SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission only (as permitted by
Rule 14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/X/ Soliciting Material Pursuant to Section 240.14-11(c) or Section
240.14a-12
First Interstate Bancorp
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(Name of Registrant as Specified in Its Charter)
First Bank System, Inc.
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(Name of Person(s) Filing Proxy Statement, if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
/ / $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
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/ / Fee paid previously with preliminary materials.
/X/ Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid: $3,748,213
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2) Form, Schedule or Registration Statement No.: 33-64447
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3) Filing Party: First Bank System, Inc.
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4) Date Filed: November 20, 1995
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Ayson & Associates
William J. Ihle
Partner
FIELD(Name)
FIELD(Title)
FIELD(Publication)
FIELD(Address)
FIELD(CityStateZip)
Dear FIELD(Name):
As you no doubt know, Wells Fargo Bank is attempting a hostile
takeover of First Interstate Bancorp. If Wells succeeds in this
action, it will have devastating consequences for consumers,
businesses and communities throughout California. Wells has
stated that it will close 85% of First Interstate's California
branches; the job layoffs that result have been reported to be as
high as 10,000. In addition, it will mean that California will
lose one more significant competitor from the banking industry.
First Interstate has rejected the hostile takeover offer from
Wells and, instead, has entered into an agreement to merge with
First Bank System, a Minnesota-based bank holding company. For
California, it would mean that First Interstate's branch network
and its employees would remain virtually intact, and the number
of major banking competitors would remain unchanged.
Your community has both Wells and First Interstate branches and,
therefore, is one of the communities slated for competitive
consolidation, branch closing and lay-offs if Wells is
successful. The ripple effects of these actions include lost
income that will affect consumer spending, more vacant real
estate, and competitive disadvantages for consumers and
businesses leading to less capital availability and higher
pricing. I am writing on behalf of First Bank to ask you to
examine the facts surrounding the First Interstate situation. We
are convinced that, when you fully appreciate the disastrous
ramifications of the Wells hostile takeover, you may decide to go
on record in an editorial opposing a Wells-First Interstate
consolidation.
First Bank System wants the First Interstate branches to remain
strong financial centers in California communities and is anxious
to compete in California, providing banking consumers with top-
notch products and services. I am enclosing materials which I
hope provide you with sufficient information on which to base an
editorial. These include:
- - Fact sheet about First Bank System, its history and
reputation;
- - Fact sheet comparing the First Bank-First Interstate merger
to Wells' hostile takeover and the ramifications of each
offer for the California economy, job situation, real estate
market and banking consumer;
8205 Santa Monica Boulevard, Suite 1-115, West Hollywood,
California 90046
Telephone: 213-656-4939 Facsimile: 213-656-3848
- - First Bank System's 1994 Annual Report;
- - Newspaper articles about First Bank;
- - Copy of a press release issued by the California
Reinvestment Committee (CRC) criticizing Wells community
commitment; and
- - An editorial cartoon, which is camera-ready and which you
are free to use. This letter serves as an official release
that allows your publication to print the cartoon in
connection with any editorial or news report on the subject
of the First Interstate-First Bank merger. You may caption
it as you wish.
You should also know that we would very much like to arrange for
a First Bank officer to discuss this issue with you and your
editorial writers. I will follow-up by telephone within a few
days or, you can reach me at my number in Los Angeles.
California regulatory officials and the Attorney General are
currently reviewing both the First Bank-First Interstate merger
and the Wells Fargo hostile takeover, which may make an editorial
very timely at this point. Thank you for your consideration of
this very important matter, which is certain to affect your
community one way or the other.
Sincerely,
William J. Ihle
<PAGE>
This letter, fact sheets and editorial cartoon may constitute
proxy solicitation materials. The participants in this
solicitation may include First Bank System, Inc. ("FBS"), the
directors of FBS (John F. Grundhofer, Roger L. Hale, Delbert W.
Johnson, Norman M. Jones, John H. Kareken, Richard L. Knowlton,
Jerry W. Levin, Kenneth A. Macke, Marilyn C. Nelson, Edward J.
Phillips, James J. Renier, S. Walter Richey, Richard L. Robinson,
Richard L. Schall, and Lyle E. Schroeder), Lester Pollack (Board
Observer) and the following executive officers and employees of
FBS: Richard A. Zona (Vice President and Chief Financial
Officer), Philip G. Heasley (Vice Chairman and President, Retail
Product Group), Lee R. Mitau (Executive Vice President, Secretary
and General Counsel), Susan E. Lester (Executive Vice President),
Elizabeth A. Malkerson (Senior Vice President, Corporate
Relations), David R. Edstam (Executive Vice President and
Treasurer), David J. Parrin (Senior Vice President and
Controller), Arnold C. Hahn (Senior Vice President, Corporate
Development), Andrew Cecere (Senior Vice President, Management
Accounting and Forecasting), John R. Danielson (Senior Vice
President, Investor Relations), Wendy Raway (Vice President and
Manager of Media Relations) and Karin Glasgow (Assistant Vice
President, Investor Relations).
FBS and First Interstate Bancorp ("First Interstate" or "FI") are
parties to an Agreement and Plan of Merger, dated November 5,
1995, pursuant to which a wholly owned subsidiary of FBS is to
merge with and into First Interstate. In addition, First
Interstate has granted to FBS an option to purchase up to 19.9%
of the outstanding shares of common stock of First Interstate in
certain circumstances. As of October 31, 1995, certain FBS
subsidiaries held 54, 437 shares of First Interstate common stock
in a fiduciary capacity. FBS disclaims beneficial ownership of
shares of First Interstate common stock held in a fiduciary
capacity and any other shares held by any pension plan of FBS or
any affiliates of FBS.
As of November 30, 1995, Marilyn C. Nelson and Richard L.
Robinson, directors of FBS, held 2,000 shares and 150 shares,
respectively, of First Interstate common stock. Lester Pollack
is an executive officer of Corporate Advisors, L.P., the general
partner of two shareholders of FBS and the investment manager for
another shareholder of FBS. Corporate Advisors, L.P. may be
deemed to be indirectly controlled by Lazard Freres & Co., LLC,
of which Mr. Pollack is a managing director. Lazard Freres & Co.,
LLC engages in a full range of investment banking, securities
trading, market-making and brokerage services for institutional
and individual clients. In the normal course of business, Lazard
Freres & Co., LLC may trade securities of First Interstate for
its own account and the account of its customers and,
accordingly, may at any time hold a long or short position in
such securities.
Although J.P. Morgan Securities, Inc. does not admit that it or
any of its directors, officers, employees of affiliates is a
"participant," as defined in Schedule 14A promulgated under the
Securities Exchange Act of 1934 by the Securities and Exchange
Commission (the "Commission"), or that such Schedule 14A requires
the disclosure of certain information concerning J.P. Morgan
Securities, Inc., it may assist FBS in this solicitation. J.P.
Morgan Securities, Inc. engages in a full range of investment
banking, securities trading, market-making and brokerage services
for institutional and individual clients. In the normal course
of business, J.P. Morgan Securities, Inc. may at any time hold a
long or short position in such securities.
Except as disclosed above, to the knowledge of FBS, none of FBS,
the directors or executive officers of FBS or the employees of
other representatives of FBS named above has any interest, direct
or indirect, by security holdings or otherwise, in First
Interstate.
<PAGE>
COMPARISON OF THE PROPOSED FIRST BANK SYSTEM/FIRST INTERSTATE
MERGER AND THE WELLS FARGO EXCHANGE OFFER
First Bank System (FBS), a regional bank holding company
headquartered in Minneapolis, has signed a merger agreement with
First Interstate Bancorp. According to the agreement, FBS will
exchange 2.6 shares of its stock for every share of First
Interstate stock. The present owners of First Interstate will
become shareholders in the new, combined company.
Wells Fargo has announced a hostile exchange offer for First
Interstate. The Wells proposal offers First Interstate
shareholders 0.67 shares of Wells Fargo stock for each share of
First Interstate stock.
Each proposal would result in a company very different than the
other. Below is some important information about the FBS - First
Interstate agreement and the Wells Fargo hostile offer.
Cost to California
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The First Bank System - First Interstate merger is better for
California.
- - FBS and First Interstate have almost no overlap in their
operating areas. Because there is no overlap in operations,
the combined company will continue to operate all of First
Interstate's branches through California. Although the new
company expects to cut 6,000 jobs, they will be spread among
the 21 states in which the new company will operate and will
not be concentrated in California or in any one market in our
community.
- - On the other hand, Wells Fargo and First Interstate have a
high degree of branch overlap. Wells has stated that they
will close most if not all of First Interstate's 457
California branches. FBS estimates that this will result in
about 12,000 California jobs lost. And, according to the
U.S. Department of Commerce's Bureau of Economic Analysis,
approximately 1.6 additional jobs are lost to the California
economy for every one job lost in the state's finance
sector. Therefore, in addition to the 12,000 California
jobs that Wells would cut from the combined Wells/First
Interstate, 19,200 innocent bystanders would also lose their
jobs as a result.
- - If it is successful, the Wells Fargo hostile offer would
remove one of the few remaining state-wide banking
competitors in California. Less competition will likely
lead to higher banking costs and fewer products for
California consumers.
Growth
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First Bank System is a highly successfully bank that is
experiencing strong growth. The First Bank System - First
Interstate merger will translate into economic benefits for
California.
- - FBS's 1994 revenue was 11% higher than its revenue level in
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1990. Wells Fargo, on the other hand, had 1994 revenue that
was 15% less than its 1990 level.
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- - Wells Fargo's no-growth business strategy depends upon
financial engineering, not business growth.
Risk
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The First Bank System - First Interstate merger entails less risk
for California and First Interstate shareholders.
- - The geographic concentration that would result from the
Wells Fargo hostile offer would create a bank highly
susceptible to regional economic downturns. Approximately
70% of the entity's total assets and 78% of its real estate
loan assets would be located in California. The FBS - First
Interstate merger, on the other hand, would create a banking
powerhouse with operations in 21 states.
- - Wells Fargo is presently pursuing a high risk business
strategy that is based upon forcing its customers to abandon
traditional branch banking in an unrealistic time frame.
Wells Fargo's strategy will likely cause the loss of
customers, and therefore revenue.
- - FBS's merger with First Interstate does not have the
regulatory uncertainty that the Wells Fargo hostile bid
faces. Because of the substantial anti-trust and regulatory
issues facing Wells, FBS believes that Wells will likely
face significant delays in obtaining regulatory approvals.
Value
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The FBS - First Interstate merger is better for First Interstate
shareholders than the Wells Fargo hostile offer.
- - The strong growth First Bank System has exhibited in recent
years will continue. The combined FBS - First Interstate is
projected to have earnings per share growth of 28.6% in 1996
for First Interstate shareholders. A Wells Fargo - First
Interstate combination, on the other hand, using the most
optimistic numbers, is projected by FBS to have earnings per
share growth of only 1.9% in 1996.
- - The combined First Bank System - First Interstate will have
better performance ratios than the proposed Wells Fargo
combination. Based upon FBS's projection, FBS - First
Interstate will have return on assets ration of 2.09%
compared to 1.54% for that of Wells Fargo - First
Interstate. Based on FBS's projections, FBS - First
Interstate will have a return on equity ratio of 28.0%
compared to 11.8% for a combined Wells Fargo - First
Interstate.
<PAGE>
[Cartoon depicting a stage coach labeled "WELLS FARGO" passing a
sign labeled "WELLS FARGO HOSTILE TAKE OVER OF FIRST INTERSTATE".
The cartoon depicts a person leaning out of the stage coach
trying to hold onto a suitcase labeled "CUSTOMERS". Suitcases
labeled, "REAL ESTATE MARKET", "CALIFORNIA ECONOMY", "BANKING
COMPETITION" and "CALIFORNIA JOBS" are shown falling out of the
stagecoach.]
<PAGE>
Facts about First Bank System, Inc.
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First Bank System, Inc., (FBS) is a top-performing regional bank
holding company headquartered in Minneapolis and serving 11
Midwest and Rocky Mountain states. We have become a leader in
our industry by focusing on our core businesses, expanding
through value-creating acquisitions, investing in technology to
lower costs and improve sales and service, and maintaining tight
control over costs.
- - FBS is the 29th largest U.S. commercial bank holding company
with assets of $37.3 billion.
- - Our market capitalization at September 30, 1995, was $6.6
billion.
- - Based on share of deposits, we are among the top two market
leaders in seven of our 11 states.
Company Information
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Primary states served Minnesota, Colorado, North Dakota,
South Dakota, Montana, Wisconsin,
Nebraska, Wyoming, Kansas, Illinois,
and Iowa
Number of financial
institutions 9 banks and 1 thrift
Locations 366 banking offices and 18 nonbanking
offices
ATMs 2,896
Employees 13,644
Balance Sheet ($ in billions)*
- ------------------------------
Assets $37,323
Deposits $25,050
Loans $27,809
Shareholders' Equity $ 3,449
* Includes pro forma FirsTier Financial, which FBS will
acquire in January 1996.
Peer Group Performance Comparison**
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FBS Peer Group Median
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3Q95 Return on average assets 1.76% 1.31%
3Q95 Return on common equity 21.2% 17.7%
3Q95 Net interest margin 4.85% 4.47%
Efficiency ratio 53.9% 59.8%
** Based on the performance of 26 regional banks tracked by
Montgomery Securities, Inc. Ratios exclude the effects of
securities gains/losses, merger-related charges, and
extraordinary items.
Core Businesses
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At FBS, we focus on four core business:
- - Retail and Community Banking - Commercial Banking
- - Payment Systems - Trust and Investment Group
Retail and Community Banking
FBS serves more than 3.1 million households and 236,000 businesses
in 11 states through 366 locations, 2,869 automated teller
machines, 24-hour telephone service, and First FinanciaLine
telemarketing.
Payment Systems
Our Payment Systems business includes products and services
related to the processing of transactions between consumers and
businesses. We are the nation's largest issuer of Visa Corporate
and Purchasing Cards and a leading issues of Visa Business Cards,
and the fifth largest U.S. processor of Visa and Mastercard
transactions. We are one of the country's largest issuers of
Visa cards, with more than $15 billion in sales.
Commercial Banking
Our Commercial Banking business focuses on serving the credit
needs of companies with $25 million or more in annual sales and
with headquarters or major operations in markets we serve. In
addition, we provide a full range of noncredit services,
including credit facilities, treasury management, and foreign
exchange.
Trust and Investment Group
We provide a wide range of investment advisory, administrative,
custodial, and trustee services to individuals, families,
corporations, public agencies, and charitable institutions. We
also are the nation's largest provider of corporate trust
services.
Community Commitment
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FBS awards grants to nonprofit organizations throughout its
region through its corporate giving program and FBS Foundation.
Our primary focus is affordable housing, economic development,
and K-12 public education, although we also support a variety of
organizations that work in the areas of human services and arts
and culture. Grant-making decisions are made in each local
market. In 1994, FBS gave more than $6.3 million to
organizations throughout its region.
FBS works with community-based organizations to deliver outreach
services and homebuyer counseling programs that help create home-
ownership opportunities for low- and moderate-income people. FBS
also provides down payment, closing cost, and gap financing
assistance to low- and moderate-income borrowers in the form of
0% loans with deferred payment options (typically due upon sale
of the property). In 1994, FBS made more than $1.4 million in
homebuyer assistance loans and gap financing.
Our ratio of loans to deposits is 113%, reflecting our strong
commitment to reinvesting deposits back into the communities we
serve. Our two largest banks, representing more than 65% of
total assets, have earned outstanding ratings under the Community
Reinvestment Act. In addition to affordable mortgage and
homebuyer counseling programs, our community reinvestment program
includes loans to small businesses, community development loans
and investments, products for all consumers, grants to nonprofit
organizations, and countless hours of volunteer service. Through
FBS CDC, we are authorized to make equity investments in both
housing and economic development.
