<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
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 240.14a-11(c) or Section
240.14a-12
FIRST BANK SYSTEM, INC
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $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:
------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
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):
------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / 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:
------------------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
3) Filing Party:
------------------------------------------------------------------------
4) Date Filed:
------------------------------------------------------------------------
<PAGE>
Contact: John R. Danielson Wendy Raway
Investor Relations Media Relations
First Bank System, Inc. First Bank System, Inc.
(612) 973-2261 (612) 973-2429
FBS AND FIRST INTERSTATE RECEIVE POOLING LETTER FROM OUTSIDE
AUDITORS, AND FBS RESPONDS TO WELLS FARGO'S ATTACKS
ON STOCK REPURCHASES
Minneapolis, MN, December 5, 1995. . .First Bank System, Inc. (NYSE:
FBS) announced today that it and First Interstate Bancorp (NYSE: I) have
received a letter from their independent auditors, Ernst & Young LLP, stating
that based upon management's analysis and representations, they concur with FBS
and First Interstate management that the proposed merger would qualify as a
pooling of interests upon consummation of the transactions contemplated by FBS
and First Interstate and closing the proposed merger in accordance with the
Merger Agreement. The receipt of this letter will be reflected in the final
proxy statement to be mailed to the shareholders of both companies.
"We are pleased that we are able to eliminate any alleged
uncertainties concerning our accounting treatment as we continue to move forward
to consummate this merger," said John F. Grundhofer, Chairman, President and
Chief Executive Officer of FBS. "This should end, once and for all, the
persistent attempts by Wells Fargo to cast doubt on our pooling accounting
treatment. The FBS-First Interstate merger will receive pooling of interests
accounting treatment. End of discussion." Richard A. Zona, FBS Vice Chairman and
Chief Financial Officer added that "Wells Fargo has consistently sought to
confuse First Interstate shareholders by attempting to cast doubt on our pooling
accounting treatment. This undoubtedly reflects Wells's concern over its great
disadvantage of being required to use purchase accounting, thereby generating at
least $8 billion in goodwill and other intangibles."
As is customary, it is a condition to both parties' obligations to
consummate the merger, that a substantially identical letter be delivered at
closing. The parties fully anticipate receiving such a letter and consider such
a bringdown to be a mere technicality.
In addition, FBS responded today to repeated assertions by Wells Fargo
that its stock repurchases have distorted the market for FBS stock and inflated
the value of its proposed merger with First Interstate. Last week, Wells Fargo
made additional allegations in this regard in its suit against First Interstate
and FBS in Delaware.
FBS has had a continuing, publicly announced stock repurchase program
throughout 1993, 1994 and 1995. This has not been a clandestine, recently
conceived, merger-related tactic. As publicly reported in its Reports on Form
10-K for 1993 and 1994, FBS repurchased 6.2 million and 6.3 million shares in
1993 and 1994, respectively.
<PAGE>
On January 19, 1995 and February 15, 1995, FBS announced programs to repurchase
2 million and 14 million shares, respectively, by the end of 1996. These
programs were described in FBS's Reports on Form 10-Q for the first and second
quarter of 1995 and its press releases announcing first and second quarter
financial results. More recently, on October 10, 1995, FBS further announced
that it had repurchased 4.3 million shares in the third quarter pursuant to such
program and in connection with its proposed acquisition of FirsTier Financial,
Inc. FBS further announced that it expected to repurchase up to 24.3 million
shares during 1995 and 1996 as a result of these previously announced repurchase
programs. The repurchase programs were reconfirmed at the November 6, 1995
analysts' meeting in connection with the announcement of the merger of FBS and
First Interstate and described in the November 6 joint press release announcing
the merger, which was also filed as an Exhibit to FBS's Report on Form 8-K filed
November 13. FBS's Form 10-Q filed with the Securities and Exchange Commission
on November 13, 1995, and the FBS Registration Statement on Form S-4 filed on
November 20, 1995, each also contains references to such repurchase programs.
As publicly reported in FBS's 1995 quarterly reports on Form 10-Q, FBS
repurchased 1,040,475, 2,644,410, and 4,306,620 shares in the first, second and
third quarters, respectively. Continuing this pattern in the fourth quarter, FBS
expects to repurchase up to approximately 4 million shares, of which 3,144,400
have been repurchased as of today's date. In order to dispel any further
misconceptions about its stock repurchase program, FBS announced today it will
soon disclose in its next SEC filing its daily trading activity in its shares in
1995.
Mr. Zona said, "It is clear that stock repurchase programs are a long-
term feature of FBS's capital management goal of returning to its shareholders
excess capital that may result from future earnings. FBS's management team
implemented these programs to enhance shareholder value well before the
contemplation of any merger agreement with First Interstate. Our SEC filings and
public statements are crystal clear on this. It's business as usual at FBS--and
repurchases are assumed in the forecasted results of a combined FBS/First
Interstate contained in FBS's recently filed Registration Statement on Form
S-4."
In making these repurchases, FBS strictly adheres to the SEC's
antimanipulation rules. One of these rules provides a safe harbor against any
claim of stock manipulation if the repurchases are limited in terms of timing,
manner of execution and other factors. Another of these rules limits the time
periods during which the repurchases must be made and expressly prohibits
repurchases during the period of merger proxy solicitations. Because of this
rule, FBS was prohibited from repurchasing shares during most of October and
expects to be prohibited from making repurchases for portions of December and
January during the solicitation period for its FirsTier merger. More directly
related to the Wells allegations, this same rule will prohibit repurchases
during a period of at least a month prior to the shareholder vote on the
proposed merger with First Interstate. This rule was adopted by the SEC
expressly to ensure that the type of manipulation Wells has accused FBS of
conducting cannot occur. That is, even if
<PAGE>
Wells's assertions about the market effect of FBS's repurchases were true (and
they are not), any such effects would necessarily have dissipated by the time
the First Interstate shareholders must determine which offer to accept.
"Wells Fargo continues to make misleading statements with respect to
our ongoing repurchase program," said Zona. "This attempt to stir up investors
and the press over this issue is a classic red herring strategy designed to
divert attention from the real fact that FBS has offered First Interstate
shareholders a superior offer to the hostile Wells bid."
First Bank System is a regional bank holding company headquartered in
Minneapolis with assets of approximately $33 billion. The company provides
complete financial services to individuals and institutions through 8 banks, a
savings association and other financial companies with 350 offices, located
primarily in the 11 states of Minnesota, Colorado, North Dakota, South Dakota,
Montana, Illinois, Wisconsin, Iowa, Kansas, Nebraska and Wyoming.
***
The participants in this solicitation may include 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), and the following executive
officers and employees of FBS: Richard A. Zona (Vice Chairman 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), Robert H. Sayre (Executive
Vice President, Human Resources), 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 are parties to an Agreement and Plan of
Merger, dated as of 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 commons stock held in such fiduciary
capacity and any other shares held by any pension plan of FBS or any affiliates
of FBS.
Although J.P. Morgan Securities Inc. does not admit that it or any of
its directors, officers, employees or affiliates is a "participant," as defined
in Schedule 14A promulgated under the Securities Exchange Act of 1934 by the
Securities and Exchange Commission, or that such Schedule 14A requires the
disclosure of certain information concerning J.P. Morgan Securities Inc., it may
assistant FBS in this solicitation. J.P. Morgan Securities Inc. engages in a
full range of investment banking, securities trading, market-making brokerage
services for institutional and individual clients. In the normal course of its
business, J.P. Morgan Securities Inc. 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.
Except as disclosed above, to the knowledge of FBS, none of FBS, the
directors or executive officers of FBS or the employees or other representatives
of FBS named above has any interest direct or indirect, by security holdings or
otherwise, in First Interstate.
-30-
<PAGE>
The following presentation may be deemed to be proxy solicitation
material and accordingly the following information is required under SEC
rules:
The participants in this solicitation may include 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), and the following executive
officers and employees of FBS: Richard A. Zona (Vice Chairman 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), Robert H. Sayre (Executive
Vice President, Human Resources), 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 are parties to an Agreement and Plan of
Merger, dated as of 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 commons stock held in such fiduciary
capacity and any other shares held by any pension plan of FBS or any affiliates
of FBS.
Although J.P. Morgan Securities Inc. does not admit that it or any of
its directors, officers, employees or affiliates is a "participant," as defined
in Schedule 14A promulgated under the Securities Exchange Act of 1934 by the
Securities and Exchange Commission, or that such Schedule 14A requires the
disclosure of certain information concerning J.P. Morgan Securities Inc., it may
assistant FBS in this solicitation. J.P. Morgan Securities Inc. engages in a
full range of investment banking, securities trading, market-making brokerage
services for institutional and individual clients. In the normal course of its
business, J.P. Morgan Securities Inc. 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.
Except as disclosed above, to the knowledge of FBS, none of FBS, the
directors or executive officers of FBS or the employees or other representatives
of FBS named above has any interest direct or indirect, by security holdings or
otherwise, in First Interstate.
<PAGE>
[LOGO] FIRST BANK SYSTEM, INC.
MERGER WITH
FIRST INTERSTATE BANCORP[LOG0]
NOVEMBER 6, 1995
<PAGE>
MERGER CREATES SIGNIFICANT
SHAREHOLDER VALUE
- --------------------------------------------------------------------------------
- Attractive complementary markets
- Powerful business line combinations
- Funding synergy
- High cost takeouts......... 22%
- Excellent IRR.............. 16%
- Accretive first full year.. 18%
- Stock buybacks continue
2
<PAGE>
FBS MERGER WITH FIRST INTERSTATE BANCORP
- --------------------------------------------------------------------------------
AGREEMENT: Definitive Agreement signed 11/5/95
STRUCTURE: Tax-free exchange of stock
ACCOUNTING: Pooling
PURCHASE PRICE: $10.3 billion
PER SHARE: $132.275 (based on FBS share price of 50 7/8)
EXCHANGE RATIO: 2.6 shares of FBS common stock for each share
of First Interstate common stock
BREAKUP FEE: $100 million
LOCKUP OPTION: $100 million cap
EXPECTED CLOSING: 2Q96
3
<PAGE>
FBS MERGER WITH FIRST INTERSTATE BANCORP
- --------------------------------------------------------------------------------
NAME: First Interstate Bancorp
MANAGEMENT: John F. Grundhofer, Chairman & CEO
William E.B. Siart, President & COO
BOARD: 50/50
HEADQUARTERS: Corporate.......... Minneapolis No
Business Lines.......Los Angeles redundant
functions
4
<PAGE>
ORGANIZATION STRUCTURE
- --------------------------------------------------------------------------------
John F. Grundhofer
Chairman &
Chief Executive Officer
William E.B. Siart
President
Chief Operating Officer
Richard A. Zona Bruce G. Willison Linnet F. Deily Philip G. Heasley
Vice Chairman Vice Chairman Vice Chairman Vice Chairman
& CFO Corporate Banking Retail Banking Retail Product/
Operations
5
<PAGE>
PRICING
- --------------------------------------------------------------------------------
FBS FI
First Interstate Share Price: -- $132.275
Market Price: $50.875 $127.75
Book Value: $20.33 $47.95 (9/30/95)
Price/Market: -- 1.04x
Price/Book: 2.50x 2.76x
Price/'96 Earnings: 11.06x 11.96x (Based on
normalized
1996 FI
earnings of
$11.06/
share)
First Interstate Shares: -- 77.5 million
- ---------------------------------------------------------------------
Exchange Ratio: -- 2.6x
- ---------------------------------------------------------------------
FBS Shares Issued: -- 201.5 million
6
<PAGE>
ATTRACTIVE COMPLEMENTARY MARKETS
- --------------------------------------------------------------------------------
FBS FI OVERLAP COMBINED
States 11 13 3 21
MSAs 29 57 3 83
[MAP]
The map shows the states in which each of FBS and First Interstate
operates, and the states in which both entities operate. The map indicates
presence in the following states:
FBS Only First Interstate Only FBS and First Interstate
-------- --------------------- ------------------------
North Dakota Washington Montana
South Dakota Oregon Wyoming
Nebraska California Colorado
Kansas Nevada
Minnesota Idaho
Iowa Utah
Wisconsin Arizona
Illinois New Mexico
Texas
7
<PAGE>
ENHANCED RETAIL DISTRIBUTION
- --------------------------------------------------------------------------------
FBS* FI COMBINED
Branches 366 1,148 1,514
ATMs 2,896 1,796 4,692
Retail customers 3.1 4.5 7.6
(millions)
Cross-sell ratio 3.9 2.6 3.1
Business customers 236 226 462
(thousands)
_____________________________
* Pro forma with FirsTier
8
<PAGE>
STRONG MARKET POSITIONS
- --------------------------------------------------------------------------------
# OF PERCENT AVERAGE
RANK MSAs DEPOSITS COMPOSITION SHARE
1 14 $19.8 25 30.0
2 14 13.2 17 19.3
3 7 19.7 25 11.5
4 4 3.1 4 10.2
Lower 44 14.0 17 --
--------- --------- ------
Subtotal 83 $69.8 88
---------
---------
Non MSA 9.5 12
-------- ------
Total $79.3 100
-------- ------
-------- ------
________________________________________________________
Source: FDIC 6/30/94 - adjusted for acquisitions
9
<PAGE>
TOP MARKETS
- --------------------------------------------------------------------------------
MSA DEPOSITS SHARE RANK
Minneapolis/St. Paul 9,137,007 31.2 1
Los Angeles/Long Beach 9,113,989 7.2 3
Denver 5,597,856 28.1 1
Phoenix/Mesa 4,712,802 21.3 3
Houston 3,229,199 8.7 3
Portland/Vancouver 2,847,840 19.8 2
Seattle/Bellevue/Everett 2,608,081 10.1 4
Sacramento 2,469,495 18.4 2
San Diego 2,165,100 9.4 6
Las Vegas 2,146,420 23.4 2
Omaha 1,797,850 21.0 2
Orange County 1,740,508 5.2 5
Riverside/San Bernardino 1,145,193 6.3 3
Tucson 1,070,880 19.9 3
_________________________________________________________
Source: FDIC 6/30/94 - adjusted for acquisitions
10
<PAGE>
COMBINING THE STRENGTHS OF
TWO HIGH PERFORMING BANKS
- --------------------------------------------------------------------------------
FBS FI
STRENGTHS STRENGTHS
- --------------------------------------------------------------------------------
- Cost management - Low cost funding
- Technology - Excess core deposits
- Product/Distribution - Broad customer base
Paradigm
- --------------------------------------------------------------------------------
- GEOGRAPHIC DIVERSITY
- SUPERIOR CREDIT QUALITY
- CAPITAL MANAGEMENT
- CUSTOMER ORIENTATION
- --------------------------------------------------------------------------------
11
<PAGE>
POWERFUL BUSINESS LINE COMBINATIONS
- --------------------------------------------------------------------------------
CREDIT CARD FBS FI COMBINED
- - Sales $15 billion $2 billion $17 billion
- - Loans $2.5 billion $1.2 billion $3.7 billion
Dominant Visa
Corporate &
Purchasing card
provider
MERCHANT PROCESSING
- - Merchants 65,000 41,000 106,000
- - Sales $16 billion $4 billion $20 billion
6th largest 5th largest
CORPORATE TRUST $145 million $32 million $177 million
REVENUES Largest U.S.
provider
INDIRECT LENDING
- - Loans $1.9 billion $3.5 billion $5.4 billion
- - Dealers 1,000 900 1,900
- - Organizations $1.0 billion $2.0 billion $3.0 billion
12
<PAGE>
POWERFUL BUSINESS LINE COMBINATIONS
- --------------------------------------------------------------------------------
$ Billions
FBS FI COMBINED
ASSETS UNDER MANAGEMENT $29.0 $22.5 $51.5
PROPRIETARY MUTUAL FUNDS
- Number 25 18 43
- Assets Under Management $7.0 $4.8 $11.8
13
<PAGE>
PRO FORMA BALANCE SHEET
- --------------------------------------------------------------------------------
9/30/95
<TABLE>
<CAPTION>
COMBINED
FBS FI ADJUSTMENTS PRO FORMA
<S> <C> <C> <C> <C>
Net loans 27,809 35,120 250 63,179
Investment securities 4,405 9,432 (4,000) 9,837
Goodwill 931 697 -- 1,628
Other assets 4,178 9,818 (390) 13,606
------- ------- ------- -------
Total assets 37,323 55,067 (4,140) 88,250
------- ------- ------- -------
------- ------- ------- -------
Deposits 25,050 48,236 -- 73,286
Funds purchased 4,361 376 (4,000) 737
Long term debt 3,345 1,368 -- 4,713
Other liabilities 1,118 1,106 -- 2,224
------- ------- ------- -------
Total liabilities 33,874 51,086 (4,000) 80,960
Preferred stock 105 350 -- 455
Common equity 3,344 3,631 (140) 6,835
------- ------- ------- -------
Total equity 3,449 3,981 (140) 7,290
------- ------- ------- -------
Total liabilities & equity 37,323 55,067 (4,140) 88,250
------- ------- ------- -------
------- ------- ------- -------
</TABLE>
_______________________________________________________
* Pro forma with FirsTier and BAC corporate trust
14
<PAGE>
CAPITAL
- --------------------------------------------------------------------------------
Percent
9/30/95
PRO FORMA
FBS* FI COMBINED
Common equity/assets 8.4 6.6 7.5
Tang. common equity/assets 6.1 5.5 5.8
Tier 1 6.6 7.3 6.9
Total Capital 11.3 10.3 10.7
Leverage 6.0 6.1 6.1
____________________________________
* Pro forma with FirsTier
15
<PAGE>
LOAN COMPOSITION
- --------------------------------------------------------------------------------
$ Millions
September 30, 1995
<TABLE>
<CAPTION>
PRO FORMA
FBS* FI COMBINED
----------------- --------------- ----------------
% OF % OF % OF
BALANCE TOTAL BALANCE TOTAL BALANCE TOTAL
<S> <C> <C> <C> <C> <C> <C>
Commercial 10,127 36 10,185 28 20,313 32
Commercial RE 3,212 11 5,948 17 9,159 14
------- ----- ------- ----- ------- -----
Total commercial 13,339 47 16,133 45 29,472 46
------- ----- ------- ----- ------- -----
Residential RE 5,366 19 6,634 18 12,000 19
Home equity/2nd mtg. 2,907 10 5,028 14 7,935 12
Credit card 2,542 9 1,226 3 3,768 6
Indirect 1,863 7 3,500 10 5,363 8
Other consumer 2,316 8 3,446 10 5,762 9
------- ----- ------- ----- ------- -----
Total consumer 14,994 53 19,834 55 34,828 54
------- ----- ------- ----- ------- -----
Total loans 28,333 100 35,967 100 64,300 100
------- ----- ------- ----- ------- -----
------- ----- ------- ----- ------- -----
</TABLE>
__________________________________________
* Pro forma with FirsTier
16
<PAGE>
CREDIT QUALITY
- --------------------------------------------------------------------------------
$ Millions
9/30/95
PRO FORMA
FBS FI COMBINED COMBINED
Nonperforming loans 127 140 267 267
OREO 51 66 117 117
---- ---- ---- ----
Nonperforming assets 178 206 384 384
Reserve for loan losses 524 847 1,371 1,121
Loans 28,333 35,967 64,300 64,300
Assets 37,323 55,067 92,390 88,250
NPLs/Loans (%) .45 .39 .41 .41
NPAs/Assets (%) .48 .37 .42 .44
NCOs/Loans annualized (%) .46 .43 .44 .44
Reserves/Loans (%) 1.85 2.35 2.13 1.74
Reserves/NPLs (%) 414 605 514 421
Reserves/NPAs (%) 294 411 357 292
17
<PAGE>
DEPOSIT COMPOSITION
- --------------------------------------------------------------------------------
$ Millions
September 30, 1995
<TABLE>
<CAPTION>
PRO FORMA
FBS* FI COMBINED
---------------- --------------- ---------------
% OF % OF % OF
BALANCE TOTAL BALANCE TOTAL BALANCE TOTAL
<S> <C> <C> <C> <C> <C> <C>
Noninterest bearing: 6,324 25 17,044 35 23,368 32
Interest bearing:
Interest checking 3,245 13 6,348 13 9,593 13
Money market 4,156 17 9,882 20 14,038 19
Other savings 1,770 7 5,547 11 7,317 10
Certificates 9,555 38 9,415 20 18,970 26
------- ----- ------- ----- ------- -----
Total int. bearing 18,726 75 31,192 65 49,918 68
------- ----- ------- ----- ------- -----
Total deposits 25,050 100 48,236 100 73,286 100
------- ----- ------- ----- ------- -----
------- ----- ------- ----- ------- -----
- --------------------------------------------------------------------------------
LOAN/DEPOSIT RATIO 113% 75% 88%
- --------------------------------------------------------------------------------
</TABLE>
_______________________________________
* Pro Forma with FirsTier
18
<PAGE>
HIGH COST TAKEOUTS
- --------------------------------------------------------------------------------
BASED ON FBS PRODUCT/DISTRIBUTION PARADIGM
- Product managers
- Standard products
- Centralized data processing and
operations
- Centralized staff
- Improved branch efficiency
- Alternative distribution channels
19
<PAGE>
RECENT BANK ACQUISITIONS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
WESTERN COLORADO METROPOLITAN FIRSTIER
BANK SHARES CAPITAL NATIONAL BOULEVARD FINANCIAL FINANCIAL
<S> <C> <C> <C> <C> <C> <C>
Assets ($ billion) $2.1 $2.5 $ 3.0 $ 1.6 $ 8.0 $ 3.6
Location Twin Cities Colorado Colorado Illinois Midwest Nebraska,
Iowa
- -------------------------------------------------------------------------------------------------
Est. Cost Savings
1993 35% 20% 7%
1994 45% 35% 35% 32%
1995 40% 30%
1996 35% 31%
1997 34%
- -------------------------------------------------------------------------------------------------
Closing 12/92 12/92 5/93 3/94 1/95 1Q96
Systems Integration 6/93 3/93 7/93 4/94 2/95 1Q96
</TABLE>
20
<PAGE>
COST TAKEOUTS
- --------------------------------------------------------------------------------
FTEs COSTS
------------------- ----------------------
NUMBER PERCENT $ MILLIONS PERCENT
Staff/Executive 850 68 110 66
Data Processing 450 50 80 39
Operations 2,280 29 110 25
Occupancy/F&E 40 10
Business Lines:
Retail 1,830 14 100 14
Payment Systems 250 50 30 50
Commercial 290 10 20 10
Trust 130 10 10 10
-------- -------
Total 6,080 22 500 22
-------- -------
-------- -------
21
<PAGE>
MERGER-RELATED CHARGES
- --------------------------------------------------------------------------------
$ Millions
Conversion costs $210
Severance 175
Occupancy/equipment writedowns 40
Other 50
------
Subtotal 475
Excess reserves (250)
------
Merger-related charges 225
Taxes (85)
------
Net merger-related charges $140
------
------
22
<PAGE>
FBS EPS ACCRETION
- --------------------------------------------------------------------------------
FBS
YEAR BASE* COMBINED ACCRETION PERCENT
1996 $4.60 $4.64 $0.04 0.8%
1997 5.15 6.09 0.94 18.2
1998 5.75 6.99 1.24 21.5
1999 6.55 8.07 1.52 23.2
2000 7.46 9.35 1.89 25.3
* at 12.8% CAGR
23
<PAGE>
1996 INCOME STATEMENT
(EXCLUDING MERGER-RELATED CHARGES)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
$ Millions, except EPS BUYBACK COST COMBINED
FBS FI COST TAKEOUT PRO FORMA
<S> <C> <C> <C> <C> <C>
Revenue 2,480 3,902 (9) 6,372
Provision 135 195 330
Expense 1,272 2,263 (125) 3,410
Taxes 408 556 (3) 48 1,008
------ ------ ------- -------- -------
Net income 665 888 (6) 77 1,624
Preferred dividend 31 31
------ ------ ------- -------- -------
Net income to common 665 857 (6) 77 1,593
------ ------ ------- -------- -------
------ ------ ------- -------- -------
Avg. shares outstanding 144.5 77.5 343.5
Earnings per share 4.60 11.06 4.64 +0.8%
accretion
ROA (%) 1.77 1.54 1.74
ROCE (%) 20.0 23.5 22.6
NIM (%) 4.80 5.56 5.39
Efficiency ratio (%) 51.2 58.0 53.5
</TABLE>
24
<PAGE>
1997 INCOME STATEMENT
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
$ Millions, except EPS BUYBACK COST COMBINED
FBS FI COST TAKEOUT PRO FORMA
<S> <C> <C> <C> <C> <C>
Revenue 2,696 4,135 (119) 6,712
Provision 197 214 411
Expense 1,298 2,308 (500) 3,106
Taxes 456 621 (45) 192 1,224
------ ------ ------ ------ -------
Net income 745 992 (74) 308 1,971
Preferred dividend 31 31
------ ------ ------ ------ -------
Net income to common 745 961 (74) 308 1,940
------ ------ ------ ------ -------
------ ------ ------ ------ -------
Avg. shares outstanding 144.5 77.5 318.6
Earnings per share 5.15 12.39 6.09 +18.2%
accretion
ROA (%) 1.79 1.65 2.03
ROCE (%) 21.0 24.6 26.5
NIM (%) 4.81 5.50 5.18
Efficiency ratio (%) 47.9 55.8 46.2
</TABLE>
25
<PAGE>
STOCK BUYBACKS CONTINUE
- --------------------------------------------------------------------------------
- Both FBS and FI have previously established
buyback programs
- Tainted shares less than 10% limit
- Current FBS program continues through 1Q96;
resumes 4Q96
- Management committed to return excess
capital to shareholders
26
<PAGE>
[LOGOS]
-REGISTRATION MARK-
<PAGE>
The following slides may be deemed to be proxy solicitation
material and accordingly the following information is required under SEC rules:
The participants in this solicitation may include 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), and the following executive
officers and employees of FBS: Richard A. Zona (Vice Chairman 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), Robert H. Sayre (Executive
Vice President, Human Resources), 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 are parties to an Agreement and Plan of
Merger, dated as of 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 commons stock held in such fiduciary
capacity and any other shares held by any pension plan of FBS or any affiliates
of FBS.
Although J.P. Morgan Securities Inc. does not admit that it or any of
its directors, officers, employees or affiliates is a "participant," as defined
in Schedule 14A promulgated under the Securities Exchange Act of 1934 by the
Securities and Exchange Commission, or that such Schedule 14A requires the
disclosure of certain information concerning J.P. Morgan Securities Inc., it may
assistant FBS in this solicitation. J.P. Morgan Securities Inc. engages in a
full range of investment banking, securities trading, market-making brokerage
services for institutional and individual clients. In the normal course of its
business, J.P. Morgan Securities Inc. 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.
Except as disclosed above, to the knowledge of FBS, none of FBS, the
directors or executive officers of FBS or the employees or other representatives
of FBS named above has any interest direct or indirect, by security holdings or
otherwise, in First Interstate.
<PAGE>
[LOGO] FBS/FI FRANCHISE
- --------------------------------------------------------------------------------
September 30, 1995
[MAP]
The map shows the states in which each of FBS and First Interstate
operates, and the states in which both entities operate. The map indicates
presence in the following states:
FBS Only First Interstate Only FBS and First Interstate
-------- --------------------- ------------------------
North Dakota Washington Montana
South Dakota Oregon Wyoming
Nebraska California Colorado
Kansas Nevada
Minnesota Idaho
Iowa Utah
Wisconsin Arizona
Illinois New Mexico
Texas
FBS*/FI PRO FORMA
Assets: $92.4 billion
U.S. Rank: 9th
Mkt cap (11/30): $16.7 billion
Offices: 1,514
ATM's: 4,692
* Pro forma with FirsTier
3
<PAGE>
[LOGO} BUILDING THE FRANCHISE
- --------------------------------------------------------------------------------
CAGR
1990 LOW -- 11/30/95
TOTAL RETURN
[BAR CHART]
FBS 41.7
WFC 38.9
___________________________
FBS low 10/31/90 - $9.625
WFC low 10/12/90 - $41.25
38
<PAGE>
[LOGO]
BUILDING THE FRANCHISE
- ------------------------------------------------------------------------------
CAGR 1990 - 1995*
NONINTEREST
REVENUE INCOME LOANS
[BAR GRAPH]
FBS 17.3 FBS 19.2 FBS 11.8
WFC 3.4 WFC 5.5 WFC** -2.6
________________________________________________________________________
* 1990 is originally reported data excluding subsequent acquisitions;
1995 is 9 months annualized
** Adding back $4 billion in loans sold in 1995
39
<PAGE>
[LOGO]
BUILDING THE FRANCHISE
- ------------------------------------------------------------------------------
CAGR 1990 - 1995*
NET INCOME EARNINS PER SHARE
[BAR GRAPH] (PRIMARY)
FBS 33.7 FBS 21.7
WFC 6.4 WFC 7.1
WFC** W/PROVISION 2.6 WFC** W/PROVISION 3.1
________________________________________________________________________
* 1990 is originally reported data excluding subsequent acquisitions;
1995 is 9 months annualized
** Assuming a normalized provision of 80 bp in 1995
40
<PAGE>
[LOGO]
BUILDING THE FRANCHISE
- ------------------------------------------------------------------------------
- Retail & Community Bank
- Payment Systems
- Corporate Trust
- First Interstate Merger
41
