ligations. The Senior Debt Securities, when issued, will constitute Senior In-
debtedness.
The Prospectus Supplement may further describe the provisions, if any, applica-
ble to the subordination of the Subordinated Debt Securities of a particular
series.
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<PAGE>
CERTAIN COVENANTS IN THE SENIOR INDENTURE
Restrictions on Certain Dispositions of Major Constituent Banks. The Senior
Indenture provides that, except as described below under "Consolidation,
Merger and Sale of Assets", the Company will not (a) sell, assign, transfer,
or otherwise dispose of any shares of, or securities convertible into, or op-
tions, warrants or rights to subscribe for or purchase shares of, Voting Stock
of a Major Constituent Bank (as defined below) (or a Subsidiary owning Voting
Stock of a Major Constituent Bank) or permit a Major Constituent Bank (or a
Subsidiary owning Voting Stock of a Major Constituent Bank) to issue any
shares of, or securities convertible into or options, warrants or rights to
subscribe for or purchase shares of such Voting Stock, if, in each case, after
giving effect to any such transaction and to the issuance of the maximum num-
ber of shares of Voting Stock of such Major Constituent Bank (or Subsidiary)
issuable upon the exercise of all such convertible securities, options, war-
rants or rights, the Major Constituent Bank would cease to be a Controlled
Subsidiary, or (b) permit a Major Constituent Bank (or a Subsidiary owning
Voting Stock of a Major Constituent Bank) to (i) merge or consolidate with or
into any other corporation, unless the surviving corporation is, or upon con-
summation of the merger or consolidation will become, a Controlled Subsidiary;
or (ii) lease, sell or transfer all or substantially all of its properties and
assets to any Person, except to a Controlled Subsidiary or a Person that, upon
such lease, sale or transfer, will become a Controlled Subsidiary. The Senior
Indenture, however, provides that any such sale or other disposition of secu-
rities, any such merger or consolidation or any such lease, sale or transfer
of properties and assets will not be prohibited (i) if required by any law or
any rule, regulation or order of any governmental agency or authority, (ii) if
required as a condition imposed by any law or rule, regulation or order of any
governmental agency or authority to the acquisition by the Company, directly
or indirectly, of any Person, provided that, after giving effect to such other
prohibited transaction and such acquisition, (A) such Person will be a Con-
trolled Subsidiary and (B) the Consolidated Banking Assets (as defined below)
of the Company will be at least equal to the Consolidated Banking Assets of
the Company prior thereto, or (iii) if the proceeds from such otherwise pro-
hibited transaction are within 180 days after such transaction, or such longer
period of time as may be necessary to obtain regulatory approval in connection
therewith, invested by the Company, pursuant to an understanding or agreement
in principle reached at the time of such otherwise prohibited transaction, in
one or more Controlled Subsidiaries (including any Person which upon such in-
vestment becomes a Controlled Subsidiary) engaged in the banking business or
any other business then legally permissible for bank holding companies. (Sec-
tion 1008)
"Major Constituent Bank" means (i) First Security Utah, First Security Idaho
and First Security New Mexico or (ii) any Subsidiary Bank the Consolidated
Banking Assets of which constitute 20% or more of the aggregate Consolidated
Banking Assets of all Subsidiary Banks. As of December 31, 1993, First Secu-
rity Utah, First Security Idaho and First Security New Mexico were the only
Major Constituent Banks. "Controlled Subsidiary" means any Subsidiary more
than 80% of the outstanding shares of the Voting Stock of which is at the time
owned directly or indirectly by the Company or by one or more Controlled Sub-
sidiaries or by the Company and one or more Controlled Subsidiaries. "Consoli-
dated Banking Assets" of a Subsidiary Bank means all assets owned directly or
indirectly by such Subsidiary Bank and reflected on the Company's consolidated
balance sheet prepared in accordance with generally accepted accounting prin-
ciples. (Section 101)
Restrictions on Liens on Voting Stock of Major Constituent Banks. The Senior
Indenture provides that the Company will not create, assume, incur or suffer
to be created, assumed or incurred or to exist any pledge, encumbrance or
lien, as security for indebtedness for borrowed money, upon any shares of, or
securities convertible into or options, warrants or rights to subscribe for or
purchase shares of, Voting Stock of a Major Constituent Bank now or hereafter
owned by the Company, directly or indirectly, without making effective provi-
sion whereby any Debt Securities shall be equally and ratably secured with any
and all such indebtedness if, treating such pledge, encumbrance or lien as a
transfer of the shares of, or securities convertible into or options, war-
rants, or rights to subscribe for or purchase shares of, Voting Stock subject
thereto to the secured party and after giving effect to the issuance of the
maximum number of shares of Voting Stock of such Major Constituent Bank issua-
ble upon the exercise of all such convertible securities, options, warrants or
rights, the Major Constituent Bank would not continue to be a Controlled Sub-
sidiary. (Section 1009)
Neither the Senior Indenture nor the Subordinated Indenture contain any re-
striction on the Company's ability to enter into a highly leveraged transac-
tion or any provision affording any special protection to Holders in the event
that the Company engages in a highly leveraged transaction.
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<PAGE>
CONSOLIDATION, MERGER, AND SALE OF ASSETS
The Indenture provides that the Company, without the consent of the Holders of
any of the Outstanding Debt Securities, may consolidate with or merge into, or
convey, transfer, or lease its properties and assets substantially as an en-
tirety to, any Person, provided that (a) the successor is a Person organized
under the laws of any domestic jurisdiction and assumes the Company's obliga-
tions on the Debt Securities and under the Indenture, (b) after giving effect
to the transaction there exists no Event of Default or, in the case of the Sub-
ordinated Indenture, Default, and no event which, after notice or lapse of time
would become an Event of Default or, in the case of the Subordinated Indenture,
Default, shall have occurred and be continuing, and (c) certain other condi-
tions are met. (Section 801)
GLOBAL DEBT SECURITIES
If any Debt Securities of a series are to be issued in permanent global form,
the Prospectus Supplement relating thereto will describe the circumstances, if
any, under which beneficial owners of interests in any such permanent global
Debt Security may exchange such interests for certificated Debt Securities of
such series and of like tenor and principal amount in any authorized form and
denomination. Principal of and any premium and interest on a permanent global
Debt Security will be payable in the manner described in the Prospectus Supple-
ment relating thereto. (Section 205).
DEFEASANCE AND COVENANT DEFEASANCE
The Indentures provide under Article 13 (for the Senior Indenture) and Article
14 (for the Subordinated Indenture), if such provision is made applicable to
the particular Debt Securities of any series pursuant to Section 301 of the Ap-
plicable Indenture (which will be indicated in the Prospectus Supplement appli-
cable thereto), that the Company may elect either (A) to defease and be dis-
charged from any and all obligations with respect to such Debt Securities then
outstanding (including, in the case of Subordinated Debt Securities, the provi-
sions described under "Subordination of Subordinated Debt Securities" and ex-
cept for the obligations to register the transfer or exchange of such Debt Se-
curities, to replace temporary or mutilated, destroyed, lost or stolen Debt Se-
curities, to maintain an office or agency in respect of the Debt Securities and
to hold moneys for payment in trust) ("defeasance") or (B) to be released from
its obligations with respect to such Debt Securities then outstanding under
Sections 1006 through Section 1009 of the Senior Indenture and Sections 1006
and 1007 of the Subordinated Indenture (and any other sections applicable to
such Debt Securities that are determined pursuant to Section 301 to be subject
to covenant defeasance), the occurrence of an event of default specified in, in
the case of Senior Debt Securities, Section 501(4) of the Senior Indenture, and
in the case of Subordinated Debt Securities, Section 503(C) of the Subordinated
Indenture (with respect to Sections 1006 through Section 1009 of the Senior In-
denture and Sections 1006 and 1007 of the Subordinated Indenture or any other
section applicable to such Debt Securities that are determined pursuant to Sec-
tion 301 to be subject to covenant defeasance), or, in the case of Senior Debt
Securities, Section 501(5) of the Senior Indenture, and in the case of Subordi-
nated Debt Securities, Section 503(D) of the Subordinated Indenture (Section
1006 of the Indentures containing the covenant to maintain properties, Section
1007 of the Indentures containing the covenant to pay taxes and other claims,
Section 1008 of the Senior Indenture containing the restrictions described un-
der "Restrictions on Certain Dispositions of Major Constituent Banks", Section
1009 of the Senior Indenture containing the restrictions described under "Re-
striction on Liens on Voting Stock of Major Constituent Banks" and Sections
501(4) and 501(5) of the Senior Indenture and Sections 503(C) and 503(D) of the
Subordinated Indenture containing the provisions described under "Defaults" re-
lating to covenant defaults and cross-defaults, respectively) and, in the case
of Subordinated Debt Securities, the provisions described under "Subordination
of Subordinated Debt Securities" ("covenant defeasance"), upon the deposit with
the Senior Trustee or Subordinated Trustee (or other qualifying trustee), in
trust for such purpose, of money, and/or U.S. Government Obligations which
through the payment of principal and interest in accordance with their terms
will provide money, in an amount sufficient, without reinvestment, to pay the
principal of (and premium, if any) and interest on such Debt Securities to ma-
turity or redemption, as the case may be, and any mandatory sinking fund or
analogous payments thereon. As a condition to defeasance or covenant defea-
sance, the Company must deliver to the Senior Trustee or Subordinated Trustee
an Opinion of Counsel (as specified in the Applicable Indenture)
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to the effect that the Holders of such Debt Securities will not recognize in-
come, gain or loss for Federal income tax purposes as a result of such defea-
sance or covenant defeasance and will be subject to Federal income tax on the
same amounts, in the same manner and at the same times as would have been the
case if such defeasance or covenant defeasance had not occurred. Such opinion,
in the case of defeasance under clause (A) above, must refer to and be based
upon a ruling of the Internal Revenue Service issued to the Company or pub-
lished as a revenue ruling or upon a change in applicable Federal income tax
law, in any such case after the date of the Applicable Indenture.
Under current Federal income tax law, defeasance would likely be treated as a
taxable exchange of Debt Securities to be defeased for interests in the defea-
sance trust. As a consequence a holder would recognize gain or loss equal to
the difference between the holder's cost or other tax basis for such Debt Secu-
rities and the value of the holder's proportionate interest in the defeasance
trust, and thereafter would be required to include in income a proportionate
share of the income, gain and loss of the defeasance trust. Under current Fed-
eral income tax law, covenant defeasance would ordinarily not be treated as a
taxable exchange of such Debt Securities. Purchasers of such Debt Securities
should consult their own advisors with respect to the tax consequences to them
of such defeasance and covenant defeasance, including the applicability and ef-
fect of tax laws other than the Federal income tax law.
The Company may exercise its defeasance option with respect to such Debt Secu-
rities notwithstanding its prior exercise of its covenant defeasance option. If
the Company exercises its defeasance option, payment of such Debt Securities
may not be accelerated because of an Event of Default. If the Company exercises
its covenant defeasance option, payment of such Debt Securities may not be ac-
celerated by reference to the covenants noted under clause (B) above. However,
if such an acceleration were to occur, the realizable value at the acceleration
date of the money and U.S. Government Obligations in the defeasance trust could
be less than the principal and interest then due on such Debt Securities, in
that the required deposit in the defeasance trust is based upon scheduled cash
flows rather than market value, which will vary depending upon interest rates
and other factors. (Article 13 and Article 14 of the Senior Indenture and the
Subordinated Indenture, respectively).
The Prospectus Supplement may further describe the provisions, if any, applica-
ble to defeasance or covenant defeasance with respect to the Debt Securities of
a particular series.
DEFAULT
The Senior Indenture
The following are Events of Default under the Senior Indenture with respect to
Senior Debt Securities of any series: (1) failure to pay principal of or premi-
um, if any, on any Debt Securities of that series when due; (2) failure to pay
any interest on any Senior Debt Securities of that series, when due, continued
for 30 days; (3) failure to deposit any sinking fund payment, when due, in re-
spect of any Senior Debt Securities of that series; (4) failure to perform any
other covenant of the Company in the Senior Indenture (other than a covenant
included in the Senior Indenture solely for the benefit of series of Senior
Debt Securities other than that series), continued for 60 days after written
notice as provided in the Senior Indenture; (5) failure to pay when due the
principal of or the acceleration of any indebtedness for borrowed money by the
Company or any Major Constituent Bank, in any individual instance or in the ag-
gregate in the principal amount in excess of $1,000,000, if such indebtedness
is not discharged or such acceleration is not annulled within 10 days after
written notice as provided in the Senior Indenture; (6) certain events in bank-
ruptcy, insolvency, or reorganization of the Company or any Major Constituent
Bank; and (7) any other Event of Default provided in any supplemental indenture
entered into with respect to Senior Debt Securities of a particular series as
described in the Prospectus Supplement. (Section 501)
If an Event of Default with respect to Senior Debt Securities of any series
shall occur and be continuing, either the Trustee or the Holders of at least
25% in aggregate principal amount of the Outstanding Senior Debt Securities of
that series by notice as provided in the Indenture may declare the principal
amount to be due and payable immediately. At any time after a declaration of
acceleration with respect to Senior Debt Securities of
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<PAGE>
any series has been made, but before a judgment or decree for payment of money
has been obtained by the Trustee, the Holders of a majority in aggregate prin-
cipal amount of outstanding Senior Debt Securities of that series may, under
certain circumstances, rescind and annul such acceleration. (Sections 502 and
503)
The Subordinated Indenture
The Subordinated Indenture defines an Event of Default with respect to any se-
ries of Subordinated Debt Securities as being certain events involving the
bankruptcy, insolvency or reorganization of the Company or any other Event of
Default provided with respect to Securities of any series. (Section 501) If
any Event of Default with respect to Subordinated Debt Securities of any se-
ries at the time Outstanding occurs and is continuing, either the Trustee or
the Holders of not less than 25% in principal amount of the Outstanding Subor-
dinated Debt Securities of that series may declare the principal amount of all
Subordinated Debt Securities of that series to be due and payable immediately
(provided that no such declaration is required upon certain events of bank-
ruptcy, insolvency or reorganization), but upon certain conditions such decla-
ration may be annulled and past defaults (except, unless theretofore cured, a
default in payment of principal of (or premium, if any), or interest on the
Subordinated Debt Securities of that series and certain other specified de-
faults) may be waived by the Holders of a majority in principal amount of the
Outstanding Subordinated Debt Securities of that series on behalf of the Hold-
ers of all Subordinated Debt Securities of that series. (Sections 502 and 513)
The Subordinated Indenture does not provide for any right of acceleration of
the payment of principal of a series of Subordinated Debt Securities upon a
default in the payment of principal or interest or in the performance of any
covenant or agreement in the Subordinated Debt Securities of the particular
series or in the Subordinated Indenture. The Subordinated Indenture defines a
Default with respect to Subordinated Debt Securities of any series as any one
of the following events: (1) an Event of Default; (2) failure to pay any in-
terest on any Subordinated Debt Securities of that series, when due, continued
for 30 days; (3) failure to pay principal of (or premium, if any), on any Sub-
ordinated Debt Securities of that series when due; (4) failure to deposit any
sinking fund payment, when due, in respect of any Subordinated Debt Securities
of that series; (5) failure to perform any other covenant of the Company in
the Subordinated Indenture (other than a covenant included in the Subordinated
Indenture solely for the benefit of a series of Subordinated Debt Securities
other than that series) continued for 60 days after written notice as provided
in the Subordinated Indenture; (6) failure to pay when due the principal of or
the acceleration on any indebtedness for borrowed money by the Company or a
Major Constituent Bank, in any individual instance or in the aggregate in the
principal amount in excess of $3,000,000, if such indebtedness is not dis-
charged or such acceleration is not annulled within 10 days after written no-
tice as provided in the Subordinated Indenture; and (7) any other Default with
respect to Subordinated Debt Securities of a particular series as described in
the Prospectus Supplement. In case a Default shall occur and be continuing,
the Trustee may in its discretion proceed to protect and enforce its rights
and the rights of the Holders by appropriate judicial proceeding as the
Trustee deems most effectual. (Section 503)
The Senior and Subordinated Indentures
Reference is made to the Prospectus Supplement for the particular provisions
relating to acceleration of the Maturity of any portion of the principal
amount of a series of Debt Securities upon the occurrence of an Event of De-
fault and the continuation thereof.
Each Indenture provides that, subject to the duty of the Trustee during de-
fault to act with the required standard of care, the Trustee will be under no
obligation to exercise any of its rights or powers under the applicable Inden-
ture at the request or direction of any of the Holders unless such Holders
shall have offered to the Trustee reasonable indemnity. (Section 603) Subject
to such provisions for the indemnification of the Trustee, the Holders of a
majority in aggregate principal amount of the Outstanding Debt Securities of
any series will have the right to direct the time, method, and place of con-
ducting any proceeding for any remedy available to the Trustee, or exercising
any trust or power conferred on the Trustee, with respect to the Debt Securi-
ties of that series. (Series 512)
Under each Indenture the Company is required to furnish annually to the
Trustee a statement as to the performance by the Company of certain of its ob-
ligations under such Indenture and as to any default in such performance.
(Section 1004)
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MODIFICATION OF INDENTURES AND WAIVER OF CONDITIONS
Modifications and amendments of each Indenture may be made by the Company and
the Trustee with the consent of the Holders of 66 2/3% in aggregate principal
amount of the Outstanding Debt Securities of each series affected by such modi-
fication or amendment, provided, however, that no such modification or amend-
ment may, without the consent of the Holder of each Outstanding Debt Security
of each series affected thereby, (1) change the stated maturity date of the
principal of, or any installment of principal of or interest on, any Debt Secu-
rities; (2) reduce the principal amount of, the rate of interest on or any pre-
mium payable upon the redemption of any Debt Securities; (3) reduce the amount
of the principal of any Original Issue Discount Security that would be due and
payable upon a declaration of acceleration of the Maturity thereof; (4) change
any Place of Payment where, or the coin or currency in which, payment of prin-
cipal of, or any premium or interest on, any Debt Securities may be made; (5)
impair the right to institute suit for the enforcement of any payment on or
with respect to any Debt Securities; or (6) in the case of the Subordinated In-
denture, modify the provisions thereof with respect to the subordination of the
Subordinated Debt Securities in a manner adverse to the Holders thereof; or (7)
reduce the percentage in principal amount of Outstanding Debt Securities of any
series, the consent of whose Holders is required for modification or amendment
of the applicable Indenture or for waiver of compliance with certain provisions
of the applicable Indenture or for waiver of certain defaults. (Section 902)
Each Indenture provides that the Holders of 66 2/3% in aggregate principal
amount of the Outstanding Debt Securities of any series may, on behalf of all
Holders of Debt Securities of that series, waive, insofar as that series is
concerned, compliance by the Company with certain restrictive provisions of the
applicable Indenture with respect to the Debt Securities of such series. (Sec-
tion 1010 of the Senior Indenture, Section 1008 of the Subordinated Indenture)
The Holders of a majority in aggregate principal amount of the Outstanding Debt
Securities of any series may, on behalf of all Holders of Debt Securities of
that series, waive any past default under the applicable Indenture with respect
to the Debt Securities of such series except a default in the payment of prin-
cipal or any premium or interest with respect to the Debt Securities of such
series or in respect of a covenant or provision of the applicable Indenture
which cannot be modified or amended without the consent of the Holders of each
Outstanding Debt Security of such series. (Section 513)
REGARDING THE TRUSTEE
The First National Bank of Chicago is the Senior Trustee under the Senior In-
denture and the Subordinated Trustee under the Subordinated Indenture. Certain
of the Company's subsidiaries now, or in the future may, maintain deposit ac-
counts and/or other banking relationships with the Trustee.
DESCRIPTION OF PREFERRED STOCK
The following statements are brief summaries of the material provisions relat-
ing to the Company's Preferred Stock and are qualified in their entirety by the
provisions of the Company's Certificate of Incorporation and Bylaws which have
been filed with the Commission.
Series A Preferred Stock. The Company's Certificate of Incorporation authorizes
the issuance of 400,000 shares of preferred stock with no par value. On Decem-
ber 31, 1993, there were 13,396 shares of $3.15 Cumulative Convertible Pre-
ferred 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 Company's Common Stock. Each
shares of Series A Preferred Stock is convertible into 12.15 shares of the
Company's Common Stock. This conversion right is subject to adjustment in cer-
tain 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 the Company, 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 Company's Common
Stock. The Company 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. The Series A Pre-
ferred Stock is currently not publicly traded.
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<PAGE>
Holders of the Company's Series A Preferred Stock are entitled to one vote per
share on all matters submitted to a vote of stockholders. Voting for the elec-
tion 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 Company's Common Stock will be en-
titled to elect the remaining directors. Holders of any additional Preferred
Stock hereafter issued may have such full or limited voting rights as are pro-
vided by the Board of Directors.
Junior Series B Preferred Stock. 48,437 shares of the Company's Preferred
Stock are reserved under the Rights Agreement between the Company and First
Security Bank of Utah, N.A., in connection with the Rights associated with the
Company's Common Stock. (See "Description of Common Stock--Rights Plan")
Additional Series of Preferred Stock. The Board of Directors of the Company 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, par-
ticipating, optional or other special rights, qualifications, limitations, re-
strictions and redemption, conversion or exchangeability provisions. Holders
of any series of preferred stock issued hereunder will have no pre-emptive
rights.
The applicable Prospectus Supplement will set forth the following specific
terms regarding the series of Preferred Stock offered thereby: (i) the desig-
nation, number of shares and liquidation preference per share; (ii) the ini-
tial public offering price; (iii) the dividend rate or rates; (iv) the index,
if any, upon which the amount of dividends, if any, is determined; (v) the
dates on which dividends, if any, will accrue and be payable and the desig-
nated record dates for determining the holders entitled to such dividends;
(vi) any redemption or sinking fund provisions; (vii) any conversion or ex-
change provisions; (viii) provisions for issuance of global securities; (ix)
the currency (which may be composite currency) in which payment of dividends,
if any, shall be payable if other than United States dollars; (x) voting
rights; and (xi) any additional terms, preferences or rights.
Under regulations adopted by the Board of Governors of the Federal Reserve
System (the "Federal Reserve Board"), if the holders of shares of any series
of preferred stock of the Company become entitled to vote for the election of
directors because the Board of Directors of the Company has failed to declare
or pay dividends on such series, such series may then be deemed a class of
"voting securities" and a holder of 25 percent or more of such series (or a
holder of five percent or more if it otherwise exercises a "controlling influ-
ence" over the Company) may then be subject to regulation as a bank holding
company in accordance with the Bank Holding Company Act of 1956, as amended.
In addition, at such time as such series is deemed a class of voting securi-
ties, any other bank holding company may be required to obtain the prior ap-
proval of the Federal Reserve Board to acquire five percent or more of such
series and any person other than a bank holding company may be required to ob-
tain the prior approval of the Federal Reserve Board to acquire ten percent or
more of such series.
The shares of Preferred Stock will, when issued, be fully paid and nonassess-
able and will have no pre-emptive rights.
The transfer agent, registrar, dividend disbursing agent and redemption agent
for the Preferred Stock will be specified in the Prospectus Supplement relat-
ing thereto.
Because the Company is a holding company, its rights, the rights of its credi-
tors and of its stockholders, including the holders of any shares of Preferred
Stock, to participate in any distribution of assets of any subsidiary upon the
latter's liquidation or recapitalization will be subject to the prior claims
of the subsidiary's creditors, except to the extent that the Company may it-
self be a creditor with recognized claims against the subsidiary. The princi-
pal sources of the Company's revenues are dividends received from its subsidi-
ary Banks. Various statutory provisions limit the amount of dividends the
Company's subsidiary Banks and certain nonbank subsidiaries can pay without
regulatory approval, and various regulations can also restrict the payment of
dividends. Certain proposed regulations could further limit the ability of the
Company's subsidiary Banks to pay dividends to the Company, and federal stat-
utes limit the ability of subsidiary Banks to make loans to the Company. See
"Supervision and Regulation."
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Dividends
The holders of the Preferred Stock of each series will be entitled to receive,
when, as and if declared by the Board of Directors of the Company, out of
funds legally available therefor, cumulative or non-cumulative cash or other
dividends at such rate or rates and on such dates as will be set forth in the
Prospectus Supplement relating to such series. Such rates may be fixed or
variable or both. If variable, the formula used for determining the dividend
rate for each dividend period will be set forth in the Prospectus Supplement.
Dividends will be payable to the holders of record as they appear on the stock
books of the Company on such record dates as will be fixed by the Board of Di-
rectors of the Company and specified in the Prospectus Supplement. If the
Board of Directors of the Company fails to declare a dividend payable on a
dividend payment date on any series of the Preferred Stock for which dividends
are noncumulative ("Noncumulative Preferred Stock"), then the holders of such
series of the Preferred Stock will have no right to receive a dividend in re-
spect of the dividend period ending on such dividend payment date, and the
Company will have no obligation to pay a dividend for such period, whether or
not dividends on such series are declared payable on any future dividend pay-
ment dates.
No dividends may be declared in respect of any dividend period on any other
series or class of preferred stock ranking on a parity as to dividends unless
full cumulative dividends on all outstanding shares of each series of Pre-
ferred Stock on which dividends are cumulative shall have been paid in full or
contemporaneously are declared and paid through the most recent dividend pay-
ment date, unless otherwise indicated in the Prospectus Supplement. In the
event that full cumulative dividends on such Preferred Stock have not been de-
clared and paid or set apart when due, the Company may not declare or pay any
dividends on, or make other distributions on or make any payment on account of
the purchase, redemption, or other retirement, of its Common Stock or any
other stock of the Company ranking as to dividends or upon liquidations junior
to such Preferred Stock (other than, in the case of dividends or distribu-
tions, dividends or distributions paid in shares of, or options, warrants or
rights to subscribe for or purchase shares of, Common Stock or such other ju-
nior ranking stock), unless full cumulative dividends on such Preferred Stock
are made or set apart for payment, unless otherwise indicated in the Prospec-
tus Supplement.
Redemption
The shares of any series of Preferred Stock may be redeemable at the option of
the Company and may be subject to mandatory redemption pursuant to a sinking
fund or otherwise, in each case upon the terms, on the date or dates and at
the redemption price or prices set forth in the Prospectus Supplement related
to such series. If fewer than all shares of Preferred Stock are to be re-
deemed, the shares to be redeemed shall be selected by the Company pro rata or
by lot, or by any other method determined by the Board of Directors to be eq-
uitable. Under regulations of the Federal Reserve Board, any perpetual pre-
ferred stock redeemable at the option of the Company may qualify as Tier 1 or
Tier 2 capital only if the redemption is subject to prior approval of the Fed-
eral Reserve Board. Therefore, any redemption of Preferred Stock at the option
of the Company will require the prior approval of the Federal Reserve Board in
order for the Preferred Stock to qualify as capital for bank regulatory pur-
poses.
If any dividends on shares of any series of Preferred Stock are in arrears, no
shares of Common Stock or shares of capital stock ranking junior to or on par-
ity with the Preferred Stock shall be redeemed and no shares of such series of
Preferred Stock shall be redeemed unless all outstanding shares of such series
are simultaneously redeemed, and the Company shall not purchase or otherwise
acquire any shares of such series; provided, however, that the foregoing shall
not prevent the purchase or acquisition of shares of such series pursuant to a
purchase or exchange offer made on the same terms to holders of all outstand-
ing shares of such series.
Notice of redemption shall be given by mailing to each record holder of the
shares to be redeemed, not less than 40 days nor more than 70 days prior to
the date fixed for the redemption thereof, to the respective addresses of such
holders as the same shall appear on the Company's stock books. Each such no-
tice shall state: (i) the redemption date; (ii) the number of shares and se-
ries of the Preferred Stock to be redeemed; (iii) the
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<PAGE>
redemption price and the manner in which such redemption price is to be paid
and delivered; (iv) the place or places where certificates for such shares of
Preferred Stock are to be surrendered for payment of the redemption price; and
(v) that dividends on the shares to be redeemed will cease to accrue on such
redemption date. If fewer than all shares of any series of the Preferred Stock
held by any holder are to be redeemed, the notice mailed to such holder shall
also specify the number of shares to be redeemed from such holder.
If notice of redemption has been given, from and after the redemption date for
the shares of the series of the Preferred Stock called for redemption (unless
default shall have occurred by the Company in providing money for the payment
of the redemption price of the shares so called for redemption), dividends on
the shares of Preferred Stock so called for redemption will cease to accrue,
any right to convert the shares of Preferred Stock will terminate, such shares
will no longer be deemed to be outstanding, and all rights of the holders
thereof as stockholders of the Company (except the right to receive the redemp-
tion price) will cease. Upon surrender in accordance with such notice of the
certificates representing any shares so redeemed (properly endorsed or assigned
for transfer, if the Board of Directors of the Company will so require and the
notice shall so state), the redemption price set forth above will be paid out
of funds provided by the Company. If fewer than all of the shares represented
by any such certificate are redeemed, a new certificate will be issued repre-
senting the unredeemed shares without cost to the holder thereof.
Liquidation Preference
Upon any liquidation, dissolution or winding up of the Company, the holders of
shares of each series of Preferred Stock shall be entitled to receive out of
the assets of the Company available for distribution to stockholders, before
any distribution of assets is made to or set apart for the holders of Common
Stock or of any other shares of stock of the Company ranking as to such a dis-
tribution junior to the shares of such series, with respect to the Preferred
Stock, an amount described in the Prospectus Supplement relating to such series
of Preferred Stock. If, in any case of any such liquidation, dissolution or
winding up of the Company, the assets of the Company or the proceeds thereof
shall be insufficient to pay in full the amounts payable with respect to shares
of each series of Preferred Stock, and any other shares of stock of the Company
ranking as to any such distribution on a parity therewith, the holders of
shares of such series of Preferred Stock and of such other shares will share
ratably in any such distribution of assets of the Company in proportion to the
full respective preferential amounts to which they are entitled. After payment
to the holders of shares of such series of Preferred Stock of the full prefer-
ential amounts to which they are entitled, the holders of shares of such series
of Preferred Stock will not be entitled to any further participation in any
distribution of assets by the Company, unless otherwise provided in the Pro-
spectus Supplement. A consolidation or merger of the Company with one or more
corporations shall not be deemed to be a liquidation, dissolution or winding up
of the Company.
The terms, if any, on which shares of any series of Preferred Stock are con-
vertible into or exchangeable for Debt Securities or Common Stock will be set
forth in the Prospectus Supplement relating thereto. Such terms may include
provisions for conversion or exchange, either mandatory, at the option of the
holder, or at the option of the Company, in which the number of shares of Com-
mon Stock to be received by the holders of Preferred Stock would be calculated
according to the market price of Common Stock as of a time stated in the Pro-
spectus Supplement.
DESCRIPTION OF COMMON STOCK
The following description of the Common Stock sets forth certain general terms
and provisions of the Common Stock to which any Prospectus Supplement may re-
late, including a Prospectus Supplement providing that Common Stock will be is-
suable in conversion of or exchange for Debt Securities or Preferred Stock is-
sued by the Company. The statements below describing the Common Stock are in
general terms and are in all respects subject to and qualified in their en-
tirety by reference to the applicable provisions of the Company's Certificate
of Incorporation and By-laws.
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General
The Company is currently authorized to issue 150,000,000 shares of Common Stock
with a par value of $1.25 per share. As of December 31, 1993, there were out-
standing 48,436,565 shares (net of shares held as Treasury Stock) of the
Company's Common Stock. At such date, there were an additional 416,350 shares
reserved for issuance under the Company's Comprehensive Management Incentive
Plan as stock bonuses and other awards; 352,670 shares reserved for issuance
under the Company's Dividend Reinvestment Plan; 162,761 shares reserved for is-
suance upon the conversion of the Company's Series A Preferred Stock, and
2,532,599 shares reserved for issuance upon exercise of outstanding stock op-
tions.
The Company's Common Stock has no pre-emptive or conversion rights.
The Company's Common Stock is not subject to redemption by the Company, and
there is no restriction on the repurchase by the Company of shares of the
Company's Common Stock except for certain regulatory limits.
Voting
The holders of the Company's 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
Dividends will be determined by the Company's Board of Directors in light of
circumstances existing at the time, including the earnings and financial condi-
tion of the Company, and there is no assurance that dividends will continue to
be paid at current levels. No material restrictions have been imposed on the
Company's ability to pay dividends from its earned surplus by bank regulations
or applicable law. As of December 31, 1993, approximately $659.92 million could
be applied to dividend payments to its shareholders and certain other payments.
Payment of dividends on the Company's Common Stock is also subject to the prior
rights of the Company's outstanding Preferred Stock.
Rights Plan
As of August 28, 1989, the Company adopted a Shareholder Rights Agreement (the
"Plan") and the Board of Directors of the Company on that date (a) declared a
dividend of one "Right" for each share of the Company's 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 the Company's 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
the Company's shares by persons not then holding such amounts. Each Right enti-
tles the registered holder to purchase from the Company 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 the
Company's 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 Company's 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 ad-
ditional shares of the Company's Common Stock. The Rights will expire at the
close of business on August 28, 1999, unless earlier redeemed by the Company,
which may be done at $0.01 per Right, in accordance with the terms of the Plan.
The Plan is designed to protect the Company's stockholders' interests in the
event of an unsolicited attempt to acquire the Company, including a gradual ac-
cumulation of shares in the open market. The Company 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 the Company's Board of Directors'
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<PAGE>
ability to represent the Company's stockholders fully. Management believes that
the Rights should also deter any attempt by a controlling stockholder to take
advantage of the Company through self-dealing transactions. The Plan is not in-
tended to prevent a takeover of the Company. Issuing the Rights has no dilutive
effect, does not affect reported earnings per share, and does not change the
way in which the Company's shares are traded. However, the exercise of Rights
by some but not all of the Company'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.
Supermajority Vote Requirement
The Company's Certificate of Incorporation provides that, in general, an affir-
mative vote of not less than 80% of the outstanding shares of the Company's
Common Stock is required to approve or authorize certain major corporate trans-
actions involving the Company and holders of more than 15% of the Company's
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 ap-
proved in advance by a majority of the Board of Directors, or where holders of
the Company's Common Stock receive a price per share that satisfies the fair-
ness criteria set forth in the Certificate of Incorporation.
SECTION 203 OF THE DELAWARE GENERAL CORPORATION LAW
Section 203 ("Section 203") of the Delaware General Corporation Law (the
"DGCL") applies to Delaware corporations with a class of voting stock listed on
a national securities exchange, authorized for quotation on an inter-dealer
quotation system or held of record by 2,000 or more persons. In general, Sec-
tion 203 prevents an "interested stockholder" (defined generally as any person
owning, or who is an affiliate or associate of the corporation and has owned in
the preceding three years, 15% or more of a corporation's outstanding voting
stock and the affiliates and associates of such person) from engaging in a
"business combination" (as defined) with a Delaware corporation for three years
following the date such person became an interested stockholder, unless (i) be-
fore such person became an interested stockholder, the board of directors of
the corporation approved either the business combination or the transaction in
which the interested stockholder became an interested stockholder; (ii) upon
consummation of the transaction that resulted in the stockholder becoming an
interested stockholder, the interested stockholder owned at least 85% of the
voting stock of the corporation outstanding at the time the transaction com-
menced (excluding stock held by directors who are also officers of the corpora-
tion and by employee stock plans that do not provide employees with the right
to determine confidentially whether shares held subject to the plan will be
tendered in a tender or exchange offer); or (iii) on or subsequent to the date
such person became an interested stockholder, the business combination is ap-
proved by the board of directors of the corporation and authorized at a meeting
of stockholders by the affirmative vote of the holders of two-thirds of the
outstanding voting stock of the corporation not owned by the interested stock-
holder. Under Section 203, the restrictions described above also do not apply
to certain business combinations proposed by an interested stockholder follow-
ing the announcement or notification of one of certain extraordinary transac-
tions involving the corporation and a person who had not been an interested
stockholder during the previous three years or who became an interested stock-
holder with the approval of a majority of the corporation's directors.
Section 203 could have the effect of delaying, deferring or preventing a change
of control of the Company.
LIMITATION OF DIRECTORS' LIABILITY
The DGCL authorizes corporations to limit or eliminate the personal liability
of directors, to the corporation and its stockholders, for monetary damages in
connection with the breach of a director's fiduciary duty of care. The duty of
care requires that, when acting on behalf of the corporation, directors must
exercise an informed business judgment based on all material information rea-
sonably available to them. Absent the limitation authorized by the Delaware
statute, directors could be accountable to corporations and their stockholders
for monetary damages for conduct that does not satisfy such duty of care. Al-
though the statute does not change a
22
<PAGE>
director's duty of care, it enables corporations to limit available relief to
equitable remedies such as injunction or rescission. The Company's Certificate
of Incorporation limits the liability of the Company's directors to the Com-
pany or its stockholders to the fullest extent permitted by the Delaware stat-
ute as in effect from time to time. Specifically, directors of the Company
will not be personally liable for monetary damages for breach of a director's
fiduciary duty as a director, except for liability (i) for any breach of the
director's duty of loyalty to the Company or its stockholders, (ii) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) for unlawful payments of dividends or unlawful
stock repurchases or redemptions as provided in Section 174 of the DGCL or
(iv) for any transaction from which the director derived an improper personal
benefit.
The inclusion of this provision in the Certificate of Incorporation may have
the effect of reducing the likelihood of derivative litigation against direc-
tors and may discourage or deter stockholders or management from bringing a
lawsuit against directors for breach of their duty of care, even though such
an action, if successful, might otherwise have benefitted the Company and its
stockholders. This provision does not affect a director's responsibilities un-
der certain other laws such as the federal securities laws or state or federal
environmental laws.
OFFICER AND DIRECTOR INDEMNIFICATION
The Company's Bylaws require indemnification of the Company's directors and
executive officers to the full extent permitted by the DGCL, except in connec-
tion with an action initiated by such officer or director or in an action
against the Company, its directors, officers, employees or agents, unless (i)
such indemnification is expressly required by law, (ii) the proceeding in
question was authorized by the Board of Directors or (iii) such indemnifica-
tion is otherwise authorized by the DGCL. The Company's Bylaws provide that
the Company shall have the power, but shall not be required, to indemnify its
other officers, employees and agents as set forth in the DGCL.
The Company provides liability insurance for its officers and directors for
certain losses arising from claims or charges which may be made against them
while acting in their capacities as directors or officers of the Company.
DESCRIPTION OF COMMON STOCK WARRANTS
The Company may issue Common Stock Warrants for the purchase of a particular
series of Common Stock. The Common Stock Warrants are to be issued under war-
rant agreements (each a "Common Stock Warrant Agreement") to be entered into
between the Company and First Security Bank, Utah, N.A., as warrant agent (the
"Common Stock Warrant Agent"), all as set forth in the Prospectus Supplement
relating to the particular issue of Common Stock Warrants (the "Offered Common
Stock Warrants"). A copy of the Common Stock Warrant Agreement, including the
form of common stock warrant certificate (the "Common Stock Warrant Certifi-
cate") representing the Common Stock Warrants, substantially in the form in
which it will be executed, is filed as an exhibit to the Registration State-
ment. The following summaries of certain provisions of the Common Stock War-
rant Agreement and Common Stock Warrant Certificates do not purport to be com-
plete and are subject to, and are qualified in their entirety by reference to,
all the provisions of the Common Stock Warrant Agreement and the Common Stock
Warrant Certificates, respectively, including the definitions therein of cer-
tain terms.
GENERAL
If Common Stock Warrants are offered, the Prospectus Supplement will describe
the terms of the Offered Common Stock Warrants, and the Common Stock Warrant
Agreement relating to the Offered Common Stock Warrants and the Common Stock
Warrant Certificates representing the Offered Common Stock Warrants including
the following:
(i) the number of shares of Common Stock purchasable upon exercise of Com-
mon Stock Warrants and the price at which such number of shares of Common
Stock may be purchased upon such exercise;
(ii) the date on which the right to exercise such Common Stock Warrants
shall commence and the date (the "Expiration Date") on which such right
shall expire;
23
<PAGE>
(iii) United States Federal income tax consequences applicable to such Com-
mon Stock Warrants; and
(iv) any other terms of such Common Stock Warrants.
Common Stock Warrants for the purchase of Common Stock will be offered and ex-
ercisable for U.S. dollars only. Common Stock Warrants will be issued in regis-
tered form only. The exercise price for Common Stock Warrants will be subject
to adjustment in accordance with the applicable Prospectus Supplement.
EXERCISE OF COMMON STOCK WARRANTS
Each Common Stock Warrant will entitle the holder to purchase for cash such
number of shares (as applicable) of Common Stock, at such exercise price as
shall in each case be set forth in, or calculable from, the Prospectus Supple-
ment relating to the Offered Common Stock Warrants, which exercise price may be
subject to adjustment upon the occurrence of certain events as set forth in
such Prospectus Supplement. Offered Common Stock Warrants may be exercised at
any time up to the close of business of the Expiration Date set forth in the
Prospectus Supplement relating to the Offered Common Stock Warrants. After the
close of business on the Expiration Date (or such later date to which such Ex-
piration Date may be extended by the Company), unexercised Common Stock War-
rants will become void. The place or places where, and the manner in which,
Common Stock Warrants may be exercised shall be specified in the Prospectus
Supplement relating to such Common Stock Warrants.
Prior to the exercise of any Common Stock Warrants to purchase Common Stock,
holders of such Common Stock Warrants will not have any rights of holders of
the Common Stock purchasable upon such exercise, including the right to receive
payments of dividends, if any, on the Common Stock purchasable upon such exer-
cise or to exercise any applicable right to vote.
PLAN OF DISTRIBUTION
The Company may sell the Securities (i) through agents, (ii) through underwrit-
ers, (iii) through dealers and (iv) directly to purchasers.
Securities may be offered and sold through agents designated by the Company
from time to time. Any such agent involved in the offer or sale of the Securi-
ties will be named, and any commissions payable by the Company to such agent
will be set forth, in the Prospectus Supplement. Unless otherwise indicated in
the Prospectus Supplement, any such agent will be acting on a best efforts ba-
sis for the period of its appointment. Any such agent may be deemed to be an
underwriter, as that term is defined in the Securities Act of 1933, as amended,
of the Securities so offered and sold. Agents may be entitled under agreements
which may be entered into with the Company to indemnification by the Company
against certain liabilities, including liabilities under the Securities Act of
1933, as amended.
If an underwriter or underwriters are utilized in the sale of the Offered Secu-
rities, the Company will execute an underwriting agreement with such under-
writer or underwriters at the time an agreement for such sale is reached, and
the names of the specific managing underwriter or underwriters, as well as any
other underwriters, and the terms of the transaction, including compensation of
the underwriters and dealers, if any, will be set forth in the Prospectus Sup-
plement which will be used by the underwriters to make resales of the Securi-
ties. Underwriters will acquire Securities for their own account and may resell
such Securities from time to time in one or more transactions, including nego-
tiated transactions, at fixed public offering prices or at varying prices de-
termined at the time of sale. Securities may be offered to the public either
through underwriting syndicates represented by managing underwriters, or di-
rectly by the managing underwriters. The underwriters may be entitled, under
the relevant underwriting agreement, to indemnification by the Company against
certain liabilities, including liabilities under the Securities Act of 1933, as
amended. If an underwriter is utilized in the sale of the Securities, the un-
derwriting agreement will provide that the obligations of the underwriter is
subject to certain conditions precedent and that the underwriter with respect
to a sale of Securities will be obligated to purchase all such Securities if
any are purchased.
24
<PAGE>
If a dealer is utilized in the sale of the Securities, the Company will sell
such Securities to the dealer, as principal. The dealer may then resell such
Securities to the public at varying prices to be determined by such dealer at
the time of resale. Any such dealer may be deemed to be an underwriter, as such
term is defined in the Securities Act of 1933, as amended, of the Securities so
offered and sold. Dealers may be entitled, under agreements which may be en-
tered into with the Company, to indemnification by the Company against certain
liabilities, including liabilities under the Securities Act of 1933, as amend-
ed. The name of the dealer and the terms of the transaction will be set forth
in the Prospectus Supplement relating thereto.
Offers to purchase Securities may be solicited directly by the Company and
sales thereof may be made by the Company directly to institutional investors or
others, who may be deemed to be underwriters within the meaning of the Securi-
ties Act of 1933, as amended, with respect to any sale thereof. The terms of
any such sales will be described in the Prospectus Supplement relating thereto.
If so indicated in the Prospectus Supplement, the Company will authorize agents
and underwriters to solicit offers by certain institutions to purchase Securi-
ties from the Company at the public offering price set forth in the Prospectus
Supplement pursuant to Delayed Delivery Contracts ("Contracts") providing for
payment and delivery on the date stated in the Prospectus Supplement. Each Con-
tract will be for an amount not less than, and, unless the Company otherwise
agrees, the aggregate principal amount of Securities sold pursuant to Contracts
shall be not less nor more than, the respective amounts stated in the Prospec-
tus Supplement. Institutions with whom Contracts, when authorized, may be made
include commercial and savings banks, insurance companies, pension funds, in-
vestment companies, educational and charitable institutions and other institu-
tions but shall in all cases be subject to the approval of the Company.
Contracts will not be subject to any conditions except that any related sale of
Securities to underwriters shall have occurred and the purchase by an institu-
tion of the Securities covered by its Contract shall not at the time of deliv-
ery be prohibited under the laws of any jurisdiction in the United States to
which such institution is subject. A commission indicated in the Prospectus
Supplement will be paid to underwriters and agents soliciting purchases of Of-
fered Securities pursuant to Contracts accepted by the Company.
The place and time of delivery of the Securities are set forth in the accompa-
nying Prospectus Supplement.
The offer and sale of the Securities by any affiliate of the Company will com-
ply with the requirements of Schedule E of the By-laws of the National Associa-
tion of Securities Dealers, Inc. regarding underwriting of securities of an af-
filiate.
Certain of the underwriters or agents and their associates may be customers of,
engage in transactions with, and perform services for, the Company in the ordi-
nary course of business.
EXPERTS
The consolidated financial statements as of December 31, 1994 and 1993, and for
each of the three years in the period ended December 31, 1994 incorporated in
this Prospectus by reference from the Company's Annual Report on Form 10-K have
been audited by Deloitte & Touche LLP, independent auditors, as stated in their
report, which is incorporated herein by reference, and have been so incorpo-
rated in reliance upon the report of such firm given upon their authority as
experts in accounting and auditing.
VALIDITY OF SECURITIES
The validity of the Securities offered hereby will be passed upon for the Com-
pany by Ray, Quinney & Nebeker, 79 South Main Street, Salt Lake City, Utah
84111; and for any underwriters by Sullivan & Cromwell, 444 South Flower
Street, Los Angeles, California 90071. Alonzo W. Watson a shareholder and di-
rector of Ray, Quinney & Nebeker, is also an officer of the Company. As of De-
cember 31, 1994, Ray, Quinney & Nebeker attorneys, together with their immedi-
ate families, beneficially owned less than 5% of the then outstanding Common
Stock of the Company. From time to time, Sullivan & Cromwell has performed le-
gal services for the Company.
25
<PAGE>
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NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFOR-
MATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS SUPPLE-
MENT OR THE PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTA-
TION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY
UNDERWRITERS. THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS DO NOT CONSTITUTE
AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES
OFFERED HEREBY IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO
MAKE SUCH OFFER IN SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS PROSPECTUS
SUPPLEMENT OR THE PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIR-
CUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION HEREIN IS CORRECT AS
OF ANY TIME SUBSEQUENT TO THE DATE HEREOF OR THAT THERE HAS BEEN NO CHANGE IN
THE AFFAIRS OF THE COMPANY SINCE SUCH DATE.
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
PROSPECTUS SUPPLEMENT
<S> <C>
Recent Developments........................................................ S-2
Recent Operating Results................................................... S-2
Use of Proceeds............................................................ S-4
Consolidated Summary Financial Data........................................ S-5
Capitalization............................................................. S-7
Description of Subordinated Notes.......................................... S-8
Underwriting............................................................... S-10
Validity of Subordinated Notes............................................. S-10
</TABLE>
PROSPECTUS
<TABLE>
<S> <C>
Available Information....................................................... 2
Incorporation of Certain Documents by Reference............................. 2
First Security Corporation.................................................. 3
Use of Proceeds............................................................. 9
Description of Debt Securities.............................................. 9
Description of Preferred Stock.............................................. 17
Description of Common Stock................................................. 20
Description of Common Stock Warrants........................................ 23
Plan of Distribution........................................................ 24
Experts..................................................................... 25
Validity of the Securities.................................................. 25
</TABLE>
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[LOGO OF SECURITY CORPORATION]
$125,000,000
7% Subordinated Notes
due July 15, 2005
PROSPECTUS SUPPLEMENT
CS First Boston
J.P. Morgan Securities Inc.
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