<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A - AMENDMENT NO. 2
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): NOVEMBER 14, 1995
-----------------
FIRST BANK SYSTEM, INC.
-----------------------
(Exact name of registrant as specified in its charter)
DELAWARE 1-6880 41-0255900
-------- ------ ----------
(State or other jurisdiction (Commission (I.R.S. Employer
of Incorporation) File Number) Identification No.)
601 SECOND AVENUE SOUTH, MINNEAPOLIS, MINNESOTA 55402
- ----------------------------------------------- -----
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 612-973-1111
------------
NOT APPLICABLE
--------------
(Former name or former address, if changed since last report)
<PAGE>
The undersigned registrant hereby amends its Current Report on Form 8-K filed
on August 18, 1995 to update the financial statements of FirsTier Financial,
Inc. to include results for the quarter ended September 30, 1995.
Item 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(a) UNAUDITED FINANCIAL STATEMENTS OF FIRSTIER FINANCIAL, INC.
Consolidated Condensed Balance Sheets -- September 30, 1995
and December 31, 1994 (unaudited)
Consolidated Statements of Income -- Nine months ended
September 30, 1995 and 1994 (unaudited)
Consolidated Statements of Retained Earnings -- Nine months
ended September 30, 1995 and 1994 (unaudited)
Consolidated Statements of Cash Flows -- Nine months ended
September 30, 1995 and 1994 (unaudited)
Notes to Consolidated Financial Statements -- September 30,
1995 (unaudited)
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
FIRST BANK SYSTEM, INC.
By: /s/ David J. Parrin
--------------------
David J. Parrin
Senior Vice President & Controller
DATE: November 14, 1995
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Under Section 13 or 15 (d)
of the Securities Exchange Act of 1934
For Quarter Ended September 30, 1995 Commission File No. 0-4515
FIRSTIER FINANCIAL, INC.
---------------------------------------------------------
(Exact name of registrant as specified in its charter)
Nebraska 47-0523055
------------------------------ ---------------------------------------
(state or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or
organization)
1700 Farnam Street Omaha, Nebraska 68102-2183
---------------------------------------------------------
(address of principal executive offices)
402-348-6000
--------------------
(Telephone Number)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15 (d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for
at least the past 90 days.
YES X NO
----- -----
Number of common shares outstanding as of November 7, 1995:
Common Stock, $5.00 par value: 18,522,507 shares outstanding.
<PAGE>
FIRSTIER FINANCIAL, INC.
INDEX
PART I. FINANCIAL INFORMATION Page No.
--------
Item 1. Financial Statements
Consolidated Condensed Balance Sheets -
September 30, 1995 and December 31, 1994........... 1
Consolidated Statements of Income - Three and nine
months ended September 30, 1995 and 1994........... *
Consolidated Statements of Retained Earnings - Nine
months ended September 30, 1995 and 1994........... *
Consolidated Statements of Cash Flows - Nine
months ended September 30, 1995 and 1994........... 2
Notes to Consolidated Financial Statements........... 3-4
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations. 5-9
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K............ 10
Signatures........................................... 10
* Incorporated in this quarterly report by reference to
FirsTier Financial, Inc.'s September 30, 1995 Quarterly
Report to Stockholders (pages 4 and 6) which is attached
as an Exhibit to this quarterly report.
<PAGE>
FIRSTIER FINANCIAL, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(Dollars in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
September 30, December 31,
1995 1994
------------ ------------
<S> <C> <C>
ASSETS
Cash and due from banks............................................................... $208,242 251,756
Federal funds sold & securities purchased under resale agreements..................... 97,050 119,845
Securities available for sale (amortized cost $255,241 in 1995 and $250,811 in 1994).. 261,411 245,267
Investment securities (market value $755,303 in 1995 and $660,068 in 1994)............ 740,843 692,457
Loans and leases...................................................................... 2,191,140 2,149,268
Less allowance for loan & lease losses............................................... 52,064 53,250
------------ ------------
Loans and leases, net.............................................................. 2,139,076 2,096,018
------------ ------------
Premises and equipment, net........................................................... 50,435 49,381
Accrued interest receivable........................................................... 35,082 29,700
Other assets.......................................................................... 53,283 55,563
------------ ------------
Total assets....................................................................... $3,585,422 3,539,987
------------ ------------
------------ ------------
LIABILITIES
Demand, non-interest bearing.......................................................... $470,703 560,025
Savings and interest checking......................................................... 867,832 874,647
Time.................................................................................. 1,437,124 1,380,154
------------ ------------
Total deposits..................................................................... 2,775,659 2,814,826
Short-term borrowings................................................................. 205,543 170,090
Federal Home Loan Bank borrowings..................................................... 156,500 150,000
Other liabilities..................................................................... 59,934 50,646
Long-term debt........................................................................ 11,773 12,193
------------ ------------
Total liabilities.................................................................. 3,209,409 3,197,755
------------ ------------
STOCKHOLDERS' EQUITY
Preferred stock-$30 par value; authorized 2,000,000 shares............................ - -
Common stock-$5 par value; authorized 40,000,000 shares; issued and outstanding:
18,822,202 shares in 1995 and 18,927,195 shares in 1994............................. 94,111 94,073
Surplus............................................................................... 5,432 10,338
Retained earnings..................................................................... 282,621 255,861
Net unrealized securities gains (losses).............................................. 3,824 (3,583)
------------ ------------
385,988 356,689
Less treasury stock, at cost 300,820 shares in 1995 and 455,050 shares in 1994........ 9,975 14,457
------------ ------------
Total stockholders' equity......................................................... 376,013 342,232
------------ ------------
Total liabilities & stockholders' equity........................................... $3,585,422 3,539,987
------------ ------------
------------ ------------
</TABLE>
See accompanying notes to consolidated financial statements
1
<PAGE>
FIRSTIER FINANCIAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994
($ in thousands)
(Unaudited)
<TABLE>
<CAPTION>
1995 1994
-------- ---------
<S> <C> <C>
Net cash provided by operating activities
Income from operations................................... $42,645 41,444
Adjustments to reconcile net income to
net cash provided by operations
Provision for loan and lease losses.................. 807 (1,220)
Depreciation and amortization........................ 5,931 7,020
Net increase in interest receivable.................. (5,034) (5,872)
Proceeds from sales of loans......................... 54,242 41,695
Net (increase) decrease in other assets.............. 528 (693)
Net increase in other liabilities.................... 9,204 3,511
Net gain on sale of securities available for sale.... (1) 3,721
Other, net........................................... (84) (12)
-------- ---------
Net cash provided by operations.................. 108,238 89,594
Cash flows from investing activities
Net cash received on acquisition..................... 1,530 -
Proceeds from sales of securities available for sale. 13,382 17,116
Proceeds from maturities of investment securities.... 37,064 138,499
Proceeds from maturities of securities available for
sale............................................... 78,357 27,105
Purchases of investment securities................... (56,694) (75,235)
Purchases of securities available for sale........... (112,969) (70,654)
Net increase in loans and leases..................... (74,870) (143,039)
Proceeds from sale of premises and equipment......... 450 62
Purchases of premises and equipment.................. (5,112) (3,802)
Purchases of mortgage servicing rights............... (843) (232)
Other, net........................................... 12 557
-------- ---------
Net cash used by investing activities............ (119,693) (109,623)
Cash flows from financing activities
Net increase in time deposits........................ 28,225 52,421
Net decrease in demand deposits and savings accounts. (104,255) (148,781)
Net increase in short-term borrowings................ 34,762 104,555
Net increase in Federal Home Loan Bank borrowings.... 6,500 89,690
Principal payments on long-term debt................. (420) (383)
Payment of cash dividends............................ (15,886) (13,382)
Repurchases of common stock.......................... (4,684) (9,565)
Proceeds from exercises of stock options............. 1,292 474
Other, net........................................... (388) -
-------- ---------
Net cash provided (used) by financing activities. (54,854) 75,029
Net (decrease) increase in cash and cash equivalents....... (66,309) 55,000
Cash and cash equivalents at beginning of period........... 371,601 331,848
-------- ---------
Cash and cash equivalents at end of period................. $305,292 386,848
-------- ---------
-------- ---------
</TABLE>
See accompanying notes to consolidated financial statements
2
<PAGE>
FIRSTIER FINANCIAL, INC.
PART I. FINANCIAL INFORMATION
ITEM 1. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. The accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with generally accepted accounting
principles for interim financial information and with the instructions to
Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include
all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the opinion of
management, all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been included.
2. Operating results for the three and nine month
periods ended September 30, 1995, are not necessarily
indicative of the results that may be expected for the year
ended December 31, 1995. For further information, refer to
the consolidated financial statements and footnotes thereto
included in the Company's annual report on Form 10-K for the
year ended December 31, 1994.
3. Income per share computations are based on average
shares of common stock outstanding, including common
stock equivalents, which total 18,749,481 and 18,880,955,
respectively, for the three months ended September 30, 1995
and 1994, and 18,694,966 and 18,977,579, respectively, for the
nine months ended September 30, 1995 and 1994.
4. See notes to consolidated financial statements includedon
page 6 of FirsTier Financial, Inc.'s September 30, 1995
Quarterly Report to Stockholders which is attached as an
Exhibit to this quarterly report.
5. For purposes of the Statement of Cash Flows, FirsTier
defines "Cash and due from banks" and "Federal funds sold
and securities purchased under resale agreements" as its
cash and cash equivalents. FirsTier paid $89.22 million
and $68.66 million in interest on deposits and
other borrowings, and $13.68 million and $15.09
million for income taxes for the nine months ended
September 30, 1995 and 1994, respectively.
6. Effective January 1, 1995, FirsTier adopted SFAS Number
114, "Accounting by Creditors for Impairment of a Loan"
and SFAS Number 118, "Accounting by Creditors for
Impairment of a Loan-Income Recognition and Disclosures."
These Statements, effective for fiscal years beginning
after December 15, 1994, address the accounting for a
loan when it is probable that all principal and
interest amounts due will not be collected in accordance
with its contractual terms. FirsTier generally identifies
nonaccrual loans as "impaired loans." Certain loans,
such as loans carried at the lower of cost or market or
3
<PAGE>
FIRSTIER FINANCIAL, INC.
PART I. FINANCIAL INFORMATION
ITEM 1. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
smaller balance homogeneous loans (e.g., credit card,
installment loans) are exempt from SFAS Number 114 and
118 provisions. The adoption of SFAS Number 114 and 118
does not materially impact required Industry Guide 3
credit risk tables disclosed in FirsTier's Form 10-K for
the year ended December 31, 1994.
FirsTier continually identifies impaired loans and
measures quarterly the extent to which such loans are
impaired in accordance with regulatory guidelines. This
analysis involves an assessment of the business
environment in FirsTier's lending market, the amount of
concentrations in industries along with borrowers'
employment, historical losses charged to the allowance for
loan loss, the level of vulnerability to business cycles,
as well as other factors.
Loans having a significant recorded investment are
measured on an individual basis while loans not having a
significant recorded investment are grouped and
measured on a pool basis. Generally, FirsTier's
"impaired loans" are measured based on the loans'
observable market price, the fair value of the
collateral (if the loan is collateral dependent) less
estimated costs to sell, or the present value of expected
future cash flows discounted at the loans' effective
interest rate, if the cash flows can be reasonably
projected.
As of September 30, 1995, the recorded investment in loans
considered impaired under SFAS Number 114 was $9.1
million, with a related allowance for credit losses of
$2.8 million. All loans designated as impaired have been
allocated an allowance for credit loss.
FirsTier retained its prior method of recognizing
interest and applying cash payments received with respect
to impaired loans. The average recorded investment in
impaired loans for the quarter ended September 30, 1995,
was approximately $8.6 million. During the first
nine months of 1995, FirsTier recognized interest
income of $132,000 associated with impaired loans.
4
<PAGE>
FIRSTIER FINANCIAL, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following is management's discussion and analysis of certain
significant factors which have affected the Registrant's financial
condition and results of operations during the periods included
in the consolidated financial statements presented with this
filing.
RESULTS OF OPERATIONS
Net income for the third quarter of 1995 was $15,009,000 or $.80
per share, compared to net income of $13,872,000 or $.73 per
share for the same period in 1994. Net income for the nine
months ended September 30, 1995 was $42,645,000 or $2.28 per
share, compared to net income of $41,444,000 or $2.18 per share
for the same period in 1994.
The annualized return on average assets for the three months
ended September 30 was 1.66% in 1995 compared to 1.60% in 1994.
The annualized return on average equity for the three months
ended September 30 was 16.13% in 1995 compared to 16.18% in 1994.
The schedule on page 6, Average Balances/Yields and Rates,
shows that FirsTier's net interest income, on a fully taxable
equivalent basis for the third quarter of 1995, was
$36,040,000, a .5% increase from the $35,863,000 recorded for the
same period in 1994. The net interest margin of 4.37% in the
third quarter of 1995 was down from the 4.53% net interest margin
recorded in the third quarter of 1994. This decrease was mainly
attributable to a compressed net interest rate spread but was
partially offset by increased net earning assets which were up
4.2% from the third quarter of 1994. Included in net interest
income is $424,100 of expense from interest rate swaps which
decreased the net interest margin for the quarter by five basis
points. Income from interest rate swaps for the quarter ended
September 30, 1994 was $143,000 which added two basis points to
that quarter's net interest margin.
A provision of $269,000 was recorded in the third quarter of1995
compared to a provision of $370,000 for the same period in 1994.
The provision recorded was based on FirsTier's on-going analysis
of the adequacy of the allowance for loan and lease losses. The
allowance for loan and lease losses as a percent of loans and
leases as of September 30, 1995, was 2.38% compared to 2.59% as
of September 30, 1994. Net charge-offs of loan and lease
losses for the third quarter were $1,207,000 compared to net
recoveries of $252,000 for the same period in 1994.
5
<PAGE>
FIRSTIER FINANCIAL, INC.
AVERAGE BALANCES/YIELDS AND RATES
(Dollars in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED THREE MONTHS ENDED
SEPTEMBER 30, 1995 SEPTEMBER 30, 1994
INTEREST AVERAGE INTEREST AVERAGE
AVERAGE INCOME/ YIELDS/ AVERAGE INCOME/ YIELDS/
BALANCES EXPENSE RATES BALANCES EXPENSE RATES
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Securities....................................... $995,681 18,569 7.40% $1,008,801 18,366 7.22%
Federal funds sold and securities
purchased under resale agreements.............. 103,742 1,549 5.93% 110,028 1,316 4.75%
Loans and leases, gross.......................... 2,175,473 48,404 8.83% 2,024,936 41,246 8.08%
--------- ------- ---------- -------
Total earning assets........................... 3,274,896 68,522 8.30% 3,143,765 60,928 7.69%
Other nonearning assets.......................... 308,739 - - 313,246 - -
--------- ------- ---------- -------
Total assets.................................$3,583,635 68,522 - $3,457,011 60,928 -
========== ------- ========== -------
LIABILITIES & STOCKHOLDERS' EQUITY
Interest-bearing deposits
Savings and interest checking.................. $883,124 5,894 2.65% $886,716 4,817 2.16%
Time deposits.................................. 1,443,511 21,643 5.95% 1,302,750 15,846 4.83%
--------- ------- ---------- -------
Total interest-bearing deposits.............. 2,326,635 27,537 4.70% 2,189,466 20,663 3.74%
Short-term borrowings............................ 172,450 2,272 5.23% 208,701 2,168 4.12%
Federal Home Loan Bank borrowings................ 156,500 2,381 6.04% 158,788 1,929 4.82%
Long-term debt................................... 2,027 55 10.84% 2,302 62 10.62%
Capitalized leases............................... 9,827 237 9.56% 10,096 243 9.55%
--------- ------- ---------- -------
Total interest-bearing funds................... 2,667,439 32,482 4.83% 2,569,353 25,065 3.87%
Demand deposits.................................. 493,542 - - 502,683 - -
Other noninterest-bearing funds.................. 53,578 - - 44,746 - -
Stockholders' equity............................. 369,076 - - 340,229 - -
--------- ------- ---------- -------
Total liabilities and equity.................$3,583,635 32,482 - $3,457,011 25,065 -
Net interest margin on a tax ========== ------- ========== -------
equivalent basis........................... $36,040 4.37% $35,863 4.53%
======= ===== ======= =====
<CAPTION>
NINE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, 1995 SEPTEMBER 30, 1994
INTEREST AVERAGE INTEREST AVERAGE
AVERAGE INCOME/ YIELDS/ AVERAGE INCOME/ YIELDS/
BALANCES EXPENSE RATES BALANCES EXPENSE RATES
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Securities....................................... $984,086 54,974 7.47% $1,038,817 56,344 7.25%
Federal funds sold and securities
purchased under resale agreements.............. 113,724 5,094 5.99% 93,647 2,882 4.11%
Loans and leases, gross.......................... 2,172,554 143,519 8.83% 1,983,521 119,421 8.05%
---------- ------- ---------- -------
Total earning assets........................... 3,270,364 203,587 8.32% 3,115,985 178,647 7.67%
Other nonearning assets.......................... 308,477 - - 310,220 - -
---------- ------- ---------- -------
Total assets.................................$3,578,841 203,587 - $3,426,205 178,647 -
========== ------- ========== -------
LIABILITIES & STOCKHOLDERS' EQUITY
Interest-bearing deposits
Savings and interest checking.................. $868,061 16,326 2.51% $910,682 14,354 2.11%
Time deposits.................................. 1,434,787 62,022 5.78% 1,293,140 45,063 4.66%
---------- ------- ---------- -------
Total interest-bearing deposits.............. 2,302,848 78,348 4.55% 2,203,822 59,417 3.60%
Short-term borrowings............................ 204,276 8,177 5.35% 210,749 5,524 3.50%
Federal Home Loan Bank borrowings................ 153,719 7,102 6.18% 112,435 3,763 4.47%
Long-term debt................................... 2,098 171 10.90% 2,369 189 10.67%
Capitalized leases............................... 9,896 711 9.60% 10,159 729 9.59%
---------- ------- ---------- -------
Total interest-bearing funds................... 2,672,837 94,509 4.73% 2,539,534 69,622 3.67%
Demand deposits.................................. 496,440 - - 504,011 - -
Other noninterest-bearing funds.................. 51,553 - - 45,515 - -
Stockholders' equity............................. 358,011 - - 337,145 - -
---------- ------- ---------- -------
Total liabilities and equity.................$3,578,841 94,509 - $3,426,205 69,622 -
Net interest margin on a tax ========= ------- ========== -------
equivalent basis........................... $109,078 4.46% $109,025 4.68%
======= ===== ======= =====
</TABLE>
Note: Income and rates are stated on a tax-equivalent basis assuming a
marginal tax rate of 35%.
6
<PAGE>
FIRSTIER FINANCIAL, INC.
Under-performing assets as a percent of total loans, leases,other
real estate owned and repossessed assets was .55% at September
30, 1995 compared to .71% at September 30, 1994. Non-accrual loans
as of September 30, 1995 totalled $9,053,000, down 18.4% from
the third quarter of 1994. Total under-performing assets at
September 30, 1995 total $12,117,000, which represents a
$1,300,000 or 12.0% increase from June 30, 1995 and a $2,400,000
or 16.5% decrease from September 30, 1994. Additional
information regarding the balance of non-accrual loans at
September 30, 1995, and related interest payment information is
provided on page 8.
Total non-interest income for the third quarter of 1995 was
$14,603,000 which is up $129,000, or .9% from the same period in
1994. The increase in non-interest income from the previous
year is mainly attributable to Service Charges on Deposits
Accounts which increased $550,000 or 14.4%.
Total non-interest expense of $26,827,000 for the quarter is down
$1,673,000, or 5.9%, from the same period in 1994. This
decrease is primarily due to a pretax credit of $1,500,000
received from the FDIC which represents a refund on a portion of
fees paid by FirsTier Banks in the second and third quarters of
1995.
As of September 30, 1995, FirsTier employed a staff of 1,711 FTE
which is up 171 FTE, or 11.1%, from the September 30, 1994
employment level. This increase is primarily due to the
acquisition of Cornerstone Bank Group in Iowa on January 3, 1995.
MATERIAL CHANGES IN FINANCIAL CONDITION
All companies included in the consolidated financial statements
are "financial" companies. Accordingly, average balances of
assets and liabilities are more representative of financial
condition than balances as of period-end. The schedule of
Average Balances/Yields and Rates on page 6 shows average
balances of earning assets and interest bearing liabilities for
the periods being reported. Because these average balances are
an integral part of the financial statements, all comments as to
significant volume changes refer to average balances unless
otherwise indicated.
Total assets of $3.58 billion for the third quarter of 1995 were
up 3.7% from the same period in 1994. Loans have increased
$150.5 million, or 7.4%. Average securities of $995.7
million, which included securities available for sale as of
September 30, 1995 of $261.4 million, decreased $13.1 million,
or 1.3% from 1994.
7
<PAGE>
FIRSTIER FINANCIAL, INC.
NONACCRUAL LOAN SUMMARY
SEPTEMBER 30, 1995
Generally, the accrual of income is discontinued when the full collection of
principal or interest is in doubt, or when the payment of principal or
interest has become contractually 90 days past due unless the obligation is
both well secured and in the process of collection. Nonaccrual loans and the
application of cash interest payments on those loans as of September 30, 1995
are as follows ($ in thousands):
<TABLE>
<CAPTION>
Cash interest payments applied as
Contractual ----------------------------------
Book balance balance Recovery of Reduction
at Sept. at Sept. 30 Interest partial of
1995 1995 income charge-offs principal
------------ ------------ -------- ----------- ---------
<S> <C> <C> <C> <C> <C>
Contractually past due with:
o substantial performance 215 237 1 0 5
o limited performance 1,285 2,019 12 0 30
o no performance 718 819 0 0 4
Contractually current, however,:
o payment in full of principal
or interest in doubt 6,006 11,640 115 0 393
o other 829 1,122 4 0 9
------ ------- ---- -- ----
Total $9,053 $15,837 $132 $0 $441
------ ------- ---- -- ----
------ ------- ---- -- ----
</TABLE>
8
<PAGE>
FIRSTIER FINANCIAL, INC.
Total deposits for the third quarter averaged $2.82 billion which
was up $128.0 million, or 4.8%, from the same period in 1994.
Time deposits have increased $140.8 million or 10.8% from the
third quarter of 1994 while demand deposits and savings and
interest checking have decreased $3.6 million and $9.1 million,
respectively, or .4% and 1.8%, respectively.
Net funds purchased of $68.7 million (the difference between
"short-term borrowings" and "federal funds sold and securities
purchased under resale agreements") decreased $30.0 million from
the average net purchased position in the third quarter of 1994.
Long-term debt as of September 30, 1995 of $11.9 million,
consisting of a mortgage loan by the Lincoln Bank and
capitalized leases of the Omaha Bank, decreased $544,000 from
September 30, 1994. The Parent Company had no borrowings as of
September 30, 1995.
LIQUIDITY AND CAPITAL RESOURCES
The maintenance of an adequate level of liquidity is necessary
to ensure that sufficient funds are available to meet customers'
loan demand and deposit withdrawals. Sources of liquidity
consist of maturities of securities recorded at amortized cost,
liquidation of securities held for sale, maturing loans, federal
funds sold and borrowings from the Federal Home Loan Bank.
Management also considers customer-related core deposits
and funds borrowed to be stable and reliable sources of
funding.
Liquidity is also important for the Parent Company. The Parent
Company's primary source of liquidity is dividends and
management fees from subsidiary banks. The Parent Company's
primary liquidity requirements are the payment of dividends and
expenses associated with management and consolidated services
provided to subsidiaries. Management believes the Parent
Company has adequate liquidity to meet its funding needs.
At September 30, 1995 stockholders' equity was $376.0 million
compared to $342.6 million at September 30, 1994, an increase
of $33.4 million or 9.7%. The Tier 1 Leverage ratios (tangible
equity capital divided by adjusted average assets) as of September
30, 1995 and September 30, 1994 were 10.06% and 9.71%,
respectively. FirsTier's risk based capital ratios as of
September 30, 1995 were 15.01% for Tier I Capital and 16.28% for
Total Capital.
9
<PAGE>
FIRSTIER FINANCIAL, INC.
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits -
(10) Material Contracts
(e)(iv) Amendment dated August 4, 1995 to
Executive Employment Agreement with
David A. Rismiller
(20) Quarterly Report to Stockholders for the
period ended September 30, 1995 - Part I
Exhibit.
(b) Reports on Form 8-K
On August 6, 1995, FirsTier filed a report on Form
8-K which disclosed details of an Agreement of
Merger and Consolidation of FirsTier Financial, Inc.
with and into First Bank System, Inc.
SIGNATURES
Pursuant to the requirement of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned thereunder duly authorized.
FIRSTIER FINANCIAL, INC.
Date: November 10, 1995 By:/s/ Aaron C. Hilkemann
------------------------------
Aaron C. Hilkemann
Vice President and Director of
Financial Operations
Date: November 10, 1995 By:/s/ Thomas B. Fischer
------------------------------
Thomas B. Fischer
Vice President, Secretary and
General Counsel
10
<PAGE>
EMPLOYMENT AGREEMENT
THIS AGREEMENT, made by and between FirsTier Financial, Inc., a Nebraska
corporation (the "Corporation"), and David A. Rismiller (the "Executive") dated
the fourth day of August, 1995.
WHEREAS, the Corporation has entered into an Agreement of Merger and
Consolidation (the "Merger Agreement") with First Bank System Inc. of even date
herewith;
WHEREAS, the Executive has served as Chairman, President and Chief
Executive Officer of the Corporation, and has gained significant and valuable
knowledge and experience with respect to the Corporation in such capacities; and
WHEREAS, the Executive and the Corporation have entered into an
Employment Agreement dated as of the 20th day of March, 1995 (the "Prior
Agreement"); and
WHEREAS, the Corporation wishes to provide for the continued
involvement of the Executive in the business of the Corporation following the
consummation of the Merger (as such term is defined in the Merger Agreement) and
the Executive desires to perform such services;
NOW, THEREFORE, in consideration of the foregoing, and of the mutual
provisions herein contained, the Executive and
<PAGE>
the Corporation agree with each other as follows:
1. EMPLOYMENT PERIOD. The Corporation hereby retains the Executive
for the period commencing on the Effective Date (as such term is defined in the
Merger Agreement) and ending on December 31, 1996 (the "Employment Period"),
during which time the Executive shall serve as Chairman and Chief Executive
Officer of First Bank Nebraska and shall be available to aid the Corporation in
the transition period following the acquisition of the Corporation with respect
to (a) general corporate and personnel organizational matters; (b) the retention
of employees and employee relations; (c) the retention of customers; and (d)
cost reduction and organizational efficiencies. During the Employment Period,
the Executive shall be an employee of the Corporation for all purposes,
including for purposes of the FirsTier Financial, Inc. Omnibus Executive Benefit
Plan (the "Omnibus Plan") as well as the Corporation's Restricted Stock Bonus
Plan, Discounted Nonqualified Stock Option Plan and Phantom Stock Unit Plan
(collectively, the "Stock Plans"). Except as specifically provided herein, this
Agreement shall not affect the Executive's rights under the Prior Agreement.
2. SALARY AND BENEFITS. In consideration of the services and duties
agreed to be rendered and performed by the Executive hereunder, the Corporation
hereby covenants and agrees to pay the Executive a monthly salary at the rate of
one-twelfth of three hundred fifty thousand dollars ($350,000). During the
<PAGE>
Employment Period, the Executive shall be entitled: to receive health and
welfare and similar benefits substantially the same as those provided by the
Corporation to the Executive's peer executives; to continued coverage under UNUM
policy number LAD318392 providing for disability income (the "Disability Income
Policy") as in effect immediately prior to the Effective Date; and to
continuation of the fringe benefits provided by the Corporation to the Executive
immediately prior to the Effective Date (including, without limitation,
providing and paying for: all fees and charges associated with the Executive's
membership at the Omaha Country Club; an automobile (the "Automobile")
comparable to the automobile currently available for the Executive's use; and
home security system) (the "Fringe Benefits").
3. BONUS POOL. On the business day immediately preceding the date
set for the closing of the Merger Agreement, the Executive shall be entitled to
receive a cash Bonus as set forth in the FirsTier Financial, Inc. Change of
Control Bonus Pool Plan (the "Bonus Pool Plan"). The Corporation hereby
covenants and agrees that the Bonus awarded to the Executive pursuant to the
terms of the Bonus Pool Plan shall in no event be in an amount comprising less
than fifty per cent (50%) of the total available Bonus Pool.
4. CHANGE IN CONTROL PAYMENT. Upon consummation of the
<PAGE>
Merger the Corporation shall immediately pay to the Executive the termination
benefit provided by the Prior Agreement as if the Executive had been terminated
by the Corporation as a result of a Change in Control pursuant to Section 5
thereof whether or not the Executive is then employed by the Corporation and
regardless of the reason for any such cessation of employment.
5. TERMINATION.
(a) During the Employment Period the Corporation may not terminate the
Executive's employment other than for "Cause." For purposes of this Agreement,
Cause means either:
i. Conviction of a felony involving moral turpitude; or
ii. Conduct willfully injurious to the Corporation.
(b) At the end of the Employment Period or if, during the Employment
Period, the Corporation shall terminate the Executive's employment other than
for Cause or the Executive shall terminate employment for any reason:
i. The Executive shall be entitled to receive retirement
benefits under Article V of the Omnibus Plan payable as if the Executive were
sixty-two (62) years of age on the date of such cessation of employment, and for
purposes of calculating such retirement benefits the Executive shall be deemed
to have
<PAGE>
continued his employment with the Corporation through the attainment of sixty-
two (62) years of age at a base annual salary equal to the greater of three
hundred fifty thousand dollars ($350,000) and the Executive's base annual salary
immediately prior to such cessation of employment; the retirement benefits
payable to the Executive shall be calculated in accordance with the assumptions
underlying Exhibit A;
ii. The Executive shall be entitled to receive retiree life and
medical benefits no less favorable than those provided by the Corporation
immediately prior to the date of the signing of the Merger Agreement, and for
purposes of calculating the retiree benefits to which the Executive shall be
entitled the Executive shall be deemed to have continued his employment with the
Corporation through the attainment of sixty-two (62) years of age at a base
annual salary equal to the greater of three hundred fifty thousand dollars
($350,000) and the Executive's base annual salary immediately prior to such
cessation of employment;
iii. The Executive shall be entitled to the continuation of the
Fringe Benefits until the earlier of his death or the attainment of sixty-two
(62) years of age;
iv. All stock options, Bonus Shares, Phantom Stock Units and any
other rights and benefits granted to the Executive pursuant to the Stock Plans
shall immediately become fully
<PAGE>
vested and/or exercisable as set forth in Section 7 of the Prior Agreement;
v. Effective as of the first premium date following such
cessation of employment, the Executive shall be entitled to assume and to
continue his coverage under the Disability Income Policy as in effect
immediately prior to such cessation of employment to the extent permissible
under the terms of such policy; such assumption and continuation of the
Disability Income Policy shall be at the Executive's own expense, provided,
however, that the Corporation shall be liable for and shall pay all premiums and
other costs payable with respect to such Disability Income Policy through the
first premium date following such cessation of employment;
vi. In accordance with the provisions of Section 6.2(d) of the
Omnibus Plan, the Executive shall be deemed to have reached his Normal
Retirement Date prior to such cessation of employment for purposes of
determining the Survivor Benefit to which the Executive and his beneficiary are
entitled pursuant to Article VI of the Omnibus Plan; and
vii. The Executive shall be entitled to purchase the Automobile
from the Corporation at a price not to exceed the Automobile's book value for
financial reporting purposes as of the date of such cessation of employment.
(c) In addition to the foregoing, in the event that,
<PAGE>
during the employment period, the Corporation shall terminate the Executive's
employment (other than for Cause) without the Executive's written consent, the
Executive shall be entitled to receive a termination payment equal to the
balance of his annual salary (no less than three hundred fifty thousand dollars
($350,000)) that would be payable if his employment had continued through the
end of the calendar year during which such cessation of employment occurs.
6. FULL SETTLEMENT. The Corporation's obligation to make the
payments provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any set-off, counterclaim, recoupment,
defense or other claim, right or action which the Corporation may have against
the Executive or others. In no event shall the Executive be obligated to seek
other employment or take any other action by way of mitigation of the amounts
payable to the Executive under any of the provisions of this Agreement and such
amounts shall not be reduced whether or not the Executive obtains other
employment. The Corporation agrees to pay as incurred, to the full extent
permitted by law, all legal fees and expenses which the Executive may reasonably
incur as a result of any contest (regardless of the outcome thereof) by the
Corporation, the Executive or others of the validity or enforceability of, or
liability under, any provision of this Agreement or any guarantee of performance
thereof
<PAGE>
(including as a result of any contest by the Executive about the amount of any
payment pursuant to this Agreement), plus in each case interest on any delayed
payment at the applicable Federal rate provided for in Section 7872(f)(2)(A) of
the Internal Revenue Code of 1986, as amended (the "Code").
7. CERTAIN ADDITIONAL PAYMENTS. In the event it shall be determined
that any payment (within the meaning of Section 280G of the Code) or
distribution to or for the benefit of the Executive (determined without regard
to any additional payments required under this Section 6) (a "Payment") would be
subject to the excise tax imposed by Section 4999 of the Code or any interest or
penalties are incurred by the Executive with respect to such excise tax (such
excise tax, together with any such interest and penalties, are hereinafter
collectively referred to as the "Excise Tax"), then the Executive shall be
entitled to receive from the Corporation an additional payment (a "Gross-Up
Payment") in an amount such that after payment by the Executive of all taxes
(including any interest or penalties imposed with respect to such taxes),
including, without limitation, any income taxes (and any interest and penalties
imposed with respect thereto) and Excise Tax imposed upon the Gross-Up Payment,
the Executive retains an amount of the Gross-Up Payment equal to the Excise Tax
imposed upon the Payments. All determinations under this Section 6 shall be
made by a nationally recognized accounting firm selected by the Executive.
<PAGE>
8. NON-EXCLUSIVITY OF RIGHTS. Nothing in this Agreement shall limit
or otherwise affect such rights as the Executive may have under any other
agreements with, or plans or programs of, the Corporation or any of its
affiliated companies, including, without limitation, the Prior Agreement, the
Omnibus Plan or the Stock Plans. Amounts which are vested benefits or which the
Executive is otherwise entitled to receive under any plan or program of the
Corporation or any of their affiliated companies at or subsequent to the
Effective Date including, but not limited to, the Executive's entitlement to
severance under the Prior Agreement shall be payable in accordance with such
plan or program, except as otherwise expressly provided herein.
9. SUCCESSORS.
(a) This Agreement is personal to the Executive and without the prior
written consent of the Corporation shall not be assignable by the Executive
otherwise than by will or the laws of descent and distribution. This Agreement
shall inure to the benefit of and be enforceable by the Executive's legal
representatives.
(b) This Agreement shall inure to the benefit of and be binding upon
the Corporation and its successors.
(c) The Corporation will require any successor (whether direct
orindirect, by purchase, merger, consolidation or
<PAGE>
otherwise) to all or substantially all of the business and/or assets of the
Corporation to expressly assume and agree to perform this Agreement in the same
manner and to the same extent that the Corporation would be required to perform
it if no such succession had taken place. As used in this Agreement,
"Corporation" shall mean the Corporation as hereinbefore defined and any
successor to its business and/or assets as aforesaid which assumes and agrees to
perform this Agreement by operation of law, or otherwise.
10. MISCELLANEOUS.
(a) This Agreement shall be governed by and construed in accordance
with the laws of the State of Nebraska, without reference to principles of
conflict of laws. The captions of this Agreement are not part of the provisions
hereof and shall have no force or effect. This Agreement may not be amended or
modified otherwise than by a written agreement executed by the parties hereto or
their respective successors and legal representatives.
(b) All notices and other communications hereunder shall be in
writing and shall be given by hand delivery to the other party or by registered
or certified mail, return receipt requested, postage prepaid, addressed as
follows:
IF TO THE EXECUTIVE:
David A. Rismiller
1223 South 113th Court
<PAGE>
Omaha, Nebraska 68144
IF TO THE CORPORATION:
FirsTier Financial, Inc.
1700 Farnam Street
Omaha, Nebraska 68102-2183
Attention: General Counsel
Fax: (402) 348-6221
with a copy to:
First Bank System, Inc.
First Bank Place
601 Second Avenue South
Minneapolis, Minnesota 55402-4302
Attention: Richard A Zona, Vice Chairman
and Chief Financial Officer
Fax: (612) 973-0410
or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.
(c) The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement.
(d) The Corporation may withhold from any amounts payable under this
Agreement such amounts as shall be required to be withheld pursuant to any
applicable law or regulation.
(e) The Executive's failure to insist upon strict compliance with any
provision hereof shall not be deemed to be a
<PAGE>
waiver of such provision or any other provision thereof.
IN WITNESS WHEREOF, the Executive has hereunto set his hand and,
pursuant to the authorization from its Board of Directors, the Corporation has
caused these presents to be executed in its name on its behalf, all as of the
day and year first above written.
/s/
--------------------------------------
David A. Rismiller
FIRSTIER FINANCIAL, INC.
By /s/
------------------------------------
Walter Scott, Jr., Chairman of the
Executive Committee of the
Board of Directors
Acknowledged and Agreed to:
FIRST BANK SYSTEM INC.
By /s/
--------------------------------
Richard A. Zona, Vice Chairman
and Chief Financial Officer
<PAGE>
TO OUR STOCKHOLDERS, CUSTOMERS AND FRIENDS
FirsTier Financial, Inc., reported record net income of $15,009,000 for the
third quarter of 1995, an increase of 8.20 percent over net income of
$13,872,000 in the same period of 1994. [Logo] For the first nine months,
earnings were $42,645,000, a 2.90 percent increase over the $41,444,000 earned
in the same period of 1994. On a per share basis, earnings were $.80 for the
third quarter and $2.28 for the first nine months, compared to $.73 and $2.18
for the same periods last year, an increase of 9.59 percent and 4.59 percent,
respectively. [Logo] The acquisition of the Cornerstone Bank Group on January 3,
1995, has been accounted for as a pooling of interests. As a result, all
financial results for 1994 and prior periods have been restated. [Logo] Net
interest income was $33.1 million for the third quarter, compared to $33.3
million for the same period last year. Net interest margin was 4.37 percent,
compared to 4.53 percent for the third quarter of 1994. [Logo] Non-interest
income increased $129,000, or .89 percent from the third quarter of 1994.
Non-interest expense in the third quarter decreased $1,673,000, or 5.87 percent,
compared to the same period in 1994. Non-interest expense in the third quarter
of 1995 reflects a one-time pretax credit of approximately $1.5 million from the
Federal Deposit Insurance Agency, representing a refund on a portion of fees
paid by FirsTier Bank to the FDIC in the second and third quarters of 1995.
[Logo] Under-performing assets on September 30, 1995 totaled $12.1 million, or
.55 percent of total loans and other real estate, compared to $14.5 million, or
.71 percent of total loans and other real estate on September 30, 1994.
Under-performing assets consist of non-accrual loans and leases, loans 90 days
past due and still accruing interest, restructured loans, other real estate
owned and repossessed assets. [Logo] On August 7, 1995, FirsTier Financial,
Inc., and first Bank System, Inc., announced plans for First Bank System to
acquire FirsTier Financial. First Bank System will exchange .8829 shares of
First Bank System common stock for each share of FirsTier Financial, Inc.,
common stock. [Logo] First Bank System is the leading bank in Minnesota and a
major player in a region stretching from Illinois to Wyoming. Our customers will
benefit from their major investment in technology and innovative services
including a broad array of mutual funds. This purchase gives our stockholders an
attractive price, at approximately 1.9 times book value as of June 30, and it
gives stockholders ownership in a company with an excellent track record in
growing shareholder value. [Logo] An application for the merger has been filed
with the Federal Reserve Board, and a proxy statement/ prospectus has been filed
with the Securities and Exchange Commission. Pending regulatory approval, we
expect to mail proxies to FirsTier stockholders in December announcing a special
stockholders' meeting in January, 1996. Subject to regulatory and stockholders'
approvals, the acquisition is expected to be completed early in the first
quarter of 1996.
Sincerely,
/s/ David A. Rismiller
- ----------------------------------------------------
David A. Rismiller
CHAIRMAN OF THE BOARD AND
CHIEF EXECUTIVE OFFICER
[LOGO]
<PAGE>
FIRSTIER FINANCIAL, INC. 2
- --------------------------------------------------------------------------------
BOARD OF DIRECTORS
JAMES P. ABEL
PRESIDENT
NEBCO, Inc.
DUANE W. ACKLIE**
CHAIRMAN
Crete Carrier Corporation
LAWRENCE J. ARTH
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
Ameritas Life Insurance Corporation
RICHARD K. DAVIDSON
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
Union Pacific Railroad Company
J. ROBERT DUNCAN
CHAIRMAN
Duncan Aviation, Inc.
STEVEN H. DURHAM
CHAIRMAN
Global Resources, Ltd. L.L.C.
CHARLES F. HEIDER**
GENERAL PARTNER
Heider-Weitz Partnership
JACK R. MCDONNELL**
EXECUTIVE VICE PRESIDENT
AND CHIEF OPERATING OFFICER
FirsTier Financial, Inc.
DAVID A. RISMILLER**
CHAIRMAN OF THE BOARD, PRESIDENT AND
CHIEF EXECUTIVE OFFICER
FirsTier Financial, Inc.
WALTER SCOTT, JR.*
PRESIDENT AND CHAIRMAN OF THE BOARD
Peter Kiewit Sons', Inc.
THOMAS J. SKUTT
CHAIRMAN OF THE BOARDS AND
CHIEF EXECUTIVE OFFICER
Mutual of Omaha Insurance Companies
DR. L. DENNIS SMITH
PRESIDENT
University of Nebraska
* Chairman of the Executive Committee, Board of Directors
** Member of the Executive Committee, Board of Directors
PRINCIPAL CORPORATE OFFICERS
DAVID A. RISMILLER**
CHAIRMAN OF THE BOARD, PRESIDENT
AND CHIEF EXECUTIVE OFFICER
JACK R. MCDONNELL**
EXECUTIVE VICE PRESIDENT AND
CHIEF OPERATING OFFICER
DWAIN C. CARLSON
VICE PRESIDENT AND DIRECTOR OF
CORPORATE ASSET LIABILITY MANAGEMENT
THOMAS B. FISCHER
VICE PRESIDENT, SECRETARY AND GENERAL COUNSEL
DAVID F. GRIEBEL
VICE PRESIDENT AND DIRECTOR OF MARKETING
AARON C. HILKEMANN
VICE PRESIDENT AND DIRECTOR OF
FINANCIAL OPERATIONS
MARK J. MATTHES
VICE PRESIDENT AND DIRECTOR OF OPERATIONS
JOHN F. MOCK
VICE PRESIDENT AND DIRECTOR OF
HUMAN RESOURCES
[LOGO]
<PAGE>
FINANCIAL HIGHLIGHTS 3
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED FOR THE NINE MONTHS ENDED
SEPTEMBER 30 SEPTEMBER 30
PERCENTAGE PERCENTAGE
1995 1994 CHANGE 1995 1994 CHANGE
--------- --------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
INCOME AND DIVIDENDS
($ IN THOUSANDS)
Net Income................ $ 15,009 13,872 8.2% $ 42,645 41,444 2.9%
Cash Dividends Declared... 5,556 4,429 25.4 15,886 13,382 18.7
PER SHARE
Net Income................ .80 .73 9.6 2.28 2.18 4.6
Cash Dividends Declared... .30 .26 15.4 .86 .78 10.3
FINANCIAL INFORMATION
($ IN THOUSANDS)
Average Assets............ 3,583,635 3,457,011 3.7 3,578,841 3,426,205 4.5
Average Loans and
Leases................... 2,175,473 2,024,936 7.4 2,172,554 1,983,521 9.5
Average Deposits.......... 2,820,177 2,692,149 4.8 2,799,288 2,707,833 3.4
Average Stockholders'
Equity................... 369,076 340,229 8.5 358,011 337,145 6.2
Book Value Per Share
(At September 30)........ 20.30 18.43 10.1
Market Value Per Share
(At September 30)........ 41.13 33.00 24.6
RATIOS
Return on Average
Assets................... 1.66% 1.60 3.8 1.59 1.62 (1.9)
Return on Average
Equity................... 16.13 16.18 (0.3) 15.93 16.44 (3.1)
Average Equity to
Assets................... 10.30 9.84 4.7 10.00 9.84 1.6
Tier 1 Leverage........... 10.06 9.71 3.6
Net Interest Margin....... 4.37 4.53 (3.5) 4.46 4.68 (4.7)
OTHER INFORMATION
Number of Shares.......... 18,521,382 18,591,020 (0.4)
Number of Stockholders.... 2,045 2,063 (0.9)
</TABLE>
[LOGO]
<PAGE>
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited) ($ in thousands, except per share amounts) 4
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30 SEPTEMBER 30
1995 1994 1995 1994
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
INTEREST INCOME
Interest and fees on loans and leases
Taxable............................................................ $ 47,723 40,528 141,486 116,304
Nontaxable......................................................... 455 479 1,366 2,115
Interest on securities
Taxable............................................................ 9,679 10,913 29,047 34,413
Nontaxable......................................................... 6,172 5,173 18,010 15,240
Interest on federal funds sold and resale agreements................. 1,549 1,317 5,093 2,882
--------- --------- --------- ---------
Total interest income.............................................. 65,578 58,410 195,002 170,954
--------- --------- --------- ---------
INTEREST EXPENSE
Interest on deposits
Savings and interest checking...................................... 5,895 4,817 16,326 14,354
Time............................................................... 21,642 15,846 62,023 45,063
Interest on short-term and FHLB borrowings........................... 4,653 4,097 15,279 9,287
Interest on long-term debt........................................... 292 305 881 918
--------- --------- --------- ---------
Total interest expense............................................. 32,482 25,065 94,509 69,622
--------- --------- --------- ---------
NET INTEREST INCOME................................................ 33,096 33,345 100,493 101,332
Provision for loan and lease losses.................................... 269 370 807 (1,220)
--------- --------- --------- ---------
NET INTEREST INCOME AFTER PROVISION FOR LOAN AND LEASE LOSSES...... 32,827 32,975 99,686 102,552
--------- --------- --------- ---------
NON-INTEREST INCOME
Trust services....................................................... 4,188 4,126 12,557 12,145
Service charges on deposit accounts.................................. 4,363 3,813 12,758 11,647
Credit card fees..................................................... 2,658 2,562 7,309 6,842
Securities gains, net................................................ (9) -- 1 212
Other................................................................ 3,403 3,973 9,824 10,868
--------- --------- --------- ---------
Total non-interest income.......................................... 14,603 14,474 42,449 41,714
--------- --------- --------- ---------
NON-INTEREST EXPENSE
Salaries and benefits................................................ 14,183 13,524 42,200 41,184
Premises and equipment............................................... 3,566 3,824 10,742 11,368
Data processing fees................................................. 1,280 1,383 3,867 4,090
Credit card processing expense....................................... 1,527 1,340 4,265 4,069
Amortization of goodwill............................................. 464 382 1,323 1,188
Other................................................................ 5,807 8,047 21,575 25,771
--------- --------- --------- ---------
Total non-interest expense......................................... 26,827 28,500 83,972 87,670
--------- --------- --------- ---------
Income before income tax expense................................... 20,603 18,949 58,163 56,596
Income tax expense................................................. 5,594 5,077 15,518 15,152
--------- --------- --------- ---------
NET INCOME............................................................. $ 15,009 13,872 42,645 41,444
--------- --------- --------- ---------
--------- --------- --------- ---------
NET INCOME PER SHARE................................................... $ .80 .73 2.28 2.18
--------- --------- --------- ---------
--------- --------- --------- ---------
</TABLE>
See accompanying notes to consolidated financial statements
[LOGO]
<PAGE>
CONSOLIDATED BALANCE SHEETS
September 30, (Unaudited) ($ in thousands) 5
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1995 1994
------------ ----------
<S> <C> <C>
ASSETS
Cash and due from banks......................................................................... $ 208,242 235,413
Federal funds sold and securities purchased under resale agreements............................. 97,050 151,435
Securities available for sale (amortized cost $255,241 in 1995 and $285,919 in 1994)............ 261,411 282,397
Investment securities (market value $755,303 in 1995 and $695,291 in 1994)...................... 740,843 707,527
Loans and leases, net........................................................................... 2,139,076 2,002,883
Premises and equipment.......................................................................... 50,435 49,828
Accrued interest receivable..................................................................... 35,082 31,943
Other assets.................................................................................... 53,283 56,014
------------ ----------
TOTAL ASSETS.................................................................................. $ 3,585,422 3,517,440
------------ ----------
------------ ----------
LIABILITIES
Deposits
Demand, non-interest-bearing.................................................................. $ 470,703 455,615
Savings and interest checking................................................................. 867,832 855,757
Time.......................................................................................... 1,437,124 1,313,103
------------ ----------
TOTAL DEPOSITS................................................................................ 2,775,659 2,624,475
Short-term borrowings........................................................................... 205,543 339,630
Federal Home Loan Bank borrowings............................................................... 156,500 148,715
Other liabilities............................................................................... 59,934 49,685
Long-term debt.................................................................................. 11,773 12,324
------------ ----------
TOTAL LIABILITIES............................................................................. 3,209,409 3,174,829
------------ ----------
STOCKHOLDERS' EQUITY
Preferred stock -- $30 par value; authorized 2,000,000 shares................................... -- --
Common stock -- $5 par value; authorized 40,000,000 shares; issued and outstanding 18,822,202
shares in 1995 and 18,927,195 shares in 1994................................................... 94,111 94,073
Surplus......................................................................................... 5,432 10,345
Retained earnings............................................................................... 282,621 251,202
Net unrealized securities gains (losses)........................................................ 3,824 (2,285)
------------ ----------
385,988 353,335
Less treasury stock, at cost 300,820 shares in 1995 and 336,175 shares in 1994.................. 9,975 10,724
------------ ----------
TOTAL STOCKHOLDERS' EQUITY.................................................................... 376,013 342,611
------------ ----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY.................................................. $ 3,585,422 3,517,440
------------ ----------
------------ ----------
</TABLE>
See accompanying notes to consolidated financial statements
[LOGO]
<PAGE>
OTHER FINANCIAL INFORMATION 6
- --------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF
RETAINED EARNINGS
Nine Months Ended September 30 (Unaudited)
($ IN THOUSANDS)
<TABLE>
<CAPTION>
1995 1994
---------- ----------
<S> <C> <C>
BALANCE AT JANUARY 1.............. $ 255,862 252,092
Net Income........................ 42,645 41,444
Cash dividends declared........... 15,886 13,382
($.86 and $.78 per share in 1995
and 1994, respectively)........
Less transfer to Surplus.......... -- 28,952
---------- ----------
BALANCE AT SEPTEMBER 30........... $ 282,621 251,202
---------- ----------
---------- ----------
</TABLE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) On August 7, 1995, FirsTier and First Bank System announced First Bank
System's intention to acquire FirsTier. Under terms of the agreement,
FirsTier shareholders will receive .8829 shares of First Bank System stock
for each FirsTier share held. Pending regulatory and shareholder approval,
the transaction is expected to be consummated in the first quarter of 1996.
(2) On January 3, 1995, FirsTier acquired Cornerstone Bank Group, Inc. in a
transaction accounted for as a pooling of interests. In connection with this
acquisition, FirsTier issued 1,555,075 shares in exchange for 100% of the
outstanding shares of Cornerstone Bank Group, Inc. All prior period
financial information has been restated to reflect this acquisition.
(3) On April 1, 1995, FirsTier acquired all of the outstanding shares of First
Continental Financial, Inc., the holding company of River City National
Bank, which had assets of approximately $41 million. River City National
Bank operated in three locations in west Omaha, Nebraska, and are now
branches of FirsTier Bank, N.A., Omaha. This acquisition has been accounted
for as a purchase transaction.
(4) Certain accounts in the financial statements of the prior year have been
reclassified to conform with current year presentation. Such
reclassifications had no effect on net income.
ALLOWANCE FOR LOAN AND LEASE LOSSES
($ IN THOUSANDS)
<TABLE>
<CAPTION>
1995 1994
------- ------
<S> <C> <C>
BALANCE AT JANUARY 1.................... $53,250 54,345
Addition due to acquisition............. 290 --
Provision for credit losses............. 807 (1,220)
Losses charged off...................... 4,608 3,669
Recoveries on amounts charged off....... 2,325 3,816
------- ------
BALANCE AT SEPTEMBER 30................. $52,064 53,272
------- ------
------- ------
Allowance as a percentage of loans and
leases................................. 2.38% 2.59
Net charge-offs as a percentage of
average loans and leases............... .11% (.01)
</TABLE>
UNDER-PERFORMING ASSETS
($ IN THOUSANDS)
<TABLE>
<CAPTION>
SEPTEMBER 30 1995 1994
------- ------
<S> <C> <C>
Non-accrual loans and leases............ $ 9,053 11,091
Loans ninety days past due and
accruing............................... 1,580 1,397
Restructured loans...................... 18 543
Other real estate owned................. 1,312 1,377
Repossessed assets...................... 154 109
------- ------
TOTAL UNDER-PERFORMING ASSETS........... $12,117 14,517
------- ------
------- ------
Under-performing assets as a
percentage of loans, leases, other
real estate owned and repossessed
assets................................. .55% .71
------- ------
------- ------
</TABLE>
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<PAGE>
ANALYSIS OF NET INTEREST INCOME
(TAX EQUIVALENT BASIS) ($ IN THOUSANDS) 7
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30 SEPTEMBER 30
1995 1994 1995 1994
------------ ---------- ------------ ----------
<S> <C> <C> <C> <C>
Net interest income................................................. $ 36,040 35,863 109,078 109,025
Average earning assets.............................................. 3,274,896 3,143,766 3,270,364 3,115,985
Average interest-bearing liabilities................................ 2,667,439 2,569,353 2,672,837 2,539,534
Yield on earning assets............................................. 8.30% 7.69 8.32 7.67
Cost of interest-bearing liabilities................................ 4.83 3.87 4.73 3.67
Net interest margin................................................. 4.37 4.53 4.46 4.68
Net interest rate spread............................................ 3.47 3.82 3.59 4.00
Interest-bearing liabilities to interest-earning assets............. 81.45 81.73 81.73 81.50
</TABLE>
STOCKHOLDERS' INFORMATION
STOCK DATA
<TABLE>
<CAPTION>
DIVIDENDS
DECLARED
YEAR PERIOD HIGH LOW PER SHARE
- --------- ---------------- --------- --------- ---------------
<S> <C> <C> <C> <C>
1994 First Quarter 33.17 28.00 .26
Second Quarter 31.83 29.33 .26
Third Quarter 35.00 31.00 .26
Fourth Quarter 33.00 30.00 .26
1995 First Quarter 33.50 29.50 .26
Second Quarter 37.50 32.75 .30
Third Quarter 41.13 36.00 .30
</TABLE>
The common stock of FirsTier Financial, Inc. (FRST) is traded on the
Over-the-Counter Market and is quoted
on the NASDAQ National Market System.
CORPORATE OFFICE
The Corporate Office is located at 1700 Farnam Street, P.O. Box 3443, Omaha,
Nebraska 68103-0443. The telephone number is (402) 348-6000.
FORM 10Q
A copy of the third quarter report to the Securities and Exchange Commission
(Form 10Q) may be obtained without charge by written request to the Director of
Marketing at the Corporate Office.
INDEPENDENT PUBLIC ACCOUNTANTS
The independent public accountants of FirsTier Financial, Inc. are Arthur
Andersen LLP, Omaha, Nebraska.
TRANSFER AGENT
Stockholder inquiries may be directed to:
State Street Bank and Trust Company
Securities Transfer Services Department
P.O. Box 8204
Boston, MA 02266
Telephone: (800) 257-1770
8:00 a.m. to 6:00 p.m.
(Eastern Time)
[LOGO]
<PAGE>
[LOGO]
- ----------------------------------
1700 FARNAM STREET
P.O. BOX 3443
OMAHA, NEBRASKA
68103-0443
[LOGO]
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T H I R D Q U A R T E R R E P O R T
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SEPTEMBER 30, 1995
