<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): JANUARY 9, 1996
---------------
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>
Item 5. Other Events
------------
On January 9, 1996, First Bank System, Inc. ("the Company") released
its fourth quarter and full year 1995 earnings summary to the public.
The Company is hereby filing with the Securities and Exchange
Commission a copy of its press release dated January 9, 1996, as well
as materials used in the January 9, 1996 analyst conference call.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
------------------------------------------------------------------
c.) Exhibits
Exhibit 99.1 Press release of First Bank System, Inc. dated
January 9, 1996.
Exhibit 99.2 Materials used in the January 9, 1996, analyst
conference call.
INDEX TO EXHIBITS
Document
--------
99.1 Press release of First Bank System, Inc. dated
January 9, 1996
99.2 Materials used in the January 9, 1996, analyst conference
call.
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 hereunto duly authorized.
FIRST BANK SYSTEM, INC.
/s/ David J. Parrin
By ___________________________
David J. Parrin
Senior Vice President & Controller
Date: January 9, 1996
---------------
-2-
<PAGE>
Contact:
--------
Wendy L. Raway John R. Danielson
Media Relations Investor Relations
(612) 973-2429 (612) 973-2261
FIRST BANK SYSTEM REPORTS RECORD
--------------------------------
FOURTH QUARTER AND FULL YEAR 1995 EARNINGS
------------------------------------------
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------
4Q 4Q PERCENT PERCENT
EARNINGS SUMMARY 1995 1994 CHANGE 1995 1994 CHANGE
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
From continuing operations
before merger-related items:
Operating earnings (in millions) $ 150.7 $122.6 22.9 $568.1 $470.4 20.8
Earnings per common share (primary) 1.14 0.90 26.7 4.19 3.36 24.7
Earnings per common share (fully diluted) 1.12 0.90 24.4 4.11 3.32 23.8
Net income (in millions) 150.7 (35.3) nm 568.1 305.0 86.3
Earnings per common share (primary) 1.14 (0.28) nm 4.19 2.15 94.9
Earnings per common share (fully diluted) 1.12 (0.28) nm 4.11 2.14 92.1
Dividends paid per common share 0.3625 0.29 25.0 1.45 1.16 25.0
Book value per common share (period-end) 20.59 18.63 10.5
Return on average common equity* (%) 22.4 18.0 21.3 17.6
Return on average assets* (%) 1.80 1.43 1.73 1.40
Net interest margin (%) 4.83 4.79 4.91 4.74
Efficiency ratio* (%) 51.2 57.3 53.9 58.1
* from continuing operations and before merger-related items
- ------------------------------------------------------------------------------------------------------
</TABLE>
MINNEAPOLIS, January 9, 1996 -- First Bank System, Inc. (NYSE: FBS) today
reported record net income of $150.7 million, or $1.12 per fully diluted share,
for the fourth quarter of 1995, compared with operating income of $122.6
million, or $0.90 per share, in the fourth quarter of 1994. The reported net
loss for the fourth quarter of 1994 (including discontinued operations and
merger-related items) was $35.3 million, or $0.28 per share. Return on average
assets and return on average common equity were 1.80 percent and 22.4 percent,
respectively, in
<PAGE>
First Bank System Reports Fourth Quarter 1995 Results
January 9, 1996
Page 2
the fourth quarter of 1995, compared with returns of 1.43 percent and 18.0
percent in the fourth quarter of 1994, from continuing operations before merger-
related items.
The strong results for the fourth quarter reflected growth in noninterest
income, lower operating expenses, and effective capital management. Noninterest
income for the quarter increased $24.7 million, or 14.3 percent, from the fourth
quarter of 1994, excluding merger-related items. Total noninterest expense in
the fourth quarter of 1995 decreased $24.5 million, or 7.9 percent, from the
same period in 1994, excluding merger-related charges. The efficiency ratio, or
ratio of expenses to revenues, continued to improve, to 51.2 percent in the
fourth quarter of 1995 from 57.3 percent in the fourth quarter of 1994,
excluding merger-related charges.
A decrease of 3.5 million average common shares outstanding also contributed
to the improvement in earnings per share in the current quarter, compared with
the fourth quarter of 1994, reflecting stock buybacks primarily connected with
the Company's planned acquisition of FirsTier.
Fourth quarter net interest income on a taxable-equivalent basis was lower by
$6.5 million, or 1.8 percent, than in the fourth quarter of 1994. The decrease
in net interest income was primarily attributable to lower total earning assets
(as loan growth was more than offset by sales and maturities of securities) and
higher funding costs, including the cost of funding the buyback of common stock,
purchased primarily in connection with the planned acquisition of FirsTier. Net
interest income in the fourth quarter was $3.2 million higher than in the third
quarter (representing an annualized increase of 3.5 percent), reflecting
annualized loan growth (excluding residential mortgage loan balances) of 12.9
percent and a stable net interest margin. The provision for credit losses for
the quarter was up by $3.5 million, or 12.7 percent, from the provision in
fourth quarter 1994, before merger-related charges, while reserve coverage as a
percentage of nonperforming assets strengthened from 204 percent at the end of
1994 to 308 percent at the end of 1995.
<PAGE>
First Bank System Reports Fourth Quarter 1995 Results
January 9, 1996
Page 3
Net income in 1995 was $568.1 million, or $4.11 per fully diluted share,
compared with $470.4 million, or $3.32 per fully diluted share, from continuing
operations before merger-related items in 1994. On the same basis, return on
average assets and return on average common equity for 1995 were 1.73 percent
and 21.3 percent, respectively, compared with 1.40 percent and 17.6 percent,
respectively, for 1994. The improvement in annual earnings reflects increased
net interest income and noninterest income and lower noninterest expense.
Reported net income for 1994, including discontinued operations and merger-
related items, was $305.0 million, or $2.14 per fully diluted share.
Nonperforming assets dropped to $153.7 million at December 31, 1995, a
decrease of $13.2 million, or 7.9 percent, from September 30, 1995, and $78.6
million, or 33.8 percent, from December 31, 1994. The provision for credit
losses of $31.0 million exceeded net charge-offs of $29.0 million in the fourth
quarter. The ratio of net charge-offs to average loans improved to 0.44 percent
in the fourth quarter of 1995, compared with 0.77 percent in the fourth quarter
of 1994 and 0.47 in the third quarter of 1995. The ratio of the allowance for
credit losses to nonperforming loans continued to indicate very strong reserve
coverage at 401 percent, compared with 400 percent at the end of last quarter
and 283 percent at December 31, 1994.
First Bank System's Chairman, President and Chief Executive Officer, John F.
Grundhofer, said, "This has been another great quarter and year for us. We are
pleased to report continued record operating results and momentum in earnings
per share for the fourth quarter and for the year, reflecting growth in
revenues, as well as ongoing cost control and effective capital management. We
have just announced plans to begin marketing a cobranded Visa card with Target
Stores. This partnership will foster additional growth in our payment systems
business and is another step in our successful program to build the First Bank
System franchise." He added, "And, of course, we are particularly excited about
our upcoming merger with First Interstate Bancorp, which we believe provides
significant value for the shareholders of both
<PAGE>
First Bank System Reports Fourth Quarter 1995 Results
January 9, 1996
Page 4
companies. We are confident that these shareholders will recognize the superior
value offered by the First Bank/First Interstate combination and that the
transaction will be approved and completed in the first quarter of 1996."
On November 6, 1995, First Bank System and First Interstate Bancorp announced
that they had entered into a definitive agreement whereby First Bank System will
exchange 2.6 shares of its common stock for each share of First Interstate. The
new institution, which will use the First Interstate name, will have
approximately $90 billion in assets, $7 billion in shareholders' equity, and the
largest service territory west of the Mississippi among regional banks,
consisting of 7.6 million households, 1,514 branch locations and 4,692 ATMs in
21 states. The transaction is subject to shareholder and regulatory approvals.
On January 3, 1996, First Bank System and Target Stores announced that they
will offer a cobranded Visa credit card beginning in January 1996. This will be
the first cobranded card offered by a major discount retailer. Target serves
over one million shoppers a day through 673 stores in 33 states.
On December 21, 1995, First Bank System announced that it had received
approval from the Federal Reserve Board to complete its previously announced
acquisition of FirsTier Financial, Inc., with $3.6 billion in assets, $2.8
billion in deposits, and 63 offices in Nebraska and Iowa. The transaction,
subject to approval by the shareholders of FirsTier, is expected to close in
February 1996.
On December 8, 1995, the Company completed the sale of its Edina Realty
operations to a local investor group. The financial results of Edina Realty
have been accounted for as discontinued operations.
On November 1, 1995, First Bank System announced that it had completed its
previously announced acquisitions of First Bank of Omaha and Southwest Bank,
also of Omaha.
<PAGE>
First Bank System Reports Fourth Quarter 1995 Results
January 9, 1996
Page 5
On August 22, 1995, the Company announced that it had agreed to acquire the
corporate trust business of BankAmerica Corporation. With this acquisition,
First Bank System becomes the nation's largest provider of domestic corporate
trust services as measured by revenues. Most of this transaction closed in the
fourth quarter of 1995 and the transaction will be substantially completed in
the first quarter of 1996.
On September 7, 1995, First Bank System announced that it will seek a buyer
for most of its mortgage banking company and that it will instead deliver
mortgage loan products through its bank branches and telemarketing.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
INCOME STATEMENT HIGHLIGHTS
- -----------------------------------------------------------------------------------------------------------
(Taxable-equivalent basis, $ in millions,
except for earnings per share) 4Q 4Q PERCENT PERCENT
1995 1994 CHANGE 1995 1994 CHANGE
-----------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net interest income $363.7 $ 370.2 (1.8) $1,454.0 $1,434.5 1.4
Provision for credit losses 31.0 27.5 12.7 115.0 107.1 7.4
Noninterest income 197.3 172.6 14.3 783.1 670.1 16.9
Noninterest expense 287.3 311.8 (7.9) 1,205.9 1,224.1 (1.5)
------------------- ----------------------
Income from continuing operations
before taxes and merger-related items 242.7 203.5 19.3 916.2 773.4 18.5
Taxable-equivalent adjustment 3.4 3.6 (5.6) 13.8 15.1 (8.6)
Income taxes 88.6 77.3 14.6 334.3 287.9 16.1
------------------- ----------------------
Income from continuing operations
before merger-related items 150.7 122.6 22.9 568.1 470.4 20.8
Discontinued operations* -- (1.9) nm -- (8.5) nm
Merger-related items (after-tax) -- (156.0) nm -- (156.9) nm
------------------- ----------------------
Net income $150.7 ($35.3) nm $ 568.1 $ 305.0 86.3
=================== ======================
Earnings per share (fully diluted) $ 1.12 ($0.28) nm $ 4.11 $ 2.14 92.1
=================== ======================
* Edina Realty
- -----------------------------------------------------------------------------------------------------------
</TABLE>
Net Interest Income
- -------------------
Fourth quarter net interest income on a taxable-equivalent basis was $363.7
million, which was lower by $6.5 million, or 1.8 percent, than in the fourth
quarter of 1994, but $3.2 million, or 3.5 percent (on an annualized basis),
higher than in the third quarter of 1995. The improvement from the third quarter
was primarily attributable to an increase in average loan balances, which were
up by $486
<PAGE>
First Bank System Reports Fourth Quarter 1995 Results
January 9, 1996
Page 6
million, or 7.6 percent on an annualized basis, from the third quarter of 1995.
Excluding residential mortgage loan balances, average loans for the fourth
quarter increased by $659 million, or 12.9 percent on an annualized basis, from
the third quarter. The average yield on earning assets was lower in the fourth
quarter than in the third quarter, reflecting the latest reduction in market
interest rates. The average cost of interest-bearing liabilities in the fourth
quarter was essentially unchanged from that of the third quarter, however, as a
result of a shift in balances from deposits to borrowings. The net interest
margin in the fourth quarter of 1995 was essentially unchanged from that of the
third quarter.
The decline in net interest income in the fourth quarter of 1995, compared
with the same period of last year, was primarily attributable to a decrease in
the average balance of securities and an increase in funding costs, including
the cost of funding the repurchase of common stock. Partially offsetting the
impact of lower securities balances were the effects of increased average loan
balances and average loan yields. The yield on loans in the fourth quarter of
1995 averaged 8.88 percent, or 34 basis points higher than the yield of 8.54
percent in the fourth quarter of last year, reflecting increased market interest
rates in 1995. Average loans for the fourth quarter totaled $26.0 billion, or
7.0 percent higher than the total of $24.3 billion in the fourth quarter of last
year, as a result of growth in both nonmortgage consumer and commercial loans,
partially offset by a decrease in the balance of residential mortgage loans.
Excluding residential mortgage loan balances, average loans for the fourth
quarter increased by $2.0 billion, or 10.7 percent, over the same quarter in
1994, as demand for small business and middle market loans, credit cards, and
home equity loans remained strong.
<PAGE>
First Bank System Reports Fourth Quarter 1995 Results
January 9, 1996
Page 7
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------
AVERAGE LOANS
- -----------------------------------------------------------------------
($ IN MILLIONS)
4Q 3Q 4Q
1995 1995 1994
----------------------------
<S> <C> <C> <C>
Commercial $ 8,291 $ 8,091 $ 7,209
Financial institutions 915 814 832
Commercial real estate 2,985 2,746 2,791
----------------------------
Total commercial 12,191 11,651 10,832
Residential mortgage 5,026 5,199 5,352
Home equity and second mortgage 2,764 2,679 2,433
Credit card 2,428 2,347 2,264
Other 3,613 3,660 3,439
----------------------------
Total consumer 13,831 13,885 13,488
Total loans $26,022 $25,536 $24,320
============================
Total, excluding residential mortgage $20,996 $20,337 $18,968
============================
- -----------------------------------------------------------------------
</TABLE>
The increase in funding costs in the fourth quarter of 1995, compared with
the same period of last year, resulted from generally higher rates paid on
interest-bearing liabilities, as well as a shift in the mix of average balances
from lower cost deposits to higher cost borrowings. The average rate paid on
interest-bearing liabilities in the fourth quarter of 1995 was 4.75 percent, or
62 basis points higher than for same period in 1994. Average interest-bearing
deposits in the fourth quarter decreased $1.9 billion (10.3 percent) from the
fourth quarter of 1994. This decrease in average deposit balances reflects the
divestiture in 1995 of $848 million of deposits, as well as the national trend
over the past year of consumers moving funds into alternative investment
vehicles.
The net interest margin of 4.83 percent in the fourth quarter of 1995 was
slightly higher than the margin of 4.79 percent in the fourth quarter of 1994.
The effect of the shift in the mix of earning assets, from lower margin
securities and residential mortgage loan balances to higher yielding consumer
and commercial loans, effectively offset the impact of the shift in interest-
bearing liabilities from deposits to higher rate borrowings.
<PAGE>
First Bank System Reports Fourth Quarter 1995 Results
January 9, 1996
Page 8
For the year, net interest income on a taxable-equivalent basis was $1.45
billion, an increase of $19.5 million, or 1.4 percent, from 1994. The
improvement in net interest income resulted from a 103 basis-point increase in
the average yield on earning assets, reflecting increases in market interest
rates during 1994 and the first quarter of 1995, as well as a shift in the mix
of earning assets from securities and residential mortgage-related balances to
other commercial and consumer loan balances. Offsetting most of the effect of
the higher yield on assets was a similar increase, of 102 basis points, in
funding costs. Rates on deposits and borrowings were generally higher in 1995
than in 1994, and borrowings comprised a greater portion of interest-bearing
liabilities during 1995 than in 1994.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
NONINTEREST INCOME
- ----------------------------------------------------------------------------------------------------
($ in millions)
4Q 4Q PERCENT PERCENT
1995 1994 CHANGE 1995 1994 CHANGE
--------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Credit card fees $ 61.7 $ 50.3 22.7 $232.7 $ 179.0 30.0
Trust fees 47.8 41.7 14.6 175.3 159.2 10.1
Service charges on deposit accounts 30.4 30.7 (1.0) 123.7 127.3 (2.8)
Securities losses -- (1.0) nm -- (3.8) nm
Investment products 7.6 6.4 18.8 27.6 29.6 (6.8)
Other 49.8 44.5 11.9 192.8 178.8 7.8
------------------- ------------------
Subtotal 197.3 172.6 14.3 752.1 670.1 12.2
Gain on sale of branches -- -- nm 31.0 -- nm
Merger-related securities losses -- (111.2) nm -- (111.2) nm
------------------- ------------------
Total noninterest income $197.3 $ 61.4 221.3 $783.1 $ 558.9 40.1
=================== ==================
- ----------------------------------------------------------------------------------------------------
</TABLE>
Noninterest Income
- ------------------
Fourth quarter noninterest income was $197.3 million, or $24.7 million (14.3
percent) higher than in the same quarter of 1994, excluding merger-related
items. The improvement resulted primarily from growth in credit card and trust
fees. Credit card fees increased $11.4 million, or 22.7 percent, from the
fourth quarter of 1994, as a result of higher sales volumes for
<PAGE>
First Bank System Reports Fourth Quarter 1995 Results
January 9, 1996
Page 9
Purchasing Card, Corporate Card, the Northwest Airlines WorldPerks credit card
and merchant processing. Trust fees were up over the fourth quarter of 1994 by
$6.1 million, or 14.6 percent, reflecting growth in corporate and personal trust
fees. Investment product fees in the fourth quarter were higher by $1.2 million,
or 18.8 percent, than in the same period of last year, reflecting an increase in
sales of mutual funds.
For the year, noninterest income was $783.1 million, or $113.0 million (16.9
percent) higher in 1995 than in 1994, excluding merger-related items. Excluding
a $31.0 million gain on the sale of branches in 1995, noninterest income
increased $82.0 million, or 12.2 percent, over 1994 (before merger-related
items). Credit card fees were up $53.7 million, or 30.0 percent, and trust fees
were up $16.1 million, or 10.1 percent, over last year.
<TABLE>
<CAPTION>
NONINTEREST EXPENSE
- ------------------------------------------------------------------------------------------------------
($ in millions)
- ------------------------------------------------------------------------------------------------------
4Q 4Q PERCENT PERCENT
1995 1994 CHANGE 1995 1994 CHANGE
-------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Salaries $111.1 $116.5 (4.6) $ 441.0 $ 450.7 (2.2)
Employee benefits 20.4 24.4 (16.4) 96.4 105.7 (8.8)
Net occupancy 24.3 25.0 (2.8) 98.6 103.8 (5.0)
Furniture and equipment 22.4 22.6 (0.9) 94.2 88.3 6.7
Amortization of goodwill and intangibles 14.9 13.8 8.0 57.1 50.4 13.3
FDIC insurance 5.6 14.4 (61.1) 35.8 58.4 (38.7)
Advertising 8.1 8.5 (4.7) 32.0 35.5 (9.9)
Other personnel costs 12.5 8.6 45.3 40.9 35.7 14.6
Professional services 11.3 11.9 (5.0) 36.9 38.5 (4.2)
Data processing 4.9 5.6 (12.5) 17.8 20.3 (12.3)
Other 51.8 60.5 (14.4) 224.2 236.8 (5.3)
----------------- ---------------------
Subtotal 287.3 311.8 (7.9) 1,174.9 1,224.1 (4.0)
Nonrecurring charges -- -- nm 31.0 -- nm
Merger-related charges -- 123.9 nm -- 125.3 nm
----------------- ---------------------
Total noninterest expense $287.3 $435.7 (34.1) $1,205.9 $1,349.4 (10.6)
================= =====================
- ------------------------------------------------------------------------------------------------------
</TABLE>
Noninterest Expense
- -------------------
Fourth quarter noninterest expense totaled $287.3 million, a decrease of
$24.5 million, or 7.9 percent, from the fourth quarter of 1994, excluding
merger-related charges. The overall
<PAGE>
First Bank System Reports Fourth Quarter 1995 Results
January 9, 1996
Page 10
reduction from last year reflects ongoing expense control and efficiencies
realized through the integration of acquisitions. Salaries and employee benefits
expense for the fourth quarter decreased by $9.4 million, or 6.7 percent,
compared with expenses in the fourth quarter of 1994. FDIC insurance expense was
$8.8 million, or 61.1 percent, lower this quarter than in the same period of
last year because the FDIC lowered the premium rate in the third quarter of
1995, from 23 basis points to four basis points on deposits. Compared with the
same periods of 1994, amortization of goodwill and intangibles expense for the
fourth quarter and full year increased by $1.1 million, or 8.0 percent, and $6.7
million, or 13.3 percent, respectively, as a result of higher intangible
balances relating to recent acquisitions, including the BankAmerica corporate
trust business and the two Omaha banks. Most of the increase in other personnel
expense for both periods in 1995 resulted from contract programming costs
associated with several technology projects which are currently in progress.
For the year, noninterest expense was $1.21 billion in 1995, or $18.2 million
(1.5 percent) lower than in 1994, before merger-related charges. Included in
other noninterest expense in 1995, were nonrecurring charges of $31.0 million,
relating to a change in Company's policy for expensing software costs and the
write-off of miscellaneous other assets. Excluding these nonrecurring charges,
noninterest expense for 1995 decreased by $49.2 million, or 4.0 percent, from
last year (before merger-related charges). Salaries and benefits expense for
the year were $19.0 million, or 3.4 percent, lower than in 1994. FDIC insurance
expense in 1995 was lower by $22.6 million, or 38.7 percent, than in 1994 as a
result of the decrease this year in the premium rate charged by the FDIC. The
increase in furniture and equipment expense in 1995 was primarily related to
automated teller machines deployed in Circle K convenience stores late in 1994
and lobby automation and other equipment associated with acquisitions.
<PAGE>
First Bank System Reports Fourth Quarter 1995 Results
January 9, 1996
Page 11
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
ALLOWANCE FOR CREDIT LOSSES
- --------------------------------------------------------------------------------
($ in millions)
4Q 4Q
1995 1994 1995 1994
----------------------------------
<S> <C> <C> <C> <C>
Balance, beginning of period $468.5 $477.7 $474.7 $466.1
Net charge-offs (recoveries)
Commercial (6.7) 15.5 (13.6) 31.0
Consumer 35.7 31.6 134.6 109.3
----------------------------------
Total 29.0 47.1 121.0 140.3
Provision for credit losses 31.0 44.0 115.0 123.6
Net additions related to acquisitions 3.0 0.1 4.8 25.3
----------------------------------
Balance, end of period $473.5 $474.7 $473.5 $474.7
==================================
Net charge-offs to average loans (%) 0.44 0.77 0.48 0.59
Allowance for credit losses to
period-end loans (%) 1.79 1.93
- --------------------------------------------------------------------------------
</TABLE>
Credit Quality
- --------------
Credit quality continued to show strength in the fourth quarter of 1995.
Total net charge-offs for the current quarter were lower by $18.1 million, or
38.4 percent, than for the fourth quarter of 1994. Commercial loan net
recoveries for the quarter were $6.7 million, compared with net charge-offs of
$15.5 million in the fourth quarter of 1994. Consumer loan net charge-offs
increased $4.1 million, or 13.0 percent, from the fourth quarter of 1994,
reflecting higher loan balances and credit card sales volumes. The provision
for credit losses was $31.0 million this quarter, higher by $3.5 million, or
12.7 percent, than in the fourth quarter of 1994, before merger-related charges.
The allowance for credit losses was $473.5 million at December 31, 1995,
compared with $474.7 million at December 31, 1994 and $468.5 million at
September 30, 1995. The ratio of allowance for credit losses to nonperforming
loans was 401 percent, compared with 400 percent at the end of the third quarter
of 1995 and 283 percent at the end of the fourth quarter of 1994.
<PAGE>
First Bank System Reports Fourth Quarter 1995 Results
January 9, 1996
Page 12
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
ASSET QUALITY
- ---------------------------------------------------------------------------------------
($ in millions)
DEC 31 SEP 30 JUN 30 MAR 31 DEC 31
1995 1995 1995 1995 1994
----------------------------------------
<S> <C> <C> <C> <C> <C>
Nonperforming loans
Commercial $ 25.1 $ 22.6 $ 18.8 $ 21.7 $ 36.5
Financial institutions -- -- -- -- --
Commercial real estate 43.8 47.3 56.2 71.6 72.6
Consumer 49.3 47.2 45.5 54.8 58.8
-----------------------------------------
Total 118.2 117.1 120.5 148.1 167.9
Other real estate 33.2 46.6 50.5 63.7 64.0
Other nonperforming assets 2.3 3.2 3.7 3.9 0.4
-----------------------------------------
Total nonperforming assets* $153.7 $166.9 $174.7 $215.7 $232.3
=========================================
Accruing loans 90 days past due $ 38.8 $ 40.7 $ 34.1 $ 32.3 $ 23.4
=========================================
Allowance to nonperforming loans (%) 401 400 388 318 283
Allowance to nonperforming assets (%) 308 281 268 218 204
Nonperforming assets to loans
plus ORE (%) 0.58 0.64 0.68 0.85 0.94
* does not include accruing loans 90 days past due
- ---------------------------------------------------------------------------------------
</TABLE>
Nonperforming assets at December 31, 1995 totaled $153.7 million, down by
$13.2 million, or 7.9 percent, from the balance at September 30, 1995, and by
$78.6 million, or 33.8 percent, from the balance at December 31, 1994. The
ratio of nonperforming assets to loans and other real estate was 0.58 percent at
December 31, 1995, compared with 0.64 percent at September 30, 1995 and 0.94
percent at December 31, 1994.
<PAGE>
First Bank System Reports Fourth Quarter 1995 Results
January 9, 1996
Page 13
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
CAPITAL POSITION
- --------------------------------------------------------------------------------
(PERCENT)
DEC 31 SEP 30 JUN 30 MAR 31 DEC 31
1995 1995 1995 1995 1994
------------------------------------------
<S> <C> <C> <C> <C> <C>
Common equity to assets 7.7 8.0 8.1 8.1 7.3
Tangible common equity to assets* 6.5 6.8 6.9 6.9 6.2
Total shareholders' equity to assets 8.0 8.3 8.4 8.4 7.7
* calculated by deducting goodwill from common equity and assets
- --------------------------------------------------------------------------------
</TABLE>
Capital
- -------
At December 31, 1995, the common-equity-to-assets ratio was 7.7 percent,
compared with the ratio of 7.3 percent at December 31, 1994, and the regional
bank peer group average of 7.4 percent at September 30, 1995. Total
shareholders' equity-to-assets at December 31, 1995 was 8.0 percent, compared
with 7.7 percent at December 31, 1994, and a peer group average of 7.9 percent
at September 30, 1995.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
COMMON SHARES
- --------------------------------------------------------------------------------
(MILLIONS)
4Q 3Q 2Q 1Q YEAR
1995 1995 1995 1995 1995
---------------------------------
<S> <C> <C> <C> <C> <C>
Beginning shares outstanding 129.4 133.4 135.4 133.8 133.8
Shares issued for:
Acquisitions 1.2 -- -- 1.6 2.8
Stock option and stock purchase plans
and other corporate purposes 0.7 0.3 0.7 1.0 2.7
---------------------------------
1.9 0.3 0.7 2.6 5.5
Shares repurchased (4.0) (4.3) (2.7) (1.0) (12.0)
---------------------------------
Ending shares outstanding 127.3 129.4 133.4 135.4 127.3
=================================
- --------------------------------------------------------------------------------
</TABLE>
In the fourth quarter, First Bank System purchased 4.0 million shares of its
common stock primarily in connection with the planned acquisition of FirsTier.
These programs allow for the Company to repurchase up to a total of 24.3 million
shares by the end of 1996. During 1995, First Bank System purchased 12.0
million shares related to the share repurchase programs and for purchase
business combinations.
<PAGE>
First Bank System Reports Fourth Quarter 1995 Results
January 9, 1996
Page 14
First Bank System is a regional bank holding company headquartered in
Minneapolis. The Company provides complete financial services to individuals and
institutions through 9 banks, a savings association and other financial
companies with approximately 350 offices, located primarily in the 11 states of
Minnesota, Colorado, North Dakota, South Dakota, Montana, Illinois, Wisconsin,
Iowa, Kansas, Nebraska and Wyoming.
###
<PAGE>
<TABLE>
<CAPTION>
First Bank System, Inc. and Subsidiaries
CONSOLIDATED STATEMENT OF INCOME
Three Months Ended Year Ended
-------------------------------------------------------
December 31 December 31 December 31 December 31
(In Millions, Except Per-Share Data) 1995 1994 1995 1994
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INTEREST INCOME (Unaudited)
Loans $580.4 $521.4 $2,273.4 $1,914.7
Securities:
Taxable 50.8 85.9 226.0 327.9
Exempt from federal income taxes 2.8 2.9 11.2 12.0
Other interest income 8.2 9.7 34.6 33.5
-------------------------------------------------------
Total interest income 642.2 619.9 2,545.2 2,288.1
INTEREST EXPENSE
Deposits 168.5 164.2 706.7 597.3
Federal funds purchased and repurchase agreements 30.5 36.6 118.1 103.1
Other short-term funds borrowed 33.4 8.9 90.2 20.4
Long-term debt 49.5 43.6 190.0 147.9
-------------------------------------------------------
Total interest expense 281.9 253.3 1,105.0 868.7
-------------------------------------------------------
Net interest income 360.3 366.6 1,440.2 1,419.4
Provision for credit losses 31.0 44.0 115.0 123.6
-------------------------------------------------------
Net interest income after provision for credit losses 329.3 322.6 1,325.2 1,295.8
NONINTEREST INCOME
Credit card fees 61.7 50.3 232.7 179.0
Trust fees 47.8 41.7 175.3 159.2
Service charges on deposit accounts 30.4 30.7 123.7 127.3
Insurance commissions 5.9 7.8 26.7 29.2
Securities losses -- (112.2) -- (115.0)
Gain on sale of branches -- -- 31.0 --
Other 51.5 43.1 193.7 179.2
-------------------------------------------------------
Total noninterest income 197.3 61.4 783.1 558.9
NONINTEREST EXPENSE
Salaries 111.1 116.5 441.0 450.7
Employee benefits 20.4 24.4 96.4 105.7
Net occupancy 24.3 25.0 98.6 103.8
Furniture and equipment 22.4 22.6 94.2 88.3
Amortization of goodwill and other intangible assets 14.9 13.8 57.1 50.4
FDIC insurance 5.6 14.4 35.8 58.4
Advertising 8.1 8.5 32.0 35.5
Other personnel costs 12.5 8.6 40.9 35.7
Professional services 11.3 11.9 36.9 38.5
Data processing 4.9 5.6 17.8 20.3
Merger and integration -- 64.8 -- 66.2
Merger-related severance -- 56.5 -- 56.5
Other 51.8 63.1 255.2 239.4
-------------------------------------------------------
Total noninterest expense 287.3 435.7 1,205.9 1,349.4
-------------------------------------------------------
Income (loss) from continuing operations before income taxes 239.3 (51.7) 902.4 505.3
Applicable income taxes (credit) 88.6 (18.3) 334.3 191.8
-------------------------------------------------------
Income (loss) from continuing operations 150.7 (33.4) 568.1 313.5
Loss from discontinued operations -- (1.9) -- (8.5)
-------------------------------------------------------
Net income (loss) $150.7 ($35.3) $568.1 $305.0
-------------------------------------------------------
Net income (loss) applicable to common equity $148.8 ($37.6) $560.6 $292.4
-------------------------------------------------------
EARNINGS PER COMMON SHARE
Primary average common and common equivalent shares 130,635,206 134,124,412 133,936,030 136,274,991
Primary income (loss) from continuing operations $1.14 ($.27) $4.19 $2.21
Primary loss from discontinued operations -- (.01) -- (.06)
-------------------------------------------------------
Primary net income (loss) $1.14 ($.28) $4.19 $2.15
-------------------------------------------------------
Fully diluted average common and common equivalent shares 134,204,414 134,124,412 138,148,158 140,128,566
Fully diluted income (loss) from continuing operations $1.12 ($.27) $4.11 $2.20
Fully diluted loss from discontinued operations -- (.01) -- (.06)
-------------------------------------------------------
Fully diluted net income (loss) $1.12 ($.28) $4.11 $2.14
-------------------------------------------------------
</TABLE>
<PAGE>
First Bank System, Inc. and Subsidiaries
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
December 31 December 31
(In Millions) 1995 1994
- --------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Cash and due from banks $1,837 $1,707
Federal funds sold 35 135
Securities purchased under agreements to resell 230 336
Trading account securities 86 77
Available-for-sale securities 3,256 5,185
Loans 26,400 24,556
Less allowance for credit losses 474 475
--------------------------
Net loans 25,926 24,081
Bank premises and equipment 413 479
Interest receivable 197 198
Customers' liability on acceptances 223 178
Other assets 1,671 1,752
--------------------------
Total assets $33,874 $34,128
==========================
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Noninterest-bearing $6,357 $5,933
Interest-bearing 16,157 18,323
--------------------------
Total deposits 22,514 24,256
Federal funds purchased 2,000 1,630
Securities sold under agreements to repurchase 269 938
Other short-term funds borrowed 2,116 658
Long-term debt 3,201 2,981
Acceptances outstanding 223 178
Other liabilities 826 875
--------------------------
Total liabilities 31,149 31,516
Shareholders' equity:
Preferred stock 103 118
Common stock 170 168
Capital surplus 909 866
Retained earnings 1,918 1,593
Unrealized gain (loss) on securities, net of tax 23 (106)
Treasury stock (398) (27)
--------------------------
Total shareholders' equity 2,725 2,612
--------------------------
Total liabilities and shareholders' equity $33,874 $34,128
==========================
</TABLE>
<PAGE>
First Bank System, Inc. and Subsidiaries
CONSOLIDATED STATEMENT OF INCOME
<TABLE>
<CAPTION>
Three Months Ended
-----------------------------------------------------------------------------
(In Millions, Except Per-Share Data) December 31 September 30 June 30 March 31 December 31
(Unaudited) 1995 1995 1995 1995 1994
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Interest Income
Loans $580.4 $573.8 $572.0 $547.2 $521.4
Securities:
Taxable 50.8 52.6 56.1 66.5 85.9
Exempt from federal income taxes 2.8 2.8 2.8 2.8 2.9
Other interest income 8.2 8.3 9.0 9.1 9.7
-----------------------------------------------------------------------------
Total interest income 642.2 637.5 639.9 625.6 619.9
Interest Expense
Deposits 168.5 173.0 186.8 178.4 164.2
Federal funds purchased and repurchase agreements 30.5 24.8 31.9 30.9 36.6
Other short-term funds borrowed 33.4 34.6 15.7 6.5 8.9
Long-term debt 49.5 48.0 46.0 46.5 43.6
-----------------------------------------------------------------------------
Total interest expense 281.9 280.4 280.4 262.3 253.3
-----------------------------------------------------------------------------
Net interest income 360.3 357.1 359.5 363.3 366.6
Provision for credit losses 31.0 31.0 27.0 26.0 44.0
-----------------------------------------------------------------------------
Net interest income after provision for
credit losses 329.3 326.1 332.5 337.3 322.6
Noninterest Income
Credit card fees 61.7 62.7 56.7 51.6 50.3
Trust fees 47.8 42.8 43.0 41.7 41.7
Service charges on deposit accounts 30.4 30.9 30.3 32.1 30.7
Insurance commissions 5.9 7.5 7.0 6.3 7.8
Securities losses -- -- -- -- (112.2)
Gain on sale of branches -- 31.0 -- -- --
Other 51.5 41.6 52.7 47.9 43.1
-----------------------------------------------------------------------------
Total noninterest income 197.3 216.5 189.7 179.6 61.4
Noninterest Expense
Salaries 111.1 108.0 109.8 112.1 116.5
Employee benefits 20.4 22.1 25.4 28.5 24.4
Net occupancy 24.3 24.3 24.3 25.7 25.0
Furniture and equipment 22.4 23.5 24.8 23.5 22.6
Amortization of goodwill and other intangible assets 14.9 13.9 14.2 14.1 13.8
FDIC insurance 5.6 2.8 13.8 13.6 14.4
Advertising 8.1 8.4 9.2 6.3 8.5
Other personnel costs 12.5 11.0 9.8 7.6 8.6
Professional services 11.3 8.5 10.5 6.6 11.9
Data processing 4.9 4.2 4.4 4.3 5.6
Merger and integration -- -- -- -- 64.8
Merger-related severance -- -- -- -- 56.5
Other 51.8 84.4 57.0 62.0 63.1
-----------------------------------------------------------------------------
Total noninterest expense 287.3 311.1 303.2 304.3 435.7
-----------------------------------------------------------------------------
Income (loss) from continuing operations
before income taxes 239.3 231.5 219.0 212.6 (51.7)
Applicable income taxes (credit) 88.6 85.8 81.1 78.8 (18.3)
-----------------------------------------------------------------------------
Income (loss) from continuing operations 150.7 145.7 137.9 133.8 (33.4)
Loss from discontinued operations -- -- -- -- (1.9)
-----------------------------------------------------------------------------
Net income (loss) $150.7 $145.7 $137.9 $133.8 ($35.3)
-----------------------------------------------------------------------------
Net income (loss) applicable to common equity $148.8 $143.9 $136.0 $131.9 ($37.6)
-----------------------------------------------------------------------------
Earnings Per Common Share
Primary average common and common equivalent
shares 130,635,206 133,648,942 135,855,386 135,545,733 134,124,412
Primary income (loss) from continuing operations $1.14 $1.08 $1.00 $.97 ($.27)
Primary loss from discontinued operations -- -- -- -- (.01)
Primary net income (loss) -----------------------------------------------------------------------------
$1.14 $1.08 $1.00 $.97 ($.28)
-----------------------------------------------------------------------------
Fully diluted average common and common
equivalent shares 134,204,414 137,623,189 139,508,911 139,604,166 134,124,412
Fully diluted income (loss) from continuing
operations $1.12 $1.06 $.99 $.96 ($.27)
Fully diluted loss from discontinued operations -- -- -- -- (.01)
-----------------------------------------------------------------------------
Fully diluted net income (loss) $1.12 $1.06 $.99 $.96 ($.28)
-----------------------------------------------------------------------------
</TABLE>
<PAGE>
First Bank System, Inc. and Subsidiaries
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
December 31 September 30 June 30 March 31 December 31
(In Millions) 1995 1995 1995 1995 1994
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
(Unaudited) (Unaudited) (Unaudited)
ASSETS
Cash and due from banks $ 1,837 $ 1,586 $ 1,772 $ 1,598 $ 1,707
Federal funds sold 35 27 47 26 135
Securities purchased under agreements to resell 230 233 380 227 336
Trading account securities 86 164 202 90 77
Available-for-sale securities 3,256 3,302 3,426 3,535 5,185
Loans 26,400 25,877 25,699 25,215 24,556
Less allowance for credit losses 474 469 467 470 475
-------------------------------------------------------------------
Net loans 25,926 25,408 25,232 24,745 24,081
Bank premises and equipment 413 410 438 475 479
Interest receivable 197 189 192 185 198
Customers' liability on acceptances 223 165 165 189 178
Other assets 1,671 1,474 1,602 1,642 1,752
------------------------------------------------------------------
Total assets $33,874 $32,958 $33,456 $32,712 $34,128
==================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Noninterest-bearing $ 6,357 $ 5,779 $ 5,749 $ 5,346 $ 5,933
Interest-bearing 16,157 16,116 17,100 18,131 18,323
------------------------------------------------------------------
Total deposits 22,514 21,895 22,849 23,477 24,256
Federal funds purchased 2,000 1,330 1,539 1,839 1,630
Securities sold under agreements to repurchase 269 272 380 440 938
Other short-term funds borrowed 2,116 2,554 2,085 275 658
Long-term debt 3,201 3,127 2,793 2,917 2,981
Acceptances outstanding 223 165 165 189 178
Other liabilities 826 879 828 818 875
Total liabilities ------------------------------------------------------------------
31,149 30,222 30,639 29,955 31,516
Shareholders' equity:
Preferred stock 103 105 106 106 118
Common stock 170 169 169 169 168
Capital surplus 909 900 898 868 866
Retained earnings 1,918 1,837 1,746 1,671 1,593
Unrealized gain (loss) on securities, net of tax 23 (3) (11) (57) (106)
Treasury stock (398) (272) (91) -- (27)
------------------------------------------------------------------
Total shareholders' equity 2,725 2,736 2,817 2,757 2,612
------------------------------------------------------------------
Total liabilities and shareholders' equity $33,874 $32,958 $33,456 $32,712 $34,128
==================================================================
</TABLE>
<PAGE>
First Bank System, Inc. and Subsidiaries
CONSOLIDATED QUARTERLY AVERAGE BALANCE SHEET
<TABLE>
<CAPTION>
(In Millions) December 31 September 30 June 30 March 31 December 31
(Unaudited) 1995 1995 1995 1995 1994
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ASSETS
Securities:
U.S. Treasury $922 $919 $988 $1,065 $1,253
Mortgage-backed securities 1,752 1,831 1,920 2,464 3,547
State & political subdivisions 177 173 177 175 182
U.S. agencies and other 426 433 488 551 652
- ------------------------------------------------------------------------------------------------------------------------
Total securities 3,277 3,356 3,573 4,255 5,634
Unrealized gain (loss) on available-for-sale securities 18 (13) (50) (138) (160)
- ------------------------------------------------------------------------------------------------------------------------
Net securities 3,295 3,343 3,523 4,117 5,474
Trading account securities 108 87 93 82 97
Federal funds sold and resale agreements 253 263 293 311 359
Loans:
Commercial:
Commercial 8,291 8,091 8,166 7,496 7,209
Financial institutions 915 814 642 724 832
Real Estate:
Commercial mortgage 2,615 2,406 2,428 2,444 2,480
Construction 370 340 363 357 311
- ------------------------------------------------------------------------------------------------------------------------
Total commercial 12,191 11,651 11,599 11,021 10,832
Consumer:
Residential mortgage 4,710 4,841 5,003 5,069 5,118
Residential mortgage held for sale 316 358 210 174 234
Home equity and second mortgage 2,764 2,679 2,587 2,445 2,433
Credit card 2,428 2,347 2,292 2,294 2,264
Other 3,613 3,660 3,673 3,589 3,439
- ------------------------------------------------------------------------------------------------------------------------
Total consumer 13,831 13,885 13,765 13,571 13,488
- ------------------------------------------------------------------------------------------------------------------------
Total loans 26,022 25,536 25,364 24,592 24,320
Allowance for credit losses 472 469 473 478 484
- ------------------------------------------------------------------------------------------------------------------------
Net loans 25,550 25,067 24,891 24,114 23,836
Other earning assets 244 238 236 226 272
- ------------------------------------------------------------------------------------------------------------------------
Total earning assets* 29,904 29,480 29,559 29,466 30,682
Cash and due from banks 1,613 1,659 1,709 1,677 1,827
Other assets 2,097 2,111 2,160 2,175 2,166
- ------------------------------------------------------------------------------------------------------------------------
Total assets $33,160 $32,768 $32,905 $32,702 $34,031
========================================================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Noninterest-bearing deposits $5,799 $5,591 $5,435 $5,511 $6,028
Interest-bearing deposits:
Interest checking 2,753 2,728 2,854 2,967 2,879
Money market accounts 3,891 3,871 3,928 3,739 3,847
Other savings accounts 1,590 1,633 1,697 1,933 2,208
Savings certificates 6,986 7,256 8,107 8,347 7,816
Certificates over $100,000 976 1,028 1,160 1,078 1,298
- ------------------------------------------------------------------------------------------------------------------------
Total interest-bearing deposits 16,196 16,516 17,746 18,064 18,048
Short-term borrowings 4,198 3,928 3,077 2,535 3,390
Long-term debt 3,146 2,892 2,876 2,935 2,872
- ------------------------------------------------------------------------------------------------------------------------
Total interest-bearing liabilities 23,540 23,336 23,699 23,534 24,310
Other liabilities 1,077 1,043 995 1,020 930
Preferred equity 104 105 106 106 118
Common equity 2,629 2,701 2,701 2,623 2,744
Unrealized gain (loss) on AFS securities, net of taxes 11 (8) (31) (92) (99)
- ------------------------------------------------------------------------------------------------------------------------
Total liabilities and shareholders' equity $33,160 $32,768 $32,905 $32,702 $34,031
========================================================================================================================
</TABLE>
* Before deducting the allowance for credit losses and excluding the unrealized
gain or loss on available-for-sale securities.
<PAGE>
First Bank System, Inc. and Subsidiaries
CONSOLIDATED DAILY AVERAGE BALANCE SHEET AND RELATED YIELDS AND RATES
<TABLE>
<CAPTION>
1995 1994
----------------------------------------------------------- % Change
For the Three Months Ended December 31 Interest Interest Average
Yields Yields Balance
(In Millions) and and Increase
(Unaudited) Balance Interest Rates Balance Interest Rates (Decrease)
- -------------------------------------------------------------------------------------------------------------------------
Assets
<S> <C> <C> <C> <C> <C> <C> <C>
U.S. Treasury $922 $14.6 6.28% $1,253 $16.9 5.35% (26.4)%
Mortgage-backed securities 1,752 29.7 6.73 3,547 59.1 6.61 (50.6)
State & political subdivisions 177 4.7 10.53 182 4.9 10.68 (2.7)
U.S. agencies and other 426 6.1 5.68 652 9.4 5.72 (34.7)
------------------- -----------------
Total securities 3,277 55.1 6.67 5,634 90.3 6.36 (41.8)
Unrealized gain (loss) on available-for-sale
securities 18 (160)
--------- --------
Net securities 3,295 5,474
Trading account securities 108 1.5 5.51 97 1.2 4.91 11.3
Federal funds sold and resale agreements 253 3.4 5.33 359 4.6 5.08 (29.5)
Loans:
Commercial:
Commercial 8,291 172.5 8.25 7,209 144.4 7.95 15.0
Financial institutions 915 9.5 4.12 832 7.0 3.34 10.0
Real estate:
Commercial mortgage 2,615 59.6 9.04 2,480 54.0 8.64 5.4
Construction 370 8.7 9.33 311 6.8 8.67 19.0
------------------- ----------------
Total commercial 12,191 250.3 8.15 10,832 212.2 7.77 12.5
Consumer:
Residential mortgage 4,710 90.0 7.58 5,118 91.6 7.10 (8.0)
Residential mortgage held for sale 316 6.0 7.53 234 4.5 7.63 35.0
Home equity and second mortgage 2,764 67.8 9.73 2,433 55.6 9.07 13.6
Credit card 2,428 73.6 12.03 2,264 69.2 12.13 7.2
Other 3,613 94.5 10.38 3,439 90.4 10.43 5.1
------------------- ----------------
Total consumer 13,831 331.9 9.52 13,488 311.3 9.16 2.5
------------------- ----------------
Total loans 26,022 582.2 8.88 24,320 523.5 8.54 7.0
Allowance for credit losses 472 484 (2.5)
--------- --------
Net loans 25,550 23,836 7.2
Other earning assets 244 3.4 5.53 272 3.9 5.69 (10.3)
------------------- ----------------
Total earning assets* 29,904 645.6 8.57 30,682 623.5 8.06 (2.5)
Cash and due from banks 1,613 1,827 (11.7)
Other assets 2,097 2,166 (3.2)
--------- --------
Total assets $33,160 $34,031 (2.6)%
========= ========
Liabilities and Shareholders' Equity
Noninterest-bearing deposits $5,799 $6,028 (3.8)%
Interest-bearing deposits:
Interest checking 2,753 10.2 1.47 2,879 11.1 1.53 (4.4)
Money market accounts 3,891 36.6 3.73 3,847 31.1 3.21 1.1
Other savings accounts 1,590 9.4 2.35 2,208 13.5 2.43 (28.0)
Savings certificates 6,986 96.2 5.46 7,816 89.4 4.54 (10.6)
Certificates over $100,000 976 16.1 6.54 1,298 19.1 5.84 (24.8)
------------------- ----------------
Total interest-bearing deposits 16,196 168.5 4.13 18,048 164.2 3.61 (10.3)
Short-term borrowings 4,198 63.9 6.04 3,390 45.5 5.32 23.8
Long-term debt 3,146 49.5 6.24 2,872 43.6 6.02 9.5
------------------- ----------------
Total interest-bearing liabilities 23,540 281.9 4.75 24,310 253.3 4.13 (3.2)
Other liabilities 1,077 930 15.8
Preferred equity 104 118 (11.9)
Common equity 2,629 2,744 (4.2)
Unrealized gain (loss) on available-for-sale
securities, net of taxes 11 (99) (111.1)
--------- ---------
Total liabilities and shareholders'
equity $33,160 $34,031 (2.6)%
========= =========
Net interest income $363.7 $370.2
======= =======
Gross interest margin 3.82% 3.93%
------- -------
Gross interest margin without taxable-equivalent increments 3.77% 3.89%
------- -------
Net interest margin 4.83% 4.79%
------- -------
Net interest margin without taxable-equivalent increments 4.78% 4.74%
------- -------
</TABLE>
Interest and rates are presented on a fully taxable-equivalent basis under a tax
rate of 35 percent.
Interest income and rates on loans include loan fees. Nonaccrual loans are
included in average loan balances.
* Before deducting the allowance for credit losses and excluding the unrealized
gain (loss) on available-for-sale securities.
<PAGE>
<TABLE>
<CAPTION>
First Bank System, Inc. and Subsidiaries
CONSOLIDATED DAILY AVERAGE BALANCE SHEET AND RELATED YIELDS AND RATES
1995 1994
----------------------------------------------------------- % Change
For the Year Ended December 31 Interest Interest Average
Yields Yields Balance
(In Millions) and and Increase
(Unaudited) Balance Interest Rates Balance Interest Rates (Decrease)
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Securities:
U.S. Treasury $ 973 $ 60.6 6.23% $ 1,574 $ 82.8 5.26% (38.2)%
Mortgage-backed securities 1,989 135.5 6.81 3,288 208.7 6.35 (39.5)
State & political subdivisions 176 18.6 10.57 188 20.0 10.64 (6.4)
U.S. agencies and other 474 28.3 5.97 619 34.4 5.56 (23.4)
------------------ ------------------
Total securities 3,612 243.0 6.73 5,669 345.9 6.10 (36.3)
Unrealized loss on available-for-sale
securities (45) (69)
-------- -------
Net securities 3,567 5,600
Trading account securities 92 5.0 5.43 73 3.4 4.66 26.0
Federal funds sold and resale agreements 280 16.2 5.79 405 16.5 4.07 (30.9)
Loans:
Commercial:
Commercial 8,013 687.8 8.58 6,832 506.6 7.42 17.3
Financial institutions 774 31.7 4.10 1,146 30.1 2.63 (32.5)
Real estate:
Commercial mortgage 2,474 223.4 9.03 2,365 202.2 8.55 4.6
Construction 358 33.7 9.41 268 21.4 7.99 33.6
------------------ ------------------
Total commercial 11,619 976.6 8.41 10,611 760.3 7.17 9.5
Consumer:
Residential mortgage 4,904 371.9 7.58 5,345 385.6 7.21 (8.3)
Residential mortgage held for sale 265 20.3 7.66 387 27.4 7.08 (31.5)
Home equity and second mortgage 2,620 253.5 9.68 2,223 193.2 8.69 17.9
Credit card 2,341 290.5 12.41 2,054 248.9 12.12 14.0
Other 3,634 368.5 10.14 3,243 308.3 9.51 12.1
------------------ ------------------
Total consumer 13,764 1,304.7 9.48 13,252 1,163.4 8.78 3.9
------------------ ------------------
Total loans 25,383 2,281.3 8.99 23,863 1,923.7 8.06 6.4
Allowance for credit losses 473 486 (2.7)
-------- -------
Net loans 24,910 23,377 6.6
Other earning assets 236 13.5 5.72 255 13.7 5.37 (7.5)
------------------ ------------------
Total earning assets* 29,603 2,559.0 8.64 30,265 2,303.2 7.61 (2.2)
Cash and due from banks 1,664 1,749 (4.9)
Other assets 2,137 2,086 2.4
-------- -------
Total assets $32,886 $33,545 (2.0)%
======== =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Noninterest-bearing deposits $5,584 $6,310 (11.5)%
Interest-bearing deposits:
Interest checking 2,825 44.5 1.58 2,940 44.4 1.51 (3.9)
Money market accounts 3,858 145.3 3.77 4,035 110.2 2.73 (4.4)
Other savings accounts 1,712 42.1 2.46 2,245 49.5 2.20 (23.7)
Savings certificates 7,669 404.8 5.28 7,750 315.4 4.07 (1.0)
Certificates over $100,000 1,060 70.0 6.60 1,381 77.8 5.63 (23.2)
------------------ ------------------
Total interest-bearing deposits 17,124 706.7 4.13 18,351 597.3 3.25 (6.7)
Short-term borrowings 3,440 208.3 6.06 2,658 123.5 4.65 29.4
Long-term debt 2,963 190.0 6.41 2,609 147.9 5.67 13.6
------------------ ------------------
Total interest-bearing liabilities 23,527 1,105.0 4.70 23,618 868.7 3.68 (0.4)
Other liabilities 1,036 871 18.9
Preferred equity 105 143 (26.6)
Common equity 2,664 2,646 0.7
Unrealized loss on available-for-sale
securities, net of taxes (30) (43) (30.2)
-------- -------
Total liabilities and shareholders' equity $32,886 $33,545 (2.0)%
======== =======
Net interest income $1,454.0 $1,434.5
======== ========
Gross interest margin 3.94% 3.93%
===== =====
Gross interest margin without taxable-equivalent increments 3.90% 3.88%
===== =====
Net interest margin 4.91% 4.74%
===== =====
Net interest margin without taxable-equivalent increments 4.87% 4.69%
===== =====
Interest and rates are presented on a fully taxable-equivalent basis under a tax rate of 35 percent.
Interest income and rates on loans include loan fees. Nonaccrual loans are included in average loan balances.
* Before deducting the allowance for credit losses and excluding the unrealized loss on available-for-sale securities.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
First Bank System, Inc. and Subsidiaries
Loan Portfolio
December 31, 1995 September 30, 1995 June 30, 1995 March 31, 1995 December 31, 1994
------------------------------------------------------------------------------------------------
Percent Percent Percent Percent Percent
(Dollars in Millions) Amount of Total Amount of Total Amount of Total Amount of Total Amount of Total
------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
(Unaudited) (Unaudited) (Unaudited)
Commercial:
Commercial $ 8,271 31.3% $ 8,311 32.1% $ 8,274 32.2% $ 8,178 32.4% $ 7,285 29.7%
Financial institutions 1,060 4.0 851 3.3 748 2.9 559 2.2 787 3.2
Real estate:
Commercial mortgage 2,784 10.6 2,476 9.6 2,414 9.4 2,461 9.8 2,454 10.0
Construction 403 1.5 356 1.4 331 1.3 374 1.5 330 1.3
-----------------------------------------------------------------------------------------------
Total commercial 12,518 47.4 11,994 46.4 11,767 45.8 11,572 45.9 10,856 44.2
Consumer:
Residential mortgage 4,655 17.6 4,772 18.4 4,940 19.2 5,060 20.1 5,098 20.8
Residential mortgage held
for sale 257 1.0 357 1.4 311 1.2 180 0.7 197 0.8
Home equity and second
mortgage 2,805 10.6 2,704 10.4 2,666 10.4 2,505 9.9 2,453 10.0
Credit card 2,586 9.8 2,397 9.3 2,321 9.0 2,248 8.9 2,409 9.8
Automobile 1,821 6.9 1,867 7.2 1,884 7.3 1,837 7.3 1,770 7.2
Revolving credit 757 2.9 742 2.9 747 2.9 737 2.9 725 2.9
Installment 607 2.3 644 2.5 686 2.7 699 2.8 712 2.9
Student 394 1.5 400 1.5 377 1.5 377 1.5 336 1.4
-----------------------------------------------------------------------------------------------
Total consumer 13,882 52.6 13,883 53.6 13,932 54.2 13,643 54.1 13,700 55.8
-----------------------------------------------------------------------------------------------
Total loans $26,400 100.0% $25,877 100.0% $25,699 100.0% $25,215 100.0% $24,556 100.0%
================================================================================================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
First Bank System, Inc. and Subsidiaries
SUPPLEMENTAL FINANCIAL DATA
(Dollars in Millions, Except Per Share Data)
(Unaudited)
December 31 September 30 June 30 March 31 December 31
1995 1995 1995 1995 1994
----------- ------------ ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Ending Common Shares Outstanding 127,334,568 129,429,363 133,419,566 135,421,355 133,832,409
Book Value per Common Share $20.59 $20.33 $20.33 $19.58 $18.63
Intangibles:
Goodwill $ 438 $ 412 $ 416 $ 426 $ 411
Mortgage Servicing Rights 40 40 44 42 47
Other Intangibles 298 177 184 194 194
------------------------------------------------------------------------
Total Intangibles $ 776 $ 629 $ 644 $ 662 $ 652
Three Months Ended
------------------------------------------------------------------------
December 31 September 30 June 30 March 31 December 31
1995 1995 1995 1995 1994
----------- ------------ ----------- ----------- -----------
Net Interest Income * $363.7 $360.5 $363.0 $366.8 $370.2
Net Interest Margin * 4.83% 4.85% 4.93% 5.05% 4.79%
Efficiency Ratio ** 51.2% 53.9% 54.9% 55.7% 57.3%
Interest Yield on Average Loans 8.88% 8.95% 9.08% 9.06% 8.54%
Rate Paid on Average Interest Bearing Liabilities 4.75% 4.77% 4.75% 4.52% 4.13%
Return on Average Assets *** 1.80% 1.76% 1.68% 1.66% 1.43%
Return on Average Common Equity *** 22.4% 21.2% 20.4% 21.1% 18.0%
Preferred Dividends $ 1.9 $ 1.8 $ 1.9 $ 1.9 $ 2.3
Gross Charge-offs $ 50.9 $ 52.7 $ 53.8 $ 51.7 $ 67.1
Gross Recoveries $ 21.9 $ 22.7 $ 23.9 $ 19.6 $ 20.0
Average Full-Time Equivalent Employees 12,918 12,894 13,237 13,874 14,588
</TABLE>
* On a taxable-equivalent basis
** Excluding merger-related charges
*** From continuing operations, excluding merger-related items
<PAGE>
[LOGO OF FIRST BANK]
4Q95 Earnings Release
First Bank System, Inc.
Richard A. Zona
Vice Chairman & CFO
January 9, 1996
<PAGE>
RECORD 4Q95 AND FULL YEAR 1995 EARNINGS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
4Q 4Q PERCENT 3Q PERCENT PERCENT
1995 1994 CHANGE 1995 CHANGE 1995 1994 CHANGE
<S> <C> <C> <C> <C> <C> <C> <C> <C>
From continuing operations
before merger-related items:
Operating earnings (millions) $150.7 $122.6 22.9 $145.7 3.4 $568.1 $470.4 20.8
Earnings per common share (fully diluted) 1.12 0.90 24.4 1.06 5.7 4.11 3.32 23.8
Return on average common equity* (%) 22.4 18.0 21.2 21.3 17.6
Return on average assets* (%) 1.80 1.43 1.76 1.73 1.40
Net interest margin (%) 4.83 4.79 4.85 4.91 4.74
Efficiency ratio* (%) 51.2 57.3 53.9 53.9 58.1
Average FTE 12,918 14,588 (11.4) 12,894 0.2
</TABLE>
* From continuing operations and before merger-related items 2
<PAGE>
INCOME STATEMENT HIGHLIGHTS
- --------------------------------------------------------------------------------
(Taxable-equivalent basis, $ in millions,
except for earnings per share)
<TABLE>
<CAPTION>
4Q 4Q PERCENT 3Q PERCENT
1995 1994 CHANGE 1995 CHANGE
<S> <C> <C> <C> <C> <C>
Net interest income $363.7 $370.2 (1.8) $360.5 0.9
Provision for credit losses 31.0 27.5 12.7 31.0 -
Noninterest income 197.3 172.6 14.3 185.5 6.4
Noninterest expense 287.3 311.8 (7.9) 280.1 2.6
------ ------ ------
Income from continuing operations
before taxes and merger-related and
nonrecurring items $242.7 $203.5 19.3 $234.9 3.3
Taxable-equivalent adjustment 3.4 3.6 (5.6) 3.4 -
Income taxes 88.6 77.3 14.6 85.8 3.3
------ ------ ------
Income from continuing operations
before merger-related and
nonrecurring items $150.7 $122.6 22.9 $145.7 3.4
Discontinued operations* - (1.9) nm - -
Merger-related items (after-tax) - (156.0) nm - -
Gain on sale of branches less
nonrecurring expenses - - nm - nm
------ ------ ------
Net income $150.7 ($35.3) nm $145.7 3.4
====== ====== ======
Earnings per share (fully diluted) $ 1.12 ($0.28) nm $1.06 5.7
====== ====== ======
* Edina Realty
</TABLE>
3
<PAGE>
STRONG NONINTEREST INCOME GROWTH
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
4Q 4Q Percent 3Q Percent Percent
$ in millions 1995 1994 Change 1995 Change 1995 1994 Change
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Credit card fees $61.7 $50.3 22.7 $62.7 (1.6) $232.7 $179.0 30.0
Trust fees 47.8 41.7 14.6 42.8 11.7 175.3 159.2 10.1
Service charges on deposit accts 30.4 30.7 (1.0) 30.9 (1.6) 123.7 127.3 (2.8)
Securities losses -- (1.0) nm -- -- -- (3.8) nm
Investment products 7.6 6.4 18.8 7.8 (2.6) 27.6 29.6 (6.8)
Other 49.8 44.5 11.9 41.3 20.6 192.8 178.8 7.8
------ ------ ------ ------ ------
Subtotal $197.3 $172.6 14.3 $185.5 6.4 $752.1 $670.1 12.2
Gain on sale of branches -- -- 31.0 31.0 --
Merger-related securities losses -- (111.2) -- -- (111.2)
------ ------ ------ ------ ------
Total noninterest income $197.3 $ 61.4 $216.5 $783.1 $558.9
====== ====== ====== ====== ======
</TABLE>
4
<PAGE>
WELL-CONTROLLED NONINTEREST EXPENSE
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
4Q 4Q Percent 3Q Percent Percent
$ in millions 1995 1994 Change 1995 Change 1995 1994 Change
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Salaries & employee benefits $131.5 $140.9 (6.7) $130.1 1.1 $ 537.4 $ 556.4 (3.4)
Net occupancy 24.3 25.0 (2.8) 24.3 -- 98.6 103.8 (5.0)
Furniture and equipment 22.4 22.6 (0.9) 23.5 (4.7) 94.2 88.3 6.7
Amortization of goodwill & intangibles 14.9 13.8 8.0 13.9 7.2 57.1 50.4 13.3
Advertising 8.1 8.5 (4.7) 8.4 (3.6) 32.0 35.5 (9.9)
Other personnel costs 12.5 8.6 45.3 11.0 13.6 40.9 35.7 14.6
Professional services 11.3 11.9 (5.0) 8.5 32.9 36.9 38.5 (4.2)
Data processing 4.9 5.6 (12.5) 4.2 16.7 17.8 20.3 (12.3)
Other 51.8 60.5 (14.4) 53.4 (3.0) 224.2 236.8 (5.3)
------ ------ ------ -------- --------
Subtotal excluding FDIC $281.7 $297.4 (5.3) $277.3 1.6 $1,139.1 $1,165.7 (2.3)
FDIC insurance 5.6 14.4 (61.1) 2.8 100.0 35.8 58.4 (38.7)
------ ------ ------ -------- --------
Subtotal $287.3 $311.8 (7.9) $280.1 2.6 $1,174.9 $1,224.1 (4.0)
Nonrecurring charges -- -- 31.0 31.0 --
Merger-related charges -- 123.9 -- -- 125.3
------ ------ ------ -------- --------
Total noninterest expense $287.3 $435.7 $311.1 $1,205.9 $1,349.4
====== ====== ====== ======== ========
</TABLE>
5
<PAGE>
BALANCE SHEET MANAGEMENT
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Quarterly Average Balances
--------------------------------------------------------
4Q 3Q Percent 4Q Percent
$ millions 1995 1995 Change 1994 Change
<S> <C> <C> <C> <C> <C>
ASSETS
Securities $ 3,277 $ 3,356 (2.4) $ 5,634 (41.8)
Loans 26,022 25,536 1.9 24,320 7.0
Other 3,861 3,876 (0.4) 4,077 (5.3)
------- ------- -------
Total assets $33,160 $32,768 1.2 $34,031 (2.6)
======= ======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Noninterest-bearing deposits $ 5,799 $ 5,591 3.7 $ 6,028 (3.8)
Interest-bearing deposits:
Interest checking 2,753 2,728 0.9 2,879 (4.4)
Money market accounts 3,891 3,871 0.5 3,847 1.1
Other savings accounts 1,590 1,633 (2.6) 2,208 (28.0)
Savings certificates 6,986 7,256 (3.7) 7,816 (10.6)
Certificates > $100,000 976 1,028 (5.1) 1,298 (24.8)
------- ------- -------
Total interest-bearing deposits $16,196 $16,516 (1.9) $18,048 (10.3)
Short-term borrowings 4,198 3,928 6.9 3,390 23.8
Long-term debt 3,146 2,892 8.8 2,872 9.5
Other liabilities 1,077 1,043 3.3 930 15.8
Equity 2,744 2,798 (1.9) 2,763 (0.7)
------- ------- -------
Total liabilities & equity $33,160 $32,768 1.2 $34,031 (2.6)
======= ======= =======
</TABLE>
6
<PAGE>
GROWING LOANS
- --------------------------------------------------------------------------------
. Increased loans (excluding residential mortgage loans) by $2.0 billion or
10.7%
<TABLE>
<CAPTION>
Quarterly Average Balances
---------------------------------------------------
4Q 3Q Percent 4Q Percent
$ millions 1995 1995 Change 1994 Change
<S> <C> <C> <C> <C> <C>
Commercial:
Commercial $ 8,291 $ 8,091 2.5 $ 7,209 15.0
Financial institutions 915 814 12.4 832 10.0
Commercial mortgage 2,615 2,406 8.7 2,480 5.4
Construction 370 340 8.8 311 19.0
------- ------- -------
Total commercial $12,191 $11,651 4.6 $10,832 12.5
Consumer:
Home equity and second mortgage 2,764 2,679 3.2 2,433 13.6
Credit card 2,428 2,347 3.5 2,264 7.2
Other 3,613 3,660 (1.3) 3,439 5.1
------- ------- -------
Subtotal $ 8,805 $ 8,686 1.4 $ 8,136 8.2
Residential mortgage 5,026 5,199 (3.3) 5,352 (6.1)
------- ------- -------
Total consumer $13,831 $13,885 (0.4) $13,488 2.5
------- ------- -------
Total loans $26,022 $25,536 1.9 $24,320 7.0
======= ======= =======
Total loans excl. residential mtge. $20,996 $20,337 3.2 $18,968 10.7
======= ======= =======
</TABLE>
7
<PAGE>
ASSET QUALITY IMPROVEMENT
- --------------------------------------------------------------------------------
. NPAs down 33.8% from previous year
. Allowance/NPLs = 401%
<TABLE>
<CAPTION>
$ in millions
Dec 31 Sep 30 Percent Dec 31 Percent
1995 1995 Change 1994 Change
<S> <C> <C> <C> <C> <C>
Nonperforming loans
Commercial $ 25.1 $ 22.6 11.1 $ 36.5 (31.2)
Commercial real estate 43.8 47.3 (7.4) 72.6 (39.7)
Consumer 49.3 47.2 4.4 58.8 (16.2)
------ ------ ------
Total $118.2 $117.1 0.9 $167.9 (29.6)
Other real estate 33.2 46.6 (28.8) 64.0 (48.1)
Other nonperforming assets 2.3 3.2 (28.1) 0.4 475.0
------ ------ ------
Total nonperforming assets * $153.7 $166.9 (7.9) $232.3 (33.8)
====== ====== ======
Accruing loans 90 days past due $ 38.8 $ 40.7 (4.7) $ 23.4 65.8
====== ====== ======
Allowance to nonperforming loans (%) 401 400 283
Allowance to nonperforming assets (%) 308 281 204
Nonperforming assets to loans + ORE (%) 0.58 0.64 0.94
Net charge-offs to average loans (%) 0.44 0.47 0.77
</TABLE>
* does not include accruing loans 90 days past due 8
<PAGE>
SHARE BUYBACK PROGRAM CONTINUES
- -------------------------------------------------------------------------------
. 12 million shares repurchased during 1995
. Committed to managing capital for shareholder benefit
<TABLE>
<CAPTION>
millions 4Q 3Q 2Q 1Q Year
1995 1995 1995 1995 1995
<S> <C> <C> <C> <C> <C>
Beginning shares outstanding 129.4 133.4 135.4 133.8 133.8
Shares issued for:
Acquisitions 1.2 -- -- 1.6 2.8
Employee stock plans 0.7 0.3 0.7 1.0 2.7
----- ----- ----- ----- -----
1.9 0.3 0.7 2.6 5.5
Shares repurchased (4.0) (4.3) (2.7) (1.0) (12.0)
----- ----- ----- ----- -----
Ending shares outstanding 127.3 129.4 133.4 135.4 127.3
===== ===== ===== ===== =====
</TABLE>
9
