<PAGE>
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): March 19, 1997
FIRST BANK SYSTEM, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 1-6880 41-0255900
- --------------------------------------------------------------------------------
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
First Bank Place, 601 Second Avenue South
Minneapolis, Minnesota 55402-4302
- --------------------------------------------------------------------------------
(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.
(a) On March 19, 1997, First Bank System, Inc., a Delaware corporation ("FBS"),
and U.S. Bancorp, an Oregon corporation ("USBC"), entered into an Agreement and
Plan of Merger, dated as of March 19, 1997 (the "Merger Agreement"). The Merger
Agreement provides for the merger (the "Merger") of USBC with and into FBS,
subject to, among other customary conditions, the affirmative vote of a majority
of the outstanding shares of common stock of each of USBC and FBS, and various
regulatory approvals.
Pursuant to the Merger Agreement, (i) each outstanding share of USBC common
stock, par value $5.00 per share (the "USBC Common Stock"), would be converted
into the right to receive 0.755 shares of FBS Common Stock, par value $1.25 per
share (the "FBS Common Stock"), and (ii) each outstanding share of USBC 8 1/8%
Cumulative Preferred Stock, liquidation preference $25 per share, would be
converted into one share of new preferred stock of FBS with substantially
identical terms. Pursuant to the Merger Agreement, FBS has agreed to change its
name to U.S. Bancorp as of the effective time of the Merger.
John F. Grundhofer will continue as President and Chief Executive Officer
of the combined company. Gerry B. Cameron, Chairman and Chief Executive Officer
of USBC, will become Chairman of the combined company for a term extending
through December 31, 1998. The combined company will continue to be
headquartered in Minneapolis, Minnesota.
The Press Release jointly issued by USBC and FBS on the date hereof
announcing the Merger is included as Exhibit 99.1 hereto and is incorporated
herein by reference.
(b) In connection with the execution of the Merger Agreement, on March 20,
1997, FBS and USBC entered into a Stock Option Agreement, dated as of March 20,
1997 (the "USBC Option Agreement"), pursuant to which USBC granted FBS the right
to purchase up to 19.9% of the shares of USBC Common Stock at a price of $47.75
per share upon the occurence of certain events described therein relating
generally to the acquisition of USBC by a third party.
Under certain circumstances, FBS may surrender the USBC Option Agreement in
exchange for a payment of $200 million. The maximum total profit FBS may
realize pursuant to the USBC Option Agreement is $300 million.
(c) In connection with the execution of the Merger Agreement, on March 20,
1997, FBS and USBC also entered into a Stock Option Agreement, dated as of March
20, 1997 (the "FBS Option Agreement"), pursuant to which FBS granted
2
<PAGE>
USBC the right to purchase up to 19.9% of the shares of FBS Common Stock at a
price of $77.50 per share upon the occurrence of certain events described
therein relating generally to the acquisition of FBS by a third party.
Under certain circumstances, USBC may surrender the FBS Option Agreement in
exchange for a payment of $200 million. The maximum total profit USBC may
realize pursuant to the FBS Option Agreement is $300 million.
(d) Exhibit 99.2 hereto contains investor presentation materials to be used by
FBS at a presentation for analysts and investors on the date hereof relating to
the Merger, and such materials are incorporated herein by reference. The
presentation materials include forward-looking statements regarding each of FBS,
USBC and the combined company following the Merger. The presentation materials
also include a cautionary statement regarding factors which may cause actual
results of operations to vary materially from the forward-looking statements
contained therein.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(c) Exhibits.
99.1 Press Release issued by U.S. Bancorp and First Bank System, Inc. on
March 20, 1997.
99.2 Investor presentation materials to be used by FBS at a presentation
for analysts and investors on March 20, 1997 relating to the Merger.
3
<PAGE>
SIGNATURES
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.
Date: March 20, 1997 FIRST BANK SYSTEM, INC.
(Registrant)
By: /s/ David J. Parrin
----------------------------
Name: David J. Parrin
Title: Senior Vice President and Controller
4
<PAGE>
EXHIBIT INDEX
99.1 Press Release issued by U.S. Bancorp and First Bank System, Inc. on
March 20, 1997.
99.2 Investor presentation materials to be used by FBS at a presentation
for analysts and investors on March 20, 1997 relating to the Merger.
<PAGE>
EXHIBIT 99.1
[LOGO] [LOGO]
Contacts:
John Danielson Wendy Raway Donald F. Bowler, Jr. Mary B. Ruble
Investor Relations Media Relations Patricia Stanton Karen Tolvstad
First Bank System First Bank System Investor Relations Media Relations
(612) 973-2261 (612) 973-2429 U.S. Bancorp U.S. Bancorp
(503) 275-5702 (503) 275-6200
FIRST BANK SYSTEM TO ACQUIRE U.S. BANCORP
MERGER CREATES $70 BILLION BANKING ORGANIZATION IN 17 CONTIGUOUS STATES UNDER
THE NAME U.S. BANCORP; HEADQUARTERS TO BE IN MINNEAPOLIS
MINNEAPOLIS/PORTLAND, March 20, 1997 -- First Bank System, Inc.
(NYSE:FBS) and U.S. Bancorp (NASDAQ:USBC) today announced the signing of a
definitive agreement for FBS to acquire Portland, Oregon-based U.S. Bancorp.
The resulting company, which will be called U.S. Bancorp, will create the 8th
largest banking organization in the U.S. based on market capitalization, and
the 14th largest banking organization based on assets. The combined
organization will serve nearly 4 million households and 475,000 businesses in
17 contiguous states.
Under terms of the agreement, U.S. Bancorp shareholders will receive a
tax-free exchange of 0.755 shares of FBS common stock for each share of U.S.
Bancorp common stock. Based on FBS's closing stock price on March 19, 1997,
this exchange ratio represents a price of $59.08 for each U.S. Bancorp share,
resulting in a purchase price of approximately $9 billion.
<PAGE>
-2-
"Together, our combined company will become the best-performing major
bank in the United States, a regionally-based, nationally-competitive bank
that uses technology to drive superior efficiency and customer service," said
John F. Grundhofer, chairman, president and chief executive officer of First
Bank System. "Our regions are contiguous, compatible and are in attractive
growth markets. Our banks both have strong market presence. Our business
strategies are virtually identical. Our business lines and products
complement each other. And each of us has special skills and resources to
offer the other. You could live a couple of lifetimes without finding another
fit this good."
Grundhofer will serve as the president and chief executive officer of
the combined organization. U.S. Bancorp chairman and CEO, Gerry B. Cameron,
will serve as chairman until his retirement in 1998. Joining Grundhofer's
current direct reports will be Gary T. Duim and Robert D. Sznewajs, who will
be vice chairmen in the new U.S. Bancorp.
Cameron said, "U.S. Bancorp and First Bank System both have strong
reputations for superior customer service, excellent employees, community
involvement and future-focused thinking. These two organizations will
integrate very well. Employees will be key to the future success of the
combined company as we provide customers with enhanced products and services
over a wider geographic territory."
<PAGE>
-3-
The transaction is expected to be accretive to FBS earnings per share in
the second quarter of 1998, nine months after closing. By 1999, FBS estimates
earnings per share accretion of approximately 8 percent. FBS said it would
incur pre-tax merger-related charges totaling $625 million through the second
quarter of 1998. The acquisition will be accounted for as a pooling. The FBS
board of directors has rescinded its stock repurchase authorization. In
connection with the merger agreement, FBS and U.S. Bancorp have each granted
the other an option for 19.9% of its outstanding shares exercisable under
certain circumstances with a potential value of between $200 million and $300
million.
FBS estimated that an expense reduction of approximately $340 million
(pre-tax), or stated as a percentage, representing 28 percent of U.S.
Bancorp's operating expenses, would be created by centralizing data
processing, staff functions and some operations functions as well as through
standardizing products, improving technology, and branch efficiencies and
offering customers increased alternative delivery channels for bank products
and services. The companies estimated that their combined operating expenses
would be reduced by 14 percent.
The companies said that as with any merger of this magnitude, job loss
at both organizations will be unavoidable. Approximately 4,000 positions will
be eliminated, however, both companies said they were committed to do
whatever they could to minimize the impact through hiring restrictions,
normal attrition and redeploying employees into other positions.
<PAGE>
-4-
FBS said the transaction would enable it to leverage its unique position
in the payment systems business by offering those services to U.S. Bancorp's
extensive corporate customer base. FBS is the largest provider of Visa
corporate and purchasing cards in the world. Other anticipated revenue
enhancements include capitalizing on FBS' success in home equity lending,
exporting U.S. Bancorp's market position and expertise in leasing to FBS'
franchise, and bringing First Bank's investment management expertise to U.S.
Bancorp's customers.
The combined organization will use the name U.S. Bancorp and will be
headquartered in Minneapolis. "The U.S. Bancorp name better reflects the
expanded geographic service area of the combined organizations," Grundhofer
explained. FBS said it intends to establish Portland as a major development
site for its ongoing technology efforts which will be critical in order to
address the needs of the combined organization. "Employees will be part of a
stronger, even more dynamic industry leader," Grundhofer noted. "The merger
enhances management depth, capitalizes on shared experience and creates
future opportunities for employees of the new U.S. Bancorp.
"The new U.S. Bancorp will have a strong shared vision in serving
customers," Grundhofer added. "The investments that FBS has already made in
technology to enhance customer satisfaction and address their needs can be
used to the benefit of U.S. Bancorp's customers. And the combined
organization will have the critical mass to invest even further in innovative
products and services." Cameron also emphasized
<PAGE>
-5-
that the complementary nature of the two companies' businesses and priorities
as well as the non-overlapping nature of the markets served by each company
would minimize disruption for customers. "We are very focused on customer
needs," stated Cameron. "Mergers can be disruptive and we are determined to
make this transition as smooth as possible." Customers will have access to
nearly 1,000 branch offices, more than 4,500 ATMs and continued 24-hour
customer service. Business customers will continue to have their needs
supported through local decision making as well as over 80 products and
services.
"Both companies have strong records as community partners and we are
totally committed to continuation of that record. Our mutual focus has been
one of community development and reinvestment initiatives that build
economically strong neighborhoods and contribute to the quality of life. The
effort has earned both our companies outstanding Community Reinvestment Act
(CRA) ratings in our major markets, as well as a high degree of community
goodwill," Grundhofer noted.
The FBS and U.S. Bancorp boards of directors will be combined. FBS
currently has 16 directors; U.S. Bancorp currently has 12 directors. The
boards of both organizations have unanimously approved the acquisition. The
acquisition is contingent upon regulatory and shareholder approvals and is
expected to close in the third quarter of 1997.
<PAGE>
-6-
First Bank System is a regional bank holding company headquartered in
Minneapolis with assets of $36.5 billion. The Company provides complete
financial services to individuals and institutions through 9 banks, a savings
association and other financial companies with 359 banking offices and 15
nonbanking offices, located primarily in the 11 states of Minnesota,
Colorado, Nebraska, North Dakota, South Dakota, Montana, Illinois, Wisconsin,
Iowa, Kansas and Wyoming.
Northwest-based U.S. Bancorp is the 26th largest bank holding company in
the nation, with assets of $33.3 billion. The company has 636 branches and
provides comprehensive financial products and services to consumers and
businesses in Oregon, Washington, Idaho, Nevada, Northern California and Utah.
Merger Summary Table
Name U.S. Bancorp
Headquarters Minneapolis
Purchase Price Approximately $9 billion
Exchange Ratio 0.755
Current Price Per Share $59.08
A NEWS MEDIA TELECONFERENCE WILL BE HELD AT 12:30 P.M. (EASTERN STANDARD
TIME) ON THURSDAY, MARCH 20. TO PARTICIPATE IN THE CALL, PLEASE CALL
(800) 251-6682. ASK TO BE CONNECTED TO THE FIRST BANK SYSTEM/U.S. BANCORP
TELECONFERENCE. INTERNATIONAL CALLERS, PLEASE CALL (706) 645-9723.
/Photo available on AP PhotoExpress Network (7:00 am, March 20, 1997, and
PRN 1. PRN 2); via NewsCom, 305-448-8411 or http://www.newscom.com; or via
PressLink Online, 703-758-1740/
-30-
<PAGE>
Forward-Looking Information
This news release contains estimates of future operating results for
1997, 1998 and 1999 for both First Bank System, Inc. and U.S. Bancorp on a
stand-alone and pro forma combined basis, as well as estimates of financial
condition, operating efficiencies and revenue creation on a combined basis.
These estimates constitute forward-looking statements (within the meaning of
the Private Securities Litigation Reform Act of 1995), which involve
significant risks and uncertainties. Actual results may differ materially
from the results discussed in these forward-looking statements. Factors that
might cause such a difference include, but are not limited to: (1) expected
cost savings from the Merger cannot be fully realized or realized within the
expected time frame; (2) revenues following the Merger are lower than
expected; (3) competitive pressures among depository institutions increase
significantly; (4) costs or difficulties related to the integration of the
business of FBS and USBC are greater than expected; (5) changes in the
interest rate environment reduce interest margins; (6) general economic
conditions, either nationally or in the states in which the combined company
will be doing business are less favorable than expected; and (7) legislation
or regulatory changes adversely affect the business in which the combined
company would be engaged.
<PAGE>
PRO FORMA RECAP
THE "NEW" U.S. BANCORP
HEADQUARTERS: MINNEAPOLIS, MINNESOTA
NATIONAL
FBS U.S. BANCORP COMBINED RANK
--- ------------ -------- --------
ASSETS ($ billions) $37 $33 $70 14th
MARKET CAPITALIZATION $10.5 $8.5 $19 8th
($ billions)
DEPOSITS ($ billions) $24 $25 $49
RETURN ON ASSETS 1.88% 1.43% 2.00+%
RETURN ON EQUITY 21.4% 17.1% Mid 20s
NET INTEREST MARGIN 4.89% 5.32% 5.00+%
EFFICIENCY RATIO 46.8% 55.2% Low 40s
STATES 11 6 17
BRANCHES
Traditional 327 578 905
Store-based 32 58 90
ATMS 3,265 1,300 4,565 3rd
CUSTOMERS
Households (millions) 1.9 2.0 3.9
Businesses (thousands) 225 250 475
COMBINED PRODUCT STRENGTHS ($ millions)
Home Equity Loans $3,263 $1,654 $ 4,917 9th
Other Consumer Loans 6,699 4,111 10,810 13th
Small Business Loans 1,535 2,108 3,643 6th
MUTUAL FUNDS ($ billions) $12.8 $ 2.5 $ 15.3
ASSETS UNDER MANAGEMENT
($ billions) 39.3 10.2 49.5
TOTAL TRUST FEE REVENUES
($ millions) 230.7 71.6 302.3
CUSTOMER CALLS USING
TELEPHONE BANKING (per year) 46 million 42 million 88 million
<PAGE>
[LOGO] [LOGO]
LEVERAGING A HIGH PERFORMANCE COMPANY
FIRST BANK SYSTEM
ACQUIRES U.S. BANCORP
MARCH 20, 1997
<PAGE>
FORWARD-LOOKING INFORMATION
- ------------------------------------------------------------------------------
This presentation contains estimates of future operating results for 1997,
1998 and 1999 for both First Bank System, Inc. and U.S. Bancorp on a
stand-alone and pro forma combined basis, as well as estimates of financial
condition, operating efficiencies and revenue creation on a combined basis.
These estimates constitute forward-looking statements (within the meaning of
the Private Securities Litigation Reform Act of 1995), which involve
significant risks and uncertainties. Actual results may differ materially
from the results discussed in these forward-looking statements. Factors that
might cause such a difference include, but are not limited to: (1) expected
cost savings from the Merger cannot be fully realized or realized within the
expected time frame; (2) revenues following the Merger are lower than
expected; (3) competitive pressures among depository institutions increase
significantly; (4) costs or difficulties related to the integration of the
business of FBS and USBC are greater than expected; (5) changes in the
interest rate environment reduce interest margins; (6) general economic
conditions, either nationally or in the states in which the combined company
will be doing business are less favorable than expected; and (7) legislation
or regulatory changes adversely affect the businesses in which the combined
company would be engaged.
2
<PAGE>
COMMON STRATEGY
- --------------------------------------------------------------------------
- Business line organization
- Centrally-directed operations
- Centralized staff
- Standardized products
- Transaction migration to direct channels
- Superior credit quality
- Focus on efficiency
STRONG SHAREHOLDER FOCUS
3
<PAGE>
COMBINATION LEADS TO EXCEPTIONAL
FINANCIAL PERFORMANCE
- --------------------------------------------------------------------------
Percent
PRO FORMA
PERFORMANCE FBS USBC COMBINED
MEASURE 1996 1996 1999
- ----------------------------------------------------------------------
ROE 21.4 17.1 Mid 20s
ROTE * 35.2 21.4 High 30s
ROA 1.88 1.43 2.00+
NIM 4.89 5.32 5.00+
Efficiency * 46.8 55.2 Low 40s
- -------------------
* excluding amortization of intangibles
ratios exclude nonrecurring items
4
<PAGE>
TRANSACTION SUMMARY
- --------------------------------------------------------------------------
Agreement: Definitive merger agreement signed 3/19/97
Structure: Tax-free exchange
Exchange Ratio: Fixed: 0.755 FBS share per USBC share
Purchase Price: $9.0 Billion (a)
Per Share: $59.08 (a)
Accounting: Pooling
Stock Buybacks: FBS Board has rescinded its stock buyback authorization
Cross Options: 19.9%, minimum $200 million, maximum $300 million
Due Diligence: Completed
Anticipated Closing: 3Q97
- ----------------------
(a) Price as of 3/19/97
5
<PAGE>
LEVERAGING A HIGH PERFORMANCE COMPANY
- ------------------------------------------------------------------------
- Builds shareholder value
- IRR = 16.2%, materially exceeds cost of equity
- Accretive to earnings by 2Q98
- Accretion of 8% within 2 years
- Significant cost takeouts
- Clearly identifiable revenue enhancements
- Complementary business line strengths
- Skills to realize the full potential of fast growth markets
- Leverages FBS technology and merger integration skills
6
<PAGE>
LEVERAGING A HIGH PERFORMANCE COMPANY
- -------------------------------------------------------------------------
- Builds shareholder value
- Complementary business line strengths
- Skills to realize the full potential of fast growth markets
- Leverages FBS technology and merger integration skills
7
<PAGE>
COMPLEMENTARY BUSINESS LINE STRENGTHS
- -------------------------------------------------------------------------
FBS USBC
- - Sophisticated technology - Strong name and brand identity
infrastructure and expertise
- - Product/Distribution paradigm - 8th largest leasing company
- - High-growth Payment Systems - Sizable small business lending
- - Home Equity lending - Strong Ag lending capabilities
- - $39 billion asset management - Leading edge position in PC
banking
- - Corporate Trust leadership
8
<PAGE>
<TABLE>
<CAPTION>
SCALE ADVANTAGE - RETAIL
- ------------------------------------------------------------------------
CUSTOMERS FBS USBC COMBINED
<S> <C> <C> <C>
Households (millions) 1.9 2.0 3.9
RETAIL
Telephone Banking (millions/yr.) 46 42 88
ATMs 3,235 1,330 4,565
Branches - Traditional 327 578 905
Branches - Store-Based 32 58 90
Home Equity Loans ($ millions) 3,263 1,654 4,917
Other COnsumer Loans ($ millions) 6,699 4,111 10,810
Total Consumer Loans ($ millions) 9,962 5,765 15,727
(excluding residential mortgages)
9
</TABLE>
<PAGE>
SCALE ADVANTAGE - COMMERCIAL
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
CUSTOMERS FBS USBC COMBINED
<S> <C> <C> <C>
Businesses(thousands) 225 250 475
COMMERCIAL ($ millions)
Leasing (bank-owned) 432 1,416 1,848
Agriculture loans 338 1,261 1,599
Small business 1,535 2,108 3,643
Total Commercial loans 14,105 17,244 31,349
10
</TABLE>
<PAGE>
UNIQUE PAYMENT SYSTEMS POSITION
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
FBS USBC COMBINED
Visa Charge Volume ($ billions) 19 2 21
Merchant Processing ($ billions) 16 6 22
Credit Card Loans ($ billions) 4.0 .8 4.8
(includes Corporate & Purchasing Card)
Fortune 1000 Corporate Card Customers 145 145
Fortune 1000 Purchasing Card Customers 107 107
</TABLE>
<PAGE>
GROWING TRUST AND ASSET MANAGEMENT BUSINESSES
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
FBS USBC COMBINED
Corporate Trust Revenue ($ millions) 120 120
Corporate Trust Offices 13 13
Mutual Funds ($ billions) 12.8 2.5 15.3
Assets Under Management ($ billions) 39.3 10.2 49.5
Total Trust Fee Revenues ($ millions) 230.7 71.6 302.3
</TABLE>
<PAGE>
LEVERAGING A HIGH PERFORMANCE COMPANY
- --------------------------------------------------------------------------------
- - Builds shareholder value
- - Complementary business line strengths
- - Skills to realize the full potential of fast growth
markets
- - Leverages FBS technology and merger
integration skills
<PAGE>
ATTRACTIVE MARKETS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
FBS USBC COMBINED
States 11 6 17
MSAs 29 28 57
Branches 359 636 995
ATMs 3,235 1,330 4,565
</TABLE>
[U.S. MAP SHOWING COMBINED MARKETS]
<PAGE>
STRONG MARKET POSITIONS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C> <C>
AVERAGE CUMULATIVE
# OF DEPOSITS SHARE PERCENT
RANK MSAS ($ BILLIONS) PERCENT COMPOSITION
- --------------------------------------------------------------------------------
1 12 20.2 32 40
2 11 8.7 20 57
3 6 5.2 15 67
Lower 28 6.5 4 80
Non MSA -- 7.9 100
-- ----
Total 57 48.5
== ====
</TABLE>
<PAGE>
STRONG MARKET POSITIONS
- -------------------------------------------------------------------------------
DEPOSITS %
MSA ($ THOUSANDS) SHARE RANK
Minneapolis/St. Paul 9,221,336 30 1
Portland/Vancouver 6,139,619 39 1
Seattle/Bellevue/Everett 3,955,968 14 3
Denver 3,765,946 19 2
Boise 1,417,738 41 1
Omaha 1,401,778 16 2
Salem 677,810 28 1
Spokane 649,553 21 2
Lincoln 638,525 24 2
Sioux Falls 613,788 23 1
Eugene 499,730 22 1
Colorado Springs 407,105 16 2
- -------------------------
Source: SNL Branch Migration Database as of 6/30/96
Markets on this page 58% of total deposits 16
<PAGE>
ATTRACTIVE MARKET GROWTH
- -------------------------------------------------------------------------------
HOUSEHOLD GROWTH RATE
1990 to 1996
USBC MARKETS 2.3%
FBS MARKETS 2.0%
U.S. 1.5%
- -------------------------
MSAs where USBC or FBS hold a top 3 ranking - 67% of total deposits 17
<PAGE>
ATTRACTIVE MARKET GROWTH
- -------------------------------------------------------------------------------
MEDIAN HOUSEHOLD INCOME GROWTH
1990 to 1996
USBC MARKETS 4.2%
FBS MARKETS 3.6%
U.S. 3.4%
- -------------------------
MSAs where USBC or FBS hold a top 3 ranking - 67% of total deposits 18
<PAGE>
ATTRACTIVE MARKET GROWTH
- -------------------------------------------------------------------------------
HOUSEHOLD GROWTH
DEPOSITS GROWTH RATE
MSA ($ THOUSANDS) RATE PERCENTILE
Minneapolis/St.Paul 9,221,336 2.0% 74%
Portland-Vancouver 6,139,619 2.2 81
Seattle-Bellevue-Everett 3,955,968 2.1 77
Denver 3,765,946 2.8 91
Boise 1,417,738 3.8 98
Oakland 1,130,945 1.6 55
Sacramento 688,820 2.2 82
Lincoln 683,525 1.6 54
Salem 677,810 2.6 88
Spokane 649,553 1.9 68
Sioux Falls 613,788 1.9 71
Salt Lake City-Ogden 602,163 2.6 87
Colorado Springs 407,105 3.5 95
ALL U.S. MSAs 1.5% 50%
- -------------------------
Source: Equifax/National Decision Systems
CAGR 1990-1996
Markets on this page - 60% of total deposits 19
<PAGE>
LEVERAGING A HIGH PERFORMANCE COMPANY
- -------------------------------------------------------------------------------
- - Builds shareholder value
- - Complementary business line strengths
- - Skills to realize the full potential of fast growth markets
- - Leverages FBS technology and merger integration skills
20
<PAGE>
MANAGEMENT STRUCTURE
Gerry Cameron
Chairman
Jack Grundhofer
President & CEO
|
|-------------------|--------------|---------------|--------------|
| | | | |
Bob Sznewajs Phil Heasley | Rick Zona Gary Duim
Vice Chairman Vice Chairman | Vice Chairman Vice Chairman
|
|-------------------|------------------------------|--------------|
| | | |
Bob Hoffmann John Murphy Rob Sayre Dan Rohr
EVP EVP EVP EVP
21
<PAGE>
TECHNOLOGY FOR THE FUTURE
-U.S. Bancorp benefits from FBS' $400 million technology investment
-Combined organization will save $100's of millions by leveraging
technology investments
USBC FBS
PLANNED INVESTMENTS CURRENT CAPABILITIES
-Hogan deposit system -Hogan deposit system
-Interstate banking -Interstate banking
-Automated teller system -Automated teller system
-Customer profitability -Relationship Management System
-Rapid systems integration
22
<PAGE>
FINANCIALLY ACCRETIVE TRANSACTION
PRO FORMA EARNINGS
--------------------
1998 1999
FBS Estimated EPS $6.09 $6.85
Pro Forma EPS $6.20 $7.41
Accretion 2% 8%
DRIVERS
-$340 million cost takeouts; $220 million in 1998; remaining in 1999
-$84 million revenue enhancements by 1999
23
<PAGE>
COST TAKEOUTS
$ Millions FBS USBC COST PERCENT PERCENT
1997 1997 TAKEOUT OF USBC OF COMBINED
Staff/Admin 100 109 60 55 29
Operations 328 370 148 40 21
Occupancy 95 84 18 22 10
Business Lines:
Retail 284 420 91 22 13
Payment Systems 110 34 14 41 10
Commercial/
Private Banking 181 153 3 2 1
Institutional Trust 53 32 6 19 7
Corporate Trust 71 0 0 0 0
----- ----- -----
Total 1,222 1,202 340 28 14
----- -----
Less:Taxes ----- ----- 133
-----
Total Cost Takeouts(AT) 207
-----
-----
24
<PAGE>
MERGER-RELATED CHARGES
$Millions
Conversion costs 190
Severance/Retention 270
Occupancy/equipment writedowns 40
Other 125
-----
Merger-related charges 625
Taxes 175
Net merger-related charges 450
-----
-----
1997 380
1998 70
-----
450
-----
-----
25
<PAGE>
REVENUE ENHANCEMENTS
$Millions 1999
-------------------------------------
PRE-TAX
VOLUME CONTRIBUTION
Corporate/Purchasing Card Sales 1,600 9
Home Equity Loans 1,200 38
Credit Card Loans 365 19
Other Consumer Lending 230 4
Leasing 50 2
Institutional Trust/Asset Management NA 12
-------------
Total Revenue Enhancements 84
-------------
-------------
26
<PAGE>
TRACK RECORD OF RAPID INTEGRATION
PERIOD BETWEEN
COST CLOSING AND
TAKEOUT SYSTEMS INTEGRATION
Western Capital 35% 3 months
Bank Shares 45% 6 months
Colorado National 35% 2 months
Boulevard 40% 1 month
Metropolitan Financial 35% 1 month
FirsTier 34% 3 days
- --------------------------------------------------------------------------------
U.S. Bancorp 28% 6-9 months
- --------------------------------------------------------------------------------
27
<PAGE>
FBS ACQUISITION HISTORY
- 24 Acquisitions
- Rapid, on-time integration
- 34-45% cost takeouts
ALWAYS ACHIEVED COST TAKEOUT OBJECTIVES
28
<PAGE>
COMBINATION LEADS TO EXCEPTIONAL EFFICIENCY
ADJUSTED EFFICIENCY RATIO
1991 66
1992 63
1993 58
1994 56
1995 51
1996 47
1997
1998
1999 LOW 40s
PEER GROUP 1996
Fifth Third 41.8
- ------------------------------------------------
FBS 46.8
- ------------------------------------------------
Wachovia 52.0
CoreStates 52.6
Comerica 53.1
NationsBank 54.2
U.S. Bancorp 55.2
Wells Fargo 55.3
First Union 55.9
PNC 56.1
BankAmerica 57.0
Bank of Boston 57.6
Barnett 57.6
Banc One 58.2
National City 58.7
KeyCorp 58.8
SunTrust 59.2
Norwest 59.2
Fleet 59.8
First Security 60.0
Mellon 60.4
Northern Trust 60.4
Bancorp Hawaii 62.3
- -----------------------------------------
Excludes amortization of intangibles
29
<PAGE>
SUPERIOR ROA
RETURN ON ASSETS
1991 0.85
1992 1.00
1993 1.36
1994 1.63
1995 1.73
1996 1.88
1997
1998
1999 ABOVE 2.00%
PEER GROUP 1996
- ------------------------------------------------
FBS 1.88
- ------------------------------------------------
CoreState 1.76
Fifth Third 1.76
Norwest 1.74
Mellon 1.65
National City 1.55
Wells Fargo 1.44
U.S. Bancorp 1.43
Wachovia 1.42
PNC 1.41
Barnett 1.39
Comerica 1.38
Banc One 1.37
First Security 1.33
KeyCorp 1.32
Fleet 1.30
First Union 1.30
SunTrust 1.27
Bank of Boston 1.26
Northern Trust 1.23
NationsBank 1.20
BankAmerica 1.11
Bancorp Hawaii 1.00
- -----------------------------------------
Excludes nonrecurring items
30
<PAGE>
TOP-TIER ROE
Return on Common Equity
1991 11.4
1992 11.7
1993 16.4
1994 19.3
1995 21.3
1996 21.4
1997
1998
1999 MID 20s
PEER GROUP 1996
Norwest 24.1
- ------------------------------------------------
FBS 21.4
- ------------------------------------------------
CoreStates 19.9
Mellon 19.2
First Union 19.1
Northern Trust 18.6
Comerica 18.2
NationsBank 18.2
National City 18.1
Fifth Third 17.6
Wachovia 17.6
PNC 17.4
Fleet 17.2
KeyCorp 17.2
U.S.Bancorp 17.1
Barnett 17.0
Bank of Boston 16.8
First Security 16.2
Banc One 15.8
Bank America 13.5
SunTrust 13.1
Bancorp Hawaii 12.6
Wells Fargo 11.2
<PAGE>
LEVERAGING A HIGH PERFORMANCE COMPANY
- Builds shareholder value
- Complementary business line strengths
- Skills to realize the full potential of fast growth
markets
- Leverages FBS technology and merger integration skills
<PAGE>
APPENDIX
<PAGE>
PRICING
- U S Bancorp transaction multiples appear higher than recent market
transactions as a result of the significant general increase in
bank stock trading multiples including FBS.
- Relative multiples lower than 1995/96 averages.
IMPLIED MULTIPLES
EXCHANGE RATIO .755X
PURCHASE PRICE
FBS USBC % of FBS MULTIPLE
- ----------------------- ----------------- -----------------------
PRICE P/E P/B P/E P/B P/E P/B
- ----- --- --- --- --- --- ---
$78.25 14.5 3.4 17.5 3.4 120% 100%
1995/96 Acquisition Averages (a) 140% 130%
(a) Average of 12 largest acquisitions; at time of announcement
<PAGE>
BALANCE SHEET
12/31/96
($ millions)
FBS USBC COMBINED
Net Loans 26,611 24,751 51,362
Investment Securities 3,555 3,845 7,400
Other Assets 6,323 4,664 10,987
------- ------- -------
Total Assets 36,489 33,260 69,749
------- ------- -------
------- ------- -------
Deposits 24,379 24,977 49,356
Funds Purchased 4,097 2,495 6,592
Long Term Debt 3,553 1,811 5,364
Other Liabilities 1,107 966 2,073
Mandatory redeemable capital
securities 300 300 600
------- ------- -------
Total liabilities 33,436 30,549 63,985
Preferred Stock 0 150 150
Common Equity 3,053 2,561 5,614
------- ------- -------
Total equity 3,053 2,711 5,764
------- ------- -------
Total liabilities & equity 36,489 33,260 69,749
------- ------- -------
------- ------- -------
<PAGE>
LOAN COMPOSITION
12/31/96
($ millions) FBS USBC Combined
-------------- -------------- ----------------
% OF % OF % OF
BALANCE TOTAL BALANCE TOTAL BALANCE TOTAL
Commercial 9,929 36.6 12,241 48.5 22,170 42.4
Lease financing 432 1.6 1,416 5.6 1,848 3.5
Commercial RE 3,744 13.8 3,587 14.2 7,331 14.0
------ ----- ------ ----- ------ -----
Total Commercial 14,105 52.0 17,244 68.3 31,349 59.9
Residential RE 3,061 11.3 2,218 8.8 5,279 10.1
Home equity/2nd mtges 3,263 12.0 1,654 6.6 4,917 9.4
Credit card 2,858 10.5 774 3.1 3,632 6.9
Other consumer 3,841 14.2 3,337 13.2 7,178 13.7
------ ----- ------ ----- ------ -----
Total consumer 13,023 48.0 7,983 31.7 21,006 40.1
Total loans 27,128 100.0 25,227 100.0 52,355 100.0
------ ----- ------ ----- ------ -----
------ ----- ------ ----- ------ -----
- -----------------------
* includes loans held for sale 36
<PAGE>
DEPOSIT COMPOSITION
4Q96 Average
($ millions) FBS USBC Combined
-------------- -------------- ----------------
% OF % OF % OF
BALANCE TOTAL BALANCE TOTAL BALANCE TOTAL
Noninterest bearing 6,672 29 5,831 24 12,503 26
Interest bearing
Interest checking 2,848 12 2,766 11 5,614 12
Money market 4,421 19 5,936 24 10,357 22
Other savings 1,573 7 1,428 6 3,001 6
Certificates 7,762 33 8,548 35 16,310 34
------ ----- ------ ----- ------ -----
Total int. bearing 16,604 71 18,678 76 35,282 74
------ ----- ------ ----- ------ -----
Total deposits 23,276 100 24,509 100 47,785 100
------ ----- ------ ----- ------ -----
------ ----- ------ ----- ------ -----
- -----------------------------------------------------------------------
LOAN/DEPOSIT RATIO 117% 102% 109%
- -----------------------------------------------------------------------
37
<PAGE>
CREDIT QUALITY
12/31/96
($ millions)
FBS USBC COMBINED
<TABLE>
<S> <C> <C> <C>
Nonperforming loans 121 149 270
OREO and other 17 25 42
----- ----- -----
Nonperforming assets 138 174 312
Reserve for loan losses 517 476 993
Loans 27,128 25,227 52,355
Assets 36,489 33,260 69,749
NPLs/Loans (%) .44 .59 .52
NPAs/Assets (%) .38 .52 .45
NCOs/Loans annualized (%) .57 .46 .52
Reserves/Loans (%) 1.90 1.90 1.90
Reserves/NPLs (%) 429 320 368
Reserves/NPAs (%) 375 274 318
</TABLE>
38
<PAGE>
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