<PAGE> 1
PROSPECTUS [LOGO]
$100,000,000
FIRSTAR CORPORATION
7.15% SUBORDINATED NOTES DUE SEPTEMBER 1, 2000
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Firstar Corporation ("Firstar" or the "Company") is offering $100,000,000
aggregate principal amount of its 7.15% Subordinated Notes due September 1, 2000
(the "Notes"). Interest on the Notes is payable semiannually on March 1 and
September 1 of each year commencing March 1, 1996. The Notes will be available
for purchase in denominations of $1,000 or any integral multiple thereof. The
Notes are not redeemable prior to September 1, 1998, and will be redeemable on
such date and on any interest payment date thereafter at Firstar's option, in
whole or in part, at their principal amount plus accrued interest. See
"Description of Notes--Redemption of Notes."
The Notes are direct, unsecured obligations of the Company, and are
subordinated in right of payment to all present and future Senior Indebtedness
of the Company. Payment of principal of the Notes may be accelerated only in the
case of certain events involving bankruptcy, insolvency, liquidation or
receivership of the Company or any Principal Constituent Bank, as defined
herein. There is no right of acceleration of the Notes in the case of a failure
to pay principal or interest on the Notes or in the performance of any other
obligation of the Company.
The Notes will be issued only in fully registered form and will be
represented by one or more Global Securities registered in the name of The
Depository Trust Company (the "Depositary"). Beneficial interests in the Notes
will be shown on, and transfers thereof will be effected only through, the
records maintained by the Depositary's participants. Except as described herein,
owners of beneficial interests in the Notes will not be entitled to receive the
Notes in definitive form and will not be deemed to be holders thereof. The Notes
will trade in the Depositary's Same-Day Funds settlement system until maturity,
and secondary market trading activity for the Notes will therefore settle in
immediately available funds. See "Description of the Notes--Same-Day Settlement
and Payment."
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THE NOTES ARE NOT SAVINGS ACCOUNTS, DEPOSITS OR OTHER OBLIGATIONS OF ANY BANK
OR NON-BANK SUBSIDIARY OF THE COMPANY AND ARE NOT INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION, BANK INSURANCE FUND OR
ANY OTHER GOVERNMENTAL AGENCY OR INSTRUMENTALITY.
THE NOTES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
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PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC(1) DISCOUNT(2) COMPANY(1)(3)
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<S> <C> <C> <C>
Per Note........................ 100% .5% 99.5%
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Total........................... $100,000,000 $500,000 $99,500,000
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</TABLE>
(1) Plus accrued interest, if any, from August 28, 1995.
(2) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended. See "Underwriting."
(3) Before deducting expenses payable by the Company estimated to be $180,000.
------------------------
The Notes are offered by the several Underwriters, subject to prior sale,
when, as and if issued to and accepted
by them, subject to approval of certain legal matters by counsel for the
Underwriters and certain other conditions. The several Underwriters reserve the
right to withdraw, cancel or modify such offer and to reject orders in whole or
in part. It is expected that the Notes will be delivered in book-entry form only
through the facilities of the Depositary on or about August 28, 1995.
------------------------
MERRILL LYNCH & CO. ROBERT W. BAIRD & CO.
INCORPORATED
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The date of this Prospectus is August 23, 1995.
<PAGE> 2
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE NOTES OFFERED
HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET.
SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
------------------------
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents previously filed by Firstar Corporation (File No.
1-2981) with the Securities and Exchange Commission (the "Commission") pursuant
to Section 13 of the Securities Exchange Act of 1934, as amended (the "1934
Act"), are incorporated herein by reference:
(a) Firstar's Annual Report on Form 10-K for the year ended December 31,
1994;
(b) Firstar's Form 10-K/A, dated June 15, 1995, which sets forth restated
financial statements for periods prior to the acquisitions of two
financial institutions by Firstar in January 1995 and April 1995, which
were accounted for using the pooling of interests method of accounting;
(c) Firstar's Quarterly Reports on Form 10-Q for the quarters ended March
31, 1995 and June 30, 1995; and
(d) Firstar's Current Reports on Form 8-K dated January 31, 1995 and April
18, 1995.
All documents filed by Firstar pursuant to Sections 13(a), 13(c), 14 or
15(d) of the 1934 Act after the date of this Prospectus and prior to the
termination of this offering shall be deemed to be incorporated by reference in
this Prospectus from the date of filing of such documents. Any statement
contained in a document incorporated or deemed to be incorporated by reference
herein shall be deemed to be modified or superseded for purposes of this
Prospectus to the extent that a statement contained herein or in any other
subsequently filed document which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Prospectus.
The Company hereby undertakes to provide without charge to each person to
whom a copy of this Prospectus is delivered, upon written or oral request of
such person, a copy of all documents incorporated herein by reference (except
for exhibits to such documents unless such exhibits are expressly incorporated
by reference into the documents that this Prospectus incorporates). Requests for
such copies should be directed to: Mr. William H. Risch, Senior Vice
President-Finance and Treasurer, Firstar Corporation, P.O. Box 532, Milwaukee,
Wisconsin 53201, telephone: (414) 765-4985.
AVAILABLE INFORMATION
Firstar is subject to the informational requirements of the 1934 Act and in
accordance therewith files reports, proxy statements and other information with
the Commission. Such reports, proxy statements and other information can be
inspected and copied at the public reference facilities of the Commission at 450
Fifth Street N.W., Washington, D.C. 20549 and at the Commission's regional
offices at Seven World Trade Center, New York, New York 10048 and 500 West
Madison Street, Chicago, Illinois 60601. Copies of such material also can be
obtained by mail from the Public Reference Section of the Commission at 450
Fifth Street N.W., Washington, D.C. 20549, at prescribed rates. In addition,
such material can be inspected at the offices of the New York Stock Exchange,
Inc., 20 Broad Street, New York, New York 10005, and the Chicago Stock Exchange
Incorporated, 440 South LaSalle Street, Chicago, Illinois 60605, on which
Firstar's common stock is listed.
Firstar has filed with the Commission under the Securities Act of 1933, as
amended, a Registration Statement on Form S-3 (including all amendments and
exhibits thereto, the "Registration Statement") with respect to the Notes. This
Prospectus does not contain all of the information set forth in the Registration
Statement, certain parts of which are omitted in accordance with the rules and
regulations of the Commission. The Registration Statement, including any
amendments and exhibits thereto, is available for inspection and copying as set
forth above. Statements contained in this Prospectus as to the contents of any
contract or other document are not necessarily complete, and in each instance,
reference is made to the copy of such contract or other document filed as an
exhibit to the Registration Statement, each such statement being qualified in
all respects by such reference.
2
<PAGE> 3
FIRSTAR CORPORATION
Firstar is a multibank holding company providing financial services at 257
branch locations primarily throughout the states of Wisconsin and Iowa and in
the Chicago and Minneapolis-St. Paul metropolitan areas. At June 30, 1995,
Firstar had total assets of $18.6 billion and total stockholders' equity of $1.5
billion. Firstar's bank subsidiaries in Wisconsin had 128 locations and total
assets of $11.2 billion of which Firstar Bank Milwaukee, the largest commercial
bank in Wisconsin, had 65 locations and total assets of $7.1 billion. Firstar's
bank subsidiaries in Iowa (with 44 locations), Chicago (with 48 locations) and
Minneapolis-St. Paul (with 32 locations) had total assets of $2.8 billion, $3.0
billion and $2.4 billion, respectively, as of that date. At June 30, 1995,
Firstar's trust and investment management subsidiaries held $16.8 billion of
assets under active management. All of Firstar's bank subsidiaries are owned by
four sub-bank holding companies which are direct subsidiaries of Firstar.
Firstar's subsidiaries offer a wide range of financial services to
businesses, individuals and governmental entities including accepting deposits,
making secured and unsecured business and personal loans, issuing and servicing
credit cards, engaging in correspondent banking services, providing trust and
investment management services, and conducting international banking services
for its local customers consisting of foreign trade financing, issuance and
confirmation of letters of credit, funds collection and foreign exchange
transactions. Firstar's subsidiaries also provide retail brokerage, mortgage
banking, insurance, and corporate computer and operational services.
Firstar is incorporated in the state of Wisconsin and its principal
executive offices are located at 777 East Wisconsin Avenue, Milwaukee, Wisconsin
53201 (Telephone (414) 765-4321).
RECENT DEVELOPMENTS
During the first half of 1995, Firstar completed three acquisitions which
added approximately $3 billion in total assets. In July 1995, Firstar announced
a fourth acquisition which will add approximately $350 million in assets.
On January 31, 1995, Firstar completed its merger with First Colonial
Bankshares Corporation, a $1.8 billion bank holding company operating 33 banking
offices in the Chicago metropolitan area. The transaction was accounted for as a
pooling of interests. The total number of shares of Firstar common stock issued
was 7,700,767 shares. All financial information has been restated to reflect
this transaction.
On March 31, 1995, Firstar completed its acquisition of First Moline
Financial Corporation, an $80 million thrift holding company operating in two
banking locations in Moline, Illinois. The transaction was accounted for as a
purchase with the issuance of 313,650 shares of Firstar common stock.
On April 28, 1995, Firstar completed the acquisition of Investors Bank
Corp., a $1.1 billion thrift holding company operating in 12 banking locations
in the Minneapolis-St. Paul metropolitan area. The transaction was accounted for
as a pooling of interests through the issuance of 3,006,923 shares of Firstar
common stock. All financial information has been restated to reflect this
transaction.
On July 24, 1995, Firstar announced that it had entered into a definitive
agreement to acquire Harvest Financial Corp., a $350 million thrift holding
company operating eight banking offices in Dubuque, Clinton and DeWitt, Iowa.
The transaction will be accounted for as a purchase and will result in the
issuance of approximately 926,000 shares of Firstar common stock. Subject to
regulatory approval, the transaction is expected to close in late 1995 or early
1996.
Firstar has announced a corporate-wide restructuring program with a goal of
reaching a 55% operating expense efficiency ratio in 1997. For the six month
period ended June 30, 1995, Firstar's efficiency ratio, excluding
acquisition-related restructuring charges, was 63.8%. To reach a 55% efficiency
ratio would require either a $100 million reduction in expenses or a $180
million increase in revenue or some combination of both expense reductions and
revenue increases on an annual basis.
The restructuring program is expected to be implemented over the next 18
months. Recently announced actions to merge certain existing banks in Iowa and
Wisconsin are part of this program. Charges for restructuring-related expenses,
which could be substantial, will be incurred during this period for both the
previously announced actions and as a result of other reviews of operations to
be conducted.
3
<PAGE> 4
USE OF PROCEEDS
The net proceeds to be received by Firstar from the sale of the Notes,
estimated to be $99,320,000, after deducting offering expenses and underwriting
commissions, will be added to the general funds of Firstar and will be available
for general corporate purposes including working capital needs; the funding of
investments in, or extensions of credit to, subsidiaries; acquisitions of other
financial institutions or other businesses or their assets; the reduction or
repayment of outstanding indebtedness; and the repurchase of outstanding equity
securities. Pending such applications, the net proceeds will be invested in
short-term investments including deposits with subsidiary banks.
Firstar has engaged in a number of acquisitions in recent periods and has
generally paid for such acquisitions through the issuance of its common stock.
Firstar has announced its intention to repurchase up to 3.5 million shares of
its common stock which will be cancelled and approximately 926,000 shares of its
common stock to be reissued in connection with the acquisition of Harvest
Financial Corp. A portion of the cash needed to make these stock repurchases may
be expected to be provided from the proceeds from the sale of the Notes. It is
possible that future acquisitions may involve some cash consideration or the
purchase of shares in the open market which will be used as needed to make
acquisitions, all or a portion of which could be provided from the proceeds from
the sale of the Notes.
CAPITALIZATION
The following table sets forth the actual capitalization of Firstar as of
June 30, 1995 and as adjusted to give effect to the issuance of the Notes
offered hereby.
<TABLE>
<CAPTION>
AS OF JUNE 30, 1995
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ACTUAL AS ADJUSTED
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(thousands of dollars)
<S> <C> <C>
Debt:
Parent Company
10.25% subordinated notes due 1998.............................. $ 78,340 $ 78,340
10% notes due 1996.............................................. 43,910 43,910
7.15% subordinated notes due 2000 offered hereby................ 100,000
Subsidiaries*
9.25% subordinated notes due 2002............................... 23,000 23,000
Federal Home Loan Bank advances................................. 435,260 435,260
Other debt...................................................... 15,336 15,336
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Total Debt.................................................... 595,846 695,846
Stockholders' Equity:
Preferred stock; 2,500,000 shares authorized;
38,200 shares issued.......................................... 19,110 19,110
Common stock, $1.25 par value; 120,000,000 shares authorized;
76,956,450 shares issued....................................... 96,196 96,196
Capital surplus................................................. 215,199 215,199
Retained earnings............................................... 1,212,124 1,212,124
Net unrealized gains on securities available for sale........... 1,701 1,701
Treasury stock; 478,653 shares of common stock at cost.......... (2,600) (2,600)
Restricted stock................................................ (571) (571)
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Total Stockholders' Equity.................................... 1,541,159 1,541,159
---------- -----------
Total Capitalization.......................................... $2,137,005 $ 2,237,005
========= =========
</TABLE>
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* These obligations are direct obligations of certain subsidiaries of Firstar
Corporation and, as such, constitute claims against them prior to Firstar's
equity interest therein.
4
<PAGE> 5
SELECTED FINANCIAL DATA
The following table sets forth certain selected consolidated historical
financial information for Firstar which has been derived from and should be read
in conjunction with, and is qualified in its entirety by, the consolidated
financial statements of Firstar, including the notes thereto, incorporated by
reference in the Prospectus. Information for the five years ended December 31,
1994 has been derived from the audited consolidated financial statements of
Firstar. Interim data for the six month periods ended June 30, 1995 and 1994 are
unaudited but, in the opinion of management, contain all adjustments necessary
for a fair presentation of such data. Results for the periods ended June 30,
1995 and 1994 are not necessarily indicative of results which may be expected
for any other period or for the fiscal year as a whole.
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30 YEARS ENDED DECEMBER 31
------------------- ----------------------------------------------------
1995 1994 1994 1993 1992 1991 1990
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<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET AT PERIOD END (MILLIONS OF DOLLARS)
Total assets..................................... $ 18,572 $ 16,625 $ 17,995 $ 16,412 $ 15,565 $ 14,551 $ 14,162
Securities....................................... 4,203 3,535 3,974 3,360 3,279 3,347 3,028
Loans............................................ 12,483 11,185 11,906 10,825 9,818 8,997 8,835
Earning assets................................... 16,970 15,000 16,293 14,551 13,621 12,814 12,281
Deposits......................................... 13,608 12,634 13,409 13,133 12,756 11,989 11,561
Short-term borrowed funds........................ 2,530 1,806 2,196 1,397 1,102 1,054 1,152
Other debt....................................... 596 493 574 267 228 161 223
Stockholders' equity............................. 1,541 1,425 1,513 1,359 1,237 1,070 974
EARNINGS AND DIVIDENDS (THOUSANDS OF DOLLARS)
Net interest revenue............................. $357,634 $340,723 $698,838 $659,939 $626,371 $555,209 $496,900
Provision for loan losses........................ 23,123 6,552 23,891 29,090 50,733 55,221 53,892
Other operating revenue.......................... 184,830 190,545 370,619 392,918 347,936 311,641 276,314
Other operating expense.......................... 383,765 361,237 706,185 689,274 655,444 595,505 534,790
Net income....................................... 90,067 109,694 226,673 227,938 185,999 154,415 132,060
Per common share:
Net income..................................... 1.17 1.45 2.98 2.99 2.50 2.11 1.78
Dividends...................................... 0.64 0.56 1.16 1.00 0.80 0.705 0.635
Stockholders' equity........................... 19.90 18.63 19.45 17.78 15.83 14.16 12.78
Average common shares (000's).................... 76,186 74,923 75,195 74,131 71,992 70,832 70,547
PERFORMANCE RATIOS(1)
Return on average assets......................... 1.01% 1.38% 1.37% 1.49% 1.29% 1.12% 1.01%
Return on average common equity.................. 12.01 15.97 16.02 17.81 16.65 15.71 14.24
Equity to assets................................. 8.30 8.57 8.41 8.28 7.94 7.35 6.88
Tangible equity to assets........................ 7.68 7.85 7.76 7.61 7.18 6.49 5.93
Total risk-based capital......................... 12.61 13.16 13.18 13.17 13.10 11.74 11.76
Loan loss reserve as a percentage of total
loans.......................................... 1.60 1.72 1.60 1.75 1.87 1.81 1.65
Loan loss reserve as a percentage of
nonperforming
loans.......................................... 231.32 242.44 275.05 279.18 245.86 183.87 129.76
Nonperforming loans as a percentage of loans..... 0.69 0.71 0.58 0.63 0.76 0.99 1.27
Nonperforming assets as a percentage of loans and
other real estate.............................. 0.75 0.87 0.69 0.81 1.17 1.50 1.83
Net loan charge-offs as a percentage of average
loans.......................................... 0.25 0.10 0.25 0.25 0.40 0.43 0.43
Net interest margin.............................. 4.57 4.95 4.89 5.04 5.11 4.84 4.62
Fee revenue as a percentage of average assets.... 2.14 2.38 2.26 2.56 2.39 2.22 2.10
Efficiency ratio................................. 63.83(2) 61.94(2) 61.75(2) 63.53 65.13 66.02 65.72
Ratio of earnings to fixed charges(3)
Excluding interest on deposits................. 2.47x 4.73x 4.06x 6.22x 5.53x 3.63x 2.65x
Including interest on deposits................. 1.44 1.86 1.78 1.88 1.60 1.35 1.27
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</TABLE>
(1) Ratios for the six month periods ended June 30 have been annualized.
(2) The efficiency ratio is operating expenses as a percent of net interest
revenue on a fully taxable equivalent basis and other operating revenue
excluding securities gains or losses. The calculation excludes acquisition
related restructuring charges in 1995 and the check kiting loss in 1994. See
"Recent Financial Results".
(3) For purposes of computing these ratios, earnings represent income before
income taxes plus fixed charges. Fixed charges, excluding interest on
deposits, include interest (other than on deposits), whether expensed or
capitalized and that portion of rental expense deemed representative of the
interest factor. Fixed charges, including interest on deposits, include all
interest, whether expensed or capitalized, and that portion of rental
expense deemed representative of the interest factor.
5
<PAGE> 6
RECENT FINANCIAL RESULTS
Firstar reported net income for the six months ended June 30, 1995 of $90.1
million, or $1.17 per common share, down from $109.7 million, or $1.45 per
common share, for the same period last year. Return on common equity was 12.01%
for the first six months of the year, compared with 15.97% for the same period
last year, while return on assets was 1.01% compared to 1.38% during the same
period last year.
In the first six months of 1995 certain merger and restructuring charges
were taken in connection with four completed acquisitions. These expenses
totaled $43.0 million pre-tax and reduced net income by $27.6 million, or 36
cents per share. In the second quarter of 1994, a $22.0 million charge was taken
in connection with a check kiting loss which reduced net income by $13.1
million, or 17 cents per share. This charge resulted from a series of fraudulent
check transactions conducted by two affiliated commercial customers.
Net interest revenue during the first six months of 1995, on a taxable
equivalent basis, was $374.1 million which was $16.3 million, or 4.6%, above the
level for the same period last year. The net interest margin was 4.57% during
the first six months of 1995 compared to 4.95% for the comparable period in
1994. The increase in net interest revenue was attributable to the higher
average earning asset balances, which increased 13.2% from the six month period
ended June 30, 1994, partially offset by the reduced net interest margin. The
margin has been compressed by rising costs of funds which have not been fully
offset by increased yields on earning assets.
The provision for loan losses of $23.1 million was $16.6 million higher
than last year of which $13.6 million of this increase was a merger related
adjustment to loan loss reserve levels. Net charge-offs for the first six months
were at a level of .25% of average outstanding loans compared to .10% a year
earlier. Charge-off levels for the first half of 1994 were unusually low and the
current period's level of .25% is consistent with recent experience. The reserve
for loan losses represented 1.60% of total loans at June 30, 1995 the same level
as at year-end 1994 and down from 1.72% a year earlier.
Nonperforming assets were $93.7 million at June 30, 1995, which amounted to
.75% of total loans and other real estate. This was an $11.2 million increase
from the December 31, 1994 level, which was .69% of total loans and other real
estate. Nonperforming assets have gone up in part due to the application of
Firstar's credit review policies to the loan portfolios of the recently acquired
banks. This has also accounted for some of the increased loan loss provision.
Other operating revenue, excluding securities gains and losses, increased
by less than 1% to a level of $190.9 million in the first six months of 1995
compared to $189.9 million for the same period last year. Revenue from trust and
investment management rose 5% and credit card service fees were up 11%. However,
reduced mortgage banking revenues offset these gains as origination volumes are
down industry wide. Firstar continues to emphasize growth in non-interest
revenue although recent growth trends have been lower than previously
experienced.
Other operating expense increased to a level of $383.8 million. Excluding
the acquisition related restructuring charges taken in the first six months of
this year and the check kiting loss in 1994, expenses increased 6.3%. Personnel
costs rose by 5.7% to a level of $202 million due in part to a bank acquisition
that occurred late in 1994. Nonpersonnel costs, excluding the restructuring
charges in 1995 and the check kiting loss in 1994, increased 7.1%. The
efficiency ratio, which is the ratio of expense to revenue, was 63.83% in the
first six months of 1995 compared to 61.94% a year earlier.
Total assets on June 30, 1995 were $18.6 billion, an increase of $1.9
billion, or 11.7%, from the same time last year. Without the effect of
acquisitions, the year-to-year increase would be 8.8%.
Earning assets totaled $17.0 billion on June 30, 1995, an increase of $2.0
billion, or 13.1%, over June 30, 1994. Loans, the largest category of earning
assets, represented 73.6% of earning assets as compared to 74.6% a year earlier.
Total loans were $12.5 billion on June 30, 1995, an increase of $1.6 billion, or
14.6%, over the 1994 level, which excludes loans which have been securitized and
held in Firstar's securities portfolio. Firstar
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<PAGE> 7
securitized $330 million of residential mortgages near the end of 1994. These
loans, now carrying a U.S. agency guarantee, are included in securities.
Fund sources, consisting of deposits and borrowed funds, increased by $1.8
billion, or 12.1%, to $16.7 billion on June 30, 1995. Total deposits were $13.6
billion, an increase of $974 million, or 7.7%, over a year earlier.
Approximately one-half of the increase in deposits was due to a bank acquisition
that occurred late in 1994.
Stockholders' equity totaled $1,541.2 million at the end of the second
quarter, an increase of $28.5 million from the level at year-end 1994 and $116.7
million over June 30, 1994. Total equity as a percent of total assets amounted
to 8.30%. Under risk-based capital rules, total capital was 12.61% of
risk-adjusted assets.
DESCRIPTION OF THE NOTES
The following sets forth certain general terms and provisions of the Notes.
The Notes will be issued under an indenture (the "Indenture"), between the
Company and Chemical Bank, as trustee (the "Trustee"). A copy of the form of the
Indenture has been filed as an exhibit to the Registration Statement of which
this Prospectus forms a part. The following summaries of certain provisions of
the Indenture do not purport to be complete and are subject to, and are
qualified in their entirety by reference to, all the provisions of the
Indenture, including the definitions therein of certain terms. Wherever
particular sections or defined terms of the Indenture are referred to, it is
intended that such sections or definitions shall be incorporated herein by
reference.
Since the Company is a holding company, the right of the Company, and hence
the right of creditors and stockholders of the Company, including the holders of
the Notes offered hereby, to participate in any distribution of assets of any
subsidiary upon its liquidation, reorganization or otherwise is necessarily
subject to the prior claims of creditors of the subsidiary, except to the extent
that the claims of the Company itself as a creditor of the subsidiary may be
recognized.
GENERAL
The Indenture does not limit the aggregate principal amount of indebtedness
which may be issued thereunder and provides that debt securities ("Debt
Securities") may be issued from time to time in one or more series. The Notes
will be the first series of Debt Securities issued by the Company under the
Indenture. All of the Debt Securities issued under the Indenture will rank
equally and ratably with any additional Debt Securities issued thereunder.
The Notes offered hereby will mature on September 1, 2000, and are limited
to $100 million aggregate principal amount. The Notes will bear interest at the
rate of 7.15% per annum, commencing on August 28, 1995. Interest will be payable
semiannually on March 1 and September 1 of each year, commencing March 1, 1996,
to the persons in whose names the Notes are registered on the February 15 and
August 15 next preceding such March 1 and September 1, respectively, and at
maturity to the persons to whom principal is payable upon proper presentment. No
sinking fund is provided for the Notes.
The Notes will be unsecured and subordinated in right of payment to the
prior payment in full of all present and future Senior Indebtedness of the
Company as described under the caption "Description of the Notes--Subordination"
herein. Neither the Indenture nor the Notes will limit or otherwise restrict the
amount of other indebtedness which may be incurred or other securities which may
be issued by the Company. As of June 30, 1995, the Company had approximately
$43.9 million principal amount of Senior Indebtedness outstanding.
Principal of and interest on the Notes will be payable, and the transfer of
Notes will be registrable, through The Depository Trust Company, as depository.
The Notes will be issued only in fully registered form without coupons in
denominations of $1,000 and integral multiples thereof.
No service charge will be made for any transfer or exchange of the Notes,
but the Company may require payment of a sum sufficient to cover any tax or
other governmental charge payable in connection therewith.
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<PAGE> 8
The Indenture does not contain any terms which would afford protection to
the holders of the Notes in the event of a recapitalization, a change of
control, a highly leveraged transaction or a restructuring involving the Company
that results in a downgrade of the Company's public debt rating.
Payment of principal of the Notes may be accelerated only in the case of
certain events of bankruptcy, insolvency, liquidation or receivership of the
Company or any of its Principal Constituent Banks. The term "Principal
Constituent Bank" shall mean any subsidiary which is a bank the consolidated
assets of which, as set forth in the most recent statement of condition of such
bank, constitute 15% or more of the Company's consolidated assets as determined
from the most recent statements of condition of the Company. There will be no
right of acceleration of the payment of principal of the Notes upon a default in
the payment of interest on the Notes or in the performance of any covenant or
agreement of the Company contained in the Notes or the Indenture. The Indenture
does not limit the consolidation, merger or corporate reorganization of any of
the Company's current and future subsidiaries.
REDEMPTION OF NOTES
The Notes may not be redeemed before September 1, 1998. On that date and on
any interest payment date thereafter, the Notes may be redeemed, as a whole or
from time to time in part, at the option of the Company, on not less than 30 nor
more than 60 days prior notice given as provided in the Indenture, at a
redemption price equal to 100% of the principal amount of the Notes to be
redeemed plus interest accrued and unpaid to the date of redemption.
If less than all of the Notes are to be redeemed, the Notes to be redeemed
shall be selected by the Trustee by such method as it shall deem fair and
appropriate and which may provide for the selection for redemption of portions
of the principal amount of the Notes of denominations larger than $1,000.
BOOK-ENTRY SYSTEM
The Notes will be issued only in fully registered form and will be
represented by one or more global securities ("Global Securities") registered in
the name of The Depository Trust Company, New York, New York, or a successor
thereof (which successor shall be a clearing agency registered under the
Exchange Act if so required by applicable law) (The Depository Trust Company or
such successor being herein referred to as the "Depositary") or the Depositary's
nominee.
Upon the issuance of a Global Security, the Depositary will credit, on its
book-entry registration and transfer system, the respective principal amount of
the Notes represented by such Global Security to the accounts of institutions
that have accounts with the Depositary ("participants"). Ownership of beneficial
interest in the Global Security will be limited to participants or persons that
may hold interests through participants. Ownership of beneficial interests in
the Global Security will be shown on, and the transfer of that ownership will be
effected only through, records maintained by the Depositary or its nominee (with
respect to interests of participants) or by participants or persons that hold
through participants (with respect to interests of persons other than
participants). The laws of certain states require that certain purchasers of
securities take physical delivery of such securities as certificates issued in
definitive form. Such limits and such laws may impair the ability to transfer
beneficial interests in a Global Security.
Principal, premium, if any, and interest payments on the Global Security
will be made to the Depositary or its nominee, as the case may be, as the
registered holder thereof. The Company has been advised that the Depositary or
its nominee, upon receipt of any payment of principal, premium, if any, or
interest in respect of a Global Security, will immediately credit participants'
accounts with payments in amounts proportionate to their respective beneficial
interests in the principal amount of such Global Security as shown on the
records of the Depositary or its nominee. Payments by participants (or by
persons that hold interests for customers through participants) to owners of
beneficial interests in such Global Security held through such participants will
be governed by standing instructions and customary practices, as is now the case
with securities held for the accounts of customers registered in "street name",
and will be the responsibility of such participants (or of such persons that
hold interests for customers through participants).
8
<PAGE> 9
Each owner of a beneficial interest in a Global Security must ensure that
the person through whom its interest is held (i.e., either a participant or
other person that holds interests through a participant) maintains accurate
records of such owner's beneficial interest in the Global Security. The
interests of participants (which may be in the form of a custodial relationship)
will be shown on records maintained by the Depositary for such Global Security.
The designation of the Depositary or its nominee as custodian for participants
and persons that hold interests through participants (either as principal,
nominee or custodian) will be shown on the register maintained by the Trustee.
Neither the Company nor the Trustee will have any responsibility or
liability for any aspect of the records relating to, or for payments made on
account of beneficial ownership interests in, a Global Security or for
maintaining, supervising or reviewing any records relating to such beneficial
ownership interests.
If the Depositary notifies the Company that it is unwilling or unable to
continue as Depositary for the Global Securities or if at any time the
Depositary ceases to be a clearing agency registered under the Exchange Act if
so required by applicable law or regulation, and, in either case, a successor
depositary is not appointed by the Company within 90 days, the Company will
issue Notes in certificated form ("Certificated Notes") in exchange for such
Global Securities. In addition, Company may at any time and in its sole
discretion determine not to have any Notes represented by Global Securities and,
in such event, will issue Certificated Notes in exchange for such Global
Securities. Furthermore, after the occurrence of an Event of Default, the
Company will issue Certificated Notes in exchange for such Global Securities.
The Certificated Notes so issued in exchange for such Global Securities shall be
in the same minimum denominations and be of like aggregate principal amount and
tenor as the portion of each such Global Security to be exchanged. Except as
provided above, owners of beneficial interests in a Global Security will not be
entitled to receive physical delivery of Certificated Notes and will not be
considered the registered holders of such Notes for any purpose (including
receiving payments of principal, premium, if any, and interest).
The Depositary has advised the Company that it is a limited-purpose trust
company organized under the laws of the State of New York, a member of the
Federal Reserve System, a "clearing corporation" within the meaning of the New
York Uniform Commercial Code and a "clearing agency" registered pursuant to the
provisions of Section 17A of the Exchange Act. The Depositary was created to
hold securities of its participants and to facilitate the clearance and
settlement of securities transactions among its participants in such securities
through electronic book-entry changes in accounts of the participants, thereby
eliminating the need for physical movement of securities certificates. The
Depositary's participants include securities brokers and dealers, banks, trust
companies, clearing corporations and certain other organizations, some of whom
(and/or their representatives) own the Depositary. Access to the Depositary's
book-entry system is also available to others, such as banks, brokers, dealers
and trust companies that clear through or maintain a custodial relationship with
a participant, either directly or indirectly.
SAME-DAY SETTLEMENT AND PAYMENT
Settlement for the Notes will be made in immediately available funds. The
Notes will trade in the Depositary's Same-Day Funds settlement system until
maturity, unless otherwise exchanged for Certificated Notes as described above,
and therefore the Depositary will require secondary trading activity in the
Notes to be settled in immediately available funds. Secondary trading in
long-term notes and debentures of corporate issuers is generally settled in
clearing-house or next-day funds. No assurance can be given as to the effect, if
any, of settlement in immediately available funds on secondary trading activity
in the Notes.
SUBORDINATION
During the continuance beyond any applicable grace period of any default
with respect to Senior Indebtedness (as defined below), no payment of principal
of and interest on the Notes shall be made by the Company until payment in full
of all principal of and premium and interest on such Senior Indebtedness. In
addition, upon any distribution of assets of the Company upon any dissolution,
winding up, liquidation or reorganization, the payment of the principal of and
interest on the Notes is to be subordinated to the extent provided in the
Indenture (Article Fifteen).
9
<PAGE> 10
In the event of any insolvency or bankruptcy proceedings, and any
receivership, liquidation, reorganization, arrangement or other similar
proceedings in connection therewith, relative to the Company or to its property,
and in the event of any proceedings for voluntary liquidation, dissolution or
other winding-up of the Company, whether or not involving insolvency or
bankruptcy, then the holders of Senior Indebtedness shall be entitled to receive
payment in full of all principal, premium and interest on all Senior
Indebtedness before the Holders of the Debt Securities are entitled to receive
any payment on account of principal, premium, if any, interest or Additional
Amounts (as defined in the Indenture) upon the Debt Securities, and to that end
(but subject to the power of a court of competent jurisdiction to make other
equitable provisions reflecting the rights conferred in the Debt Securities upon
Senior Indebtedness and the Holders thereof with respect to the subordinated
indebtedness represented by the Debt Securities and the Holders hereof by a
lawful plan of reorganization under applicable bankruptcy law) the holders of
Senior Indebtedness shall be entitled to receive for application in payment
thereof any payment or distribution of any kind or character, whether in cash or
property or securities, which may be payable or deliverable in any such
proceedings in respect of the Debt Securities after giving effect to any
concurrent payment or distribution in respect of such Senior Indebtedness,
except securities which are subordinate and junior in right of payment to the
payment of all Senior Indebtedness then outstanding. If any payment or
distribution shall be paid or delivered to any Holder of the Debt Securities or
to the Trustee for their benefit before all Senior Indebtedness shall have been
paid in full, such payment or distribution shall be held in trust for and so
paid and delivered to the holders of Senior Indebtedness (or their duly
authorized representatives) until all Senior Indebtedness shall have been paid
in full.
For purposes of the preceding paragraphs, the term "Senior Indebtedness"
will be defined to mean the principal of, and premium, if any, and interest on,
all indebtedness of Company, whether outstanding on the date of execution of the
Indenture or thereafter incurred or created, except such indebtedness as is by
its terms expressly stated to be not superior in right of payment to the Notes
or to rank pari passu or is identified in a Board Resolution of the Company or
any indenture supplemental to the Indenture as not superior in right of payment
nor to rank pari passu with the Notes (Section 101).
DEFAULT; EVENT OF DEFAULT AND LIMITED RIGHTS OF ACCELERATION
With respect to the Notes, the following are "Defaults" under the
Indenture: (a) failure to pay when due principal of or any premium on any of the
Notes; (b) failure to pay any interest on any Note when due and such failure
continues for 30 days; (c) failure to perform any other covenant of Firstar in
the Indenture and such failure continues for 60 days after written notice of
such default; (d) an Event of Default; and (e) any other Default provided with
respect to Notes. (Section 513). With respect to the Notes, an Event of Default
is defined under the Indenture as certain events of bankruptcy, liquidation,
insolvency or receivership of the Company or any Principal Constituent Bank.
Unless an Event of Default has occurred and shall be continuing with respect to
the Notes, neither the holders of the Notes nor the Trustee may declare the
acceleration of the payment of principal or premium, if any, of such Notes under
the Indenture.
The Indenture provides that, subject to the duty of the Trustee during the
continuance of a Default to act with the required standard of care, the Trustee
will be under no obligation to exercise any of its rights or powers under the
Indenture at the request or direction of any of the Holders, unless such Holders
shall have offered to the Trustee reasonable indemnity (Section 602). Subject to
certain limitations, the holders of a majority in aggregate principal amount of
the Outstanding Notes will have the right to direct the time, method and place
of conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred on the Trustee, with respect to the
Notes (Section 512).
No holder of any Notes or any related coupons will have any right to
institute any proceeding with respect to the Indenture or for any remedy
thereunder, unless such holder shall have previously given to the Trustee
written notice of a continuing Default with respect to the Notes, the holders of
at least 25% in aggregate principal amount of the Outstanding Notes shall have
made written request, and offered reasonable indemnity, to the Trustee to
institute such proceeding as Trustee, and the Trustee shall not have received
from the holders of a majority in aggregate principal amount of the Outstanding
Notes a direction inconsistent with such request and shall have failed to
institute such proceeding within 60 days. (Section 507). However, such
10
<PAGE> 11
limitations do not apply to a suit instituted by a holder of an Outstanding Note
for enforcement of payment of the principal of, or any premium or interest on,
such Note on or after the respective due dates expressed in such Note. (Section
508).
The Company is required to furnish to the Trustee annually a statement as
to the performance by the Company of certain of its obligations under the
Indenture and as to any default in such performance (Section 1005). The Trustee
may withhold notice to Holders of any default (except in payment of principal,
premium or interest, if any) if it in good faith determines that it is in the
interests of the Holders to do so.
If any Event of Default with respect to the Notes at the time outstanding
shall occur and be continuing, then and in every such case the Trustee or the
holders of not less than 25% in principal amount of the Outstanding Notes may
declare the principal amount of all of the Notes to be due and payable
immediately by a notice in writing to the Company (and to the Trustee if given
by the holders). However, at any time after such a declaration of acceleration
with respect to the Notes has been made and before a judgment or decree based on
such acceleration has been obtained by the Trustee, the holders of not less than
a majority in principal amount of the Outstanding Notes may, under certain
circumstances, rescind and annul such acceleration if all Events of Default,
have been cured or waived as provided in the Indenture (Section 502).
MODIFICATION AND WAIVER
The Indenture provides that modifications and amendments may be made by the
Company and the Trustee with the consent of the holders of not less than a
majority in principal amount of the Outstanding Debt Securities of each series
affected thereby; provided, however, that no such modifications or amendments
may, without the consent of the holder of each Outstanding Debt Security
affected thereby (a) change the stated maturity date of the principal of, or any
installment of interest on, any Debt Security; (b) reduce the principal amount
thereof, or the rate of interest (if any) thereon, or additional amounts, if
any, in respect of, or any premium payable upon the redemption of any Debt
Security; (c) change the place of payment, coin or currency in which any Debt
Security or any premium or interest thereon is payable; (d) impair the right to
institute suit for the enforcement of any payment on or after the stated
maturity date thereof or, in the case of redemption, on or after the redemption
date; (e) reduce the above-stated percentage in principal amount of Outstanding
Debt Securities of any series, the consent of the holders of which is required
to modify or amend the Indenture; (f) reduce the percentage in principal amount
of Outstanding Debt Securities of any series, the consent of the holders of
which is required for waiver of compliance with certain provisions of the
Indenture or for waiver of certain defaults; (g) modify (with certain
exceptions) any provision of the Indenture relating to modification and
amendment of the Indenture or waiver of compliance with conditions and defaults
thereunder; (h) alter in any respect the provisions regarding subordination of
the Debt Securities in a manner adverse to the holders thereof; (i) with respect
to any Debt Securities convertible into Common Stock, adversely affect the right
of conversion; (j) reduce the principal amount of any Original Issue Discount
Securities which could be declared due and payable upon acceleration of maturity
thereof; or (k) change the obligation of the Company to pay additional amounts
(Section 902).
The holders of a majority in principal amount of the Outstanding Debt
Securities of any series may on behalf of the holders of all Debt Securities of
that series waive, insofar as that series is concerned, compliance by the
Company and the Trustee, with certain restrictive provisions of the Indenture
(Section 1008). The holders of a majority in principal amount of the Outstanding
Debt Securities of any series may on behalf of the holders of all Debt
Securities of that series waive any past default under the Indenture with
respect to that series, except a default in the payment of the principal of (and
premium, if any) or interest on or additional amounts payable in respect of any
Debt Security of such series or in respect of a covenant or provision which
under the terms of the Indenture cannot be modified or amended without the
consent of the holder of each Outstanding Debt Security of such series affected
(Section 513).
Modification and amendment of the Indenture may be made by the Company and
the Trustee without the consent of any holder for any of the following purposes:
(i) to evidence the succession of another Person to the Company; (ii) to add to
the covenants of the Company for the benefit of the holders of all or any series
of Debt Securities; (iii) to add any additional Defaults; (iv) to add or change
any provisions of the Indenture to
11
<PAGE> 12
facilitate the issuance of Bearer Securities; (v) to add to, delete from or
revise the conditions, limitations and restrictions on the authorized amount,
terms or purposes of issue, authentication and delivery of Debt Securities as
set forth in the Indenture; (vi) to establish the form or terms of Debt
Securities of any series and any related coupons; (vii) to provide for the
acceptance of appointment by a successor Trustee; (viii) to cure any ambiguity,
defect or inconsistency in the Indenture, provided such action is not
inconsistent with the provisions of the Indenture and does not adversely affect
the interests of holders of Debt Securities of any series in any material
respect under the Indenture; (ix) to modify, eliminate or add to the provisions
of the Indenture to such extent as is necessary to conform to the obligations of
the Company and the Trustee under the Indenture to the Trust Indenture Act of
1939, as amended; or (x) to make provision for the conversion rights of the
holders of the Debt Securities in certain events (Section 901).
GOVERNING LAW
The Indenture and the Notes will be governed by and construed in accordance
with the laws of the State of New York.
UNDERWRITING
Subject to the terms and conditions set forth in an underwriting agreement
(the "Underwriting Agreement"), the Company has agreed to sell to each of the
Underwriters named below, and each of the Underwriters for whom Merrill Lynch,
Pierce, Fenner & Smith Incorporated and Robert W. Baird & Co. Incorporated are
acting as representatives (the "Representatives"), has severally agreed to
purchase, the respective principal amounts of the Notes set forth opposite its
name below. In the Underwriting Agreement, the Underwriters have agreed, subject
to the terms and conditions set forth herein, to purchase all of the Notes
offered hereby if any Notes are purchased.
<TABLE>
<CAPTION>
UNDERWRITER PRINCIPAL AMOUNT
----------- ----------------
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated............................ $ 36,000,000
Robert W. Baird & Co. Incorporated................... 18,000,000
BA Securities, Inc................................... 8,000,000
Chemical Securities Inc.............................. 8,000,000
First Chicago Capital Markets, Inc................... 8,000,000
Keefe, Bruyette & Woods, Inc......................... 8,000,000
Smith Barney Inc..................................... 8,000,000
Alex. Brown & Sons Incorporated...................... 1,000,000
The Chicago Corporation.............................. 1,000,000
Dain Bosworth Incorporated........................... 1,000,000
Kemper Securities, Inc............................... 1,000,000
McDonald & Company Securities, Inc................... 1,000,000
Piper Jaffray Inc.................................... 1,000,000
------------
Total................................... $100,000,000
============
</TABLE>
The Underwriters have advised the Company that they propose initially to
offer the Notes to the public at the public offering price set forth on the
cover page of this Prospectus, and to certain dealers at such price less a
concession not in excess of .3% of the principal amount of the Notes. The
Underwriters may allow and such dealers may reallow a discount not in excess of
.25% of such principal amount to certain other dealers. After the initial public
offering, the public offering price, concession and discount may be changed.
The Notes are a new issue of securities with no established trading market.
The Company has been advised by the Underwriters that they intend to make a
market in the Notes, but are not obligated to do so, and may discontinue market
making at any time without notice. No assurance can be given as to the liquidity
of the trading market for the Notes.
12
<PAGE> 13
The Underwriters and their affiliates may engage in transactions with and
perform services for the Company in the ordinary course of business including,
among other things, investment banking transactions and sources.
The Underwriting Agreement provides that the Company will indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act of 1933, as amended, or contribute to payments the Underwriters
may be required to make in respect thereof.
LEGAL OPINIONS
The legality of the Notes will be passed upon for Firstar by Howard H.
Hopwood III, Esq., Senior Vice President and General Counsel of Firstar, and for
the Underwriters by Brown & Wood, One World Trade Center, New York, New York
10048. Mr. Hopwood is a full time employee of Firstar and at June 30, 1995
directly or beneficially owned 62,700 shares of Firstar common stock.
EXPERTS
The consolidated financial statements of Firstar and its subsidiaries as of
December 31, 1994 and 1993, and for each of the years in the three-year period
ended December 31, 1994 and the consolidated financial statements of First
Colonial Bankshares Corporation and its subsidiaries as of December 31, 1994 and
1993, and for each of the years in the three year period ended December 31,
1994, have been incorporated by reference herein in reliance upon the reports of
KPMG Peat Marwick LLP, independent certified public accountants, incorporated by
reference herein, and upon the authority of such firm as experts in accounting
and auditing.
13
<PAGE> 14
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NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS IN CONNECTION WITH THE OFFERING
COVERED BY THIS PROSPECTUS. IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY
OR THE UNDERWRITERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A
SOLICITATION OF AN OFFER TO BUY, THE NOTES IN ANY JURISDICTION WHERE, OR TO ANY
PERSON TO WHOM, IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE
DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE FACTS
SET FORTH IN THIS PROSPECTUS OR IN THE AFFAIRS OF THE COMPANY SINCE THE DATE
HEREOF.
------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Incorporation of Certain Documents by
Reference............................. 2
Available Information................... 2
Firstar Corporation..................... 3
Use of Proceeds......................... 4
Capitalization.......................... 4
Selected Financial Data................. 5
Recent Financial Results................ 6
Description of the Notes................ 7
Underwriting............................ 12
Legal Opinions.......................... 13
Experts................................. 13
</TABLE>
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$100,000,000
FIRSTAR CORPORATION
7.15% SUBORDINATED NOTES
DUE 2000
----------------
PROSPECTUS
----------------
MERRILL LYNCH & CO.
ROBERT W. BAIRD & CO.
INCORPORATED
AUGUST 23, 1995
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