<PAGE>
As filed with the Securities and Exchange Commission on June 15, 1994
Registration No. 33-_____
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------
FORM S-4
REGISTRATION STATEMENT
Under
The Securities Act of 1933
-----------------------
NORWEST CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 6711 41-0449260
(State or other jurisdiction (Primary Standard (I.R.S. Employer
of incorporation or Industrial Identification No.)
organization) Classification
Code Number)
Norwest Center
Sixth and Marquette
Minneapolis, Minnesota 55479-1000
612-667-1234
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
-----------------------
Stanley S. Stroup, Esq.
Executive Vice President and General Counsel Copy to :
Norwest Corporation H. Bernt von Ohlen, Esq.
Norwest Center Norwest Corporation
Sixth and Marquette Norwest Center
Minneapolis, Minnesota 55479-1026 Sixth and Marquette
612-667-8858 Minneapolis, Minnesota 55479-1026
(Name, address, including zip code,
and telephone number, including area code,
of agent for service)
-----------------------
Approximate date of commencement of proposed sale of the securities to the
public: As soon as practicable after the effective date of the Registration
Statement.
If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. / /
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Title of Securities Amount Proposed Proposed Amount of
to Be to Be Maximum Maximum Registration
Registered Registered Offering Price Aggregate Fee
Per Share Offering Price
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock 525,000 N/A $8,011,075 (3) $2,762.44
(par value $1 2/3 Shares (2)
per share) (1)
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<FN>
(1) Each share of the registrant's common stock includes one preferred stock
purchase right.
(2) Based upon the maximum number of shares that may be issued in the
Reorganization described herein.
(3) Estimated solely for purpose of computing the registration fee, in
accordance with Rule 457(f), based upon the book value, as of March 31,
1994, of all shares of common stock to be acquired by the registrant in the
Reorganization described herein.
</TABLE>
-----------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
- -------------------------------------------------------------------------------
<PAGE>
NORWEST CORPORATION
Cross Reference Sheet
Pursuant to Regulation S-K, Item 501(b)
Form S-4 Item Prospectus Heading
------------- ------------------
1. Forepart of Registration Statement Outside Front Cover Page
and Outside Front Cover Page of
Prospectus
2. Inside Front and Outside Back Cover Available Information;
Pages of Prospectus Incorporation of Certain
Documents by Reference;
Table of Contents
3. Risk Factors, Ratio of Earnings to Fixed Summary Information
Charges, and Other Information
4. Terms of the Reorganization The Reorganization
5. Pro Forma Financial Information *
6. Material Contracts with the Company The Reorganization
Being Acquired
7. Additional Information Required for *
Reoffering by Persons and Parties
Deemed to be Underwriters
8. Interests of Named Experts and Counsel Legal Opinion
9. Disclosure of Commission Position on *
Indemnification for Securities Act
Liabilities
10. Information with Respect to S-3 Summary; Certain Regulatory
Registrants Considerations
11. Incorporation of Certain Information Incorporation of Certain
by Reference Documents by Reference;
Management and Additional
Information
12. Information with Respect to S-2 or *
S-3 Registrants
<PAGE>
NORWEST CORPORATION
Cross Reference Sheet
Pursuant to Regulation S-K, Item 501(b)
Form S-4 Item Prospectus Heading
------------- ------------------
13. Incorporation of Certain Information *
by Reference
14. Information with Respect to *
Registrants Other Than S-2 or S-3
Registrants
15. Information with Respect to S-3 *
Companies
16. Information with Respect to *
S-2 or S-3 Companies
17. Information with Respect to Companies Summary Information--Selected
Other Than S-2 or S-3 Companies Financial Data; Summary
Information--Comparative
Unaudited Per Share Data;
Information About
Bancshares and the Bank
18. Information If Proxies, Consents, Meeting Information;
or Authorizations Are to Be Solicited The Reorganization--
Rights of Dissenting
Shareholders; The
Reorganization--Interests
of Certain Persons in the
Reorganization
19. Information If Proxies, Consents, or *
Authorizations Are Not to Be Solicited or
in an Exchange Offer
- ---------------
*Item is omitted because answer is negative or item is inapplicable.
<PAGE>
COPPER BANCSHARES, INC.
P.O. BOX 1250
SILVER CITY, NEW MEXICO 88062-1250
July __, 1994
Dear Shareholder:
You are cordially invited to attend a special meeting of shareholders (the
"Special Meeting") of Copper Bancshares, Inc. ("Bancshares") to be held at
_______________, _______________, ____________, New Mexico, on ___________,
August __, 1994, at __:__ _.m., local time. At the Special Meeting you will be
asked to consider and vote upon the Agreement and Plan of Reorganization, dated
as of March 3, 1994, among Bancshares, The American National Bank of Silver City
(the "Bank"), and Norwest Corporation ("Norwest"), and the related Agreement and
Plan of Merger (together, the "Merger Agreement"), providing for (a) the merger
of a wholly owned subsidiary of Norwest into Bancshares (the "Merger") and (b)
subsequent to the Merger, the consolidation of the Bank with a wholly owned
banking subsidiary of Norwest.
Under the terms of the Merger Agreement, the Merger will result in the
conversion of each share of Bancshares Common Stock outstanding immediately
prior to the time the Merger becomes effective into a number of shares of
Norwest Common Stock determined in accordance with the provisions of the Merger
Agreement, which are described in the accompanying Proxy Statement-Prospectus
for the Special Meeting.
The enclosed Proxy Statement-Prospectus contains a more complete
description of the terms of the Merger. You are urged to read the Proxy
Statement-Prospectus carefully.
The Board of Directors has approved the Merger Agreement as being in the
best interest of Bancshares's shareholders and recommends that you vote in favor
of the Merger. In making this recommendation, the Board of Directors has
considered numerous factors including the structure of the Merger, the
consideration to be received by Bancshares shareholders, the probable tax
consequences of the Merger, and the probable impact of the merger on the
communities served by the Bank and on the Bank's employees. Please read
carefully the enclosed Proxy Statement-Prospectus for a detailed description of
the Merger and related transactions.
In order to ensure that your vote is represented at the Special Meeting,
PLEASE DATE, SIGN, AND PROMPTLY RETURN YOUR PROXY IN THE ENCLOSED ENVELOPE. If
you attend the meeting, you may vote in person if you wish, even though you have
previously returned your proxy.
Danny T. Skarda
CHAIRMAN OF THE BOARD AND PRESIDENT
<PAGE>
COPPER BANCSHARES, INC.
P. O. BOX 1250
SILVER CITY, NEW MEXICO 88062-1250
-----------------------
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
ON AUGUST __, 1994
-----------------------
A special meeting of shareholders (the "Special Meeting") of Copper
Bancshares, Inc. ("Bancshares), a New Mexico corporation, will be held at
_______________, ________________, ____________, New Mexico, on _________,
August __, 1994, at __:__ _.m., local time, for the following purposes:
1. To consider and vote upon the Agreement and Plan of
Reorganization, dated as of March 3, 1994, (including the Agreement and
Plan of Merger attached thereto) by and among Bancshares, The American
National Bank of Silver City (the "Bank"), a national banking association,
and Norwest Corporation ("Norwest"), a Delaware corporation, a copy of
which is included in the accompanying Proxy Statement-Prospectus as
Appendix A, under the terms of which (a) a wholly owned subsidiary of
Norwest would be merged with Bancshares (the "Merger"), with Bancshares as
the surviving corporation, and each outstanding share of common stock, par
value $1.00 per share, of Bancshares would be converted into shares of
common stock, par value $1 2/3 per share, of Norwest, and (b) subsequent to
the consummation of the Merger, the Bank would be consolidated with a
wholly owned banking subsidiary of Norwest; and to authorize such further
action by the Board of Directors and proper officers of Bancshares as may
be necessary or appropriate to carry out the intent and purposes of the
Merger.
2. To transact such other business as may properly come before the
meeting or any adjournments thereof.
Only shareholders of record on the books of Bancshares at the close of
business on June __, 1994, will be entitled to vote at the Special Meeting or
any adjournments thereof.
Your attention is directed to the Proxy Statement-Prospectus accompanying
this notice for a more complete statement regarding the matters to be acted upon
at the Special Meeting.
By Order of the Board of Directors
Jack G. Stroman
SECRETARY
July __, 1994
HOLDERS OF BANCSHARES COMMON STOCK ARE URGED TO COMPLETE, SIGN, DATE, AND MAIL
THE ENCLOSED PROXY PROMPTLY IN THE ACCOMPANYING ENVELOPE. NO POSTAGE IS
REQUIRED IF MAILED IN THE UNITED STATES. IF YOU ATTEND THE SPECIAL MEETING, YOU
MAY, IF YOU WISH, REVOKE YOUR PROXY AND VOTE IN PERSON. THE PROXY MAY BE
REVOKED AT ANY TIME PRIOR TO ITS EXERCISE IN THE MANNER DESCRIBED IN THE PROXY
STATEMENT-PROSPECTUS.
<PAGE>
THE AMERICAN NATIONAL BANK OF SILVER CITY
P. O. BOX 1250
SILVER CITY, NEW MEXICO 88062-1250
July __, 1994
Dear Shareholder:
You are cordially invited to attend a special meeting of shareholders (the
"Special Meeting") of The American National Bank of Silver City (the "Bank") to
be held at _______________, _______________, ____________, New Mexico, on
________, August __, 1994, at __:__ _.m., local time. At the Special Meeting
you will be asked to consider and vote upon the consolidation (the
"Consolidation") of the Bank with Norwest Interim Bank Silver City, National
Association ("Norwest Bank"), a wholly owned subsidiary of Norwest Corporation
("Norwest"), pursuant to the terms of the Agreement and Plan of Consolidation
(the "Consolidation Agreement"), to be entered into by the Bank and Norwest Bank
and the related Agreement and Plan of Reorganization dated as of March 3, 1994,
among Copper Bancshares, Inc., the Bank, and Norwest (the "Merger Agreement").
Pursuant to the terms of the Merger Agreement and the Consolidation
Agreement, the Consolidation will result in the conversion of each share of
common stock of the Bank ("Bank Common Stock") outstanding prior to the
Consolidation, other than shares owned by Norwest, into a number of shares of
Norwest Common Stock determined in accordance with the provisions of the Merger
Agreement, which are described in the enclosed Proxy Statement-Prospectus.
Please read the enclosed Proxy Statement-Prospectus for further information
concerning the Consolidation and related Reorganizations, and the parties
involved.
Approval of the Consolidation requires the affirmative vote of a majority
of the outstanding shares of Bank Common Stock. YOUR BOARD OF DIRECTORS
BELIEVES THAT THE TERMS OF THE PROPOSED REORGANIZATION ARE FAIR AND IN THE BEST
INTERESTS OF BANK SHAREHOLDERS, AND THEREFORE RECOMMENDS APPROVAL OF THE
CONSOLIDATION.
Danny T. Skarda
CHAIRMAN OF THE BOARD AND PRESIDENT
<PAGE>
THE AMERICAN NATIONAL BANK OF SILVER CITY
P. O. BOX 1250
SILVER CITY, NEW MEXICO 88062-1250
-----------------------
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
ON AUGUST __, 1994
-----------------------
A special meeting of shareholders (the "Special Meeting") of The American
National Bank of Silver City (the "Bank"), a national banking association, will
be held at the main office of the Bank, _______________, ____________, New
Mexico, on _________, August __, 1994, at __:__ _.m., local time, for the
following purposes:
1. To consider and vote upon whether the proposed consolidation (the
"Consolidation") of The American National Bank of Silver City with Norwest
Interim Bank Silver City, National Association ("Norwest Bank"), a national
banking association which is a wholly owned subsidiary of Norwest
Corporation, a Delaware corporation, pursuant to the terms of the Agreement
and Plan of Consolidation (the "Consolidation Agreement"), to be entered
into by the Bank and Norwest Bank (the form of which is attached as
Appendix B to the accompanying Proxy Statement-Prospectus), under the laws
of the United States, shall be ratified and confirmed; and to vote upon any
other matters incidental to the Consolidation.
2. To transact such other business as may properly come before the
meeting or any adjournments thereof.
Only stockholders of record on the books of the Bank at the close of
business on June __, 1994, will be entitled to vote at the Special Meeting or
any adjournments thereof.
Your attention is directed to the Proxy Statement-Prospectus accompanying
this notice for a more complete statement regarding the matters to be acted upon
at the Special Meeting.
By Order of the Board of Directors
Jo Ann Bock
VICE PRESIDENT AND CASHIER
July __, 1994
HOLDERS OF BANK COMMON STOCK ARE URGED TO READ
THE ENCLOSED PROXY STATEMENT-PROSPECTUS
CAREFULLY AND COMPLETELY.
THE BANK IS NOT ASKING YOU FOR A PROXY
AND YOU ARE REQUESTED NOT TO SEND A PROXY TO THE BANK.
<PAGE>
PROXY STATEMENT OF
COPPER BANCSHARES, INC.
FOR A SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON AUGUST __, 1994
-----------------------
INFORMATION STATEMENT OF
THE AMERICAN NATIONAL BANK OF SILVER CITY
FOR A SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON AUGUST __, 1994
-----------------------
PROSPECTUS
OF
NORWEST CORPORATION
COMMON STOCK
This Prospectus of Norwest Corporation ("Norwest") relates to up to 525,000
shares of the common stock, par value $1 2/3 per share, of Norwest ("Norwest
Common Stock") issuable to (i) the shareholders of Copper Bancshares, Inc.
("Bancshares") upon consummation of the proposed merger (the "Merger") of a
wholly owned subsidiary of Norwest with Bancshares, with Bancshares as the
surviving corporation, pursuant to the terms of an Agreement and Plan of
Reorganization, dated as of March 3, 1994, by and among Bancshares, The American
National Bank of Silver City (the "Bank"), and Norwest (together with the
Agreement and Plan of Merger attached thereto, the "Merger Agreement"), and (ii)
the shareholders, other than Bancshares, of the Bank upon consummation of the
proposed consolidation (the "Consolidation") of the Bank with Norwest Interim
Bank Silver City, National Association ("Norwest Bank"), a wholly owned
subsidiary of Norwest, under the charter of the Bank, pursuant to the terms of
an Agreement and Plan of Consolidation to be entered into by the Bank and
Norwest Bank (the "Consolidation Agreement"). The Merger and the Consolidation
are sometimes hereinafter collectively referred to as the "Reorganization." The
Merger Agreement and the form of the Consolidation Agreement are set forth in
Appendix A and Appendix B, respectively, to this Proxy Statement-Prospectus and
incorporated by reference herein.
This Prospectus also serves as the Proxy Statement of Bancshares for a
special meeting of its shareholders to be held on August __, 1994 (the
"Bancshares Special Meeting"), and the Information Statement of the Bank for a
special meeting of its shareholders to be held on August __, 1994 (the "Bank
Special Meeting").
Except as described herein, upon consummation of the Reorganization, each
outstanding share of common stock of Bancshares ("Bancshares Common Stock") and
each outstanding share of common stock of the Bank ("Bank Common Stock"), other
than shares of Bank Common Stock owned by Norwest, will be converted into
4.71425 and 4.35133 shares of Norwest Common Stock, respectively. The closing
price of Norwest Common Stock on the New York Stock Exchange on June __, 1994,
was $___ per share. For a more complete description of the Merger Agreement and
the Consolidation Agreement and the terms of the Merger and the Consolidation,
see "THE REORGANIZATION."
This Proxy Statement-Prospectus and the form of proxy for the Bancshares
Special Meeting are first being mailed to shareholders of Bancshares and of the
Bank on or about July __, 1994.
-----------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROXY STATEMENT-PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
-----------------------
The date of this Proxy Statement-Prospectus is July __, 1994.
<PAGE>
AVAILABLE INFORMATION
Norwest is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). In accordance therewith,
Norwest files reports, proxy statements, and other information with the
Securities and Exchange Commission (the "Commission").
Reports, proxy statements, and other information concerning Norwest can be
inspected and copied at the public reference facilities of the Commission, Room
1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the regional
offices of the Commission located at Seven World Trade Center, Suite 1300,
New York, New York 10048, and at 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661-2511. Copies of such materials can be obtained at prescribed
rates by writing to the Commission, Public Reference Section, 450 Fifth Street,
N.W., Washington, D.C. 20549. Reports, proxy statements, and other information
filed by Norwest with the New York Stock Exchange and the Chicago Stock Exchange
may be inspected at the offices of the New York Stock Exchange at 20 Broad
Street, New York, New York 10005 and at the offices of the Chicago Stock
Exchange at One Financial Place, 440 South LaSalle Street, Chicago, Illinois
60605.
This Proxy Statement-Prospectus does not contain all of the information set
forth in the Registration Statement on Form S-4 and exhibits thereto (the
"Registration Statement") covering the securities offered hereby that Norwest
has filed with the Commission. Certain portions of the Registration Statement
have been omitted pursuant to the rules and regulations of the Commission.
Reference is hereby made to such omitted portions for further information with
respect to Norwest, Bancshares, and the securities offered hereby.
2
<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
THIS PROXY STATEMENT-PROSPECTUS INCORPORATES BY REFERENCE DOCUMENTS WHICH
ARE NOT PRESENTED HEREIN OR DELIVERED HEREWITH. DOCUMENTS RELATING TO NORWEST,
EXCLUDING EXHIBITS, UNLESS SPECIFICALLY INCORPORATED THEREIN, ARE AVAILABLE
WITHOUT CHARGE UPON REQUEST TO LAUREL A. HOLSCHUH, SECRETARY, NORWEST
CORPORATION, NORWEST CENTER, SIXTH AND MARQUETTE, MINNEAPOLIS, MINNESOTA 55479-
1026, TELEPHONE (612) 667-8655. IN ORDER TO ENSURE TIMELY DELIVERY OF THE
DOCUMENTS, ANY REQUEST SHOULD BE MADE BY AUGUST __, 1994.
The following documents filed by Norwest with the Commission are
incorporated by reference in, and made a part of, this Proxy Statement-
Prospectus: (i) Annual Report on Form 10-K for the year ended December 31,
1993, as amended by Form 10-K/A dated May 13, 1994; (ii) Quarterly Report on
Form 10-Q for the quarter ended March 31, 1994; (iii) Current Report on Form 8-K
dated February 15, 1994; and (iv) the description of Norwest Common Stock,
10.24% Cumulative Preferred Stock, Cumulative Convertible Preferred Stock,
Series B, and Series A Junior Participating Preferred Stock Purchase Rights
contained in the Registration Statements filed pursuant to Section 12 of the
Securities Exchange Act, as amended, (the "Exchange Act") and any amendment or
report filed for the purpose of updating any such description.
All documents filed by Norwest with the Commission pursuant to
Sections 13(a), 13(c), 14, or 15(d) of the Exchange Act subsequent to the date
hereof and prior to the Special Meeting shall be deemed to be incorporated by
reference herein and to be a part hereof from the date of such filing. 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
hereof 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 such statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part hereof.
3
<PAGE>
TABLE OF CONTENTS
Page
----
AVAILABLE INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . 2
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE . . . . . . . . . . . 3
SUMMARY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
The Companies . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Terms of the Reorganization . . . . . . . . . . . . . . . . . . . 7
Special Meetings and Vote Required . . . . . . . . . . . . . . . 7
Reasons for the Reorganization; Recommendations of the
Boards of Directors . . . . . . . . . . . . . . . . . . . . . . 8
Effective Dates of the Merger and the Consolidation . . . . . . . 9
Accounting Treatment . . . . . . . . . . . . . . . . . . . . . . 9
Regulatory Approvals . . . . . . . . . . . . . . . . . . . . . . 9
Management and Operations After the Reorganization . . . . . . . 9
Interests of Certain Persons in the Reorganization. . . . . . . . 9
Rights of Dissenting Shareholders . . . . . . . . . . . . . . . . 10
Certain Federal Income Tax Consequences . . . . . . . . . . . . . 10
Markets and Market Prices . . . . . . . . . . . . . . . . . . . . 10
Certain Differences in Rights of Shareholders . . . . . . . . . . 11
Comparative Unaudited Per Share Data . . . . . . . . . . . . . . 11
Selected Financial Data . . . . . . . . . . . . . . . . . . . . . 13
MEETING INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . 18
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Date, Place, and Time . . . . . . . . . . . . . . . . . . . . . . 18
Record Date; Vote Required . . . . . . . . . . . . . . . . . . . 18
Principal Shareholders and Security Ownership of Management of
Bancshares . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Principal Shareholders and Security Ownership of Management of
the Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Voting and Revocation of Proxies for the Bancshares Special
Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Solicitation of Proxies for the Bancshares Special Meeting. . . . 22
THE REORGANIZATION . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Reasons for the Reorganization; Recommendations of the
Boards of Directors . . . . . . . . . . . . . . . . . . . . . . 23
Terms of the Reorganization . . . . . . . . . . . . . . . . . . . 24
Effective Dates of the Merger and the Consolidation . . . . . . . 26
Surrender of Certificates . . . . . . . . . . . . . . . . . . . . 26
Conditions to the Reorganization . . . . . . . . . . . . . . . . 27
Regulatory Approvals . . . . . . . . . . . . . . . . . . . . . . 28
Business Pending the Reorganization . . . . . . . . . . . . . . . 29
Waiver, Amendment, and Termination . . . . . . . . . . . . . . . 30
Management and Operations After the Reorganization . . . . . . . 31
Interests of Certain Persons in the Reorganization. . . . . . . . 31
Certain Differences in Rights of Shareholders . . . . . . . . . . 32
Rights of Dissenting Shareholders . . . . . . . . . . . . . . . . 36
Certain Federal Income Tax Consequences . . . . . . . . . . . . . 38
Resale of Norwest Common Stock . . . . . . . . . . . . . . . . . 40
Dividend Reinvestment and Optional Cash Payment Plan . . . . . . 41
Accounting Treatment . . . . . . . . . . . . . . . . . . . . . . 41
Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
4
<PAGE>
INFORMATION ABOUT BANCSHARES AND THE BANK . . . . . . . . . . . . . . 42
Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
General Banking Services. . . . . . . . . . . . . . . . . . . . . 42
Market Prices and Dividends . . . . . . . . . . . . . . . . . . . 42
Management's Discussion and Analysis of Financial Condition and
Results of Operations of Copper Bancshares, Inc.. . . . . . . . 44
Management's Discussion and Analysis of Financial Condition and
Results of Operations of The American National Bank of
Silver City . . . . . . . . . . . . . . . . . . . . . . . . . . 68
CERTAIN REGULATORY CONSIDERATIONS . . . . . . . . . . . . . . . . . . 90
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
Dividend Restrictions . . . . . . . . . . . . . . . . . . . . . . 90
Holding Company Structure . . . . . . . . . . . . . . . . . . . . 90
Capital Requirements . . . . . . . . . . . . . . . . . . . . . . 91
Federal Deposit Insurance Corporation Improvement Act of 1991 . . 92
FDIC Insurance . . . . . . . . . . . . . . . . . . . . . . . . . 94
EXPERTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94
LEGAL OPINION . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95
MANAGEMENT AND ADDITIONAL INFORMATION . . . . . . . . . . . . . . . . 95
INDEX TO FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . F-1
APPENDIX A AGREEMENT AND PLAN OF REORGANIZATION, AND AGREEMENT
AND PLAN OF MERGER
APPENDIX B AGREEMENT AND PLAN OF CONSOLIDATION
APPENDIX C NEW MEXICO STATUTES ANNOTATED, SECTION 53-15-4
APPENDIX D UNITED STATES CODE, TITLE 12, SECTION 215
APPENDIX E BANKING CIRCULAR 259
-----------------------
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION
NOT CONTAINED IN THIS PROXY STATEMENT-PROSPECTUS AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION SHOULD NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED. THIS PROXY STATEMENT-PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO
SELL, OR A SOLICITATION OF AN OFFER TO PURCHASE, THE NORWEST COMMON STOCK
OFFERED BY THIS PROXY STATEMENT-PROSPECTUS, OR THE SOLICITATION OF A PROXY, IN
ANY JURISDICTION TO OR FROM ANY PERSON TO WHOM OR FROM WHOM IT IS UNLAWFUL TO
MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROXY STATEMENT-
PROSPECTUS NOR ANY DISTRIBUTION OF SECURITIES MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF NORWEST OR BANCSHARES SINCE THE DATE OF THIS PROXY STATEMENT-
PROSPECTUS.
5
<PAGE>
SUMMARY
The following summary is not intended to be complete and is qualified in
all respects by the more detailed information included in this Proxy Statement-
Prospectus, the Appendices hereto, and the documents incorporated by reference
herein. As used in this Proxy Statement-Prospectus, the terms "Norwest" and
"Bancshares" refer to such entities, respectively, and where the context
requires, such entities and their respective subsidiaries. All information
concerning Norwest included in this Proxy Statement-Prospectus has been
furnished by Norwest, and all information concerning Bancshares included in this
Proxy Statement-Prospectus has been furnished by Bancshares to Norwest for
incorporation herein.
THE COMPANIES
NORWEST CORPORATION
Norwest Corporation is a regional bank holding company organized under the
laws of Delaware in 1929 and registered under the Bank Holding Company Act of
1956, as amended (the "BHC Act"). As a diversified financial services
organization, Norwest operates through subsidiaries engaged in banking and in
related businesses. Norwest provides retail, commercial, and corporate banking
services to its customers through banks located in Arizona, Colorado, Illinois,
Indiana, Iowa, Minnesota, Montana, Nebraska, New Mexico, North Dakota, Ohio,
South Dakota, Texas, Wisconsin, and Wyoming. Norwest provides additional
financial services to its customers through subsidiaries engaged in various
businesses, principally mortgage banking, consumer finance, equipment leasing,
agricultural finance, commercial finance, securities brokerage and investment
banking, insurance, computer and data processing services, trust services, and
venture capital investments.
At March 31, 1994, Norwest had consolidated total assets of $55.3 billion,
total deposits of $35.3 billion, and total stockholders' equity of $3.9 billion.
Based on total assets at March 31, 1994, Norwest was the 13th largest commercial
banking organization in the United States.
Norwest regularly explores opportunities for acquisitions of financial
institutions and related businesses. Generally, management of Norwest does not
make a public announcement about an acquisition until a definitive agreement has
been signed. Norwest has entered into definitive agreements for the acquisition
of various financial institutions having aggregate total assets at March 31,
1994, of $786.9 million. Two of these acquisitions were completed subsequent to
March 31, 1994, and the others remain subject to regulatory approval and are
expected to be completed in 1994. None of these acquisitions are significant
for the financial statements of Norwest, either individually or in the
aggregate.
Norwest's principal executive offices are located at Norwest Center, Sixth
and Marquette, Minneapolis, Minnesota 55479-1000, and its telephone number is
612-667-1234.
Additional information concerning Norwest is included in the Norwest
documents incorporated by reference herein. See "INCORPORATION OF CERTAIN
DOCUMENTS BY REFERENCE."
6
<PAGE>
COPPER BANCSHARES, INC. AND THE AMERICAN NATIONAL BANK OF SILVER CITY
Bancshares is a one-bank holding company organized under the laws of New
Mexico in 1979 and registered under the BHC Act. It owns 98.8% of the stock of
its sole subsidiary, The American National Bank of Silver City, Silver City, New
Mexico.
Originally organized under New Mexico law in 1906, the Bank engages in
general commercial banking in Grant County, New Mexico, as well as portions of
Catron, Luna, and Hidalgo Counties. The Bank has a main office in Silver City
and branches in three nearby communities. As of March 31, 1994, the Bank
reported total assets of $99.9 million, total deposits of $91.5 million, and net
loans outstanding of $38.1 million.
The principal executive offices of Bancshares and the Bank are located at
Pope and Twelfth Streets, Silver City, New Mexico 88061. The telephone number
of Bancshares and the Bank is 505-538-5302. See "INFORMATION ABOUT BANCSHARES
AND THE BANK."
TERMS OF THE REORGANIZATION
The Merger Agreement provides for the merger of a wholly owned subsidiary
of Norwest with Bancshares, with Bancshares as the surviving corporation. Upon
consummation of the Merger, the outstanding shares of Bancshares Common Stock
(other than shares as to which statutory dissenters' rights have been exercised
and not forfeited) will be converted into a number of shares of Norwest Common
Stock determined in accordance with the provisions of the Merger Agreement. The
exact number of shares of Norwest Common Stock into which each outstanding share
of Bancshares Common Stock will be converted will be determined by a conversion
factor (the "Merger Conversion Factor") based on the number of shares of
Bancshares Common Stock outstanding immediately prior to the Effective Time of
the Merger (as defined below).
The Merger Agreement also provides for the consolidation, following the
Effective Time of the Merger, of the Bank with Norwest Bank, under the charter
of the Bank (the "Consolidation"). Upon consummation of the Consolidation, the
outstanding shares of Bank Common Stock (other than shares owned by Bancshares
and shares as to which statutory dissenters' rights have been exercised and not
forfeited) will be converted into shares of Norwest Common Stock in accordance
with the provisions of the Merger Agreement. The exact number of shares of
Norwest Common Stock into which each outstanding share of Bank Common Stock will
be converted will be determined by a conversion factor (the "Consolidation
Conversion Factor") based on the number of shares of Bank Common Stock owned by
shareholders other than Bancshares immediately prior to the Effective Time of
the Consolidation (as defined below). See "THE REORGANIZATION--Terms of the
Reorganization."
SPECIAL MEETINGS AND VOTE REQUIRED
BANCSHARES SPECIAL MEETING
The special meeting of Bancshares shareholders (the "Bancshares Special
Meeting") to consider and vote on the Merger will be held on _________, August
__, 1994, at __:__ _.m., local time, at _______________, _______________, Silver
City, New Mexico. Only holders
7
<PAGE>
of record of Bancshares Common Stock at the close of business on June __, 1994,
will be entitled to vote at the Bancshares Special Meeting. At such date, there
were 109,980 shares of Bancshares Common Stock outstanding. Each share of
Bancshares Common Stock is entitled to one vote. For additional information
relating to the Bancshares Special Meeting, see "MEETING INFORMATION."
Approval of the Merger Agreement requires the affirmative vote of the
holders of a majority of the outstanding shares of Bancshares Common Stock. As
of the record date for the Bancshares Special Meeting, directors and executive
officers of Bancshares and their affiliates owned beneficially or controlled the
voting of an aggregate of 51,328 shares of Bancshares Common Stock, or
approximately 46.67% of the shares of Bancshares Common Stock outstanding on
that date. Accordingly, approval of the Merger Agreement is virtually assured.
At the record date, directors and executive officers of Norwest did not own
beneficially any shares of Bancshares Common Stock. See "MEETING INFORMATION--
Record Date; Vote Required" and "MEETING INFORMATION--Principal Shareholders and
Security Ownership of Management of Bancshares."
BANK SPECIAL MEETING
The special meeting of Bank shareholders (the "Bank Special Meeting") to
consider and vote on the Consolidation will be held on _________, August __,
1994, at __:__ _.m., local time, at _____________________, _______________,
Silver City, New Mexico. Only holders of record of Bank Common Stock at the
close of business on June __, 1994, will be entitled to vote at the Bank Special
Meeting. At such date, there were 129,600 shares of Bank Common Stock
outstanding. Each share of Bank Common Stock is entitled to one vote. For
additional information relating to the Bank Special Meeting, see "MEETING
INFORMATION."
Approval of the Consolidation Agreement requires the affirmative vote of
the holders of two-thirds of the outstanding shares of Bank Common Stock. AS OF
THE RECORD DATE FOR THE BANK SPECIAL MEETING, BANCSHARES HELD 128,100 SHARES, OR
98.8%, OF THE OUTSTANDING SHARES OF BANK COMMON STOCK. ACCORDINGLY, WITHOUT THE
VOTE OF THE REMAINING BANK SHAREHOLDERS, BANCSHARES WILL HAVE THE ABILITY TO
EFFECTUATE THE CONSOLIDATION. As of the record date for the Bank Special
Meeting, directors and officers of the Bank and their affiliates did not own
beneficially or control the voting of any shares of Bank Common Stock. At the
record date, directors and executive officers of Norwest did not own
beneficially any shares of Bank Common Stock. See "MEETING INFORMATION--Record
Date; Vote Required" and "MEETING INFORMATION--Principal Shareholders and
Security Ownership of Management of the Bank."
REASONS FOR THE REORGANIZATION; RECOMMENDATIONS OF THE BOARDS OF DIRECTORS
The Board of Directors of Bancshares carefully considered and approved the
terms of the Merger as being in the best interests of Bancshares and its
shareholders and recommends that Bancshares shareholders vote FOR the proposal
to approve the Merger Agreement.
The Board of Directors of the Bank carefully considered and approved the
terms of the Consolidation as being in the best interests of the Bank and its
shareholders and recommends that Bank shareholders vote FOR the proposal to
approve the Consolidation Agreement.
8
<PAGE>
The recommendations of Bancshares's Board of Directors and of the Bank's
Board of Directors are based upon a number of factors, including the financial
and other terms of the Merger Agreement and the Consolidation Agreement; the
financial condition, results of operations, and prospects of Norwest; the active
trading market for Norwest Common Stock; the tax-free nature of the
Reorganization; the potential for future dividend income; and the probable
impact of the Reorganization on the community served by the Bank and on the
Bank's employees. See "THE REORGANIZATION--Reasons for the Reorganization."
EFFECTIVE DATES OF THE MERGER AND THE CONSOLIDATION
Subject to the terms and conditions of the Merger Agreement, the Merger
will be effective on the date on which the appropriate filings are made with the
Secretary of State of the State of New Mexico (the "Effective Date of the
Merger") at 11:59 p.m., New Mexico time (the "Effective Time of the Merger").
Such filing will be made ten business days following the satisfaction or waiver
of all conditions set forth in the Merger Agreement or on such other date upon
which the parties may agree. The Consolidation will be effective as of 12:01
a.m. (the "Effective Time of the Consolidation") on the date specified in the
Consolidation Agreement (the "Effective Date of the Consolidation"). The
Effective Date of the Merger and the Effective Date of the Consolidation are
sometimes hereinafter referred to collectively as the "Effective Dates." The
closing of the Reorganization will occur on the Effective Date of the Merger
(the "Closing Date"). The parties expect the closing of the Reorganization to
occur as soon as possible following shareholder approval of the Merger and the
Consolidation. See "THE REORGANIZATION--Effective Dates of the Merger and the
Consolidation" and "THE REORGANIZATION--Conditions to the Reorganization."
ACCOUNTING TREATMENT
It is anticipated that the Reorganization will be accounted for as a
purchase under generally accepted accounting principles. See "THE
REORGANIZATION--Accounting Treatment."
REGULATORY APPROVALS
The Merger is subject to the prior approval of the Board of Governors of
the Federal Reserve System (the "Federal Reserve Board"). The Consolidation is
subject to the prior approval of the Office of the Comptroller of the Currency
(the "OCC"). Norwest has filed applications for approval with the Federal
Reserve Board and the OCC. There can be no assurance that either the Federal
Reserve Board or the OCC will approve the Reorganization, or as to the date of
such approvals. See "THE REORGANIZATION--Regulatory Approvals."
MANAGEMENT AND OPERATIONS AFTER THE REORGANIZATION
Following the Merger and the Consolidation, Norwest intends to operate at
the Bank's present locations and to offer products and services offered by
Norwest affiliates. See "THE REORGANIZATION--Management and Operations After
the Reorganization."
INTERESTS OF CERTAIN PERSONS IN THE REORGANIZATION
All but one of the current directors and executive officers of Bancshares
and the Bank are shareholders of Bancshares and can be expected, upon
consummation of the
9
<PAGE>
Reorganization, to receive shares of Norwest Common Stock in exchange for their
shares of Bancshares or Bank Common Stock. Effective as of the Effective Time
of the Merger, Danny T. Skarda, who is Chairman of the Board and President of
both Bancshares and the Bank, will enter into an employment agreement with
Bancshares. See "THE REORGANIZATION--Interests of Certain Persons in the
Reorganization."
RIGHTS OF DISSENTING SHAREHOLDERS
Under New Mexico law, shareholders of Bancshares who dissent from the
Merger will be entitled to receive payment in cash of an appraised value of
their shares of Bancshares Common Stock instead of receiving Norwest Common
Stock. Under federal law, shareholders of the Bank who dissent from the
Consolidation will be entitled to receive payment in cash of an appraised value
of their shares of Bank Common Stock instead of receiving Norwest Common Stock.
The values so determined could be more than, the same as, or less than the value
of the consideration to be received by Bancshares shareholders, pursuant to the
Merger Agreement, or by Bank shareholders, pursuant to the Consolidation
Agreement, who do not dissent. WITH RESPECT TO BOTH SHAREHOLDERS OF BANCSHARES
AND THE BANK, FAILURE TO COMPLY WITH STATUTORY PROCEDURES IN THE EXERCISE OF
DISSENTERS' RIGHTS MAY NULLIFY SUCH RIGHTS. See "THE REORGANIZATION--Rights of
Dissenting Shareholders."
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
Rothgerber, Appel, Powers & Johnson, counsel to Bancshares and the Bank,
has issued an opinion to Bancshares and the Bank with respect to the material
federal income tax consequences of the Merger and the Consolidation. The legal
opinion is based on certain assumptions and representations and, in summary, is
to the effect that, for federal income tax purposes, the Merger and
Consolidation will constitute nontaxable reorganizations in that no gain or loss
will be recognized by shareholders who exchange Bancshares Common Stock or Bank
Common Stock for Norwest Common Stock, except with respect to any cash paid in
lieu of fractional shares of Norwest Common Stock. Such opinion expressly
excludes any opinion as to the applicability of, or taxes owed due to, the
alternative minimum tax or state or local taxes. See "THE REORGANIZATION--
Certain Federal Income Tax Consequences."
MARKETS AND MARKET PRICES
Norwest Common Stock is listed on the New York Stock Exchange (the "NYSE")
and the Chicago Stock Exchange (the "CHX"). On March 2, 1994, the last trading
day preceding public announcement of the proposed Reorganization, the closing
price per share of Norwest Common Stock was $23.25 and on June __, 1994, the
price was $__.__. There is no public market for Bancshares Common Stock or Bank
Common Stock. Shareholders of Bancshares and of the Bank are advised to obtain
current market quotations for Norwest Common Stock. The market price for
Norwest Common Stock will fluctuate between the date of this Proxy Statement-
Prospectus and the Effective Dates, which may be a period of several weeks or
more. As a result, the market value of the Norwest Common Stock that
shareholders of Bancshares and of the Bank ultimately receive in the Merger or
the Consolidation, as the case may be, could be more or less than its market
value on the date of this Proxy Statement-Prospectus. No assurance can be given
concerning the market price of Norwest Common Stock before or after the
Effective Dates.
10
<PAGE>
CERTAIN DIFFERENCES IN RIGHTS OF SHAREHOLDERS
Upon consummation of the Reorganization, shareholders of Bancshares and of
the Bank will become stockholders of Norwest. As a result, such shareholders'
rights will change significantly. See "THE REORGANIZATION--Certain Differences
in Rights of Shareholders."
COMPARATIVE UNAUDITED PER SHARE DATA
The following table presents selected comparative unaudited per share data
for Norwest Common Stock on a historical and pro forma combined basis and for
Bancshares Common Stock and Bank Common Stock on a historical and a pro forma
equivalent basis giving effect to the Reorganization using the purchase method
of accounting. See "THE REORGANIZATION--Accounting Treatment." This
information is derived from the consolidated historical financial statements of
Norwest, including the related notes thereto, incorporated by reference in this
Proxy Statement-Prospectus, the consolidated historical financial statements of
Bancshares, and the historical financial statements of the Bank, including the
notes thereto, appearing elsewhere in this Proxy Statement-Prospectus. This
information should be read in conjunction with such historical financial
statements and the related notes thereto. See "INCORPORATION OF CERTAIN
DOCUMENTS BY REFERENCE" and "INFORMATION ABOUT BANCSHARES AND THE BANK."
This data is not necessarily indicative of the results of the future
operations of the combined entity or the actual results that would have occurred
had the Reorganization been consummated prior to the periods indicated.
11
<PAGE>
COMPARATIVE UNAUDITED PER SHARE DATA
<TABLE>
<CAPTION>
Norwest Common Stock Bancshares Common Stock Bank Common Stock
------------------------- ------------------------- --------------------------
Pro Forma Pro Forma Pro Forma
Historical Combined Historical Equivalent Historical Equivalent
---------- --------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
BOOK VALUE (1):
March 31, 1994 $11.14 11.14 72.00 52.53 61.34 48.48
December 31, 1993 11.00 11.01 82.52 51.92 71.30 47.92
DIVIDENDS DECLARED (2):
Three Months Ended
March 31, 1994 0.185 0.185 13.460 0.872 12.640 0.805
Year Ended
December 31, 1993 0.640 0.640 12.000 3.017 12.000 2.785
NET INCOME (3):
Three Months Ended
March 31, 1994 0.58 0.58 2.94 2.71 2.68 2.50
Year Ended
December 31, 1993 1.86 1.86 13.19 8.76 11.91 8.08
<FN>
(1) The pro forma combined book values per share of Norwest Common Stock are
based upon the historical total common equity for Norwest and Bancshares divided
by total pro forma common shares of the combined entities assuming (i)
conversion of the outstanding Bancshares Common Stock at a Merger Conversion
Factor of 4.71425 and (ii) conversion of the outstanding Bank Common Stock
(other than shares owned indirectly by Norwest as a result of the Merger) at a
Consolidation Conversion Factor of 4.35133. The difference between the
historical total common equity of Bancshares and the total market value of
Norwest Common Stock to be issued in the Reorganization is not material. The
pro forma equivalent book values per share of Bancshares Common Stock and per
share of Bank Common Stock represent the pro forma combined amounts multiplied
by the assumed Merger Conversion Factor and the assumed Consolidation Conversion
Factor, respectively. The assumed conversion factors used in this table, which
are based on an assumed aggregate number of shares of Norwest Common Stock to be
issued in the Reorganization of 525,000 would result in the issuance of 518,473
shares of Norwest Common Stock upon conversion of all outstanding shares of
Bancshares Common Stock in the Merger and of 6,527 shares upon conversion of all
outstanding shares of Bank Common Stock (other than shares owned indirectly by
Norwest as a result of the Merger) in the Consolidation. See "THE
REORGANIZATION--Terms of the Reorganization."
(2) Assumes no changes in cash dividends per share. The pro forma equivalent
dividends per share of Bancshares Common Stock and per share of Bank Common
Stock represent cash dividends declared per share of Norwest Common Stock
multiplied by 4.71425 and 4.35133, respectively.
(3) The pro forma combined net income per share (based on fully diluted net
income and weighted average shares outstanding) is based upon the combined
historical net income for Norwest and Bancshares divided by the average pro
forma common shares of the combined entities, assuming a Merger Conversion
Factor of 4.71425 and a Consolidation Conversion Factor of 4.35133. The pro
forma equivalent net income per share of Bancshares Common Stock and Bank Common
Stock represents the pro forma combined net income per share multiplied by
4.71425 and 4.35133, respectively.
</TABLE>
12
<PAGE>
SELECTED FINANCIAL DATA
The following table sets forth certain selected historical financial
information for Norwest, Bancshares, and the Bank. The income statement and
balance sheet data included in the selected financial data for the five years
ended December 31, 1993, are derived from the audited consolidated financial
statements of Norwest for such five-year period, the audited consolidated
financial statements of Bancshares and the audited financial statements of the
Bank for the five years ended December 31, 1993. The financial data for the
three-month periods ended March 31, 1994 and 1993, are derived from the
unaudited historical financial statements of Norwest, Bancshares, and the Bank.
All financial information derived from unaudited financial statements reflects,
in the respective opinions of management of Norwest, Bancshares, and the Bank,
all adjustments (consisting only of normal recurring adjustments) necessary for
a fair presentation of such data. Results for the three months ended March 31,
1994, are not necessarily indicative of the results that may be expected for any
other interim period or for the year as a whole. This information should be read
in conjunction with the consolidated financial statements of Norwest and the
related notes thereto, included in documents incorporated herein by reference,
and in conjunction with consolidated financial statements of Bancshares and the
financial statements of the Bank, including the notes thereto, appearing
elsewhere in this Proxy Statement-Prospectus. See "INCORPORATION OF CERTAIN
DOCUMENTS BY REFERENCE" and "INFORMATION ABOUT BANCSHARES AND THE BANK."
13
<PAGE>
SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
THREE MONTHS
ENDED MARCH 31 YEAR ENDED DECEMBER 31
------------------- ----------------------------------------------------
1994 1993 1993(1) 1992(2) 1991 1990(3) 1989(4)
---- ---- ------- ------- ---- ------- -------
(In millions except per share amounts)
<S> <C> <C> <C> <C> <C> <C> <C>
NORWEST:
Interest income $992.8 967.8 3,946.3 3,806.4 4,025.9 3,885.7 3,624.5
Interest expense 342.9 357.2 1,442.9 1,610.6 2,150.3 2,320.0 2,210.1
------ ------ ------- ------- ------- ------- -------
Net interest income 649.9 610.6 2,503.4 2,195.8 1,875.6 1,565.7 1,414.4
Provision for credit losses 36.3 38.1 158.2 270.8 406.4 433.0 233.5
Non-interest income 434.1 349.1 1,585.0 1,273.7 1,064.0 896.3 728.5
Non-interest expense 769.1 683.7 3,050.4 2,553.1 2,041.5 1,744.5 1,525.9
------ ------ ------- ------- ------- ------- -------
Income before income taxes 278.6 237.9 879.8 645.6 491.7 284.5 383.5
Income tax expense 88.1 79.6 266.7 175.6 73.4 115.1 99.0
------ ------ ------- ------- ------- ------- -------
Income before cumulative effect
of a change in accounting method 190.5 158.3 613.1 470.0 418.3 169.4 284.5
Cumulative effect on years prior
to 1992 of change in accounting method -- -- -- (76.0) -- -- --
------ ------ ------- ------- ------- ------- -------
Net income $190.5 158.3 613.1 394.0 418.3 169.4 284.5
------ ------ ------- ------- ------- ------- -------
------ ------ ------- ------- ------- ------- -------
Net income per share:
Primary:
Before cumulative effect of a
change in accounting method 0.59 0.49 1.89 1.44 1.33 0.59 1.00
Cumulative effect on years prior
to 1992 of change in accounting method -- -- -- (0.25) -- -- --
------- ------- ------- -------- -------- -------- --------
Net income $0.59 0.49 1.89 1.19 1.33 0.59 1.00
------- ------- -------- -------- -------- -------- --------
------- ------- -------- -------- -------- -------- --------
Fully diluted:
Before cumulative effect of a
change in accounting method $0.58 0.48 1.86 1.42 1.32 0.59 1.00
Cumulative effect on years prior
to 1992 of change in accounting method -- -- -- (0.23) -- -- --
------- ------- ------- -------- -------- -------- --------
Net income $0.58 0.48 1.86 1.19 1.32 0.59 1.00
------- ------- -------- -------- -------- -------- --------
------- ------- -------- -------- -------- -------- --------
Dividends declared per
common share $0.185 0.145 0.640 0.540 0.470 0.423 0.380
At period end:
Total assets $55,328.2 48,910.9 54,665.0 50,037.0 45,974.5 43,523.0 38,322.0
Long-term debt 6,829.5 5,500.6 4,553.2 4,553.2 3,686.6 3,066.0 2,720.0
Total stockholders' equity 3,853.3 3,496.3 3,760.9 3,371.8 3,192.3 2,434.0 2,288.2
14
<PAGE>
<FN>
(1) On January 14, 1994, First United Bank Group, Inc. ("First United"), a $3.9
billion bank holding company headquartered in Albuquerque, New Mexico, was
acquired in a pooling transaction. Norwest's historical results have been
restated to include the historical results of First United. Appropriate
Norwest items reflect an increase in First United's provision for credit
losses of $16.5 million to conform with Norwest's credit loss reserve
practices and methods and $83.2 million in accruals and reserves for
merger-related expenses, including termination costs, systems and
operations costs, and investment banking, legal, and accounting expenses.
(2) On February 9, 1993, Lincoln Financial Corporation ("Lincoln"), a $2.0
billion bank holding company headquartered in Fort Wayne, Indiana, was
acquired in a pooling transaction. Norwest's historical results have been
restated to include the historical results of Lincoln. Appropriate Norwest
items reflect an increase in Lincoln's provision for credit losses of $60.0
million and $33.5 million in Lincoln's provisions and expenditures for
costs related to restructuring activities.
(3) On April 19, 1991, United Banks of Colorado, Inc. ("United"), a $5.5
billion financial institution headquartered in Denver, Colorado, merged
with Norwest in a pooling transaction. Norwest's historical results have
been restated to include the historical results of United. Appropriate
Norwest items reflect United's special provisions for credit losses and
writedowns for other real estate owned, which together totaled $165
million, and $31 million of accruals for expected reorganization and
restructuring costs for the year ended December 31, 1990. The special
provisions were due to deterioration of several large commercial loan
relationships, the anticipated results of the then recent examination by
the Office of the Comptroller of the Currency, and the anticipated impact
of the Resolution Trust Corporation's accelerated efforts to liquidate
foreclosed properties at deep discounts.
(4) On May 1, 1990, First Interstate Corporation of Wisconsin ("FIWI"), a $2.0
billion financial institution headquartered in Sheboygan, Wisconsin, merged
with Norwest in a pooling transaction. Norwest's historical results have
been restated to include the historical results of FIWI. Appropriate
Norwest items reflect $12.0 million in charges resulting from FIWI's
decision to sell its portfolio of stripped mortgage-backed securities, an
increase in FIWI's provision for credit losses of $16.2 million, and $24.5
million in FIWI's provisions and expenditures for costs related to
restructuring activities.
</TABLE>
15
<PAGE>
<TABLE>
<CAPTION>
THREE MONTHS
ENDED MARCH 31 YEAR ENDED DECEMBER 31
------------------- ----------------------------------------------------
1994 1993 1993 1992 1991 1990 1989
---- ---- ---- ---- ---- ---- ----
(In millions except per share amounts)
<S> <C> <C> <C> <C> <C> <C> <C>
BANCSHARES:
Interest income $1.6 1.7 6.8 7.3 7.8 8.3 8.4
Interest expense 0.6 0.6 2.3 3.1 4.2 4.7 4.6
---- --- --- --- --- --- ---
Net interest income 1.0 1.1 4.5 4.2 3.6 3.6 3.8
Provision for credit losses -- -- 0.2 0.5 0.3 0.1 0.1
Non-interest income 0.1 0.1 0.6 0.6 0.5 0.5 0.4
Non-interest expenses 0.7 0.8 3.1 3.0 2.9 2.7 2.5
---- --- --- --- --- --- ---
Income before income taxes 0.4 0.4 1.8 1.3 0.9 1.3 1.6
Income tax expense 0.1 0.1 0.4 0.2 0.2 0.3 0.4
---- --- --- --- --- --- ---
Income before cumulative effect
of a change in accounting method 0.3 0.3 1.4 1.1 0.7 1.0 1.2
Cumulative effect on years prior to 1992
of change in accounting method -- 0.1 0.1 -- -- -- --
---- --- --- --- --- --- ---
Net income $0.3 0.4 1.5 1.1 0.7 1.0 1.2
---- --- --- --- --- --- ---
---- --- --- --- --- --- ---
Net income per share:
Primary:
Before cumulative effect of a
change in accounting method $2.94 2.77 12.78 9.66 6.58 9.00 11.07
Cumulative effect on years prior
to 1992 of change in accounting method -- 0.41 0.41 -- -- -- --
----- ---- ----- ---- ---- ---- -----
Net income $2.94 3.18 13.19 9.66 6.58 9.00 11.07
----- ---- ----- ---- ---- ---- -----
----- ---- ----- ---- ---- ---- -----
Fully diluted:
Before cumulative effect of a
change in accounting method $2.94 2.71 12.78 9.66 6.58 9.00 11.07
Cumulative effect on years prior
to 1993 of change in accounting method -- 0.41 0.41 -- -- -- --
----- ---- ----- ---- ---- ---- -----
Net income $2.94 3.12 13.19 9.66 6.58 9.00 11.07
----- ---- ----- ---- ---- ---- -----
----- ---- ----- ---- ---- ---- -----
Dividends declared per
common share $13.46 12.00 12.00 3.00 -- 12.00 1.50
At period end:
Total assets $100.8 96.7 99.6 101.4 97.6 90.9 90.9
Long-term debt 0.9 1.0 1.0 1.1 1.2 1.4 1.5
Total stockholders' equity 7.9 8.0 9.1 8.9 8.2 7.5 7.8
</TABLE>
16
<PAGE>
<TABLE>
<CAPTION>
THREE MONTHS
ENDED MARCH 31 YEAR ENDED DECEMBER 31
------------------- ----------------------------------------------------
1994 1993 1993 1992 1991 1990 1989
---- ---- ---- ---- ---- ---- ----
(In millions except per share amounts)
<S> <C> <C> <C> <C> <C> <C> <C>
THE BANK:
Interest income $1.6 1.7 6.8 7.3 7.8 8.3 8.4
Interest expense 0.6 0.6 2.3 3.1 4.2 4.7 4.6
---- --- --- --- --- --- ---
Net interest income 1.0 1.1 4.5 4.2 3.6 3.6 3.8
Provision for credit losses -- 0.1 0.2 0.5 0.3 0.1 0.1
Non-interest income 0.1 0.1 0.6 0.6 0.5 0.5 0.4
Non-interest expense 0.7 0.7 3.0 2.9 2.7 2.5 2.3
---- --- --- --- --- --- ---
Income before income taxes 0.4 0.4 1.9 1.4 1.1 1.5 1.8
Income tax expense 0.1 0.1 0.4 0.2 0.2 0.4 0.4
---- --- --- --- --- --- ---
Income before cumulative effect
of a change in accounting method 0.3 0.3 1.5 1.2 0.9 1.1 1.4
Cumulative effect on years prior to 1992
of change in accounting method -- 0.1 0.1 -- -- -- --
---- --- --- --- --- --- ---
Net income $0.3 0.4 1.6 1.2 0.9 1.1 1.4
---- --- --- --- --- --- ---
---- --- --- --- --- --- ---
Net income per share:
Primary:
Before cumulative effect of a
change in accounting method $2.68 2.53 11.56 8.97 6.50 8.74 10.67
Cumulative effect on years prior
to 1992 of change in accounting method -- 0.35 0.35 -- -- -- --
----- ---- ----- ---- ---- ---- -----
Net income $2.68 2.88 11.91 8.97 6.50 8.74 10.67
----- ---- ----- ---- ---- ---- -----
----- ---- ----- ---- ---- ---- -----
Fully diluted:
Before cumulative effect of a
change in accounting method $2.68 2.53 11.56 8.97 6.50 8.74 10.67
Cumulative effect on years prior
to 1993 of change in accounting method -- 0.35 0.35 -- -- -- --
----- ---- ----- ---- ---- ---- -----
Net income $2.68 2.88 11.91 8.97 6.50 8.74 10.67
----- ---- ----- ---- ---- ---- -----
----- ---- ----- ---- ---- ---- -----
Dividends declared per
common share $12.64 12.00 12.00 2.80 2.31 12.84 2.60
At period end:
Total assets $99.90 95.8 98.7 100.4 96.5 89.8 89.0
Long-term debt -- -- -- -- -- -- --
Total stockholders' equity 8.0 8.1 9.2 9.3 8.5 7.9 8.4
</TABLE>
17
<PAGE>
MEETING INFORMATION
GENERAL
This Proxy Statement-Prospectus is being furnished to holders of Bancshares
Common Stock in connection with the solicitation of proxies by the Board of
Directors of Bancshares for use at the Bancshares Special Meeting to be held on
_________, August __, 1994, and any adjournments thereof, to consider and take
action upon a proposal to approve the Merger Agreement and such other business
as may properly come before the Bancshares Special Meeting or any adjournments
thereof. Each copy of this Proxy Statement-Prospectus mailed to holders of
Bancshares Common Stock is accompanied by a form of proxy for use at the
Bancshares Special Meeting.
This Proxy Statement-Prospectus is also being furnished by the Bank to
holders of Bank Common Stock in connection with the Bank Special Meeting to be
held on _________, August __, 1994, and any adjournments thereof, to consider
and take action upon a proposal to approve the Consolidation Agreement and such
other business as may properly come before the Bank Special Meeting or any
adjournments thereof.
This Proxy Statement-Prospectus is also being furnished by Norwest to the
shareholders of Bancshares and of the Bank as a prospectus in connection with
the issuance by Norwest of shares of Norwest Common Stock upon consummation of
the Merger and the Consolidation.
This Proxy Statement-Prospectus, the attached Notices of Special Meeting,
and the form of proxy for Bancshares shareholders enclosed herewith are first
being mailed to shareholders of Bancshares and of the Bank on or about July __,
1994.
DATE, PLACE, AND TIME
The Bancshares Special Meeting will be held at _______________,
_______________, Silver City, New Mexico, on _________, August __, 1994, at
__:__ _.m., local time. The Bank Special Meeting will be held at
___________________, _______________, Silver City, New Mexico, on _________,
August __, 1994, at __:__ _.m., local time.
RECORD DATE; VOTE REQUIRED
BANCSHARES SPECIAL MEETING
The Board of Directors of Bancshares has fixed the close of business on
June __, 1994, as the record date for the determination of shareholders of
Bancshares entitled to receive notice of, and to vote at, the Bancshares Special
Meeting. On the record date there were 109,980 shares of Bancshares Common
Stock issued and outstanding. Approval of the Merger Agreement requires the
affirmative vote of the holders of a majority of the outstanding shares of
Bancshares Common Stock. The Merger cannot be consummated without shareholder
approval of the Merger Agreement.
As of the record date for the Bancshares Special Meeting, directors and
officers of Bancshares and their affiliates owned beneficially or controlled the
voting of an aggregate of 51,328 shares of Bancshares Common Stock or
approximately 46.67% of the shares of
18
<PAGE>
Bancshares Common Stock outstanding on that date. Information regarding the
shares of Bancshares Common Stock beneficially owned, directly or indirectly, by
certain shareholders, by each director and executive officer of Bancshares, and
by all directors and officers as a group is set forth in the table under the
heading "Principal Shareholders and Security Ownership of Management of
Bancshares" below.
BANK SPECIAL MEETING
The Board of Directors of the Bank has fixed the close of business on June
__, 1994, as the record date for the determination of shareholders of the Bank
entitled to receive notice of, and to vote at, the Bank Special Meeting. On the
record date there were 129,600 shares of Bank Common Stock outstanding.
Approval of the Consolidation Agreement requires the affirmative vote of the
holders of two-thirds of the outstanding shares of Bank Common Stock. If the
Merger is approved at the Bancshares Special Meeting, Norwest will be deemed to
own beneficially 100% of the outstanding shares of Bancshares Common Stock.
Management of Bancshares has advised Norwest that it will vote all of the shares
of Bank Common Stock held by Bancshares in favor of the Consolidation.
Therefore, approval of the Consolidation is assured. The Merger cannot be
consummated without shareholder approval of the Consolidation Agreement.
As of the record date for the Bank Special Meeting, directors and officers
of the Bank and their affiliates did not own beneficially or control the voting
of any shares of Bank Common Stock. Information regarding the shares of Bank
Common Stock beneficially owned, directly or indirectly, by certain
shareholders, by each director and executive officer of the Bank, and by all
directors and officers as a group is set forth in the table under the heading
"Principal Shareholders and Security Ownership of Management of the Bank" below.
At the record date, directors and executive officers of Norwest did not own
beneficially any shares of Bancshares Common Stock or Bank Common Stock.
PRINCIPAL SHAREHOLDERS AND SECURITY OWNERSHIP OF MANAGEMENT OF BANCSHARES
PRINCIPAL SHAREHOLDERS
Set forth below are the names and addresses of, and the number of shares
and the percentage of outstanding shares beneficially owned as of the record
date for the Bancshares Special Meeting by, each holder of record who owns of
record, or who is known by Bancshares to be the beneficial owner of, more than
5% of the outstanding shares of Bancshares Common Stock. Each shareholder named
below has sole voting and investment power over the shares shown in the table,
unless otherwise indicated. The shares shown in the table include all shares
the named parties may be deemed to own beneficially, including shares held by
spouses.
19
<PAGE>
Number of Shares Percent of
Beneficially Outstanding
Name and Address Owned Bancshares Common Stock
- ------------------------------- ---------------- ------------------------
John Paul Jones 10,461.5 (1) 9.51%
P.O. Box 2814
Silver City, NM 88062
Linda K. Jones 12,621.5 (2) 11.48%
P.O. Box 2814
Silver City, NM 88062
Schmitz Investment Partnership 8,195 7.45%
P.O. Box 1126
Silver City, NM 88062
Estate of Cash T. Skarda (3) 28,021.5 25.48%
P.O. Box 1250
Silver City, NM 88062
Danny T. Skarda 28,685.5 (4) 26.08%
P.O. Box 1250
Silver City, NM 88062
Dorothy M. Skarda 12,699 11.55%
P.O. Box 1184
Silver City, NM 88062
- ---------------
(1) Includes 9,207.5 shares owned by Mr. Jones's wife, Linda K. Jones, and 282
shares owned jointly by his wife and her mother, Dorothy M. Skarda.
(2) Includes 972 shares owned by Mrs. Jones's husband, John Paul Jones; 282
shares owned jointly with Dorothy M. Skarda; and 2,160 shares held in
custodial accounts for her minor grandchildren.
(3) Danny T. Skarda, President and Chairman of the Board of both Bancshares and
the Bank, the son of Cash T. Skarda, is a beneficiary and serves as the
personal representative of the Cash T. Skarda estate.
(4) Includes 100 shares owned jointly with Mr. Skarda's wife, 564 shares owned
jointly with his sons, and 28,021.5 shares held by the estate of Cash T.
Skarda, of which he is a beneficiary and for which he serves as personal
representative; excludes 20 shares owned jointly by Mr. Skarda's sons and
their mother.
20
<PAGE>
SECURITIES OWNERSHIP OF MANAGEMENT
Set forth below is the number of shares of Bancshares Common Stock held by
each director and executive officer, and by all directors and executive officers
as a group, of Bancshares as of the record date for the Bancshares Special
Meeting. Each shareholder named below has sole voting and investment power over
the shares shown in the table, unless otherwise indicated. The shares shown in
the table include all shares the named parties may be deemed to own
beneficially, including shares held by spouses.
Number of Shares Percent of
Beneficially Outstanding
Name Owned Bancshares Common Stock
- ----------------------- ---------------- ------------------------
Manual Aragon 480 (1)
Dr. Gilbert Arizaga 0 0.0%
Jo Ann Bock 187 (1)
Joe H. Brown 550 (1)
Joseph P. Casey 15 (1)
Michael I. Conner 972 (1)
Daniel R. Dunagan 2,326 2.11%
J.T. Hollimon 200 (1)
John Paul Jones 10,461.5 (2) 9.51%
Jack C. Keen 2,616 2.38%
David A. Kinneberg 1,600 1.45%
Dushan P. Milovich 1,040 (1)
David O. Pierson 200 (1)
Danny T. Skarda 28,685.5 (3) 26.08%
Jack G. Stroman 1,995 1.81%
Directors and officers as a group 51,328 46.67%
(15 persons)
- ---------------
(1) Less than 1%.
(2) Includes 9,207.5 shares owned by Mr. Jones's wife, Linda K. Jones, and 282
shares owned jointly by his wife and her mother, Dorothy M. Skarda.
21
<PAGE>
(3) Includes 100 shares owned jointly with Mr. Skarda's wife, 564 shares owned
jointly with his sons, and 28,021.5 shares held by the estate of Cash T.
Skarda, of which he is a beneficiary and for which he serves as personal
representative; excludes 20 shares owned jointly by Mr. Skarda's sons and
their mother.
PRINCIPAL SHAREHOLDERS AND SECURITY OWNERSHIP OF MANAGEMENT OF THE BANK
Set forth below is the name of, and the number of shares and the percentage
of outstanding shares beneficially owned as of the record date for the Bank
Special Meeting by, the sole person known by the Bank to be the beneficial owner
of, more than 5% of the outstanding shares of Bank Common Stock. None of the
directors or executive officers of the Bank own shares of Bank Common Stock.
Each shareholder named below has sole voting and investment power over the
shares shown in the table, unless otherwise indicated. The shares shown in the
table include all shares the named parties may be deemed to own beneficially,
including shares held by spouses.
Number of Shares Percent of
Beneficially Outstanding
Name and Address Owned Bancshares Common Stock
- ------------------------------- ---------------- ------------------------
Copper Bancshares, Inc. 128,100 98.8%
P.O. Box 1250
Silver City, NM 88062-1250
VOTING AND REVOCATION OF PROXIES FOR THE BANCSHARES SPECIAL MEETING
Shares of Bancshares Common Stock represented by a proxy properly signed
and received at, or prior to, the Bancshares Special Meeting, unless
subsequently revoked, will be voted at the Bancshares Special Meeting in
accordance with the instructions thereon. If a proxy is signed and returned
without indicating any voting instructions, shares of Bancshares Common Stock
represented by such proxy will be voted FOR approval of the Merger Agreement.
Any proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before the proxy is voted by filing either an instrument
revoking it or a duly executed proxy bearing a later date with the Secretary of
Bancshares prior to or at the Bancshares Special Meeting or by voting the shares
subject to the proxy in person at the Bancshares Special Meeting. Attendance at
the Bancshares Special Meeting will not in and of itself constitute a revocation
of a proxy.
The Board of Directors of Bancshares is not aware of any business to be
acted upon at the Bancshares Special Meeting other than the business described
herein. If, however, other matters are properly brought before the Bancshares
Special Meeting, or any adjournments thereof, the persons appointed as proxies
will have discretion to vote or act on such matters according to their best
judgment.
SOLICITATION OF PROXIES FOR THE BANCSHARES SPECIAL MEETING
In addition to solicitation by mail, directors, officers, and employees of
Bancshares may solicit proxies from the shareholders of Bancshares, either
personally or by telephone, telegram, or other form of communication. None of
the foregoing persons who solicit proxies will be specifically compensated for
such services. Nominees, fiduciaries, and other
22
<PAGE>
custodians will be requested to forward soliciting materials to beneficial
owners and will be reimbursed for their reasonable expenses incurred in sending
proxy material to beneficial owners. Bancshares will bear its own expenses in
connection with any solicitation of proxies for the Bancshares Special Meeting.
See "THE REORGANIZATION--Expenses." No solicitation of proxies will be
conducted in connection with the Bank Special Meeting.
HOLDERS OF BANCSHARES COMMON STOCK ARE REQUESTED TO COMPLETE, DATE, AND SIGN THE
ACCOMPANYING PROXY AND RETURN IT PROMPTLY TO BANCSHARES IN THE ENCLOSED POSTAGE-
PREPAID ENVELOPE.
THE REORGANIZATION
This section of the Proxy Statement-Prospectus describes certain aspects of
the Merger and the Consolidation. The following description does not purport to
be complete and is qualified in its entirety by reference to the Merger
Agreement and the form of the Consolidation Agreement, which are attached as
Appendix A and Appendix B, respectively, to this Proxy Statement-Prospectus and
are incorporated by reference herein. ALL SHAREHOLDERS ARE URGED TO READ THE
MERGER AGREEMENT AND THE CONSOLIDATION AGREEMENT IN THEIR ENTIRETY.
REASONS FOR THE REORGANIZATION; RECOMMENDATIONS OF THE BOARDS OF DIRECTORS
The terms of the Reorganization were the results of arms'-length
negotiations between the parties. The Boards of Directors of Bancshares and the
Bank did not seek the advice of independent investment bankers or other third
parties but rather reached the conclusion to accept the Norwest offer and
recommend the Merger and the Consolidation to shareholders as a result of their
own analysis. In reaching this conclusion, the Directors of Bancshares and the
Bank considered a number of factors without assigning any specific weight to any
of the factors considered. The Boards of Directors did consider the following
factors to be significant positive reasons for the proposed Merger and
Consolidation which in the aggregate led to their determination in the exercise
of their business judgment to recommend that the Merger and Consolidation be
approved by the shareholders of Bancshares and of the Bank, respectively:
(i) the market value of Norwest shares to be received in the Merger and
Consolidation as compared to the book value and limited market value of
Bancshares and the Bank shares to be exchanged in the Merger and as a multiple
of the historic and projected earnings of Bancshares and the Bank;
(ii) the financial condition, results of operations and prospects for
Norwest as compared to the current business and expansion opportunities and
constraints, and projections and prospects of future performance and earnings
for Bancshares and the Bank on a stand-alone basis;
(iii) the greater market liquidity of Norwest Common Stock compared to
Bancshares and Bank Common Stock;
(iv) the review of the Merger Agreement and the Consolidation Agreement by
management and the Boards of Directors of Bancshares and the Bank with its legal
counsel;
23
<PAGE>
(v) the fact that the Reorganization will be tax free for federal income
tax purposes to the holders of the Common Stock of Bancshares and the Bank not
exercising their dissenters' rights of appraisal (other than in respect to cash
paid in lieu of fractional shares); and
(vi) the probable impact of the Reorganization on customers and employees
and the community served by Bancshares and the Bank.
Based upon the market value of Norwest Common Stock on June __, 1994, the
value of the shares of Norwest Common Stock to be received for each share of
Bancshares Common Stock in the Merger would have been ____________. This is
equal to ______ times the book value of each share of Bancshares Common Stock as
of March 31, 1994, and is equal to _____ times the earnings per share of
Bancshares Common Stock for the year ended December 31, 1993. Based upon the
market value of Norwest Common Stock on June __, 1994, the value of the shares
of Norwest Common Stock to be received for each share of Bank Common Stock would
have been __________, which is _____ times the book value of each share of Bank
Common Stock as of March 31, 1994, and _____ times the earnings per share of
Bank Common Stock for the year ended December 31, 1993.
THE BOARDS OF DIRECTORS OF BANCSHARES AND THE BANK RECOMMEND THAT THE
AGREEMENT AND PLAN OF REORGANIZATION AND MERGER AND CONSOLIDATION BE ADOPTED AND
APPROVED BY THE SHAREHOLDERS OF BANCSHARES AND THE BANK.
TERMS OF THE REORGANIZATION
THE MERGER
At the Effective Time of the Merger, a wholly owned subsidiary of Norwest
will merge into Bancshares, with Bancshares as the surviving corporation, and
the outstanding shares of Bancshares Common Stock (other than shares as to which
statutory dissenters' rights have been exercised and not forfeited) will be
converted into a number of shares of Norwest Common Stock determined in
accordance with the provisions of the Merger Agreement. The Merger Conversion
Factor, used to determine the number of shares of Norwest Common Stock into
which each outstanding share of Bancshares Common Stock will be converted, will
be calculated by dividing 518,473 by the number of shares of Bancshares Common
Stock outstanding immediately prior to the Effective Time of the Merger. As of
the date of this Proxy Statement-Prospectus, the Merger Conversion Factor would
be 4.71425. On March 2, 1994, the last trading day preceding public
announcement of the proposed Reorganization, the closing price per share of
Norwest Common Stock on the NYSE was $23.25 and on June __, 1994, the price was
$____.
THE CONSOLIDATION
The Merger Agreement also provides that, following the Effective Time of
the Merger and subject to the terms and conditions of the Merger Agreement and
the Consolidation Agreement, the Bank will be consolidated with a national
banking association which is a wholly owned subsidiary of Norwest, under the
charter of the Bank. The resulting bank will continue to be known as "The
American National Bank of Silver City." The Articles of
24
<PAGE>
Incorporation of the resulting bank are attached as an appendix to the
Consolidation Agreement. Under applicable law, consummation of the
Consolidation requires the affirmative vote of the holders of two-thirds of the
outstanding shares of Bank Common Stock. If the Merger is approved, Norwest
will be deemed to own beneficially 100% of the outstanding shares of Bancshares
Common Stock. The Consolidation will be effective at 12:01 a.m. on the date
specified in the Consolidation Agreement (the "Effective Time of the
Consolidation"), which is expected to be the day following the Effective Date of
the Merger. The Consolidation Conversion Factor, used to determine the number
of shares of Norwest Common Stock into which each share of Bank Common Stock
outstanding immediately prior to the Effective Time of the Consolidation owned
by shareholders other than Bancshares (other than shares with respect to which
statutory dissenters' rights have been exercised and not forfeited) will be
converted, will be calculated by dividing 6,527 by the number of shares of Bank
Common Stock owned by shareholders other than Bancshares immediately prior to
the Effective Time of the Consolidation. As of the date of this Proxy
Statement-Prospectus, the Consolidation Conversion Factor would be 4.35133. On
March 2, 1994, the last trading day preceding public announcement of the
proposed Reorganization, the closing price per share of Norwest Common Stock on
the NYSE was $23.25 and on June __, 1994, the price was $____.
The market price for Norwest Common Stock will fluctuate between the date
of this Proxy Statement-Prospectus and the Effective Dates of the Merger and the
Consolidation, which may be a period of several weeks or more. As a result, the
market value of the Norwest Common Stock that shareholders of Bancshares and of
the Bank ultimately receive in the Merger or the Consolidation, as the case may
be, may be more or less than its market value on the date of this Proxy
Statement-Prospectus.
The Merger Agreement provides that if, between the date of the Merger
Agreement and the Effective Time of the Merger, shares of Norwest Common Stock
are changed into a different number or class of shares by reason of any
reclassification, recapitalization, split-up, combination, exchange of shares,
or readjustment, or if a stock dividend thereon is declared with a record date
within the same period, the conversion factors provided for in the Merger
Agreement will be adjusted accordingly. The Consolidation Agreement includes a
parallel provision.
No fractional shares of Norwest Common Stock will be issued in the Merger
or the Consolidation. Instead, Norwest will pay to each holder of Bancshares
Common Stock or Bank Common Stock who would otherwise be entitled to a
fractional share an amount of cash equal to the fraction of a share of Norwest
Common Stock to which the shareholder of Bancshares or of the Bank would
otherwise be entitled multiplied by the average of the closing prices of a share
of Norwest Common Stock reported by the consolidated tape of the New York Stock
Exchange for each of the five trading days immediately preceding the Effective
Time of the Merger.
Shares of Norwest Common Stock issued and outstanding immediately prior to
the Effective Time of the Merger will remain issued and outstanding.
25
<PAGE>
EFFECTIVE DATES OF THE MERGER AND THE CONSOLIDATION
Subject to the terms and conditions of the Merger Agreement, the Effective
Date of the Merger will be the date on which a Certificate of Merger is filed
with the Secretary of State of the State of New Mexico. Such filings will be
made ten business days following the satisfaction or waiver of all conditions of
the Merger Agreement or on such other date upon which the parties agree, and the
time at which such filing will be made is hereinafter referred to as the "Time
of Filing." The Effective Time of the Merger will be 11:59 p.m. New Mexico
time, on the Effective Date of the Merger; and the Consolidation will be
effective as of 12:01 a.m. on the date specified in the certificate of approval
with respect to the Consolidation to be issued by the OCC. There can be no
assurance, however, as to when or whether the Merger and the Consolidation will
occur. Norwest and Bancshares anticipate that the closing will occur as soon as
possible following the Special Meetings. See "Terms of the Reorganization,"
"Conditions to the Reorganization," and "Regulatory Approvals."
SURRENDER OF CERTIFICATES
As soon as practicable after the Effective Times, Norwest Bank Minnesota,
National Association, acting in the capacity of exchange agent for Norwest (the
"Exchange Agent"), will mail to each former holder of record of shares of
Bancshares Common Stock or shares of Bank Common Stock a form of letter of
transmittal, together with instructions for the exchange of such holder's stock
certificates for a certificate representing Norwest Common Stock.
SHAREHOLDERS OF BANCSHARES AND OF THE BANK SHOULD NOT SEND IN THEIR
CERTIFICATES UNTIL THEY RECEIVE THE LETTER OF TRANSMITTAL FORM AND INSTRUCTIONS.
Upon surrender to the Exchange Agent of one or more certificates for
Bancshares Common Stock or Bank Common Stock, together with a properly completed
letter of transmittal, there will be issued and mailed to the holder a
certificate representing the number of whole shares of Norwest Common Stock to
which such holder is entitled and, where applicable, a check for the amount
representing any fractional share. A certificate for Norwest Common Stock may
be issued in a name other than the name in which the surrendered certificate is
registered only if (i) the certificate surrendered is properly endorsed and
otherwise in proper form for transfer and (ii) the person requesting the
issuance of such certificate either pays to the Exchange Agent any transfer or
other taxes required by reason of the issuance of a certificate for such shares
in a name other than the registered holder of the certificate surrendered or
establishes to the satisfaction of the Exchange Agent that such tax has been
paid or is not applicable.
All Norwest Common Stock issued pursuant to the Reorganization will be
deemed issued as of the Effective Time of the Merger or the Effective Date of
the Consolidation, as the case may be. No dividends with a record date after
the Effective Dates will be paid to shareholders of Bancshares or of the Bank
entitled to receive certificates for shares of Norwest Common Stock until such
shareholders surrender their certificates representing shares of Bancshares
Common Stock or Bank Common Stock, as the case may be. Upon such surrender,
there shall be paid to the shareholder in whose name the certificates
representing such shares of Norwest Common Stock are issued any dividends the
record and payment dates of which shall have been after the Effective Dates and
before the date of such surrender. After
26
<PAGE>
such surrender, there shall be paid to the person in whose name the certificate
representing such shares of Norwest Common Stock is issued, on the appropriate
dividend payment date, any dividend on such shares of Norwest Common Stock which
shall have a record date after the Effective Dates and prior to the date of
surrender, but a payment date subsequent to the surrender. In no event shall
the persons entitled to receive such dividends be entitled to receive interest
on amounts payable as dividends.
CONDITIONS TO THE REORGANIZATION
THE MERGER
The Merger will occur only if each of the Merger Agreement and the
Consolidation Agreement is approved by the requisite vote of shareholders.
Consummation of the Merger is subject to the satisfaction of certain other
conditions, unless waived, to the extent waiver is permitted by applicable law.
Such conditions to the obligations of both parties to consummate the Merger
include (i) the continued accuracy of representations and warranties by the
other party, (ii) the performance by the other party of its obligations under
the Merger Agreement, (iii) the receipt of certain certificates from officers of
the other party, (iv) the receipt of all necessary regulatory approvals,
including the approval of the Merger by the Federal Reserve Board and the
approval of the Consolidation by the OCC, and the expiration of all applicable
waiting and approval periods, (v) the absence of any order of a court or agency
of competent jurisdiction restraining, enjoining, or otherwise prohibiting
consummation of the transactions contemplated by the Merger Agreement, (vi) the
receipt of an opinion of counsel for Bancshares and the Bank to the effect that
for federal income tax purposes both the Merger and the Consolidation will be
tax-free reorganizations, (vii) the continued effectiveness of the Registration
Statement of which this Proxy Statement-Prospectus is a part and receipt by
Norwest of all state securities law or blue sky authorizations necessary for the
Merger and the Consolidation, (viii) the Merger Agreement shall not have been
terminated, and (ix) there shall not have occurred any general suspension of, or
limitation on prices for, trading securities on the NYSE or in the over-the-
counter market, or a declaration of a banking moratorium or any suspension of
payments in respect of banks in the United States.
Bancshares's obligation to consummate the Merger is also subject to
authorization for listing on the NYSE and CHX upon official notice of issuance
of the shares of Norwest Common Stock issuable pursuant to the Reorganization.
Norwest's obligation to consummate the Merger is also subject to (i) the
receipt by Bancshares and the Bank of any and all material consents or waivers
from third parties to loan agreements, leases, or other material contracts
required for the consummation of the Merger and the Consolidation, and the
receipt by Bancshares and the Bank of any and all material permits,
authorizations, consents, waivers, and approvals required for the consummation
of the Merger and the Consolidation; (ii) the qualification of the Merger as a
pooling of interests for accounting purposes and the receipt by Norwest from
Peat Marwick and Bock, Rutherford & Company of letters to that effect, (iii) the
total number of shares of Bancshares Common Stock and Bank Common Stock
(including phantom shares and other share equivalents) outstanding and subject
to issuance upon exercise of all warrants, options, conversion rights, phantom
shares, or other share equivalents not having exceeded 109,980 and 129,600,
respectively; (iv) the receipt of a certificate signed by Bancshares's Chief
Executive Officer and Chief Financial Officer concerning the accuracy and
completeness of certain of Bancshares's and the Bank's
27
<PAGE>
financial statements and related information and the absence of any changes in
such financial statements and related information subsequent to the date of such
financial statements; (v) the requirement that Bancshares and the Bank
considered as a whole shall not have sustained since September 30, 1993, any
material loss or interference with their business from any civil disturbance or
any fire, explosion, flood, or other calamity, whether or not covered by
insurance; (vi) the absence of any reasonable basis for any proceeding, claim,
or action seeking to impose, or that could reasonably be expected to result in
the imposition, on Bancshares or the Bank or their respective properties of any
liability arising from the release of hazardous substances under any local,
state, or federal environmental statute, regulation, or ordinance which has had
or could reasonably be expected to have a material adverse effect upon
Bancshares and the Bank taken as a whole, and the absence of any violations of
any applicable environmental protection laws or regulations which would,
individually or in the aggregate, have a material adverse effect on Bancshares
and the Bank taken as a whole.
THE CONSOLIDATION
The Consolidation will occur only if (i) the Consolidation Agreement is
approved by the requisite vote of the shareholders of the Bank and of Norwest
Bank; (ii) the Consolidation is approved by all appropriate banking and
regulatory authorities, and all conditions prescribed by law for the
consummation of the Consolidation have been satisfied; and (iii) the Merger has
been consummated.
REGULATORY APPROVALS
The Merger is subject to prior approval by the Federal Reserve Board under
Section 3 of the Bank Holding Company Act of 1956, as amended (the "BHC Act"),
which requires that the Federal Reserve Board take into consideration the
financial and managerial resources and future prospects of the existing and
proposed institutions and the convenience and needs of the communities to be
served. The BHC Act prohibits the Federal Reserve Board from approving the
Merger if it would result in a monopoly or be in furtherance of any combination
or conspiracy to monopolize or to attempt to monopolize the business of banking
in any part of the United States, or if its effect in any section of the country
may be substantially to lessen competition or to tend to create a monopoly, or
if it would in any other manner be a restraint of trade, unless the Federal
Reserve Board finds that the anticompetitive effects of the Merger are clearly
outweighed in the public interest by the probable effect of the Reorganization
in meeting the convenience and needs of the communities to be served. The
Federal Reserve Board also has the authority to deny an application if it
concludes that the combined organization would have an inadequate capital
position. Under the BHC Act, the Merger may not be consummated until the 30th
day following the date of Federal Reserve Board approval, during which time the
United States Department of Justice may challenge the Merger on antitrust
grounds. The commencement of an antitrust action would stay the effectiveness
of the Federal Reserve Board's approval unless a court specifically orders
otherwise. The BHC Act provides for the publication of notice and public
comment on the applications and authorizes the regulatory agency to permit
interested parties to intervene in the proceedings. There can be no assurance
that the Department of Justice will not challenge the Merger or, if such a
challenge were made, that the outcome would be favorable to the parties to the
Merger.
The Consolidation is subject to the prior approval of the OCC, and receipt
of such approval is a condition to consummation of the Consolidation.
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Norwest filed an application for approval of the Merger with the Federal
Reserve Board on April 29, 1994, and an application for approval of the
Consolidation with the OCC on May 31, 1994. These applications remain pending
as of the date of this Proxy Statement-Prospectus. There can be no assurance
that the Federal Reserve Board and the OCC will approve the Merger and the
Consolidation or as to the dates of such approvals. In addition, as required by
New Mexico law, by letter dated May 17, 1994, Norwest notified the Director of
the Financial Institutions Division of the New Mexico Regulation and Licensing
Department of its intent to make an interstate acquisition.
The approval of any application merely implies satisfaction of regulatory
criteria for approval, which do not include review of the Reorganization from
the standpoint of the adequacy of the consideration to be received by, or
fairness to, shareholders. Regulatory approvals do not constitute an
endorsement or recommendation of the proposed Reorganization.
Norwest is not aware of any governmental approvals or compliance with
banking laws and regulations that are required for consummation of the
Reorganization other than those described above. Should any other approval or
action be required, it is presently contemplated that such approval or action
would be sought. There can be no assurance that any such approval or action, if
needed, could be obtained and, if such approvals or actions are obtained, there
can be no assurance as to the timing thereof. Neither the Merger nor the
Consolidation can proceed in the absence of all requisite regulatory approvals.
See "Effective Dates of the Merger and the Consolidation," "Conditions to the
Reorganization," and "Waiver, Amendment, and Termination."
BUSINESS PENDING THE REORGANIZATION
Under the Merger Agreement, each of Bancshares and the Bank is generally
obligated to maintain its corporate existence in good standing; to maintain the
general character of its business and conduct its business in the ordinary and
usual manner; to extend credit in accordance with existing lending policies,
except that it shall not, without the prior written consent of Norwest, make any
new loan or modify, restructure, or renew any existing loan (except pursuant to
commitments made prior to the date of the Merger Agreement) to any borrower if
the amount of the resulting loan, when aggregated with all other loans or
extensions of credit to such person, would exceed $100,000; to maintain proper
business and accounting records in accordance with generally accepted
principles; to maintain its properties in good repair and condition, ordinary
wear and tear excepted; to maintain in all material respects presently existing
insurance coverage; to use its best efforts to preserve its business
organization intact, to keep the services of its present principal employees,
and to preserve its goodwill and the goodwill of its suppliers, customers, and
others having business relationships with it; to use its best efforts to obtain
any approvals or consents required to maintain existing leases and other
contracts in effect following the Merger; to comply in all material respects
with all laws, regulations, ordinances, codes, orders, licenses, and permits
applicable to the properties and operations of Bancshares and the Bank the
noncompliance with which reasonably could be expected to have a material adverse
effect on Bancshares and the Bank taken as a whole; and to permit Norwest and
its representatives to examine its books, records, and properties, and to
interview officers, employees, and agents at all reasonable times when it is
open for business. The Merger Agreement also provides that, prior to the
Effective Time of the Merger, neither Bancshares nor the Bank may, without the
prior written consent of
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Norwest, among other things: (i) amend or otherwise change its articles of
incorporation or association or bylaws; (ii) issue or sell, or authorize for
issuance or sale, or grant any options or make other agreements with respect to
the issuance or sale, or conversion of, any shares of its capital stock, phantom
shares, or other share equivalents, or any other of its securities; (iii)
authorize or incur any long-term debt (other than deposit liabilities); (iv)
mortgage, pledge, or subject to lien or other encumbrance any of its properties,
except in the ordinary course of business; (v) enter into any material
agreement, contract, or commitment in excess of $25,000 except banking
transactions in the ordinary course of business and in accordance with policies
and procedures in effect on the date of the Merger Agreement; (vi) make any
investments except investments made by the Bank in the ordinary course of
business for terms of up to one year and in amounts of $100,000 or less; (vii)
amend or terminate any "employee benefit plan" within the meaning of the
Employee Retirement Income Security Act of 1974, as amended, except as required
by law; (viii) make any contributions to any such plan except as required by the
terms of such plan in effect as of the date of the Merger Agreement; (ix)
declare, set aside, make, or pay any dividend, except dividends declared by the
Bank for the purpose of and in an amount necessary to make scheduled payments of
principal and interest on debt of Bancshares; (x) redeem, purchase, or otherwise
acquire, directly or indirectly, any of the capital stock of Bancshares; (xi)
increase the compensation of any officers, directors, or executive employees,
except pursuant to existing compensation plans and practices; (xii) sell or
otherwise dispose of any shares of the capital stock of the Bank; or (xiii) sell
or otherwise dispose of any of its assets or properties other than in the
ordinary course of business.
Neither Bancshares nor the Bank, nor any director, officer, representative,
or agent thereof, will, directly or indirectly, solicit, authorize the
solicitation of, or enter into any discussions with any party or group (other
than Norwest) concerning any offer or possible offer (i) to purchase any shares
of common stock, any option or warrant to purchase any shares of common stock,
any securities convertible into any shares of common stock, or any other equity
security of Bancshares or the Bank; (ii) to make a tender or exchange offer for
any shares of such common stock or other equity security; (iii) to purchase,
lease, or otherwise acquire the assets of Bancshares or the Bank, except in the
ordinary course of business; or (iv) to merge, consolidate, or otherwise combine
with Bancshares or the Bank. Any offer or inquiry to Bancshares or the Bank
concerning any of the foregoing must be promptly disclosed, along with the terms
thereof, to Norwest.
WAIVER, AMENDMENT, AND TERMINATION
The parties may, in writing, give any consent, take any action with respect
to termination of the Merger Agreement, or waive any inaccuracies in the
representations and warranties of the other party or compliance by the other
party with any of the covenants and conditions in the Merger Agreement.
At any time before the appropriate filing is made with the New Mexico
Secretary of State on the Effective Date of the Merger the parties may amend the
Merger Agreement by action of their respective Boards of Directors or pursuant
to authority delegated by their respective Boards of Directors; provided,
however, that no such amendment occurring after approval of the Merger by the
shareholders of Bancshares and the Bank may adversely affect the consideration
to be received by such shareholders.
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The Merger Agreement provides that it may be terminated at any time prior
to the filing with the New Mexico Secretary of State (i) by mutual written
consent of the parties; (ii) by either party by written notice to the other if
the Merger shall not have been consummated by November 1, 1994, unless such
failure of consummation is due to the failure of the party seeking termination
to perform or observe in all material respects the covenants and agreements to
be performed or observed by it under the Merger Agreement; or (iii) by either
party by written notice to the other if any court or governmental authority of
competent jurisdiction shall have issued a final order restraining, enjoining,
or otherwise prohibiting the consummation of the transactions contemplated by
the Merger Agreement.
The Consolidation Agreement provides that it may be terminated at any time
prior to the Effective Date of the Consolidation by mutual written consent of
the Boards of Directors of the parties or by action of the Board of Directors of
either party if the Merger Agreement is terminated. The Consolidation Agreement
may be amended by mutual consent of the Boards of Directors of the parties;
provided, however, that no such amendment occurring after approval of the
Consolidation Agreement shall have a material adverse affect on the rights of
shareholders of the Bank.
MANAGEMENT AND OPERATIONS AFTER THE REORGANIZATION
As of the Effective Time of the Merger, Bancshares will become a wholly
owned subsidiary of Norwest, and the Bank will become an indirect subsidiary of
Norwest. As a result of the Consolidation, which will occur immediately
following the Merger, the Bank will be consolidated with another subsidiary of
Norwest, Norwest Bank, under the charter of the Bank. The consolidated bank
will operate at the Bank's present locations, providing products and services
offered by Norwest affiliates. See "Terms of the Reogranization."
INTERESTS OF CERTAIN PERSONS IN THE REORGANIZATION
All but one of the current directors and executive officers of Bancshares
and the Bank own Common Stock of Bancshares or the Bank, or both. Such
Bancshares Common Stock will be converted in the Merger into Norwest Common
Stock on the same terms and conditions as apply to all other shareholders of
Bancshares. As of the Record Date, Bancshares's directors and executive
officers owned a total of 51,328 shares of Bancshares Common Stock constituting
approximately 46.67% of the issued and outstanding shares of Bancshares Common
Stock.
None of the directors or executive officers of Bancshares or the Bank
excerpt Danny T. Skarda, President and a director of both Bancshares and the
Bank, has an agreement for additional compensation from Norwest or rights which
become effective upon a change of control like the Merger and Consolidation.
Danny T. Skarda will enter into an employment agreement with Bancshares
effective as of the Effective Time of the Merger pursuant to which he will be
employed for 12 months after the Effective Time of the Merger unless such
employment is sooner terminated by his death or resignation, or by Bancshares
upon a termination of Mr. Skarda for cause. Pursuant to this employment
agreement, Mr. Skarda will be paid $120,000 for the one-year term of the
agreement. He will also be entitled to this normal benefits during such time.
In addition, Mr. Skarda will agree not to engage in the business of commercial
banking or in the thrift business or aid or assist anyone else in
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engaging or becoming interested in or entering into the commercial bank or
thrift business, within 50 miles of Silver City, New Mexico.
CERTAIN DIFFERENCES IN RIGHTS OF SHAREHOLDERS
Bancshares is incorporated as a corporation under the laws of New Mexico,
and Norwest is incorporated as a corporation under the laws of Delaware.
Shareholders of Bancshares, whose rights are governed by Bancshares's Articles
of Incorporation and Bylaws and by New Mexico corporate law, will, upon
consummation of the Merger, become stockholders of Norwest. Shareholders of the
Bank, whose rights are governed by the Bank's Amended Articles of Association
and Amended Bylaws and by federal banking law, will, upon consummation of the
Consolidation, also become stockholders of Norwest. The rights of former
shareholders of Bancshares and of the Bank as Norwest stockholders will then be
governed by Norwest's Certificate of Incorporation and By-Laws and by the
Delaware General Corporation Law. The following is a summary of certain
significant differences between the rights of shareholders of Bancshares,
shareholders of the Bank, and stockholders of Norwest.
CAPITAL STOCK
BANCSHARES. Bancshares's Articles of Incorporation authorize the issuance
of 120,000 shares of common stock, par value $1.00 per share, and 50,000 shares
of preferred stock, par value $23.33 per share. At March 31, 1994, 109,980
shares of Bancshares Common Stock were issued and outstanding. No shares of
Bancshares's preferred stock are issued and outstanding as of the date of this
Proxy Statement-Prospectus. Accordingly, all Bancshares shareholders have equal
rights and preferences with respect to dividends and distributions upon
liquidation.
THE BANK. The Bank's Amended Articles of Association authorize the
issuance of 129,600 shares of common stock, par value $5.00 per share. At March
31, 1994, 129,600 shares of Bank Common Stock were issued and outstanding. All
shares of Bank Common Stock currently outstanding have equal rights and
preferences with respect to voting, dividends, and distributions upon
liquidation.
NORWEST. Norwest's Certificate of Incorporation authorizes the issuance of
500,000,000 shares of common stock, par value $ 1 2/3 per share, and 5,000,000
shares of preferred stock ("Norwest Preferred Stock"). At March 31, 1994,
318,602,669 shares of Common Stock were issued, of which 314,920,116 were
outstanding and 3,682,553 were held as treasury shares; 2,315,900 shares of
Norwest Preferred Stock were issued and outstanding; and 1,000,000 additional
shares of Norwest Preferred Stock were reserved for issuance upon the exercise
of certain rights described below. Norwest has authorized for issuance from
time to time and registered with the Securities and Exchange Commission (the
"SEC") an additional 1,700,000 shares of Norwest Preferred Stock. In addition,
Norwest has authorized for issuance from time to time and registered with the
SEC, pursuant to a universal shelf registration statement, an indeterminate
number of securities (the "Shelf Securities") with an aggregate initial offering
price not to exceed $1,000,000,000. The Shelf Securities may be issued as
Preferred Stock or as securities convertible into shares of Preferred Stock or
Common Stock. All or any portion of the authorized but unissued Norwest
Preferred Stock or Shelf Securities issuable as, or convertible into, Norwest
Preferred Stock may be issued by the Board of Directors of Norwest without
further action by Norwest stockholders. Holders of Norwest Preferred Stock have
certain rights and
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preferences with respect to dividends and upon liquidation that are superior to
those of holders of Norwest Common Stock. The relative rights and preferences
of any Norwest Preferred Stock issued in the future may be established by the
Norwest Board of Directors without stockholder action. Although management has
no current plans for the issuance of any shares of Norwest Preferred Stock,
except as disclosed in this Proxy Statement-Prospectus, such shares, when and if
issued, could have dividend, liquidation, voting, and other rights superior to
those of Norwest Common Stock.
On November 22, 1988, the Board of Directors of Norwest declared a dividend
of one preferred share purchase right (collectively, the "Rights") for each
outstanding share of Norwest Common Stock. The dividend was paid on December 9,
1988, to stockholders of record on that date. Holders of shares of Norwest
Common Stock issued subsequent to that date, including those to be issued in
connection with the Merger, will receive the Rights with their shares. The
Rights trade automatically with shares of Norwest Common Stock and become
exercisable only under certain circumstances. The Rights are designed to
protect the interests of Norwest and its stockholders against coercive takeover
tactics. The purpose of the Rights is to encourage potential acquirors to
negotiate with Norwest's Board of Directors prior to attempting a takeover and
to give the Board leverage in negotiating on behalf of all stockholders the
terms of any proposed takeover. The Rights may, but are not intended to, deter
takeover proposals.
Until a Right is exercised, the holder of a Right, as such, will have no
rights as a stockholder of Norwest including, without limitation, the right to
vote or receive dividends. Upon becoming exercisable, each Right will entitle
the registered holder to purchase from Norwest one four-hundredth of a share of
Norwest Series A Junior Participating Preferred Stock (collectively, the "Junior
Preferred Shares"). The stated purchase price for each one one-hundredth of a
Junior Preferred Share is $175.00. The purchase price is subject to adjustment
upon the occurrence of certain events, including stock dividends on the Junior
Preferred Shares or issuance of warrants for, or securities convertible on
certain terms into, Junior Preferred Shares. The number of Rights outstanding
and the number of Junior Preferred Shares issuable upon exercise of the Rights
are subject to adjustment in the event of a stock split of, or a stock dividend
on, Norwest Common Stock.
The Rights will become exercisable only if a person or group acquires or
announces an offer to acquire 25% or more of the outstanding shares of Norwest
Common Stock. This triggering percentage may be reduced to no less than 15% by
the Board of Directors prior to the time the Rights become exercisable. The
Rights have certain additional features that will be triggered upon the
occurrence of specified events:
(1) If a person or group acquires at least the triggering percentage of
Norwest Common Stock, the Rights permit holders of the Rights, other than
such person or group, to acquire Norwest Common Stock at 50% of market
value. However, this feature will not apply if a person or group which
owns less than the triggering percentage acquires at least 85% of the
outstanding shares of Norwest Common Stock pursuant to a cash tender offer
for 100% of the outstanding Norwest Common Stock.
(2) After a person or group acquires at least the triggering percentage
and before the acquiror owns 50% of the outstanding shares of Norwest
Common Stock, the Board of
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Directors may exchange each Right, other than Rights owned by such
acquiror, for one share of Norwest Common Stock or one four-hundredth of a
Junior Preferred Share.
(3) In the event of certain business combinations involving Norwest or the
sale of 50% or more of the assets or earning power of Norwest, the Rights
permit holders of the Rights to purchase the stock of the acquiror at 50%
of market value.
The Junior Preferred Shares will not be redeemable. Each Junior Preferred
Share will be entitled to a minimum preferential quarterly dividend payment of
$1.00 per share but will be entitled to an aggregate dividend of 400 times the
dividend declared per share of Norwest Common Stock. In the event of
liquidation, the holders of the Junior Preferred Shares will be entitled to a
minimum preferential liquidation payment of $400.00 per share but will be
entitled to an aggregate payment of 400 times the payment made per share of
Norwest Common Stock. Each Junior Preferred Share will have 400 votes, voting
together with the Norwest Common Stock. Finally, in the event of any merger,
consolidation, or other Reorganization in which Norwest Common Stock is
exchanged, each Junior Preferred Share will be entitled to receive 400 times the
amount received per share of Norwest Common Stock. These rights are protected
by customary antidilution provisions.
At any time prior to the acquisition by a person or group of the triggering
percentage or more of the outstanding shares of Norwest Common Stock, the Board
of Directors may redeem the Rights in whole, but not in part, at a price of
$.0025 per Right (the "Redemption Price"). The redemption of the Rights may be
made effective at such time, on such basis, and with such conditions as the
Board of Directors in its sole discretion may establish. Immediately upon any
redemption of the Rights, the right to exercise the Rights will terminate and
the only remaining right of the holders of Rights will be to receive the
Redemption Price.
The Rights will expire on November 23, 1998, unless extended or earlier
redeemed by Norwest. Generally, the terms of the Rights may be amended by the
Board of Directors without the consent of the holders of the Rights.
REQUIRED VOTE FOR AUTHORIZATION OF CERTAIN ACTIONS
BANCSHARES. Under New Mexico law, the affirmative vote of the holders of a
majority of the voting power of all shares entitled to vote is required to
approve a plan of merger, consolidation, or exchange.
THE BANK. Under federal law, the affirmative vote of the holders of at
least two-thirds of the outstanding shares of Bank Common Stock is required to
approve a merger or consolidation.
NORWEST. Under Delaware law, the vote of a simple majority of the
outstanding shares of Norwest Common Stock entitled to vote thereon is required
to approve a merger or consolidation, or the sale, lease, or exchange of
substantially all of Norwest's corporate assets. With respect to a merger, no
vote of the stockholders of Norwest is required if Norwest is the surviving
corporation and (1) the related agreement of merger does not amend Norwest's
Certificate of Incorporation, (2) each share of stock of Norwest outstanding
immediately before the merger is an identical outstanding or treasury share of
Norwest after the merger, and (3) the number of shares of Norwest stock to be
issued in the merger (or to be issuable upon
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conversion of any convertible instruments to be issued in the merger) does not
exceed 20% of the shares of Norwest Common Stock outstanding immediately before
the merger.
DISSENTERS' RIGHTS
BANCSHARES. Under New Mexico law, shareholders of Bancshares are entitled
to exercise dissenters' rights and obtain payment of the fair value of their
shares. See the more detailed discussion below under "Rights of Dissenting
Shareholders."
THE BANK. Under federal law shareholders of the Bank are entitled to
receive payment of the value of their shares of Bank Common Stock if they
dissent from any merger or consolidation for which a vote of the Bank's
shareholders is required. See the more detailed discussion below under "Rights
of Dissenting Shareholders."
NORWEST. Under Delaware law a stockholder is generally entitled to receive
payment of the appraised value of such stockholder's shares if the stockholder
dissents from a merger or consolidation. However, appraisal rights are not
available to holders of (a) shares listed on a national securities exchange or
held of record by more than 2,000 persons or (b) shares of the corporation
surviving a merger, if the Merger did not require the approval of the
stockholders of such corporation, unless in either case, the holders of such
stock are required by the terms of the Merger to accept anything other than (i)
shares of stock of the surviving corporation, (ii) shares of stock of another
corporation which are also listed on a national securities exchange or held by
more than 2,000 holders, or (iii) cash in lieu of fractional shares of such
stock. Appraisal rights are not available for a sale of assets or an amendment
to the Certificate of Incorporation. Because shares of Norwest Common Stock are
listed on both the NYSE and the CHX, and Norwest has more than 2,000
stockholders of record, its stockholders are not, subject to the aforementioned
exceptions, entitled to any rights of appraisal in connection with mergers or
consolidations involving Norwest.
SPECIAL MEETINGS
BANCSHARES. Under New Mexico law and Bancshares's Bylaws, a special
meeting of shareholders may be called by Bancshares's President or its Board of
Directors, and shall be called upon the request of a majority of the Board of
Directors or the holders of not less than ten percent of the outstanding shares
of Bancshares Common Stock.
THE BANK. Under federal law and the Bank's Bylaws, a special meeting of
shareholders may be called by the Board of Directors or by shareholders owning
not less than 25% of the stock of the Bank.
NORWEST. Under Delaware law and the By-Laws of Norwest, a special meeting
of stockholders may be called only by the Chairman of the Board, a Vice
Chairman, the President, or a majority of the Board of Directors.
ANTITAKEOVER STATUTES
BANCSHARES. The laws of New Mexico do not include any statute that
regulates the accumulation of shares of voting stock of, or business
combinations with, New Mexico corporations.
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THE BANK. National banking associations are not covered by any specific
antitakeover statute. However, the acquisition of more than 5% of the capital
stock of a national bank requires the approval of federal regulatory agencies.
NORWEST. The Delaware antitakeover statute governs business combinations
between a publicly held Delaware corporation having certain numbers of
stockholders or listed on certain exchanges and an interested stockholder. This
statute is designed primarily to regulate the second step of a two-tiered
takeover attempt. Delaware law broadly defines a "business combination" as
including a merger, sale of assets, issuance of voting stock, and various other
types of transactions with an interested stockholder and other related parties.
An "interested stockholder" is defined as any person who beneficially owns,
directly or indirectly, 15% or more of the outstanding voting stock of a
corporation. Delaware law prohibits a corporation from engaging in a business
combination with an interested stockholder for a period of three years following
the date on which the stockholder became an interested stockholder, unless (a)
the board of directors approved the business combination before the stockholder
became an interested stockholder, (b) upon consummation of the transaction which
resulted in the stockholder becoming an interested stockholder, such stockholder
owned at least 85% of the voting stock outstanding when the transaction began,
excluding in computing such percentage shares held by certain types of
stockholders, or (c) the board of directors approved the business combination
after the stockholder became an interested stockholder and the business
combination was approved by at least two-thirds of the outstanding voting stock
not owned by such stockholder.
In addition to being subject to the laws of Delaware, Norwest, as a bank
holding company, is subject to various provisions of federal law with respect to
mergers, consolidations, and certain other corporate transactions.
RIGHTS OF DISSENTING SHAREHOLDERS
BANCSHARES
Shareholders of Bancshares are entitled to exercise dissenters' rights
under Section 53-15-4 of the New Mexico Business Corporation Act (the "NMBCA").
Shareholders electing to demand the appraisal of their shares must deliver a
written objection to the Merger to Bancshares before the taking of the vote on
the Merger. If the Merger is approved, the shareholder may, within ten days
after the date on which the vote on the Merger is taken, make written demand on
Bancshares, as the surviving corporation, for payment of the fair value of the
shareholder's shares. Such demand will be sufficient if it reasonably informs
Bancshares of the identity of the shareholder and that the shareholder intends
thereby to demand the appraisal of the shareholder's shares. Because a proxy or
vote against the Merger will not constitute such a demand, a separate written
demand is required.
Within ten days after the Effective Date of the Merger, Bancshares will
notify each shareholder who has made a demand for appraisal as of the Effective
Date of the Merger. If, within 30 days after the Effective Date of the Merger,
the shareholder and Bancshares reach an agreement as to the fair value of the
shareholder's shares, Bancshares will remit the fair value payment agreed upon
to the shareholder within 90 days after the Effective Date of the Merger. If
Bancshares and the shareholder do not agree upon the fair value of the
shareholder's shares
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within such 30-day period, Bancshares is required to file a petition in the
Sixth Judicial District Court, County of Grant, State of New Mexico (the
"Court"), asking that the Court determine the fair value of the shares. If
Bancshares fails to file such a petition, any shareholder demanding appraisal
rights may do so on Bancshares behalf. All shareholders asserting appraisal
rights will be made parties to any court action filed to determine such fair
value. Notwithstanding the foregoing, at any time within 60 days after the
Effective Date of the Merger, dissenting shareholders have the right to withdraw
their demand for appraisal and to accept the terms offered in the Merger.
At a hearing on a petition for appraisal, the Court is directed to
determine which shareholders have complied with the provisions of Section 53-15-
4 and are therefore entitled to appraisal rights. The Court is then directed to
appraise the shares, determining their fair value exclusive of any element of
value arising from the accomplishment or expectation of the Merger, together
with a fair rate of interest, if any, to be paid upon the amount determined to
be the fair value. In determining the fair value of the shares, the Court is
required to take into account all relevant factors. The fair value of the
shares, as determined by the Court, together with interest, if any, will be
required to be paid by Bancshares to all dissenting holders of Bancshares Common
Stock who have complied with Section 53-15-4.
From and after the Effective Date of the Merger, no shareholder who has
demanded appraisal rights will be entitled to vote such shareholder's shares of
the Bancshares Common Stock for any purpose or to receive payment of dividends
or other distributions on such stock.
Any demands, notices, or other documents required to be sent to Bancshares
should be sent to Bancshares at the address at the forepart of this Proxy
Statement-Prospectus.
THE FOREGOING SUMMARY OF DISSENTERS' RIGHTS DOES NOT PURPORT TO BE A
COMPLETE STATEMENT OF THE PROCEDURE OUTLINED IN THE RELEVANT PROVISIONS OF THE
NMBCA, WHICH ARE REPRODUCED IN THEIR ENTIRETY AS EXHIBIT C TO THIS PROXY
STATEMENT-PROSPECTUS. FURTHERMORE, BECAUSE OF THE COMPLEXITY OF THE PROCEDURES
DESCRIBED ABOVE, ANY SHAREHOLDER WISHING TO EXERCISE THE RIGHT TO AN APPRAISAL
MAY WISH TO CONSULT WITH COUNSEL.
BANK
Title 12, Section 215, of the United States Code provides that any
shareholder of either of the parties to a consolidation involving a national
bank who objects to the proposed consolidation has the right to receive payment
in cash of the value of such shareholder's shares as of the effective date of
the consolidation, if and when the consolidation is consummated, subject to
certain conditions. These conditions, in the case of a shareholder of the Bank,
are that: (i) the shareholder must have voted against approval of the
Consolidation at the Bank Special Meeting or given notice in writing at, or
prior to, the Bank Special Meeting to the presiding officer that such
shareholder dissents from the proposed Consolidation; (ii) the shareholder must,
within 30 days after the effective date of the Consolidation, make a written
request for payment to the surviving bank; and (iii) the written request must be
accompanied by surrender of the shareholder's stock certificate(s). Any
shareholder of the Bank who votes against the Consolidation at the Bank Special
Meeting, or who gives notice in writing at, or prior to, the Bank Special
Meeting to the presiding officer that such shareholder dissents, will be
notified in writing of the effective date of the Consolidation.
37
<PAGE>
Failure to comply with each of the foregoing conditions will result in the loss
of the appraisal rights described herein.
The value of the shares of any dissenting shareholder shall be determined
by an appraisal made by a committee of three persons, one to be selected by the
majority vote of the dissenting shareholders, one by the Board of Directors of
the surviving bank, and the third by the two so chosen. The valuation agreed
upon by any two of the three appraisers shall govern. If the value so fixed is
not satisfactory to any dissenting shareholder, that shareholder may, within
five days after being notified of the appraised value of such shareholder's
shares, appeal to the Comptroller of the Currency, who shall cause a reappraisal
to be made which shall be final and binding as to the value of such shares. If
a shareholder dissents and, within 90 days from the date of consummation of the
Consolidation, one or more of the appraisers is not selected as above provided
for any reason, or the appraisers fail to determine the value of such shares,
the Comptroller shall, upon written request of any interested party, cause an
appraisal to be made which shall be final and binding on all parties. The
expenses of the Comptroller in making the reappraisal or the appraisal, as the
case may be, shall be paid by the surviving bank. The value of the shares
ascertained shall be promptly paid to the dissenting shareholder by the
surviving bank.
The foregoing summary does not purport to be a complete statement of the
provisions of Section 215 and is qualified in its entirety by reference to the
relevant provisions of Section 215, the text of which is attached hereto as
Exhibit D. Any shareholder of the Bank who desires to exercise dissenters'
appraisal rights should carefully review and comply with the relevant provisions
of Section 215. DISSENTERS' RIGHTS WILL BE LOST IF THE PROCEDURAL REQUIREMENTS
OF SECTION 215 ARE NOT FULLY AND PRECISELY SATISFIED.
Attached hereto as Appendix E is a copy of Banking Circular 259 regarding
the valuation methods used by the Comptroller to estimate the value of a bank's
shares when the Comptroller is involved in the appraisal of shares held by
dissenting shareholders. The results of appraisals performed by the Comptroller
for transactions that were consummated in 1989 and 1986 are also summarized in
Appendix E. EACH SHAREHOLDER OF THE BANK SHOULD FULLY CONSIDER APPENDIX E
BEFORE DECIDING WHETHER TO EXERCISE DISSENTERS' RIGHTS.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The description of certain federal income tax considerations with respect
to the Merger and the Consolidation is included solely for the information of
shareholders of Bancshares and of the Bank. No information is provided with
respect to the consequences of any applicable state, local or foreign tax laws.
Applicability of the alternative minimum tax and other tax consequences of the
Merger and the Consolidation to a shareholder may depend upon the individual
situation of the shareholder. Furthermore, special tax considerations may apply
to shareholders who are insurance companies, securities dealers, financial
institutions, and foreign persons. Therefore, each shareholder is urged to
consult his or her own tax advisor concerning the specific tax consequences of
the Merger and the Consolidation to such shareholder.
It is intended that the Merger and the Consolidation will be treated as
reorganizations within the meaning of Section 368(a) of the Code and that,
accordingly, for federal income tax purposes, (i) no gain or loss will be
recognized by the holders of Bancshares Common Stock or
38
<PAGE>
Bank Common Stock upon the receipt of Norwest Common Stock in exchange for such
Bancshares Common Stock or Bank Common Stock pursuant to the Merger or the
Consolidation, except as discussed below with respect to cash received in lieu
of a fractional share interest in Norwest Common Stock; and (ii) the aggregate
adjusted tax basis of the shares of Norwest Common Stock received by
shareholders of Bancshares or the Bank pursuant to the Merger and the
Consolidation will be the same as the aggregate adjusted tax basis of the shares
of Bancshares or Bank Common Stock surrendered in exchange therefor (reduced by
the amount allocable to fractional share interests for which cash is received);
and (iii) the holding period of the shares of Norwest Common Stock received by
shareholders of Bancshares or the Bank will include the holding period of the
Bancshares Common Stock or the Bank Common Stock exchanged therefor provided the
shares of Bancshares or Bank Common Stock were held as a capital asset as of the
Effective Time of the Merger or the Effective Time of the Consolidation, as the
case may be.
Consummation of the Merger is conditioned upon receipt by Bancshares and
the Bank of the opinion of Rothgerber, Appel, Powers & Johnson to the effect
that, on the basis of facts, representations, and assumptions set forth or
referred to in such opinion, the material federal income tax consequences of the
Merger and the Consolidation under current law will be as set forth above.
Bancshares and the Bank do not intend to apply for a ruling from the IRS
with respect to the federal income tax consequences of the Merger and the
Consolidation. Instead, they intend to rely on the tax opinion of legal counsel
referred to above. An opinion of counsel is not binding upon the IRS or the
courts. The tax opinions will be based upon certain factual assumptions and
upon certain representations and assurances made by Bancshares and the Bank.
The tax opinion will not address the consequences of the Merger and the
Consolidation on the shareholders under applicable state or local income tax
laws.
One of the requirements for tax-free reorganization treatment is that
shareholders of the acquired corporation acquire a substantial and continuing
interest in the acquiring corporation. The tax opinion will be based on the
assumption that the shareholders of Bancshares and the Bank have no plan or
intention at the time of the Merger and the Consolidation to sell or otherwise
dispose of an amount of Norwest Common Stock to be received in the Merger or the
Consolidation that would reduce their aggregate ownership of Norwest Common
Stock to a number of shares having in the aggregate a value at the time of the
Merger and the Consolidation of less than 50% of the total value of the
Bancshares and Bank Common Stock outstanding immediately prior to the Merger and
the Consolidation. For purposes of such determination, shares of Bancshares and
Bank Common Stock that are exchanged for cash or other property, or surrendered
by dissenters, or exchanged for cash in lieu of the issuance of fractional
shares of Norwest Common Stock, will be treated as outstanding shares of
Bancshares and Bank Common Stock immediately prior to the Merger and the
Consolidation.
Any cash received by the holders of Bancshares and Bank Common Stock,
whether pursuant to the exercise of dissenters' rights or in lieu of a
fractional share of Norwest Common Stock, will be treated as having been
received in redemption of the shares or fractional share interest so cashed out
and will result in taxable gain or loss. The amount of such gain or loss will
be the difference between the cash received and the basis of the shares or the
fractional share interest surrendered in exchange therefor. Provided the shares
or the fractional share was held as a capital asset at the time of the
redemption, such gain or loss will
39
<PAGE>
constitute capital gain or loss, and such gain or loss will be long-term capital
gain or loss if the holding period for such shares or fractional share interest
was greater than one year.
Shareholders should also be aware that the IRS may examine transactions
taking place before, contemporaneously with, or after a reorganization to
determine whether reorganization treatment is appropriate, or in some cases to
determine whether shareholders will be taxed on other economic benefits that are
included as part of the overall transaction. Thus, loan transactions between
parties, compensation arrangements, noncompete agreements, consulting
arrangements, and other transactions could be reviewed by the IRS and determined
to constitute taxable income to specific parties to the Merger or the
Consolidation or could be a basis for assertion that reorganization treatment is
not appropriate to the Merger or the Consolidation. Furthermore, if the IRS
were to establish as to some shareholders that part of the Norwest Common Stock
received in the Merger or the Consolidation is severable from the Merger or the
Consolidation, resulting in a proportionally increased equity interest being
received in the Merger or the Consolidation by other shareholders, the
shareholders whose equity interests were deemed to be constructively increased
by the Merger or the Consolidation may be treated as having received a taxable
stock dividend. Thus, notwithstanding the tax opinion, shareholders should
consult with their tax advisors as to the tax consequences of the Merger or the
Consolidation.
Under Section 3406 of the Code, shareholders may be subject to "backup
withholding" at the rate of 31% on "reportable payments" to be received by them
if they fail to furnish their correct taxpayer identification numbers or for
certain other reasons. Norwest will report to these persons and to the IRS for
each calendar year the amount of any reportable payments during that year and
the amount of tax withheld, if any, with respect to those reportable payments.
The Code also imposes an alternative minimum tax and excise taxes on
certain types of transactions. Applicability of such taxes is usually
controlled, in whole or part, by other matters unrelated to the Merger or the
Consolidation or by the unique characteristics of the particular taxpayer.
Accordingly, shareholders are encouraged to consult their tax advisors if they
are or might be subject to such taxes.
Resale of Norwest Common Stock
The shares of Norwest Common Stock issuable to shareholders of Bancshares
and the Bank upon consummation of the Reorganization have been registered under
the Securities Act of 1933 (the "Securities Act"). Such shares may be traded
freely and without restriction by those shareholders not deemed to be
"affiliates" of Bancshares, the Bank, or Norwest as that term is defined in the
rules under the Securities Act. Norwest Common Stock received by those
shareholders of Bancshares or of the Bank who are deemed to be "affiliates" of
Bancshares or the Bank, as the case may be, may be resold without registration
as provided for by Rule 145, or as otherwise permitted under the Securities Act.
In the Merger Agreement, Bancshares has agreed to use its best efforts to cause
each Bancshares shareholder who is an executive officer or director of
Bancshares or who may otherwise reasonably be deemed to be an affiliate of
Bancshares to enter into an agreement with Norwest providing that such affiliate
will not sell, transfer, or otherwise dispose of the shares of Norwest Common
Stock to be received by such person in the Merger except in compliance with the
applicable provisions of the Securities Act and the rules and regulations
promulgated thereunder. This Proxy
40
<PAGE>
Statement-Prospectus does not cover any resales of Norwest Common Stock received
by affiliates of Bancshares or the Bank.
The Merger Agreement provides for the filing by Norwest of listing
applications with the NYSE and the CHX covering the shares of Norwest Common
Stock issuable upon consummation of the Reorganization. It is a condition to
the consummation of the Merger that such shares of Norwest Common Stock shall
have been authorized for listing on the NYSE and the CHX effective upon official
notice of issuance.
DIVIDEND REINVESTMENT AND OPTIONAL CASH PAYMENT PLAN
For those stockholders who elect to participate in Norwest's Dividend
Reinvestment and Optional Cash Payment Plan, dividends on Norwest Common Stock
will be reinvested in shares of Norwest Common Stock at market price (as
defined). The plan also permits participants to invest through voluntary cash
payments, within certain dollar limitations, in additional shares of Norwest
Common Stock at the market price (as defined) of such stock at the time of
purchase. It is anticipated that after the Effective Times, Norwest will
continue to offer its Dividend Reinvestment and Optional Cash Payment Plan and
that shareholders of Bancshares and of the Bank who receive Norwest Common Stock
in the Reorganization will have the right to participate in the Plan.
ACCOUNTING TREATMENT
Notwithstanding any provisions of the Merger Agreement to the contrary,
Norwest anticipates that it will account for the Reorganization as a purchase
transaction in accordance with generally accepted accounting principles.
EXPENSES
Norwest and Bancshares will each pay their own expenses in connection with
the Reorganization, including fees and expenses of their respective accountants
and counsel.
41
<PAGE>
INFORMATION ABOUT BANCSHARES AND THE BANK
BUSINESS
Bancshares was incorporated under the laws of the State of New Mexico on
July 17, 1979, for the purpose of forming a one-bank holding company. On August
16, 1979, Bancshares acquired The American National Bank of Silver City, which
had its main office in Silver City and branches in Hurley, New Mexico, and
Bayard, New Mexico. Bancshares became a bank holding company subject to the
supervision of the Federal Reserve Board in accordance with the BHCA. The Bank
remains subject to the supervision of the OCC and the Federal Deposit Insurance
Corporation (the "FDIC"). The Bank remains the only subsidiary of Bancshares.
The predecessor to the Bank was incorporated as a New Mexico banking
corporation on March 2, 1906.
The Bank engages in the business of general commercial banking primarily in
Grant County, New Mexico, as well as portions of Catron, Luna, and Hidalgo
Counties. The Bank currently has a main office and three branches. The present
main office was opened in March 1983, the Hurley branch in 1974, the Bayard
branch in 1973, and the Hudson branch in 1969.
GENERAL BANKING SERVICES
The Bank conducts a commercial banking business including accepting demand,
savings, and time deposits, and making commercial, real estate, and consumer
loans. It also offers escrow note collection, issues cashier's checks and money
orders, sells traveler's checks, and provides safe deposit boxes and other
customary banking services. The Bank does have trust powers.
The Bank's operation emphasizes retail banking. Most of the Bank's
customers are retail customers and small sized businesses. The Bank also
emphasizes servicing the needs of local businesses, ranchers, retired
individuals, and wage earners.
Most of the Bank's depositors are attracted from individuals and business
related sources. No single person or group of persons provides a material
portion of the bank's deposits, the loss of any one or more of which would have
a materially adverse effect on the business of the bank.
In order to attract loan and deposit business from individuals and small
sized businesses, branches of the Bank set lobby hours to accommodate local
demands. In general, lobby hours are from 9:00 a.m. to 3:00 p.m., Monday
through Thursday, and from 9:00 a.m. to 5:00 p.m. on Friday. The Bank also
provides Saturday banking from 9:00 a.m. to 12:00 p.m. and all drive-up
locations are open 9:00 a.m. to 6:00 p.m., Monday through Friday.
The Bank offers a 24-hour ATM at its main office. The ATM is linked to
several national and regional networks such as CIRRUS, Lynx, and Pulse.
42
<PAGE>
MARKET PRICE AND DIVIDENDS
There has never been an established public trading market for Bancshares
Common Stock or Bank Common Stock. At March 31, 1994, Bancshares had 148
shareholders of record, and the Bank had 15 shareholders of record.
The following table sets forth the amount of cash dividends paid per share
of Bancshares Common Stock and Bank Common Stock in each of the years indicated
and for the period ended March 31, 1994. In 1992 two dividend payments were
made on Bank Common Stock. There were 109,980 shares of Bancshares's Common
Stock and 129,600 shares of the Bank's Common Stock outstanding throughout those
periods. See "SUMMARY--Comparative Unaudited Per Share Data."
Cash Dividends Paid per Share
---------------------------------------------
Period Bancshares Common Stock Bank Common Stock
- ------------------------ ----------------------- -------------------
1992 $ 3.00 $ 2.80
1993 12.00 12.00
Three months ended 13.46 12.64
March 31, 1994
43
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS OF COPPER BANCSHARES, INC.
FINANCIAL REVIEW
GENERAL
The following is management's discussion and analysis of the significant factors
affecting Copper Bancshares, Inc.'s financial condition and results of
operations. This should be read in conjunction with Copper Bancshares, Inc.'s
audited and unaudited financial statements and accompanying footnotes and other
selected financial data presented elsewhere herein.
Copper Bancshares, Inc. is a one-bank holding company, which owns 98.84% of the
common stock of The American National Bank of Silver City, New Mexico.
FINANCIAL CONDITION
Total assets increased by $1,169,000 during the first three months of 1994 to
$100,787,000 at March 31, 1994 following a decrease of $1,734,000 during 1993
to $99,618,000 at December 31, 1993. The 1994 increase is reflected primarily
in investment securities while the 1993 decrease was reflected primarily in
Federal funds sold and cash.
Loans increased in the first three months of 1994 by $468,000 to
$38,658,000 at March 31, 1994 and decreased $1,043,000 during 1993 to
$39,126,000 at December 31, 1993. A decline occured in real estate and consumer
loans which was partially offset by an increase in commercial loans.
Investment securities increased in the first three months of 1994
by $2,837,000 to $47,426,000 at March 31, 1994 following an increase of
$1,108,000 during 1993 to $44,589,000 at December 31, 1993. Substantially all
of the 1994 increase is reflected in U.S. Treasury securities.
COMPARISON OF THREE MONTHS ENDED MARCH 31, 1994 AND 1993
EARNINGS PERFORMANCE
Copper Bancshares, Inc. earned net income of $324,000 and $350,000 for the three
months ended March 31, 1994, and 1993 respectively. The 1993 earnings include
$45,000 as the "cumulative effect of accounting change", resulting from the
adoption by the Company of SFAS No. 109 as of the beginning of its 1993 fiscal
year. The annualized return on average assets was 1.29% for the first three
months of 1994, compared to 1.41% for the first three months of 1993.
Annualized return on average stockholders' equity was 15.23% for the first three
months of 1994, compared to 16.53% for the first three months of 1993. On a per
share basis, net income for the first three months of 1994 and 1993 was $2.94
and $3.18 (including $0.41 relating to the cumulative effect of accounting
change), respectively.
44
<PAGE>
The following is a condensed summary of the statements of earnings (dollars in
thousands):
<TABLE>
<CAPTION>
Three months
ended
March 31,
---------
1994 1993
- -----------------------------------------------------------------
<S> <C> <C>
Net interest income $ 1,035 $ 1,086
Provision for loan losses 15 60
Non-interest income 124 116
Non-interest expense 742 754
Net income 324 350
</TABLE>
NET INTEREST INCOME
Net interest income is affected by changes in both interest rates and the volume
of average earning assets and interest-bearing liabilities.
The following table is provided to show the percentage of change in interest
income and expenses of significant interest-bearing assets and liabilities:
<TABLE>
<CAPTION>
Three months
ended
March 31,
(dollars in Percentage
thousands) increase
----------
1994 1993 (decrease)
- ---------------------------------------------------------------
<S> <C> <C> <C>
Interest income:
Loans $994 $1,021 ( 2.6)%
Securities 548 664 (17.5)
Federal funds sold 54 31 74.2
Interest-bearing deposits 13 13 --
----------------------------------------------
Total interest income 1,609 1,729 ( 6.9)
- -------------------------------------------------------------
Interest expense:
Deposits 560 627 (10.7)
Long-term debt 14 16 (12.5)
- ------------------------------------------------
Total interest expense 574 643 (10.7)
- -------------------------------------------------------------
NET INTEREST INCOME $1,035 $1,086 ( 4.7)%
- --------------------------------------------------------------
</TABLE>
45
<PAGE>
The following table is provided to show changes in interest income and expense
attributable to changes in volume and interest rates of significant
interest-earning assets and interest-bearing liabilities:
<TABLE>
<CAPTION>
Three months ended
March 31, 1994-1993
(dollars in thousands)
- -------------------------------------------------------------
Attributable to change
Total ----------------------
change in volume in rate
- -------------------------------------------------------------
<S> <C> <C> <C>
Interest-earning Assets
Loans $( 27) $( 45) $ 18
Securities ( 116) 222 ( 338)
Federal funds sold 23 ( 3) 26
Interest-bearing deposits 0 0 0
- -----------------------------------------------------------
TOTAL INTEREST INCOME ( 120) 174 ( 294)
- -----------------------------------------------------------
Interest bearing Liabilities
Deposits ( 67) ( 6 ( 61)
Long-term debt ( 2) ( 2)
- -------------------------------------------------------------
TOTAL INTEREST EXPENSE $( 69) ( 8) $( 61)
- -------------------------------------------------------------
</TABLE>
The change in interest income/expense attributable to volume reflects the change
in volume times the prior period's rate and the change in interest
income/expense attributable to rate reflects the change in rates times the prior
period's volume. The change due to combined rate/volume variance is allocated
to the change due to rate and the change due to volume on the basis of the
percentage of the total change excluding the combined rate/volume component.
46
<PAGE>
The following table presents average asset and liability balances and percentage
changes:
<TABLE>
<CAPTION>
Three months
ended
March 31, Percentage
(dollars in increase
thousands) (decrease)
-----------------------------
1994 1993 1994/93
- ---------------------------------------------------------------
<S> <C> <C> <C>
Loans $38,892 $40,708 ( 4.6)%
Securities 46,008 41,951 9.7
Federal funds sold 5,740 6,433 (10.8)
Interest-bearing deposits 1,500 1,500 0
- ---------------------------------------------------
TOTAL AVERAGE
INTEREST-EARNING ASSETS 92,140 90,592 1.7
- ---------------------------------------------------
Deposits:
Non-interest bearing demand 16,752 14,674 14.2
Interest-bearing demand 25,109 23,852 5.3
Savings 15,154 13,452 12.7
Time 33,251 36,954 (10.0)
- ---------------------------------------------------
TOTAL AVERAGE
INTEREST-BEARING DEPOSITS 73,514 74,258 ( 1.0)
Long-term debt 918 1,078 (14.8)
- ---------------------------------------------------
TOTAL AVERAGE
INTEREST-BEARING
LIABILITIES $74,432 $75,336 ( 1.2)%
- ---------------------------------------------------
</TABLE>
47
<PAGE>
The following table shows the annualized average interest yield on
interest-earning assets and the annualized average interest rate paid on
interest-bearing liabilities:
<TABLE>
<CAPTION>
Three months
ended
March 31,
---------
1994 1993
- ---------------------------------------------------------------
<S> <C> <C>
Average yield earned:
Loans 10.22% 10.03%
Securities 4.76 6.33
Federal funds sold 3.76 1.93
Interest-bearing deposits 3.47 3.47
Total interest-earning assets 6.99 7.63
- ---------------------------------------------------------------
Average rates paid:
Interest-bearing deposits 3.05 3.38
Long-term debt 6.10 5.94
Total interest-bearing liabilities 3.08 3.41
- ---------------------------------------------------------------
INTEREST RATE SPREAD 3.91% 4.22%
- ---------------------------------------------------------------
</TABLE>
The following table shows the annualized net yield on interest-earning assets
for the three months ended March 31:
<TABLE>
<CAPTION>
1994 1993
- ---------------------------------------------------------------
<S> <C> <C>
Average yield earned 6.99% 7.63%
Interest expense to average earning assets 2.49 2.84
--------------------------------------------------------------
NET YIELD ON INTEREST-EARNING ASSETS 4.50% 4.79%
--------------------------------------------------------------
</TABLE>
Net interest income was $1,035,000 for the first three months of 1994, compared
with $1,086,000 for the same period of 1993. The decrease is due primarily to
lower rates of return on investment securities.
Total interest income decreased to $1,609,000 or 6.99% for the first three
months of 1994 as compared to $1,729,000 for the same period of 1993. Average
interest-earning assets increased to $92,140,000 for the three months ended
March 31, 1994 from $90,592,000 for the three months ended March 31, 1993.
Earning assets yield declined to 6.99% for the 1994 period compared to 7.63% for
the 1993 period.
Total interest expense for the first three months of 1994 of $574,000 declined
from $643,000 for the same period of 1993. This decline was attributed
primarily to rates on interest-bearing liabilities declining to 3.05% in 1994,
from 3.38% in 1993. The 33 basis point decline from 1993 to 1994 was caused by
the general economic and market conditions which moved interest rates lower in
1994.
48
<PAGE>
PROVISION FOR LOAN LOSSES
The allowance for loan losses is determined based on management's evaluation of
the loan portfolio, economic conditions, prior loss experience, review of
specific problem loans, and other pertinent factors. Actual losses on loans are
charged against this allowance and recoveries on charged-off loans are credited
to this allowance. Copper Bancshares, Inc.'s provision for loan losses was
$15,000 and $60,000 for the first three months of 1994 and 1993, respectively.
Net charge-offs were $12,000 for the first three months of 1994 and $84,000 for
the same period of 1993. The allowance for loan losses as a percentage of loans
was 1.56% and 1.31% at March 31, 1994 and 1993, respectively.
NON-INTEREST INCOME
Non-interest income increased to $124,000 for the first three months of 1994
compared to $116,000 for the same period of 1993.
NON-INTEREST EXPENSE
The following table presents a summary of non-interest expenses (dollars in
thousands) and percentage changes:
<TABLE>
<CAPTION>
Percentage
increase
1994 1993 (decrease)
- ---------------------------------------------------------------
<S> <C> <C> <C>
Salaries/employee benefits $ 411 $ 399 3.0%
Net occupancy expense 48 35 37.1
Other expenses 283 320 (11.6)
- ---------------------------------------------------------------
Total $ 742 $ 754 ( 1.6)%
- ---------------------------------------------------------------
</TABLE>
Total non-interest expenses decreased to $742,000 for the first three months of
1994, compared to $754,000 for the same period of 1993. The decrease reflects
the reduction of $30,000 in write-down of other real estate owned.
COMPARISON OF YEARS ENDED DECEMBER 31, 1993, 1992, AND 1991
EARNINGS PERFORMANCE
Net earnings for Copper Bancshares, Inc. were $1,451,000 in 1993, $1,062,000 in
1992, and $724,000 in 1991. The increase in net earnings from 1992 to 1993 of
$389,000 was due primarily to the reduction in the provision for loan losses of
$300,000 and the recognition of a "cumulative effect of accounting change" of
$45,000. The increase in net earnings from 1991 to 1992 of $338,000 was
primarily due to an increase in net interest income
49
<PAGE>
after provision for loan losses. The return on assets was 1.44% in 1993
compared to 1.07% in 1992 and 0.77% in 1991. Return on average stockholders'
equity was 16.10% in 1993 compared to 12.38% in 1992 and 9.22% in 1991. On a
per share basis, net earnings for the years 1993, 1992 and 1991 were $13.19,
$9.66, and $6.58, respectively. The amount for 1993 includes $0.41 relating to
the cumulative effect of accounting change. The return on average assets from
The American National Bank of Silver City was 1.55% in 1993, 1.18% in 1992 and
0.90% in 1991.
The following is a condensed summary of the statements of operations (dollars in
thousands):
<TABLE>
<CAPTION>
1993 1992 1991
--------------------------------------------------------
<S> <C> <C> <C>
Net interest income $4,414 $4,080 $3,500
Provision for loan losses 200 500 345
Operating income 647 594 540
Operating expense 3,087 2,909 2,777
Net income 1,451 1,062 724
</TABLE>
NET INTEREST INCOME
Net interest income is affected by changes in both interest rates and the volume
of average earnings assets and interest-bearing liabilities.
The following table is provided to show the percentage of change in interest
income and expense of significant interest-bearing assets and liabilities:
<TABLE>
<CAPTION>
Percentage-increase
Dollars (in thousands) (decrease)
---------------------- -------------------
1993 1992 1991 1993/92 1992/91
- ---------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Interest income:
Loans $4,355 $4,385 $4,643 ( 0.7)% ( 5.6)%
Securities 2,312 2,523 2,027 ( 8.4) 24.5
Federal funds sold 106 295 1,013 (64.1) (70.8)
Interest-bearing
deposits 49 71 108 (31.0) (34.3)
- -------------------------------------------
Total interest
income 6,822 7,274 7,791 ( 6.2) ( 6.6)
- -------------------------------------------
Interest expense:
Deposits 2,347 3,117 4,182 (24.7) (25.5)
Long-term debt 61 77 109 (20.8) (29.4)
- -------------------------------------------
Total interest
expense 2,408 3,194 4,291 (24.6) (25.6)
- -------------------------------------------
NET INTEREST INCOME $4,414 $4,080 $3,500 8.2% 16.5%
- -------------------------------------------
</TABLE>
50
<PAGE>
The following table is provided to show changes in interest income and expense
attributable to changes in volume and interest rates of significant
interest-earning assets and interest-bearing liabilities:
<TABLE>
<CAPTION>
1993-1992
(dollars in thousands)
Attributable to change
Total ----------------------
change in volume in rate
- ---------------------------------------------------------------
<S> <C> <C> <C>
Interest-earning Assets
Loans $( 30) $( 134) $ 104
Securities ( 211) 81 ( 292)
Federal funds sold ( 189) ( 80) ( 109)
Interest-bearing deposits ( 22) -- ( 22)
- ---------------------------------------------------------------
TOTAL INTEREST INCOME ( 452) ( 133) ( 319)
- ---------------------------------------------------------------
Interest-bearing Liabilities
Deposits ( 770) ( 142) ( 628)
Long-term debt ( 16) ( 7) ( 9)
- ---------------------------------------------------------------
TOTAL INTEREST EXPENSE $( 786) $( 149) $( 628)
- ---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
1992-1991
(dollars in thousands)
Attributable to change
Total ----------------------
change in volume in rate
- ----------------------------------------------------------------
<S> <C> <C> <C>
Interest-earning Assets
Loans $( 258) $ 108 $( 366)
Securities 496 1,849 (1,353)
Federal funds sold ( 718) ( 489) ( 229)
Interest-bearing deposits ( 37) -- ( 37)
- ---------------------------------------------------------------
TOTAL INTEREST INCOME ( 517) 1,468 (1,985)
- ---------------------------------------------------------------
Interest-bearing Liabilities
Deposits (1,065) 226 (1,291)
Long-term debt ( 32) ( 10) ( 22)
- ---------------------------------------------------------------
TOTAL INTEREST EXPENSE $(1,097) $ 216 $(1,313)
- ---------------------------------------------------------------
</TABLE>
The change in interest income/expense attributable to volume reflects the change
in volume times the prior year's rate and the change in interest income/expense
attributable to rate reflects the change in rates times the prior year's volume.
The change due to combine rate/volume variance is allocated to the change due to
rate and the change due to volume on the basis of the percentage of the total
change excluding the combined rate/volume component.
51
<PAGE>
The following table presents average asset and liability balances and percentage
changes:
<TABLE>
<CAPTION>
Percentage increase
(Dollars in thousands) (decrease)
---------------------- ----------
1993 1992 1991 1993/92 1992/91
- ----------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Loans $39,648 $40,985 $40,055 ( 3.3)% 2.3 %
Securities 44,035 38,968 23,972 13.0 62.6
Federal funds sold 6,230 8,555 18,795 (27.1) (54.4)
Interest-bearing
deposits 1,500 1,500 1,500 0.0 0.0
- ---------------------------------------------
TOTAL AVERAGE
INTEREST-EARNING
ASSETS 91,413 90,008 84,322 1.6 6.7
- ---------------------------------------------
Deposits:
Non-interest bearing
demand 15,530 13,092 12,210 19.1 7.2
Interest-bearing
deposits 24,053 22,642 21,414 6.2 5.7
Savings 14,315 12,221 9,622 17.1 27.0
Time 35,949 41,058 40,996 (12.4) .2
- ---------------------------------------------
TOTAL AVERAGE
INTEREST-BEARING
DEPOSITS 74,317 75,921 72,032 ( 2.1) 5.4
- ---------------------------------------------
Long-term debt 1,058 1,168 1,282 ( 9.4) ( 8.9)
- ---------------------------------------------
TOTAL AVERAGE
INTEREST-BEARING
LIABILITIES $75,376 $77,089 $73,314 ( 2.2)% 5.1%
- ---------------------------------------------
</TABLE>
The following table shows the average interest yield on interest-earning assets
and the average interest rate paid on interest-bearing liabilities.
<TABLE>
<CAPTION>
1993 1992 1991
- ---------------------------------------------------------------
<S> <C> <C> <C>
Average yield earned:
Loans 10.98% 10.70% 11.59%
Securities 5.25 6.47 8.46
Federal funds sold 1.70 2.95 5.39
Interest-bearing deposits 3.27 4.73 7.20
TOTAL INTEREST-EARNING ASSETS 7.46 8.08 9.24
- ---------------------------------------------------------------
Average rates paid:
Interest-bearing deposits 3.16 4.10 5.81
Long-term debt 5.77 6.59 8.50
TOTAL INTEREST-BEARING LIABILITIES 3.19 4.14 5.85
- ---------------------------------------------------------------
INTEREST RATE SPREAD 4.27% 3.94% 3.39%
- ----------------------------------------------------------------
</TABLE>
52
<PAGE>
The following table shows the net yield on interest-earning assets:
<TABLE>
<CAPTION>
1993 1992 1991
- ----------------------------------------------------------------
<S> <C> <C> <C>
Average yield earned 7.46% 8.08% 9.24%
Interest expense to
average earning assets 2.63 3.55 5.09
- ----------------------------------------------------------------
Net yield on interest-earning assets 4.83% 4.53% 4.15%
- ----------------------------------------------------------------
</TABLE>
Net interest income was $4,414,000 in 1993, compared with $4,080,000 in 1992 and
$3,500,000 in 1991. During 1990 interest rates in the United States began a
general decline with short-term interest falling faster than long-term rates.
This trend continued through 1993.
Total interest income decreased to $6,822,000 or 6.2% in 1993 as compared to
$7,274,000 in 1992, which was down from $7,791,000 in 1991. Earning asset
yields declined to 7.46% in 1993 as compared to 8.08% and 9.24% in 1992 and
1991.
Total interest expense in 1993 of $2,408,000 declined from $3,194,000 in 1992
which was down from $4,291,000 in 1991. This decline was attributed primarily
to rates on interest-bearing liabilities declining to 3.19% in 1993, from 4.14%
in 1992 and 5.85% in 1991. The 95 basis point decline from 1992 to 1993 and the
171 basis point decline from 1991 to 1992 were caused by the general economic
and market conditions which moved interest rates lower in 1993 and 1992.
PROVISION FOR LOAN LOSSES
The allowance for loan losses is determined based on management's evaluation of
the loan portfolio, economic conditions, prior loss experience, review of
specific problem loans, and other pertinent factors. Actual losses on loans are
charged against this allowance and recoveries on charged-off loans are credited
to this allowance. Copper Bancshares, Inc.'s provision for loan losses was
$200,000, $500,000 and $345,000 in 1993, 1992 and 1991, respectively.
The allowance for loan losses as a percentage of loans was 1.54%, 1.39% and
.083% at December 31, 1993, 1992, and 1991, respectively.
NON-INTEREST INCOME
The following table presents a summary of non-interest income (dollars in
thousands) and percentage changes:
<TABLE>
<CAPTION>
Percentage increase
(decrease)
-------------------
1993 1992 1991 1993/92 1992/91
- ----------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Service charges
and fees $430 $409 $424 5.1% ( 3.5)%
Other 217 185 116 17.3 59.5
- ---------------------------------------
$647 $594 $540 8.9% 10.0%
- ---------------------------------------------------------------
</TABLE>
53
<PAGE>
Non-interest income increased 8.9% in 1993 over 1992 due to an increase in
service fee rates plus an increase in gain from sale of real estate mortgages to
The Federal Home Loan Mortgage Corporation (FHLMC). The increase in
non-interest income from 1991 to 1992 was substantially due to the gain realized
on the sale of real estate mortgages to FHLMC.
NON-INTEREST EXPENSES
The following table presents a summary of non-interest expenses (dollars in
thousands) and percentage changes:
<TABLE>
<CAPTION>
Percentage increase
(decrease)
----------
1993 1992 1991 1993/92 1992/91
- ------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Salaries and employee
benefits $1,664 $1,629 $1,581 2.1% 3.0%
Net occupancy expense 153 160 138 5.0 6.7
Other expenses 1,271 1,120 1,058 13.5 5.8
- -------------------------------------------------------------------
TOTAL $3,088 $2,909 $2,777 6.2% 4.8%
- ------------------------------------------------------------------
</TABLE>
Total non-interest expenses were $3,088,000 in 1993, compared to $2,909,000 in
1992 and $2,777,000 in 1991. The increase in 1993 is largely attributable to an
increase in salaries and employee benefits, write-down of other real estate
owned and an increase in data processing expenses. The increase in 1992 over
1991 was caused in part by an increase in salaries and employee benefits,
write-down of other real estate owned and an increased FDIC insurance
assessment. These increases were partially off-set by a decline in other
operating expenses.
Salaries and employee benefits increased to $1,664,000 in 1993, compared to
$1,629,000 in 1992 and $1,581,000 in 1991. The increase in 1993 and 1992
reflect annual increases in wage rates and in 1993, the annual employer
contribution of $25,000 to the company's 401(K) savings plan.
Write-down of other real estate owned of $89,000 was made in 1993 and $61,000 in
1992.
Data processing expenses increased $59,000 or 63.8% in 1993 as a result of the
installation of a new data processing system.
FDIC insurance assessment increased $22,000 or 12.8% in 1992 over 1991. The
increase was due to the impact of increased premium rates as well as an
increased level of deposits.
54
<PAGE>
INCOME TAXES
Copper Bancshares, Inc. adopted SFAS No. 109 ACCOUNTING FOR INCOME TAXES as of
the beginning of its 1993 fiscal year. The effect of this change in the method
of accounting for income taxes is reported in the financial statements as
"cumulative effect of accounting change", which amounted to $45,000. Under the
previous method of accounting for income taxes (APB 11), deferred income taxes
or credits were computed based upon the difference between taxes computed with
and without temporary differences for the current year. These differences were
accumulated as the total deferred tax asset or liability. Changes in tax law or
rates were only reflected in the calculation for the current year.
Under the accounting methods prescribed by SFAS No. 109, the so-called temporary
differences between financial and tax bases of assets and liabilities are
accumulated and the income tax consequences of these differences are calculated
by applying the current applicable tax rates.
Income taxes for each of the years 1993, 1992, and 1991 was less than the
"expected" tax expense computed by applying the applicable federal rates as a
result of the following (dollars in thousands):
<TABLE>
<CAPTION>
1993 1992 1991
---------------------------------
<S> <C> <C> <C>
Federal income tax expense
at statutory rates $603 $430 $312
Increase (reduction) in
taxes resulting from:
Tax exempt interest (330) (241) (144)
Other 77 -0- 17
- ---------------------------------------------------------------
INCOME TAX EXPENSE $350 $189 $ 185
- ---------------------------------------------------------------
</TABLE>
STATEMENTS OF FINANCIAL ACCOUNTING STANDARDS
In May, 1993, the Financial Accounting Standard Board (FASB) issued Statement of
Financial Accounting Standards (SFAS) No. 114, ACCOUNTING BY CREDITORS FOR
IMPAIRMENT OF A LOAN, which requires that certain impaired loans be measured to
reflect the time value of money. SFAS No. 114 is required to be adopted for
fiscal years beginning after December 15, 1994. The impact of adoption of the
new accounting standards on the Copper Bancshares, Inc.'s financial statements
has not yet been determined.
In May 1993, the FASB issued SFAS No. 115, ACCOUNTING FOR CERTAIN INVESTMENTS IN
DEBT AND EQUITY SECURITIES. This statement addressed the accounting and
reporting for investments by classifying into three categories--securities held
to maturity, trading securities, and
55
<PAGE>
securities available for sale. The statement is effective for fiscal years
beginning after December 15, 1993. All investment securities held at December
31, 1993 and March 31, 1994 are classified as "held-to-maturity".
FUNDING SOURCES AND LIQUIDITY MANAGEMENT
Copper Bancshares, Inc. relies primarily on The American National Bank of Silver
City for its source of cash needs. The cash flow from the Bank to Copper
Bancshares, Inc. comes in the form of dividends and tax benefits. The American
National Bank is restricted in paying dividends due to the general regulatory
capital requirements that apply to all banks. See "Capital Management of The
American National Bank".
The Board of Directors of The American National Bank of Silver City's investment
committee is charged with the responsibility of maintaining an adequate level of
liquidity and managing the risks associated with interest rate changes while
sustaining stable growth in net interest income. The basic strategy is to
minimize interest rate risk through matching the repricing periods of earning
assets and interest-bearing liabilities.
CAPITAL MANAGEMENT OF COPPER BANCSHARES, INC.
Bank regulatory agencies measure capital adequacy through standardized
risk-based capital guidelines which compare different levels of capital (as
defined in such guidelines) to risk-weighted assets and off-balance sheet
obligations. Under the rules effective December 31, 1993, all financial
institutions are required to maintain a level of core capital (known as tier 1
capital) which must be at least 4.0% of risk-weighted assets, and a minimum
level of total capital of at least 8.0% of risk-weighted assets. Tier 1 capital
consists principally of stockholders' equity less goodwill. Total capital is
comprised of tier 1 capital, certain debt instruments and a portion of the
allowance for loan losses. Copper Bancshares, Inc.'s actual risk-based capital
requirement and excess risk-based capital at March 31, 1994 and December 31,
1993 (dollars in thousands) are summarized as follows:
56
<PAGE>
<TABLE>
<CAPTION>
March 31, 1994 December 31, 1993
-------------- -----------------
Amount Percent (1) Amount Percent (1)
- -----------------------------------------------------------------------
<S> <C> <C> <C> <C>
Tier 1 capital $7,950 $9,241
Allowable portion of allowance
for loan losses 566 755
- ---------------------------------------------------------------------
Total risk-based capital 8,516 19.60% 9,996 22.51%
- ---------------------------------------------------------------------
Risk-based capital
requirement 3,476 8.00 3,553 8.00
- ---------------------------------------------------------------------
Excess risk-based capital $5,040 11.60% $6,443 14.51%
- ---------------------------------------------------------------------
<FN>
(1) Percentage based on risk-weighted assets of $43,448 and $44,414 at March
31, 1994 and December 31, 1993, respectively.
</TABLE>
57
<PAGE>
COPPER BANCSHARES, INC. AND SUBSIDIARY
Selected Statistical Information
Average Balance Sheets and Average Yields Earned And Rate Paid
The following table sets forth certain selected statistical information and
should be read in conjunction with the consolidated financial statements of
Copper Bancshares, Inc. and The American National Bank of Silver City (dollars
in thousands):
<TABLE>
<CAPTION>
Three months ended March 31
---------------------------
1994 1993
------------------------ -------------------------
Average Average
Average Yield/ Average Yield/
ASSETS Balance Interest Rate(1) Balance Interest Rate(1)
- ----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Securities:
Taxable $22,752 $ 284 4.99% $23,381 $ 405 6.92%
Non-taxable 23,256 264 4.54 18,570 259 5.58
Loans 38,892 994 10.22 40,708 1,021 10.03
Federal funds sold 5,740 54 3.76 6,433 31 1.93
Interest-bearing
deposits 1,500 13 3.47 1,500 13 3.47
- -----------------------------------------------------------------------------
Total Earning Assets 92,140 1,609 6.99 90,592 1,729 7.63
- -----------------------------------------------------------------------------
Allowance for loan
losses ( 603) ( 549)
Cash and due from
banks 5,070 5,336
Other assets 3,595 3,671
- -----------------------------------------------------------------------------
TOTAL ASSETS 100,202 99,050
- -----------------------------------------------------------------------------
LIABILITIES AND
- ---------------
STOCKHOLDERS' EQUITY
- -----------------------------------------------------------------------------
Non-interest bearing
deposits 16,752 14,674
Interest-bearing
demand deposits 25,109 146 2.33 23,852 141 2.36
Savings deposits 15,154 113 2.98 13,452 109 3.24
Time deposits 33,251 301 3.62 36,954 377 4.08
Long-term borrowing 918 14 6.10 1,078 16 5.94
- ----------------------------------------------------------------------------
Total Interest-bearing
Liabilities 74,432 574 3.08 75,336 643 3.41
- ----------------------------------------------------------------------------
Other liabilities 422 480
Minority interest 99 100
Stockholders' equity 8,497 8,460
- ----------------------------------------------------------------------------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $100,202 $99,050
- ----------------------------------------------------------------------------
NET INTEREST INCOME $1,035 $1,086
- ----------------------------------------------------------------------------
Interest rate spread 3.91% 4.22%
Net interest income to
average earning assets 4.49% 4.80%
<FN>
(1)Yield/rate is annualized
</TABLE>
Average yield/rates are stated on a before income tax basis
58
<PAGE>
COPPER BANCSHARES. INC. AND SUBSIDIARY
Selected Statistical Information
Average Balance Sheets and Average Yields Earned and Rate Paid
The following table sets forth certain selected statistical information and
should be read in conjunction with the consolidated financial statements of
Copper Banchares, Inc. and The American National Bank of Silver City (dollars in
thousands):
<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------------------------------------------------
1993 1992 1991
--------------------- -------------------- --------------------
Average Average Average
Average Inte- Yield/ Average Inte- Yield/ Average Inte- Yield/
ASSETS Balance rest Rate Balance rest Rate Balance rest Rate
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Securities:
Taxable $23,845 $1,233 5.17% $26,036 $1,734 6.66% $16,790 $1,446 8.62%
Non-taxable 20,190 1,079 5.34 12,932 789 6.10 7,182 581 8.09
Loans 39,648 4,355 10.98 40,985 4,385 10.70 40,055 4,643 11.59
Federal funds
sold 6,230 106 1.70 8,555 295 3.45 18,795 1,013 5.39
Int.-bearing
deposits 1,500 49 3.27 1,500 71 4.73 1,500 108 7.20
- ----------------------------------------------------------------------------
TOTAL EARNING
ASSETS 91,413 6,822 7.46 90,008 7,274 8.08 84,322 7,791 9.24
- ----------------------------------------------------------------------------
Allowance for
loan losses ( 581) ( 451) ( 315)
Cash and due
from banks 5,923 5,921 6,361
Other Assets 3,730 3,982 3,848
- ----------------------------------------------------------------------------
TOTAL ASSETS 100,485 99,460 94,221
- ----------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
- -----------------------------------------------------------------------------
Non-int. bearing
deposits 15,530 13,092 12,210
Int.-bearing
demand dep. 24,053 568 2.37 22,642 727 3.21 21,414 996 4.66
Savings dep. 14,315 418 2.92 12,221 446 3.65 9,622 444 4.61
Time dep. 35,949 1,360 3.78 41,058 1,944 4.73 40,996 2,742 6.69
Long-term
borrowing 1,058 61 5.77 1,168 77 6.59 1,282 109 8.50
- ----------------------------------------------------------------------------
Total Int.-Bearing
Liabilities 75,375 2,408 3.19 77,089 3,194 4.14 73,314 4,291 5.85
- ----------------------------------------------------------------------------
Other
Liabilities 463 598 751
Minority Int. 107 102 95
Stockholders'
equity 9,010 8,579 7,851
- ----------------------------------------------------------------------------
TOTAL LIABILITIES
AND STOCKHOLDERS'
EQUITY $100,485 $99,460 $94,221
- -----------------------------------------------------------------------------
NET INTEREST INCOME $4,414 $4,080 $3,500
- ----------------------------------------------------------------------------
Interest Rate Spread 4.27% 3.94% 3.39%
Net interest income
to average earning
assets 4.83% 4.53% 4.15%
</TABLE>
Average yield/rates are stated on a before income tax basis
59
<PAGE>
COPPER BANCSHARES, INC. AND SUBSIDIARY
Selected Statistical Information
Securities
All investment securities are classified as "held-to-maturity".
Following is a table of the carrying value (dollars in thousands) of securities:
<TABLE>
<CAPTION>
December 31
March 31 ---------------------------
1994 1993 1992 1991
- ---------------------------------------- ---------------------------
<S> <C> <C> <C> <C>
U.S. Treasury $24,058 $21,080 $26,123 $25,084
U. S. government agencies 114 142 234 495
Municipals 23,199 23,312 17,069 8,795
Other Securities 55 55 55 81
- ------------------------------------------------------------------------
$47,426 $44,589 $43,481 $34,455
- ------------------------------------------------------------------------
</TABLE>
The following table reflects the maturity distribution of each investment
security category and the approximate weighted-average annual yield at March 31,
1994 (dollars in thousands):
<TABLE>
<CAPTION>
Maturing within
----------------------------------------------
Less
than 1-5 5-10 More than
1 year years years 10 years Total
- --------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
U. S. Treasury $ 8,026 $16,032 $24,058
Weighted Average Yield 5.04% 4.57% 4.74%
U. S. Government agencies $ 114 $ 114
Weighted Average Yield 7.99% 7.99%
Municipals $ 2,366 $19,443 $ 1,390 $23,199
Weighted Average Yield 4.22% 4.60% 5.30% 4.60%
Other Securities $ 55 $ 55
Weighted Average Yield .50% .50%
- -------------------------------------------------------------------------
Total Securities $10,392 $35,475 $ 1,390 $ 169 $47,426
- -------------------------------------------------------------------------
Weighted Average Yield 4.85% 4.59% 5.30% 5.50% 4.67%
- -------------------------------------------------------------------------
</TABLE>
The following is a listing of issuers whose securities included in the portfolio
as of March 31, 1994 (dollars in thousands) had an aggregate book value of such
securities exceeding ten percent of stockholders' equity:
<TABLE>
<CAPTION>
Issuer Aggregate Aggregate
------ Book Value Market Value
---------- ------------
<S> <C> <C>
Silver City NM Cons. Sch. Dist. $3,212 $3,146
Carlsbad NM Sch District 2,694 2,694
Albuquerque NM Met Arroyo 3,204 3,198
Luna Cty NM Sch Dist. 797 822
Santa Fe NM Pub Sch Dist. 1,964 2,036
Gallup NM Plltn. Ctl Rev. 1,000 1,026
</TABLE>
60
<PAGE>
COPPER BANCSHARES, INC. AND SUBSIDIARY
Selected Statistical Information
Securities, Continued
The following table reflects the maturity distribution of each security category
and the approximate weighted-average yield at December 31, 1993 (dollars in
thousands):
<TABLE>
<CAPTION>
Maturing Within
--------------------------------------------------
Less than 1-5 5-10 More than
1 year years years 10 years Total
- -------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
U. S. Treasury $7,022 $14,058 $21,080
Weighted average yield 5.85% 4.78% 5.14%
U.S. government agencies $ 142 $ 142
Weighted average yield 7.99% 7.99%
Municipals $2,362 $19,600 $ 1,390 $23,312
Weighted average yield 4.20% 4.52% 5.30% 4.53%
Other securities $ 55 $ 55
Weighted average yield .50% .50%
- --------------------------------------------------------------------------
Total Securities $9,384 $33,618 $ 1,390 $ 197 $44,589
- --------------------------------------------------------------------------
Weighted average
yield 5.44% 4.63% 5.30% 5.50% 4.82%
- --------------------------------------------------------------------------
</TABLE>
The following is a listing of issuers whose securities included in the portfolio
as of December 31, 1993 (dollars in thousands) had an aggregate book value of
such securities exceeding ten percent of stockholders' equity:
<TABLE>
<CAPTION>
Issuer Aggregate Aggregate
------ Book Value Market Value
---------- ------------
<S> <C> <C>
Silver City NM Cons. Sch Dist. $3,214 $3,203
Carlsbad NM Sch Dist. 2,699 2,720
Albuquerque NM Metro Arroyo 3,204 3,228
Santa Fe NM Pub Sch Dist. 1,965 2,079
Gallup NM Plltn. Ctl. Rev. 1,000 1,043
</TABLE>
61
<PAGE>
COPPER BANCSHARES, INC. AND SUBSIDIARY
Selected Statistical Information
Loan Portfolio
The following table classifies loans by major category (dollars in thousands):
<TABLE>
<CAPTION>
December 31
March 31 --------------------------------------
1994 1993 1992 1991 1990 1989
-------- ------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Commercial business
and agriculture $15,855 $15,354 $12,939 $13,515 $10,890 $11,420
Real Estate 12,265 12,714 16,513 16,100 13,844 14,934
Consumer/Personal 10,538 11,058 10,717 12,186 13,574 12,345
- ---------------------------------------------------------------------
Total Loans $38,658 $39,126 $40,169 $41,801 $38,308 $38,699
- ---------------------------------------------------------------------
</TABLE>
The following table presents maturities of loans as of March 31, 1994 (dollars
in thousands):
<TABLE>
<CAPTION>
Less than 1-5 More than
1 year years 5 years Total
- -----------------------------------------------------------------------
<S> <C> <C> <C> <C>
1. Maturities
a. Commercial business
and Agricultural $ 5,720 $ 5,845 $ 4,290 $15,855
Real Estate 1,907 3,677 6,685 12,265
Consumer 618 9,546 374 10,538
- -----------------------------------------------------------------------
$ 8,245 $19,068 $11,349 $38,658
</TABLE>
The following tables present maturities of loans as of December 31, 1993
(dollars in thousands):
<TABLE>
<CAPTION>
Less than 1-5 More than
1 year years 5 years Total
- ----------------------------------------------------------------------
<S> <C> <C> <C> <C>
1. Maturities
a. Commercial business
and agricultural $ 4,000 $ 6,323 $ 5,031 $15,354
Real Estate 1,663 3,751 7,300 12,714
Consumer 360 9,986 712 11,058
- -----------------------------------------------------------------------
$6,023 $20,060 $13,043 $39,126
</TABLE>
62
<PAGE>
COPPER BANCSHARES, INC. AND SUBSIDIARY
Selected Statistical Information
Nonaccrual, Restructured and Past Due Loans
(dollars in thousands)
<TABLE>
<CAPTION>
March 31 December 31
-------- --------------------------------
1994 1993 1992 1991 1990 1989
- -------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Nonaccrual loans 11 177 255 171 367 499
Loans past due more than 90
days and still accruing 13 34 0 22 96 476
- -------------------------------------------------------------------------
</TABLE>
The reduction of interest income for the three months ended March 31, 1994 and
the year ended December 31, 1993 for nonaccrual loans was approximately $726 and
$12,241, respectively.
63
<PAGE>
COPPER BANCSHARES, INC. AND SUBSIDIARY
Selected Statistical Information
Allocation of Allowance for Loan Losses
(dollars in thousands)
<TABLE>
<CAPTION>
December 31
--------------------------------------
March 31, 1994 1993 1992
------------------- ------------------- -------------------
Allowance Allowance Allowance
Loans for loan Loans for loan Loans for loan
outstanding losses outstanding losses outstanding losses
- ---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Commercial &
Agricultural $15,855 $ 242 $15,354 $ 221 $12,939 $ 239
Real Estate 12,265 167 12,714 166 16,513 139
Consumer/Pers. 10,538 196 11,058 214 10,717 182
- ------------------------------------------------------------------------
$38,658 $ 604 $39,126 $ 601 $40,169 $ 560
- -------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
December 31
-----------------------------------------------------------
1991 1990 1989
------------------- --------------------- -----------------
Allowance Allowance Allowance
Loans for loan Loans for loan Loans for loan
outstanding losses outstanding losses outstanding losses
- ----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Commercial &
Agricultural $13,515 $ 246 $10,890 $ 145 $11,420 $ 150
Real Estate 16,100 30 13,844 72 14,934 75
Consumer/Pers. 12,186 65 13,574 73 12,345 76
- ------------------------------------------------------------------------
$41,801 $ 341 $38,308 $ 290 $38,699 $ 301
- ------------------------------------------------------------------------
</TABLE>
64
<PAGE>
COPPER BANCSHARES, INC. AND SUBSIDIARY
Selected Statistical Information
Analysis of Allowance for Loan Losses
(dollars in thousands)
<TABLE>
<CAPTION>
December 31
March 31 ----------------------------------
1994 1993 1992 1991 1990 1989
-------- ----------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balance beginning of
period $ 601 $ 560 $ 341 $ 290 $ 301 $ 301
Provision for loan
losses 15 200 500 345 56 144
Charge-offs:
Commercial and
Agricultural 0 110 196 91 14 120
Consumer 18 126 113 189 74 61
Real Estate 4 0 0 46 0 0
- -----------------------------------------------------------------------
Total loan losses 22 236 309 326 88 181
- -----------------------------------------------------------------------
Recoveries:
Commercial and
Agricultural 0 19 8 7 4 7
Consumer 9 58 20 24 17 30
Real Estate 1 0 0 1 0 0
- -----------------------------------------------------------------------
Total recoveries 10 77 28 32 21 37
- -----------------------------------------------------------------------
Net (recoveries)
charge-offs 12 159 281 294 67 144
- -----------------------------------------------------------------------
Balance end of period $ 604 $ 601 $ 560 $ 341 $ 290 $ 301
- -----------------------------------------------------------------------
Net charge-offs as a
percent of average
loans 0.0% 0.4% 0.7% 0.7% 0.2% 0.4%
Allowance for loan
losses to:
Total loans at
period end 1.6 1.5 1.4 0.8 0.8 0.8
Net charge-offs 12.6x (1) 3.8x 2.0x 1.2x 4.3x 2.1x
Provision for loan
losses to average
loans 0.1 (1) 0.5 1.2 0.9 0.1 0.4
<FN>
(1) Annualized
</TABLE>
65
<PAGE>
COPPER BANCSHARES, INC. AND SUBSIDIARY
Selected Statistical Information
Maturity of Time Deposits of $100,000 or More
<TABLE>
<CAPTION>
At March 31, 1994
(dollars in thousands)
Within 3-6 6-12 Over 12
3 months months months months Total
- ----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Certificates of deposit
and other time $7,117 $ 938 $ 964 $ 888 $9,907
</TABLE>
Maturity of Time Deposits of $100,000 or More
<TABLE>
<CAPTION>
At December 31, 1993
(dollars in thousands)
Within 3-6 6-12 Over 12
3 months months months months Total
- ----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Certificates of deposit
and other time $10,939 $ 747 $ 702 $ 782 $13,370
</TABLE>
66
<PAGE>
COPPER BANCSHARES, INC. AND SUBSIDIARY
Selected Statistical Information
<TABLE>
<CAPTION>
Three months
ended March 31, Year Ended December 31,
---------------- -------------------------------
1994 1993 1993 1992 1991
- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Return on
average
assets 1.29%(1) 1.41%(1) 1.44% 1.07% 0.77%
Return on
average
equity 15.23%(1) 16.53%(1) 16.10% 12.38% 9.22%
Average
equity
to
Average
assets 8.48% 8.54% 8.97% 8.63% 8.33%
Dividends
paid per
share $13.46 $12.00 $12.00 $3.00 0
<FN>
(1) Annualized
</TABLE>
67
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS OF THE AMERICAN NATIONAL BANK OF SILVER CITY
GENERAL
The following is management's discussion and analysis of the significant factors
affecting The American National Bank of Silver City's financial condition and
results of operations. This should be read in conjunction with The American
National Bank of Silver City's audited and unaudited financial statements and
accompanying footnotes and other selected financial data presented elsewhere
herein.
Copper Bancshares, Inc. owns 98.84% of the common stock of The American National
Bank of Silver City.
FINANCIAL CONDITION
Total assets increased by $1,183,000 during the first three months of 1994 to
$99,875,000 at March 31, 1994 following a decrease of $1,702,000 during 1993 to
$98,692,000 at December 31, 1993. The 1993 decrease was reflected in an
increase in investment securities. The 1994 increase is reflected primarily in
investment securities while the 1993 decrease was reflected in Federal funds
sold and cash.
Loans decreased in the first three months of 1994 by $468,000 to $38,658,000 at
March 31, 1994 and decreased $1,043,000 during 1993 to $39,126,000 at December
31, 1993. A decline occured in real estate and consumer loans which was
partially offset by an increase in commercial loans.
Investment securities increased in the first three months of 1994 by $2,837,000
to $47,426,000 at March 31, 1994 following an increase of $1,108,000 during 1993
to $44,589,000 at December 31, 1993. Substantially all of the 1994 increase is
related in U. S. Treasury securities.
COMPARISON OF THREE MONTHS ENDED MARCH 31, 1994 AND 1993
EARNINGS PERFORMANCE
The American National Bank of Silver City earned net income of $348,000 and
$374,000 for the three months ended March 31, 1994 and 1993, respectively. The
1993 earnings include $45,000 as the "cumulative effect of an accounting change"
resulting from the adoption by the bank of SFAS No. 109 as of the beginning of
its 1993 fiscal year. The annualized return on average assets was 1.40% for the
first three months of 1994 compared to 1.56% for the first three months of 1993.
Annualized return on average stockholders' equity was 16.19% for the first three
months of 1994 compared to 17.27% for the first three months of 1993. On a per
share basis net income for the first three months of 1994 and 1993 were $2.68
and $2.88 (including $0.35 relating to the cumulative effect of accounting
change) respectively.
68
<PAGE>
The following is a condensed summary of the statements of earnings (dollars in
thousands):
<TABLE>
<CAPTION>
Three months
ended
March 31,
---------
1994 1993
- -----------------------------------------------------------
<S> <C> <C>
Net interest income $ 1,049 1,102
Provision for loan losses 15 60
Non-interest income 124 116
Non-interest expense 732 745
Net income 348 374
</TABLE>
NET INTEREST INCOME
- -------------------
Net interest income is affected by changes in both interest rates and the volume
of average earning assets and interest-bearing liabilities.
The following table is provided to show the percentage of change in interest
income and expenses of significant interest-bearing assets and liabilities:
<TABLE>
<CAPTION>
Three months
ended
March 31,
(dollars in Percentage
thousands) increase
----------
1994 1993 (decrease)
- -------------------------------------------------------------
<S> <C> <C> <C>
Interest income:
Loans $ 994 1,021 ( 2.6)%
Federal funds sold 54 31 74.2
Interest-bearing
deposits 13 13 --
Investments 548 664 (17.5)
- ----------------------------------------------
Total interest income $ 1,609 1,729 ( 6.9)
- ----------------------------------------------
Interest expense:
Deposits 560 627 (10.7)
- ----------------------------------------------
Total interest expense 560 627 (10.7)
- ----------------------------------------------
NET INTEREST INCOME 1,049 1,102 ( 4.8)%
- ----------------------------------------------
</TABLE>
69
<PAGE>
The following table is provided to show changes in interest income and expense
attributable to changes in volume and interest rates of significant interest-
earning assets and interest-bearing liabilities:
<TABLE>
<CAPTION>
Three months ended
March 31, 1994-1993
(dollars in thousands)
-------------------------
Total Attributable to change
----------------------
change in volume in rate .
- -------------------------------------------------------------
<S> <C> <C> <C>
Interest-earning Assets:
Loans $( 27) $( 45) $ 18
Securities (116) 222 (338)
Federal funds sold 23 ( 3) 26
Interest-bearing deposits 0
- ----------------------------------------------------------
Total interest income (120) 174 (294)
- -----------------------------------------------------------
Interest-bearing Liabilities
Deposits ( 67) ( 6) ( 61)
- -----------------------------------------------------------
TOTAL INTEREST EXPENSE $( 67) $( 6) $( 61)
</TABLE>
The change in interest income/expense attributable to volume reflects the change
in volume times the prior period's rate and the change in interest
income/expense attributable to rate reflects the change in rates times the prior
period's volume. The change due to combined rate/volume variance is allocated
to the change due to rate and the change due to volume on the basis of the
percentage of the total change excluding the combined rate/volume component.
70
<PAGE>
The following table presents average asset and liability balances and percentage
changes:
<TABLE>
<CAPTION>
Three months
ended
March 31, Percentage
(dollars in increase
thousands) . (decrease)
---------------- ------------
1994 1993 1994/93
- --------------------------------------------------------------
<S> <C> <C> <C>
Loans $38,892 $40,708 ( 4.6)%
Securities 46,008 41,951 9.7
Federal funds sold 5,740 6,433 (10.8)
Interest-bearing deposits 1,500 1,500 --
- ---------------------------------------------------
TOTAL AVERAGE
INTEREST-EARNING ASSETS 92,140 90,592 1.7
- ---------------------------------------------------
Deposits:
Non-interest bearing demand 16,753 14,678 14.1
Interest-bearing demand 25,115 23,898 5.1
Savings 15,154 13,452 12.7
Time 33,252 36,954 (10.0)
- ---------------------------------------------------
TOTAL AVERAGE
INTEREST-BEARING DEPOSITS $73,521 $74,304 1.1%
- ---------------------------------------------------
</TABLE>
71
<PAGE>
The following table shows the annualized average interest yield on interest-
earning assets and the annualized average interest rate paid on interest-bearing
liabilities:
<TABLE>
<CAPTION>
Three months
ended
March 31,
---------
1994 1993
- --------------------------------------------------------------
<S> <C> <C>
Average yield earned:
Loans 10.22% 10.03%
Securities 4.76 6.33
Federal funds sold 3.76 1.93
Interest-bearing deposits 3.47 3.47
Total interest-earning assets 6.99 7.63
- ---------------------------------------------------------------
Average rates paid:
Interest-bearing deposits 3.05 3.36
Total interest-bearing liabilities 3.05 3.36
- --------------------------------------------------------------
INTEREST RATE SPREAD 3.94% 4.27%
- ---------------------------------------------------------------
</TABLE>
The following table shows the annualized net yield on interest-earning assets
for the three months ended March 31:
<TABLE>
<CAPTION>
1994 1993
- --------------------------------------------------------------
<S> <C> <C>
Average yield earned 6.99% 7.63%
Interest expense to average earning assets 2.42 2.76
- ---------------------------------------------------------------
NET YIELD ON INTEREST-EARNING ASSETS 4.57% 4.87%
- -------------------------------------------------------------
</TABLE>
Net interest income was $1,049,000 for the first three months of 1994, compared
with $1,102,000 for the same period of 1993. The decrease is due primarily to
lower rates of return on investment securities.
Total interest income decreased to $1,609,000 or 6.9% for the first three
months of 1994 as compared to $1,729,000 for the same period of 1993. Average
interest-earning assets increased to $92,140,000 for the three months ended
March 31, 1994 from $90,592,000 for the three months ended March 31, 1993.
Earning asset yields declined to 6.99% for the 1994 period compared to 7.63% for
the 1993 period.
Total interest expense for the first three months of 1994 of $560,000 declined
from $627,000 for the same period of 1993. This decline was attributed
primarily to rates on interest-bearing liabilities declining to 3.05% in 1994,
from 3.36% in 1993. The 31 basis point decline from 1993 to 1994 was caused by
the general economic and market conditions which moved interest rates lower in
1994.
72
<PAGE>
PROVISION FOR LOAN LOSSES
The allowance for loan losses is determined based on management's evaluation of
the loan portfolio, economic conditions, prior loss experience, review of
specific problem loans, and other pertinent factors. Actual losses on loans are
charged against this allowance and recoveries on charged-off loans are credited
to this allowance. The American National Bank of Silver City's provision for
loan losses was $15,000 and $60,000 for the first three months of 1994 and 1993,
respectively.
Net charge-offs were $12,000 for the first three months of 1994 and net charge-
offs were $84,000 for the same period of 1993. The allowance for loan losses as
a percentage of loans was 1.56% and 1.31% at March 31, 1994 and 1993,
respectively.
NON-INTEREST INCOME
Non-interest income increased to $124,000 for the first three months of 1994
compared to $116,000 for the same period of 1993.
NON-INTEREST EXPENSE
The following table presents a summary of non-interest expenses (dollars in
thousands) and percentage changes:
<TABLE>
<CAPTION>
Percentage
increase
1994 1993 (decrease)
- ---------------------------------------------------------------
<S> <C> <C> <C>
Salaries/employee benefits $ 411 $ 399 3.0%
Net occupancy expense 48 35 37.1
Other expenses 274 311 (11.9)
- -------------------------------------------------------------
$ 733 $ 745 ( 1.6)%
- --------------------------------------------------------------
</TABLE>
Total non-interest expenses decreased to $733,000 for the first three months of
1994, compared to $745,000 for the same period of 1993. The decrease is due to
the write down of other real estate owned.
COMPARISON OF YEARS ENDED DECEMBER 31, 1993, 1992, AND 1991
EARNINGS PERFORMANCE
Net earnings for The American National Bank of Silver City were $1,544,000 in
1993, $1,163,000 in 1992 and $842,000 in 1991. The increase in net earnings
from 1992 to 1993 of $381,000 was due primarily to a reduction in the provision
for loan losses of $300,000 and the recognition of a "cumulative effect of an
acccounting change" of $45,000. The increase in net earnings from 1991 to 1992
of $321,000 was primarily due to an increase in net interest income after
provision for loan losses. The return on average assets was 1.55% in 1993
compared to 1.18% in 1992 and
73
<PAGE>
0.90% in 1991. Return on average stockholders' equity was 16.70% in 1993
compared to 13.14% in 1992 and 10.29% in 1991. On a per share basis, net
earnings for the years 1993, 1992, and 1991 were $11.91, $8.97, and $6.50,
respectively. The earnings per share amount for 1993 includes $0.35 relating to
the cumulative effective of accounting change.
The following is a condensed summary of the statements of earnings (dollars in
thousands):
<TABLE>
<CAPTION>
1993 1992 1991
- --------------------------------------------------------------
<S> <C> <C> <C>
Net interest income 4,474 4,156 3,607
Provision for loan losses 200 500 345
Other income 647 594 540
Operating expense 3,051 2,872 2,739
Net income 1,544 1,163 842
</TABLE>
NET INTEREST INCOME
Net interest income is affected by changes in both interest rates and the volume
of average earnings assets and interest-bearing liabilities.
The following table is provided to show the percentage of change in interest
income and expense of significant interest-bearing assets and liabilities:
<TABLE>
<CAPTION>
Percentage-increase
Dollars (in thousands) (decrease)
---------------------- -------------------
1993 1992 1991 1993/92 1992/91
- -------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Interest income:
Loans 4,355 4,385 4,643 ( 0.7) 5.6
Securities 2,312 2,523 2,027 ( 8.4) 24.5
Federal funds sold 106 295 1,013 (64.1) (70.8)
Interest-bearing
deposits 49 71 108 (31.0) (34.3)
Total interest
income 6,822 7,274 7,791 ( 6.2) (6.6)
- -------------------------------------------------------------------
Interest expense:
Deposits 2,348 3,118 4,184 (24.7) (25.5)
- -------------------------------------------------------------------
Total interest
expense 2,348 3,118 4,184 (24.7) (25.5)
- -------------------------------------------------------------------
NET INTEREST INCOME 4,474 4,156 3,607 7.7 15.2
- -------------------------------------------------------------------
</TABLE>
74
<PAGE>
The following table is provided to show changes in interest income and expense
attributable to changes in volume and interest rates of significant interest-
earning assets and interest-bearing liabilities:
<TABLE>
<CAPTION>
1993-1992
(dollars in thousands) .
------------------------------
Total Attributable to change.
------------------------
Interest-earning Assets change in volume in rate
- ---------------------------------------------------------------
<S> <C> <C> <C>
Loans ( 30) (134) 104
Securities (211) 81 ( 292)
Federal funds sold (189) ( 82) ( 109)
Interest-bearing deposits ( 22) 0 ( 22)
- ---------------------------------------------------------------
TOTAL INTEREST INCOME (452) (133) ( 319)
- ---------------------------------------------------------------
Interest-bearing Liabilities .
- ---------------------------------------------------------------
Deposits (770) (142) ( 628)
TOTAL INTEREST EXPENSE (770) (142) ( 628)
- ---------------------------------------------------------------
1992-1991
(dollars in thousands) .
------------------------------
Total Attributable to change.
------------------------
Interest-earning Assets change in volume in rate
- ---------------------------------------------------------------
Loans ( 258) 108 ( 366)
Securities 496 1,849 (1,353)
Federal funds sold ( 718) (489) ( 229)
Interest-bearing deposits ( 37) 0 ( 37)
- ----------------------------------------------------------------
TOTAL INTEREST INCOME ( 517) 1,468 (1,985)
- ----------------------------------------------------------------
Interest-bearing Liabilities .
- ----------------------------------------------------------------
Deposits (1,066) 226 (1,291)
- ----------------------------------------------------------------
TOTAL INTEREST EXPENSE (1,066) 226 (1,291)
- ----------------------------------------------------------------
</TABLE>
The change in interest income/expense attributable to volume reflects the change
in volume times the prior year's rate and the change in interest income/expense
attributable to rate reflects the change in rates times the prior year's volume.
The change due to combined rate/volume variance is allocated to the change due
to rate and the change due to volume on the basis of the percentage of the total
change excluding the combined rate/volume component.
75
<PAGE>
The following table presents average asset and liability balances and percentage
changes:
<TABLE>
<CAPTION>
Percentage increase
Dollars (in thousands) (decrease)
--------------------- ----------
1993 1992 1991 1993/92 1992/91
- ----------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Loans $39,648 $40,985 $40,055 ( 3.3)% 2.3%
Securities 44,035 38,968 23,972 13.0 62.6
Federal funds sold 6,230 8,555 18,795 (27.1) (54.4)
Interest-bearing
deposits 1,500 1,500 1,500 -- --
TOTAL AVERAGE
INTEREST-EARNING
ASSETS 91,413 90,008 84,322 1.6 6.7
- ---------------------------------------------------------------
Deposits:
Non-interest bearing
demand 15,535 13,096 12,211 18.6 27.2
Interest-bearing
demand 24,070 22,653 21,430 6.3 5.7
Savings 14,315 12,221 9,622 17.1 27.0
Time 35,949 41,058 40,996 (12.4) ( 0.2)
- ----------------------------------------------------------------
Total average
interest-bearing
deposits 74,334 75,932 72,048 ( 2.1) 4.7
- ----------------------------------------------------------------
TOTAL AVERAGE
INTEREST-BEARING
LIABILITIES 74,334 75,432 72,049 ( 2.1) 4.7
- ---------------------------------------------------------------
</TABLE>
The following table shows the average interest yield on interest-earning assets
and the average interest rate paid on interest-bearing liabilities.
<TABLE>
<CAPTION>
1993 1992 1991
- -------------------------------------------------------------------
<S> <C> <C> <C>
Average yield earned:
Loans 10.98% 10.70% 11.59%
Securities 5.25 6.47 8.46
Federal funds sold 1.70 3.45 5.39
Interest-bearing deposits 3.27 4.73 7.20
Total interest-earning assets 7.46 8.08 9.24
- -------------------------------------------------------------------
Average rates paid:
Interest-bearing deposits 3.16 4.11 5.81
Total interest-bearing liabilities 3.16 4.11 5.81
- -------------------------------------------------------------------
INTEREST RATE SPREAD 4.30% 3.95% 3.43%
- --------------------------------------------------------------------
76
<PAGE>
The following table shows the net yield on interest-earning assets:
1993 1992 1991
- ----------------------------------------------------------------
<S> <C> <C> <C>
Average yield earned 7.46% 8.08% 9.24%
Interest expense to
average earning assets 2.57 3.46 4.96
- ----------------------------------------------------------------
Net yield on interest-earning assets 4.89% 4.62% 4.28%
- -----------------------------------------------------------------
</TABLE>
Net interest income was $4,474,000 in 1993, compared with $4,156,000 in 1992 and
$3,607,000 in 1991. During 1990 interest rates in the United States began a
general decline with short-term interest falling faster than long-term rates.
This trend continued through 1993.
Total interest income decreased to $6,822,000 or 6.2% in 1993 as compared to
$7,274,000 in 1992, which was down from $7,791,000 in 1991. Earning asset
yields declined to 7.46% in 1993 as compared to 8.08% and 9.24% in 1992 and
1991, respectively.
Total interest expense in 1993 of $2,348,000 declined from $3,118,000 in 1992
which was down from $4,184,000 in 1991. This decline was attributed primarily
to rates on interest-bearing liabilities declining to 3.16% in 1993, from 4.11%
in 1992 and 5.81% in 1991. The 95 basis point decline from 1992 to 1993 and the
171 basis point decline from 1991 to 1992 were caused by the general economic
and market conditions which moved interest rates lower in 1993 and 1992.
PROVISION FOR LOAN LOSSES
The allowance for loan losses is determined based on management's evaluation of
the loan portfolio, economic conditions, prior loss experience, review of
specific problem loans, and other pertinent factors. Actual losses on loans are
charged against this allowance and recoveries on charged-off loans are credited
to this allowance. The American National Bank of Silver City's provision for
loan losses was $200,000, $500,000 and $345,000 in 1993, 1992 and 1991,
respectively. The reduction in the provision is the result of improved asset
quality.
The allowance for loan losses as a percentage of loans was 1.54%, 1.39% and
0.83% at December 31, 1993, 1992, and 1991, respectively.
NON-INTEREST INCOME
The following table presents a summary of non-interest income (dollars in
thousands) and percentage changes:
<TABLE>
<CAPTION>
Percentage increase
(decrease) .
-------------------
1993 1992 1991 1993/92 1992/91
- ---------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Service charges
and fees $ 430 $ 409 $ 424 5.1% ( 3.5)%
Other 217 185 116 17.3 59.5
- ---------------------------------------------------------------------
$ 647 $ 594 $ 540 8.9% 10.0%
- --------------------------------------------------------------------
</TABLE>
77
<PAGE>
Non-interest income increased 8.9% in 1993 over 1992 due to an increase in
service fee rates plus an increase in gain from sale of real estate mortgages to
the Federal Home Loan Mortgage Corporation (FHLMC). The increase in non-
interest income from 1991 to 1992 was substantially due to the gain realized on
the sale of real estate mortages to FHLMC.
NON-INTEREST EXPENSES
The following table presents a summary of non-interest expenses (dollars in
thousands) and percentage changes:
<TABLE>
<CAPTION>
Percentage increase
(decrease)
-------------------
1993 1992 1991 1993/92 1992/91
- ---------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Salaries and employee
benefits $1,664 $1,629 $1,581 2.1% 3.0%
Occupancy expense 153 161 138 5.0 16.7
Other operating
expenses 1,234 1,082 1,020 14.0 6.1
- --------------------------------------------------------------
Total Non-interest
expenses $3,051 $2,872 $2,739 6.2% 4.9%
- ---------------------------------------------------------------
</TABLE>
Total non-interest expenses were $3,051,000 in 1993, compared to $2,872,000 in
1992 and $2,739,000 in 1991. The increase in 1993 is largely attributable to an
increase in salaries and employee benefits, write-down of other real estate
owned, and increased data processing expenses. The increase in 1992 over 1991
was caused in part by an increase in salaries and employee benefits, write-down
of other real estate owned and an increased FDIC insurance assessment. These
increases were partially offset by a decline in other operating expenses.
Salaries and employee benefits increased to $1,664,000 in 1993 compared to
$1,629,000 in 1992 and $1,581,000 in 1991. The increases in 1993 and 1992
reflect annual increases in wage rates and in 1993, the annual employer
contribution of $25,000 in to the Bank's 401(K) savings plan.
Write-down of other real estate owned of $89,000 was made in 1993 and $61,000 in
1992.
Data processing expenses increased $59,000 or 63.8% in 1993 as a result of the
installation of a new data processing system.
FDIC insurance assessment increased $22,000 or 12.8% in 1992 over 1991. The
increase was due to the impact of increased premium rates as well as an
increased level of deposits.
78
<PAGE>
INCOME TAXES
The American National Bank of Silver City adopted SFAS No. 109 ACCOUNTING FOR
INCOME TAXES as of the beginning of its 1993 fiscal year. The effect of this
change in the method of accounting for income taxes is reported in the financial
statements as "cumulative effect of accounting change", which amounted to
$45,000. Under the previous method of accounting for income taxes (APB 11),
deferred income taxes or credits were computed based upon the difference between
taxes computed with and without temporary differences for the current year.
These differences were accumulated as the total deferred tax asset or liability.
Changes in tax law or rates were only reflected in the calculation for the
current year.
Under the accounting methods prescribed by SFAS No. 109, the so-called temporary
differences between financial and tax bases of assets and liabilities are
accumulated and the income tax consequences of these differences are calculated
by applying the current applicable tax rates.
Income taxes for each of the years 1993, 1992 and 1991 was less than the
"expected" tax expense computed by applying the applicable federal rates as a
result of the following (dollars in thousands):
<TABLE>
<CAPTION>
1993 1992 1991
---------------------------------
<S> <C> <C> <C>
Federal income tax expense
at statutory rates $635 $468 $362
Increase (reduction) in
taxes resulting from:
Tax-exempt interest (330) (241) (144)
Other 65 ( 12) 4
- ------------------------------------------------------------------
INCOME TAX EXPENSE $370 $215 $222
- ------------------------------------------------------------------
</TABLE>
STATEMENTS OF FINANCIAL ACCOUNTING STANDARDS
In May, 1993, the Financial Accounting Standard Board (FASB) issued Statement of
Financial Accounting Standards (SFAS) No. 114, ACCOUNTING BY CREDITORS FOR
IMPAIRMENT OF A LOAN, which requires that certain impaired loans be measured to
reflect the time value of money. SFAS No. 114 is required to be adopted for
fiscal years beginning after December 15, 1994. The impact of adoption of the
new accounting standards on The American National Bank of Silver City's
financial statements has not yet been determined.
In May 1993, the FASB issued SFAS No. 115, ACCOUNTING FOR CERTAIN INVESTMENTS IN
DEBT AND EQUITY SECURITIES. This statement addressed the accounting and
reporting for investments by classifying into three categories--securities held
to maturity, trading securities, and
79
<PAGE>
securities for sale. The statement is effective for fiscal years beginning
after December 15, 1993. All investment securities held by The American
National Bank of Silver City are classified as "held-to-maturity".
FUNDING SOURCES AND LIQUIDITY MANAGEMENT
The assets of The American National Bank of Silver City are primarily funded
through the use of borrowings in the form of deposits. The maintenance of an
adequate level of liquidity is necessary to ensure that sufficient funds are
available to meet customers' loan demand and deposit withdrawals. The sources
of asset liquidity consist of federal funds, maturing loans and investment
securities.
The Board of Directors of The American National Bank of Silver City is charged
with the responsibility of maintaining an adequate level of liquidity and
managing the risks associated with interest rate changes while sustaining stable
growth in net interest income. The basic strategy is to minimize interest rate
risk through matching the repricing periods of earning assets and interest-
bearing liabilities.
CAPITAL MANAGEMENT OF THE AMERICAN NATIONAL BANK OF SILVER CITY
Bank regulatory agencies measure capital adequacy through standardized risk-
based capital guidelines which compare different levels of capital (as defined
in such guidelines) to risk-weighted assets and off-balance sheet obligations.
Under the rules effective December 31, 1992, all financial institutions are
required to maintain a level of core capital (known as tier 1 capital) which
must be at least 4.0% of risk-weighted assets, and a minimum level of total
capital of at least 8.0% of risk-weighted assets. Tier 1 capital consists
principally of stockholders' equity less goodwill. Total capital is comprised
of tier 1 capital, certain debt instruments and a portion of the allowance for
loan losses. The American National Bank of Silver City's actual risk-based
capital requirement and excess risk-based capital at March 31, 1994 and December
31, 1993 (dollars in thousands) are summarized as follows:
<TABLE>
<CAPTION>
March 31, 1994 December 31, 1993
------------------------------------
Amount Percent (1) Amount Percent (1)
- -----------------------------------------------------------------------
<S> <C> <C> <C> <C>
Tier 1 capital $7,950 $9,241
Allowable portion of allowance
for loan losses 604 601
- ---------------------------------------------------------------------
Total risk-based capital 8,554 17.5% 9,842 20.3%
- ---------------------------------------------------------------------
RISK-BASED CAPITAL
REQUIREMENT 3,907 8.00 3,887 8.00
- ---------------------------------------------------------------------
EXCESS RISK-BASED CAPITAL $4,647 9.5% $5,955 12.3%
- ---------------------------------------------------------------------
<FN>
(1) Percentage based on risk-weighted assets of $48,841 and $48,586 at March
31, 1994 and December 31, 1993, respectively.
</TABLE>
80
<PAGE>
THE AMERICAN NATIONAL BANK OF SILVER CITY
Selected Statistical Information
Average Balance Sheets and Average Yields Earned And Rate Paid
The following table sets forth certain selected statistical information and
should be read in conjunction with the financial statements of The American
National Bank of Silver City (dollars in thousands):
<TABLE>
<CAPTION>
Three months ended March 31
---------------------------
1994 1993
- ------------------------------------------------- ---------------------------
Average Average
Average Yield/ Average Yield/
ASSETS Balance Interest Rate(1) Balance Interest Rate(1)
- ----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Securities:
Taxable $22,752 $ 284 4.99% $23,381 $ 405 6.92%
Non-taxable 23,256 264 4.54 18,570 259 5.58
Loans 38,892 994 10.22 40,708 1,021 10.03
Federal funds sold 5,740 54 3.76 6,433 31 1.93
Int-bearing deposits 1,500 13 3.47 1,500 13 3.47
- --------------------------------------------------------------------------
Total Earning Assets 92,140 1,609 6.99 90,592 1,729 7.63
- --------------------------------------------------------------------------
Allowance for loan
losses ( 603) ( 549)
Cash and due from
banks 5,070 5,336
Other assets 2,676 2,716
- ----------------------------------------------------------------------------
TOTAL ASSETS 99,283 98,095
- ---------------------------------------------------------------------------
LIABILITIES AND
STOCKHOLDERS' EQUITY
- ----------------------------------------------------------------------------
Non-interest bearing
deposits 16,753 14,678
Interest-bearing
demand deposits 25,115 146 2.33 23,898 141 2.38
Savings deposits 15,154 113 2.98 13,452 109 3.24
Time deposits 33,251 301 3.62 36,954 377 4.08
- --------------------------------------------------------------------------
Total Interest-bearing
liabilities 73,520 560 3.05 74,304 627 3.38
- --------------------------------------------------------------------------
Other Liabilities 415 452
Stockholders' equity 8,595 8,661
- ---------------------------------------------------------------------------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY 99,283 98,095
- ---------------------------------------------------------------------------
NET INTEREST INCOME $1,049 $1,102
- --------------------------------------------------------------------------
Interest rate spread 3.94% 4.25%
Net interest income to
average earning assets 4.55% 4.87%
<FN>
(1)Yield/rate is annualized
Average yield/rates are on a before income tax basis
</TABLE>
81
<PAGE>
THE AMERICAN NATIONAL BANK OF SILVER CITY
Selected Statistical Information
Average Balance Sheets and Average Yields Earned and Rate Paid
The following table sets forth certain selected statistical information and
should be read in conjunction with the financial statements of The American
National Bank of Silver City (dollars in thousands):
<TABLE>
<CAPTION>
Year Ended December 31,
------------------------------------------------
1993 1992 1991
---------------------------------------------------------------
Average Average Average
Average Inte- Yield/ Average Inte- Yield/ Average Inte-Yield/
ASSETS Balance rest Rate Balance rest Rate Balance rest Rate
- ---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Securities:
Taxable 23,845 1,233 5.17 26,036 1,734 6.66 16,790 1,446 8.62
Non-taxable 20,190 1,079 5.34 12,932 789 6.10 7,182 581 8.09
Loans 39,648 4,355 10.98 40,985 4,385 10.70 40,055 4,643 11.59
Federal funds
sold 6,230 106 1.70 8,555 295 3.45 18,795 1,013 5.39
Int.-bearing
deposits 1,500 49 3.27 1,500 71 4.73 1,500 108 7.20
- ----------------------------------------------------------------------------
TOTAL EARNING
ASSETS 91,413 6,822 7.46 90,008 7,274 8.08 84,322 7,791 9.24
- ----------------------------------------------------------------------------
Allowance for
loan losses ( 581) ( 451) ( 315)
Cash and due
from banks 5,923 5,922 6,366
Other Assets 2,788 2,964 2,798
Total Assets 99,543 98,443 93,171
- ----------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
- -----------------------------------------------------------------------------
Non-int. bearing
deposits 15,535 13,096 12,221
Int.-bearing
demand dep. 24,070 570 2.37 22,653 728 3.21 21,430 998 4.66
Savings dep. 14,315 418 2.92 12,221 446 3.65 9,622 444 4.61
Time dep. 35,949 1,360 3.78 41,058 1,944 4.73 40,996 2,742 6.69
- ----------------------------------------------------------------------------
Total Int.-Bearing
Liabilities 74,334 2,348 3.16 75,932 3,118 4.11 72,048 4,184 5.81
- ----------------------------------------------------------------------------
Other
Liabilities 428 563 731
Stockholders'
equity 9,246 8,852 8,181
- ----------------------------------------------------------------------------
TOTAL LIABILITIES
AND STOCKHOLDERS'
EQUITY 99,543 98,443 93,171
- -----------------------------------------------------------------------------
NET INTEREST INCOME $4,474 $4,156 $3,607
- ----------------------------------------------------------------------------
Interest Spread 4.30% 3.97% 3.43%
Net Interest Income to average
earning assets 4.89% 4.62% 4.28%
</TABLE>
Average yield/rates are on a before income tax basis.
82
<PAGE>
AMERICAN NATIONAL BANK OF SILVER CITY
Selected Statistical Information
Securities
All investment securities are classified as "held-to-maturity".
Following is a table of the carrying value (dollars in thousands) of securities:
<TABLE>
<CAPTION>
December 31
March 31 --------------------------
1994 1993 1992 1991
- ------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. Treasury $24,058 $21,080 $26,123 $25,084
U.S. government agencies 114 142 234 495
Municipals 23,199 23,312 17,069 8,795
Other Securities 55 55 55 81
- -------------------------------------------------------------------------
$47,426 $44,589 $43,481 $34,455
- -------------------------------------------------------------------------
</TABLE>
The following table reflects the maturity distribution of each investment
security category and the approximate weighted-average annual yield at March 31,
1994 (dollars in thousands):
<TABLE>
<CAPTION>
Maturing within
---------------------------------------------
Less
than 1-5 5-10 More than
1 year years years 10 years Total
- --------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
U. S. Treasury $ 8,026 $16,032 $24,058
Weighted average yield 5.04% 4.57% 4.74%
U. S. Government agencies $ 114 $ 114
Weighted average yield 7.99% 7.99%
Municipals $ 2,366 $19,443 $ 1,390 $23,199
Weighted average yield 4.22% 4.60% 5.30% 4.60%
Other Securities $ 55 $ 55
Weighted average yield .50% .50%
- --------------------------------------------------------------------------
Total Securities $10,392 $35,475 $ 1,390 $ 169 $47,426
- --------------------------------------------------------------------------
Weighted average yield 4.85% 4.59% 5.30% 5.50% 4.67%
- --------------------------------------------------------------------------
</TABLE>
The following is a listing of issuers whose securities included in the portfolio
as of March 31, 1994 (dollars in thousands) had an aggregate book value of such
securities exceeding ten percent of stockholders' equity:
<TABLE>
<CAPTION>
Aggregate Aggregate
Issuer Book Value Market Value
------ ---------- ------------
<S> <C> <C>
Silver City NM Cons. Sch. Dist. $3,212 $3,146
Carlsbad NM Sch District 2,694 2,694
Albuquerque NM Met Arroyo 3,204 3,198
Luna Cty NM Sch Dist. 797 822
Santa Fe NM Pub Sch Dist. 1,964 2,036
Gallup NM Plltn. Ctl Rev. 1,000 1,026
</TABLE>
83
<PAGE>
AMERICAN NATIONAL BANK OF SILVER CITY
Selected Statistical Information
Securities, Continued
The following table reflects the maturity distribution of each security category
and the approximate weighted-average yield at December 31, 1993 (dollars in
thousands):
<TABLE>
<CAPTION>
Maturing Within
-------------------------------------------------
Less than 1-5 5-10 More than
1 year years years 10 years Total
- -------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
U. S. Treasury $7,022 $14,058 $21,080
Weighted average yield 5.85% 4.78% 5.14%
U.S. government agencies $ 142 $ 142
Weighted average yield 7.99% 7.99%
Municipals $2,362 $19,600 $ 1,390 $23,312
Weighted average yield 4.20% 4.52% 5.30% 4.53%
Other securities $ 55 $ 55
Weighted average yield .50% .50%
- --------------------------------------------------------------------------
Total Securities $9,384 $33,618 $ 1,390 $ 197 $44,589
- --------------------------------------------------------------------------
Weighted average
yield 5.44% 4.63% 5.30% 5.50% 4.82%
- --------------------------------------------------------------------------
</TABLE>
The following is a listing of issuers whose securities included in the portfolio
as of December 31, 1993 (dollars in thousands) had an aggregate book value of
such securities exceeding ten percent of stockholders' equity:
<TABLE>
<CAPTION>
Issuer Aggregate Aggregate
------
Book Value Market Value
---------- ------------
<S> <C> <C>
Silver City NM Cons. Sch Dist. $3,214 $3,203
Carlsbad NM Sch Dist. 2,699 2,720
Albuquerque NM Metro Arroyo 3,204 3,228
Santa Fe NM Pub Sch Dist. 1,965 2,079
Gallup NM Plltn. Ctl. Rev. 1,000 1,043
</TABLE>
84
<PAGE>
AMERICAN NATIONAL BANK OF SILVER CITY
Selected Statistical Information
Loan Portfolio
The following table classifies loans by major category (dollars in thousands):
<TABLE>
<CAPTION>
March 31 December 31
------------------------------------
1994 1993 1992 1991 1990 1989
- --------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Commercial business
and agriculture $15,855 $15,354 $12,939 $13,515 $10,890 $11,420
Real Estate 12,265 12,714 16,513 16,100 13,844 14,934
Consumer/Personal 10,538 11,058 10,717 12,186 13,574 12,345
- ---------------------------------------------------------------------
Total Loans $38,658 $39,126 $40,169 $41,801 $38,308 $38,699
- ---------------------------------------------------------------------
</TABLE>
The following table presents maturities of loans as of March 31, 1994 (dollars
in thousands):
<TABLE>
<CAPTION>
Less than 1-5 More than
1 year years 5 years Total
- -----------------------------------------------------------------------
<S> <C> <C> <C> <C>
1. Maturities
a. Commercial business
and Agricultural $ 5,720 $ 5,845 $ 4,290 $15,855
Real Estate 1,907 3,677 6,685 12,265
Consumer 618 9,546 374 10,538
- ------------------------------------------------------------------------
$8,245 $19,068 $11,345 $38,658
- ------------------------------------------------------------------------
</TABLE>
The following tables present maturities of loans as of December 31, 1993
(dollars in thousands):
<TABLE>
<CAPTION>
Less than 1-5 More than
1 year years 5 years Total
- ----------------------------------------------------------------------
<S> <C> <C> <C> <C>
1. Maturities
a. Commercial business
and agricultural $ 4,000 $ 6,323 $ 5,031 $15,354
Real Estate 1,663 3,751 7,300 12,714
Consumer 360 9,986 712 11,058
- ----------------------------------------------------------------------
$ 6,023 $20,060 $13,043 $39,126
- ----------------------------------------------------------------------
</TABLE>
85
<PAGE>
AMERICAN NATIONAL BANK OF SILVER CITY
Selected Statistical Information
Nonaccrual, Restructured and Past Due Loans
(dollars in thousands)
<TABLE>
<CAPTION>
March 31 December 31
-------- ----------------------------------
1994 1993 1992 1991 1990 1989
- -------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Nonaccrual loans 11 177 255 171 3,675 49
Loans past due more than 90
days and still accruing 13 34 0 22 96 49
- -------------------------------------------------------------------------
</TABLE>
The reduction of interest income for the three months ended March 31, 1994 and
the year ended December 31, 1993 for nonaccrual loans was approximately $726 and
$12,241, respectively.
86
<PAGE>
AMERICAN NATIONAL BANK OF SILVER CITY
Selected Statistical Information
Allocation of Allowance for Loan Losses
(dollars in thousands)
<TABLE>
<CAPTION>
December 31
--------------------------------------
March 31, 1994 1993 1992
-------------------- --------------------------------------
Allowance Allowance Allowance
Loans for loan Loans for loan Loans for loan
outstanding losses outstanding losses outstanding losses
- ---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Commercial &
Agricultural $15,585 $ 242 $15,354 $ 221 $12,939 $ 239
Real Estate 12,265 167 12,714 166 16,513 139
Consumer/Personal 10,538 196 11,058 214 10,717 182
- -------------------------------------------------------------------------
$38,658 $ 604 $39,126 $ 601 $40,169 $ 560
- -------------------------------------------------------------------------
December 31
---------------------------------------------------------------
1991 1990 1989
---------------------------------------------------------------
Allowance Allowance Allowance
Loans for loan Loans for loan Loans for loan
outstanding losses outstanding losses outstanding losses
- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Commercial &
Agricultural $13,515 $ 246 $10,890 $ 145 $11,420 $ 150
Real Estate 16,100 30 13,844 72 14,934 75
Consumer/Personal 12,186 65 13,574 73 12,345 76
- -----------------------------------------------------------------------------
$41,801 $ 341 $38,308 $ 290 $38,699 $ 301
- -----------------------------------------------------------------------------
</TABLE>
87
<PAGE>
AMERICAN NATIONAL BANK OF SILVER CITY
Selected Statistical Information
Analysis of Allowance for Loan Losses
(dollars in thousands)
<TABLE>
<CAPTION>
March 31 December 31
--------------------------------------
1994 1993 1992 1991 1990 1989
-----------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balance beginning of
period $ 601 $ 560 $ 341 $ 290 $ 301 $ 301
Provision for loan
losses 15 200 500 345 56 144
Charge-offs:
Commercial and
Agricultural 0 110 196 91 14 120
Consumer/Personal 18 126 113 189 74 61
Real Estate 4 0 0 46 0 0
- -----------------------------------------------------------------------
Total loan losses 22 236 309 326 88 181
- -------------------------------------------------------------------------
Recoveries:
Commercial and
Agricultural 0 19 8 7 4 7
Consumer/Personal 9 58 20 24 17 30
Real Estate 1 0 0 1 0 0
- -----------------------------------------------------------------------
Total recoveries 10 77 28 32 21 37
- -----------------------------------------------------------------------
Net charge-offs 12 159 281 294 67 144
- -----------------------------------------------------------------------
Balance end of period $ 604 $ 601 $ 560 $ 341 $ 290 $ 301
- -----------------------------------------------------------------------
Net charge-offs as a
percent of average
loans 0.0% 0.4% 0.7% 0.7% 0.2% 0.4%
Allowance for loan
losses to:
Total loans at
period end 1.6 1.5 1.4 0.8 0.8 0.8
Net charge-offs 12.6x (1) 3.8x 2.0x 1.2x 4.3x 2.1x
Provision for loan
losses to average
loans 0.1 (1) 0.5 1.2 0.9 0.1 0.4
<FN>
(1) Annualized
</TABLE>
88
<PAGE>
AMERICAN NATIONAL BANK OF SILVER CITY
Selected Statistical Information
Maturity of Time Deposits of $100,000 or More
At March 31, 1994
(dollars in thousands)
<TABLE>
<CAPTION>
Within 3-6 6-12 Over 12
3 months months months months Total
- ----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Certificates of deposit
and other time $7,117 $ 938 $ 964 $ 888 $9,907
<CAPTION>
Maturity of Time Deposits of $100,000 or More
At December 31, 1993
(dollars in thousands)
Within 3-6 6-12 Over 12
3 months months months months Total
- ----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Certificates of deposit
and other time $10,939 $ 747 $ 702 $ 782 $13,370
</TABLE>
89
<PAGE>
AMERICAN NATIONAL BANK OF SILVER CITY, NM
Selected Statistical Information
<TABLE>
<CAPTION>
Three months
ended March 31, Year Ended December 31,
--------------- -------------------------------
1994 1993 1993 1992 1991
- ----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Return on
average
assets 1.40%(1) 1.56%(1) 1.55% 1.18% 0.90%
Return on
average
equity 16.19%(1) 17.27%(1) 16.70% 13.14% 10.29%
Average
equity
to
Average
assets 8.66% 8.83% 9.29% 8.99% 8.78%
Dividends
paid per
share $12.64 $12.00 $12.00 $2.80 $2.31
<FN>
(1) Annualized
</TABLE>
90
<PAGE>
CERTAIN REGULATORY CONSIDERATIONS
GENERAL
As a bank holding company, Norwest is subject to the supervision of the
Federal Reserve Board. Norwest's banking subsidiaries are subject to supervision
and examination by applicable federal and state banking agencies. All of
Norwest's banking subsidiaries are insured, and therefore are subject to
regulation, by the FDIC. In addition to the impact of regulation, commercial
banks are affected significantly by the actions of the Federal Reserve Board as
it attempts to control the money supply and credit availability in order to
influence the economy.
Norwest is a legal entity separate and distinct from its banking and
nonbanking subsidiaries. Accordingly, the right of Norwest, and thus the right
of Norwest's creditors, to participate in any distribution of the assets or
earnings of any subsidiary is necessarily subject to the prior claims of
creditors of such subsidiary, except to the extent that claims of Norwest in its
capacity as a creditor may be recognized. The principal sources of Norwest's
revenues are dividends and fees from its subsidiaries.
DIVIDEND RESTRICTIONS
Various federal and state statutes and regulations limit the amount of
dividends the subsidiary banks can pay to Norwest without regulatory approval.
The approval of the OCC is required for any dividend by a national bank if the
total of all dividends declared by the bank in any calendar year would exceed
the total of its net profits, as defined by regulation, for that year combined
with its retained net profits for the preceding two years less any required
transfers to surplus or a fund for the retirement of any preferred stock. In
addition, a national bank may not pay a dividend in an amount greater than its
net profits then on hand after deducting its losses and bad debts. For this
purpose, bad debts are defined to include, generally, loans which have matured
and are in arrears with respect to interest by six months or more, other than
such loans which are well secured and in the process of collection. Under these
provisions Norwest's national bank subsidiaries could have declared, as of March
31, 1994, without obtaining prior regulatory approval, aggregate dividends of at
least $375.5 million. The payment of dividends by any subsidiary bank may also
be affected by other factors, such as the maintenance of adequate capital for
such subsidiary bank.
If, in the opinion of the applicable regulatory authority, a bank under its
jurisdiction is engaged in or is about to engage in an unsafe or unsound
practice (which, depending on the financial condition of the bank, could include
the payment of dividends), such authority may require, after notice and hearing,
that such bank cease and desist from such practice. The Federal Reserve Board,
the OCC, and the FDIC have issued policy statements which provide that insured
banks and bank holding companies should generally pay dividends only out of
current operating earnings.
HOLDING COMPANY STRUCTURE
Norwest's banking subsidiaries are subject to restrictions under federal
law which limit the transfer of funds by the subsidiary banks to Norwest and its
nonbanking subsidiaries, whether in the form of loans, extensions of credit,
investments, or asset purchases. Such transfers by any subsidiary bank to
Norwest or any nonbanking subsidiary are limited in amount to 10% of the
91
<PAGE>
bank's capital and surplus and, with respect to Norwest and all such nonbanking
subsidiaries, to an aggregate of 20% of such bank's capital and surplus.
Furthermore, such loans and extensions of credit are required to be secured in
specified amounts.
The Federal Reserve Board has a policy to the effect that a bank holding
company is expected to act as a source of financial and managerial strength to
each of its subsidiary banks and to commit resources to support each such
subsidiary bank. This support may be required at times when Norwest may not have
the resources to provide it. Any capital loans by Norwest to any of the
subsidiary banks are subordinate in right of payment to deposits and to certain
other indebtedness of such subsidiary bank. In addition, the Crime Control Act
of 1990 provides that in the event of a bank holding company's bankruptcy, any
commitment by the bank holding company to a federal bank regulatory agency to
maintain the capital of a subsidiary bank will be assumed by the bankruptcy
trustee and entitled to a priority of payment.
A depository institution insured by the FDIC can be held liable for any
loss incurred by, or reasonably expected to be incurred by, the FDIC after
August 9, 1989, in connection with (i) the default of a commonly controlled
FDIC-insured depository institution or (ii) any assistance provided by the FDIC
to a commonly controlled FDIC-insured depository institution in danger of
default. "Default" is defined generally as the appointment of a conservator or
receiver and "in danger of default" is defined generally as the existence of
certain conditions indicating that a "default" is likely to occur in the absence
of regulatory assistance.
Federal law (12 U.S.C. Section 55) permits the OCC to order the pro rata
assessment of shareholders of a national bank whose capital stock has become
impaired, by losses or otherwise, to relieve a deficiency in such national
bank's capital stock. This statute also provides for the enforcement of any such
pro rata assessment of shareholders of such national bank to cover such
impairment of capital stock by sale, to the extent necessary, of the capital
stock of any assessed shareholder failing to pay the assessment. Similarly, the
laws of certain states provide for such assessment and sale with respect to
banks chartered by such states. Norwest, as the sole shareholder of certain of
its subsidiary banks, is subject to such provisions.
CAPITAL REQUIREMENTS
In January 1989, the Federal Reserve Board issued final risk-based capital
guidelines for bank holding companies, such as Norwest. The new guidelines,
which became effective December 31, 1990, were phased in over two years. The
minimum ratio of total capital to risk-adjusted assets (including certain
off-balance sheet items, such as stand-by letters of credit) is 8%. At least
half of the total capital is to be comprised of common equity, retained
earnings, and a limited amount of noncumulative perpetual preferred stock ("Tier
1 capital"). The remainder ("Tier 2 capital") may consist of hybrid capital
instruments, perpetual debt, mandatory convertible debt securities, a limited
amount of subordinated debt, other preferred stock, and a limited amount of loan
and lease loss reserves. In addition, the Federal Reserve Board approved in
August 1990 final minimum "leverage ratio" (the ratio of Tier 1 capital to
quarterly average total assets) guidelines for bank holding companies and state
member banks. These guidelines provide for a minimum leverage ratio of 3% for
bank holding companies and state member banks that meet certain specified
criteria, including that they have the highest regulatory rating. All other bank
holding companies and state member banks will be required to maintain a leverage
ratio of 3% plus an additional cushion of 100 to 200 basis points. The
guidelines also provide that banking organizations experiencing internal growth
or making acquisitions will be expected to maintain
92
<PAGE>
strong capital positions substantially above the minimum supervisory levels,
without significant reliance on intangible assets. Furthermore, the guidelines
indicate that the Federal Reserve Board will continue to consider a "tangible
Tier 1 leverage ratio" in evaluating proposals for expansion or new activities.
The tangible Tier 1 leverage ratio is the ratio of a banking organization's Tier
1 capital, less all intangibles, to total assets, less all intangibles. Each of
Norwest's banking subsidiaries is also subject to capital requirements adopted
by applicable regulatory agencies which are substantially similar to the
foregoing. At March 31, 1994, Norwest's Tier 1 and total capital (the sum of
Tier 1 and Tier 2 capital) to risk-adjusted assets ratios were 10.15% and
12.65%, respectively, and Norwest's leverage ratio for the quarter ended March
31, 1994, was 6.97%. Neither Norwest nor any subsidiary bank has been advised by
the appropriate federal regulatory agency of any specific leverage ratio
applicable to it.
The Federal Reserve Board has adopted changes to its risk-based and
leverage ratio requirements applicable to bank holding companies and state
chartered member banks that require that all intangibles, including core deposit
intangibles, purchased mortgage servicing rights ("PMSRs"), and purchased credit
card relationships ("PCCRs") be deducted from Tier 1 capital. The changes,
however, grandfather identifiable assets (other than PMSRs and PCCRs) acquired
on or before February 19, 1992, and permit the inclusion of readily marketable
PMSRs and PCCRs in Tier 1 capital to the extent that (i) PMSRs and PCCRs do not
exceed 50% of Tier 1 capital and (ii) PCCRs do not exceed 25% of Tier 1 capital.
For such purposes, PMSRs and PCCRs each would be included in Tier 1 capital only
up to the lesser of (i) 90% of their fair market value (which must be determined
quarterly) and (ii) 100% of the remaining unamortized book value of such assets.
The OCC has adopted substantially similar regulations. In the opinion of
management, the foregoing changes have not had a material impact on the results
of operations of Norwest.
FEDERAL DEPOSIT INSURANCE CORPORATION IMPROVEMENT ACT OF 1991
In December 1991, Congress enacted the Federal Deposit Insurance
Corporation Improvement Act of 1991 ("FDICIA"), which substantially revises the
bank regulatory and funding provisions of the Federal Deposit Insurance Act and
makes revisions to several other federal banking statutes.
Among other things, FDICIA requires the federal banking agencies to take
"prompt corrective action" in respect of depository institutions that do not
meet minimum capital requirements. FDICIA establishes five capital tiers: "well
capitalized," "adequately capitalized," "undercapitalized," "significantly
undercapitalized," and "critically undercapitalized." A depository
institution's capital tier will depend upon where its capital levels are in
relation to various relevant capital measures, which will include a risk- based
capital measure and a leverage ratio capital measure, and certain other factors.
A depository institution is well capitalized if it significantly exceeds
the minimum level required by regulation for each relevant capital measure,
adequately capitalized if it meets each such measure, undercapitalized if it
fails to meet any such measure, significantly undercapitalized if it is
significantly below any such measure, and critically undercapitalized if it
fails to meet any critical capital level set forth in regulations. The critical
capital level must be a level of tangible equity equal to not less than 2% of
total assets and not more than 65% of the minimum leverage ratio to be
prescribed by regulation (except to the extent that 2% would be higher than such
65% level). An institution may be deemed to be in a capitalization category that
is lower than is
93
<PAGE>
indicated by its actual capital position if, among other things, it receives an
unsatisfactory examination rating.
Under regulations adopted pursuant to the foregoing provisions, for an
institution to be well capitalized it must have a Tier 1 risk-based capital
ratio of a least 6%, a total risk-based capital ratio of at least 10%, and a
leverage ratio of at least 5%, and not be subject to any specific capital order
or directive. For an institution to be adequately capitalized it must have a
Tier 1 risk-based capital ratio of at least 4%, a total risk-based capital ratio
of at least 8%, and a leverage ratio of a least 4% (and in some cases 3%). As of
March 31, 1994, all of Norwest's banking subsidiaries were well capitalized.
FDICIA generally prohibits a depository institution from making any capital
distribution (including payment of a dividend) or paying any management fee to
its holding company if the depository institution would thereafter be
undercapitalized. Undercapitalized depository institutions are subject to a wide
range of limitations on operations and activities, including growth limitations,
and are required to submit a capital restoration plan. The federal banking
agencies may not accept a capital plan without determining, among other things,
that the plan is based on realistic assumptions and is likely to succeed in
restoring the depository institution's capital. In addition, for a capital
restoration plan to be acceptable, the depository institution's parent holding
company must guarantee that the institution will comply with such capital
restoration plan. The aggregate liability of the parent holding company is
limited to the lesser of (i) an amount equal to 5% of the depository
institution's total assets at the time it became undercapitalized and (ii) the
amount which is necessary (or would have been necessary) to bring the
institution into compliance with all capital standards applicable with respect
to such institution as of the time it fails to comply with the plan. If a
depository institution fails to submit an acceptable plan, it is treated as if
it were significantly undercapitalized.
Significantly undercapitalized depository institutions may be subject to a
number of requirements and restrictions, including orders to sell sufficient
voting stock to become adequately capitalized, requirements to reduce total
assets, and cessation of receipt of deposits from correspondent banks.
Critically undercapitalized institutions are subject to the appointment of a
receiver or conservator.
FDICIA directs that each federal banking agency prescribe standards for
depository institutions and depository institution holding companies relating to
internal controls, information systems, internal audit systems, loan
documentation, credit underwriting, interest rate exposure, asset growth,
compensation, a maximum ratio of classified assets to capital, minimum earnings
sufficient to absorb losses, a minimum ratio of market value to book value for
publicly traded shares, and such other standards as the agency deems
appropriate. The FDIC, in consultation with the other federal banking agencies,
has adopted a final rule and guidelines with respect to external and internal
audit procedures and internal controls in order to implement those provisions
of FDICIA intended to facilitate the early identification of problems in
financial management of depository institutions. The FDIC has also issued
proposed rules prescribing standards relating to certain other of the
management and operational standards listed above. The full impact of such rule
and guidelines and proposed standards on the Corporation cannot yet be
ascertained.
FDICIA also contains a variety of other provisions that may affect the
operations of Norwest, including new reporting requirements, revised regulatory
standards for real estate lending, "truth in savings" provisions, and the
requirement that a depository institution give 90 days' notice to customers and
regulatory authorities before closing any branch.
Under other regulations promulgated under FDICIA a bank cannot accept
brokered deposits (that is, deposits obtained through a person engaged in the
business of placing deposits with insured depository institutions or with
interest rates significantly higher than prevailing market
94
<PAGE>
rates) unless (i) it is "well capitalized" or (ii) it is "adequately
capitalized" and receives a waiver from the FDIC. A bank is defined to be well
capitalized if it maintains a leverage ratio of at least 5%, a ratio of Tier 1
capital to risk- adjusted assets of at least 6%, and a ratio of total capital to
risk-adjusted assets of at least 10%, and is not otherwise in a "troubled
condition" as specified by the appropriate federal regulatory agency. A bank is
defined to be "adequately capitalized" if it meets all of its minimum capital
requirements. A bank that cannot receive brokered deposits also cannot offer
"pass-through" insurance on certain employee benefit accounts, unless it
provides certain notices to affected depositors. In addition, a bank that is
"adequately capitalized" and that has not received a waiver from the FDIC may
not pay an interest rate on any deposits in excess of 75 basis points over
certain prevailing market rates. There are no such restrictions on a bank that
is "well capitalized." At March 31, 1994, all of Norwest's banking subsidiaries
were well capitalized and therefore were not subject to these restrictions.
FDIC INSURANCE
Effective January 1, 1993, the deposit insurance assessment rate for the
Bank Insurance Fund ("BIF") and the Savings Association Insurance Fund ("SAIF")
increased as part of the adoption by the FDIC of a transitional risk- based
assessment system. In June 1993, the FDIC published final regulations making the
transitional system permanent effective January 1, 1994, but left open the
possibility that it may consider expanding the range between the highest and
lowest assessment rates at a later date. An institution's risk category is based
upon whether the institution is well capitalized, adequately capitalized, or
less than adequately capitalized. Each insured depository institution is also to
be assigned to one of the following "supervisory subgroups": Subgroup A, B, or
C. Subgroup A institutions are financially sound institutions with few minor
weaknesses; Subgroup B institutions are institutions that demonstrate weaknesses
which, if not corrected, could result in significant deterioration; and Subgroup
C institutions are institutions for which there is a substantial probability
that the FDIC will suffer a loss in connection with the institution unless
effective action is taken to correct the areas of weakness. Based on its capital
and supervisory subgroups, each BIF or SAIF member institution will be assigned
an annual FDIC assessment rate ranging from 0.23% per annum (for well
capitalized Subgroup A institutions) to 0.31% (for undercapitalized Subgroup C
institutions). Adequately capitalized institutions will be assigned assessment
rates ranging from 0.26% to 0.30%. Norwest incurred $72.4 million of FDIC
insurance expense in 1993. Because of decreases in the reserves of the BIF and
SAIF due to the increased number of bank failures in recent years, it is
possible the BIF and SAIF premiums will be further increased and it is possible
that there may be a special assessment. Any such further increase or special
assessment would also decrease net income, and a special assessment could have a
material adverse effect on the results of operations of Norwest.
EXPERTS
The consolidated financial statements of Norwest and subsidiaries as of
December 31, 1993 and 1992, and for each of the years in the three-year period
ended December 31, 1993, incorporated by reference herein, have been
incorporated herein in reliance upon the report of KPMG Peat Marwick,
independent certified public accountants, incorporated by reference herein and
upon the authority of said firm as experts in accounting and auditing.
The consolidated financial statements of Bancshares and subsidiary as of
December 31, 1993 and 1992, and for each of the years in the three-year period
ended December 31, 1993, have
95
<PAGE>
been included herein in reliance upon the report of Bock, Rutherford & Company,
independent certified public accountants, included herein and upon the authority
of said firm as experts in accounting and auditing.
LEGAL OPINION
A legal opinion to the effect that the shares of Norwest Common Stock
offered hereby, when issued in accordance with the Merger Agreement, will be
validly issued and fully paid and nonassessable, has been rendered by Stanley S.
Stroup, Executive Vice President and General Counsel of Norwest. At March 31,
1994, Mr. Stroup was the beneficial owner of approximately 106,971 shares and
held options to acquire 215,931 additional shares of Norwest Common Stock.
MANAGEMENT AND ADDITIONAL INFORMATION
Certain information relating to the executive compensation, voting
securities and the principal holders thereof, certain relationships and related
transactions, and other related matters concerning Norwest is included or
incorporated by reference in its Annual Report on Form 10-K for the year ended
December 31, 1993, and Form 10-K/A dated May 13, 1994, which are incorporated in
this Proxy Statement-Prospectus by reference. See "INCORPORATION OF CERTAIN
DOCUMENTS BY REFERENCE." Shareholders of Bancshares desiring copies of such
documents may contact Norwest at its address or phone number indicated under
"AVAILABLE INFORMATION" above.
96
<PAGE>
INDEX TO FINANCIAL STATEMENTS
OF
COPPER BANCSHARES, INC.
AND THE AMERICAN NATIONAL BANK OF SILVER CITY
- -------------------------------------------------------------------------------
COPPER BANCSHARES, INC CONSOLIDATED FINANCIAL STATEMENTS:
Independent Auditor's Report. F-2
Consolidated Balance Sheet as of March 31, 1994 (unaudited)
and December 31, 1993 and December 31, 1992. F-3
Consolidated Statements of Earnings for the three-month
periods ended March 31, 1994 (unaudited) and 1993 (unaudited). F-4
Consolidated Statements of Earnings for the years ended
December 31, 1993, 1992 and 1991. F-6
Consolidated Statements of Changes in Stockholders' Equity
for the three-month period ended March 31, 1994 (unaudited)
and the years ended December 31, 1993, 1992 and 1991. F-8
Consolidated Statements of Cash Flows for the three-month
periods ended March 31, 1994 (unaudited) and 1993 (unaudited). F-9
Consolidated Statements of Cash Flows for the years ended
December 31, 1993, 1992 and 1991. F-10
Notes to Consolidated Financial Statements. F-11
THE AMERICAN NATIONAL BANK OF SILVER CITY:
Independent Auditor's Report. F-23
Balance Sheet as of March 31, 1994 (unaudited) and
December 31, 1993 and December 31, 1992. F-24
Statements of Earnings for the three-month periods ended
March 31, 1994 (unaudited) and 1993 (unaudited). F-25
Statements of Earnings for the years ended December 31, 1993,
1992 and 1991. F-26
Statements of Changes in Stockholders' Equity for the
three-month period ended March 31, 1994 (unaudited) and
the years ended December 31, 1993, 1992, and 1991. F-27
Statements of Cash Flows for the three-month periods ended
March 31, 1994 (unaudited) and 1993 (unaudited). F-28
Statements of Cash flows for the years ended December 31, 1993,
1992 and 1991. F-29
Notes to Financial Statements. F-30
F-1
<PAGE>
COPPER BANCSHARES, INC.
-------------------------------------------------------
CONSOLIDATED FINANCIAL STATEMENTS
with
INDEPENDENT AUDITOR'S REPORT
YEARS ENDED DECEMBER 31, 1993 AND 1992
------------------------------
<PAGE>
January 6, 1994
INDEPENDENT AUDITOR'S REPORT
The Board of Directors and Stockholders
Copper Bancshares, Inc.
Silver City, New Mexico
We have audited the accompanying consolidated balance sheets of Copper
Bancshares, Inc. as of December 31, 1993 and 1992, and the related statements of
earnings, stockholders' equity, and cash flows for each of the three years in
the period ended December 31, 1993. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the financial position of Copper
Bancshares, Inc. at December 31, 1993 and 1992, and the results of its
operations and its cash flows for each of the three years in the period ended
December 31, 1993 in conformity with generally accepted accounting principles.
BOCK, RUTHERFORD & CO.
F-2
<PAGE>
COPPER BANCSHARES, INC.
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
ASSETS
December 31,
March 31, ---------------------------
1994 1993 1992
------------ ----- ----
(Unaudited)
<S> <C> <C> <C>
Cash and due from banks $ 4,440,444 $ 5,699,286 $ 6,146,707
Federal funds sold 5,840,000 5,640,000 6,820,000
Interest-bearing deposits with banks 1,500,000 1,500,000 1,500,000
Federal income taxes refundable -- 4,507 --
Investment securities 47,426,153 44,589,063 43,480,786
Loans, net of allowance for loan losses of
$604,040, $601,043 and $560,233, respectively 38,054,424 38,524,987 39,609,185
Bank premises and equipment, net 1,594,604 1,623,800 1,585,983
Goodwill (less accumulated amortization of
$522,730, $513,789 and $478,024, respectively) 906,489 915,430 951,195
Interest receivable 851,361 1,055,879 1,002,228
Other real estate 12,083 -- 155,000
Other assets 161,481 64,861 100,980
------------ ----------- ------------
$100,787,039 $99,617,813 $101,352,064
------------ ----------- ------------
------------ ----------- ------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits:
Demand: Non-interest bearing $ 17,053,337 $16,449,599 $ 14,610,877
Interest bearing 25,428,513 24,788,849 23,317,862
Savings 16,041,094 14,266,939 14,362,498
Time 32,966,009 33,536,581 38,361,426
------------ ----------- ------------
91,488,953 89,041,968 90,652,663
Long-term debt 858,404 978,404 1,138,404
Accrued interest payable 231,701 265,878 341,962
Federal income taxes payable 70,780 -- 40,956
Other liabilities 126,126 148,793 126,039
------------ ----------- ------------
92,775,964 90,435,043 92,300,024
------------ ----------- ------------
Minority interest in equity of subsidiary 92,016 106,953 107,081
------------ ----------- ------------
Stockholders' equity:
Common stock, $1.00 par value per share
Authorized - 120,000 shares
Outstanding - 109,980 shares 109,980 109,980 109,980
Surplus 748,965 748,965 748,965
Retained earnings 7,060,114 8,216,872 8,086,014
------------ ----------- ------------
7,919,059 9,075,817 8,944,959
------------ ----------- ------------
$100,787,039 $99,617,813 $101,352,064
------------ ----------- ------------
------------ ----------- ------------
</TABLE>
The accompanying notes are an integral
part of the consolidated financial statements.
F-3
<PAGE>
COPPER BANCSHARES, INC.
CONSOLIDATED STATEMENT OF EARNINGS
<TABLE>
<CAPTION>
Three months ended March 31,
----------------------------
1994 1993
---- ----
(Unaudited) (Unaudited)
<S> <C> <C>
Interest income:
Interest and fees on loan $ 993,882 $ 1,021,469
Interest on federal funds sold 54,019 30,516
Interest on deposits with bank 12,866 13,315
Interest on investment securities:
Taxable 284,404 405,243
Exempt from income taxes 263,911 258,910
----------- -----------
1,609,082 1,729,453
Interest expense on deposits 559,795 627,014
----------- -----------
Net interest income 1,049,287 1,102,439
Provision for loan losses 15,000 60,000
----------- -----------
Net interest income after provision for loan losses 1,034,287 1,042,439
----------- -----------
Other income:
Service charges on deposit accounts 107,325 89,422
Other 16,397 26,500
----------- -----------
123,722 115,922
----------- -----------
Other expenses:
Salaries and employee benefits 411,208 398,917
Interest expense on long-term debt 14,411 16,281
Occupancy of bank premises 48,054 34,547
Equipment 24,084 25,984
Amortization of goodwill 8,941 8,941
Other operating expenses 249,782 255,810
Write down of other real estate owned -- 30,000
----------- -----------
756,480 770,480
----------- -----------
Earnings before income taxes, cumulative effect
of accounting change and minority interest 401,529 387,881
Income taxes 73,933 79,500
----------- -----------
Earnings before cumulative effect of accounting
change and minority interest 327,596 308,381
(Continued)
</TABLE>
F-4
<PAGE>
COPPER BANCSHARES, INC.
CONSOLIDATED STATEMENT OF EARNINGS
(Continued)
<TABLE>
<CAPTION>
Three months ended March 31,
----------------------------
1994 1993
---- ----
(Unaudited) (Unaudited)
<S> <C> <C>
Cumulative effect of accounting change $ -- $ 45,435
----------- -----------
Earnings before minority interest 327,596 353,816
Minority interest in earnings of subsidiary 4,023 4 ,244
----------- -----------
Net earnings $ 323,573 $ 349,572
----------- -----------
----------- -----------
Earnings per common share:
Earnings before cumulative effect of
accounting change $2.94 $2.77
Cumulative effect of accounting change -- .41
----- -----
Net earnings $2.94 $3.18
----- -----
----- -----
</TABLE>
The accompanying notes are an integral
part of the consolidated financial statements.
F-5
<PAGE>
COPPER BANCSHARES, INC.
CONSOLIDATED STATEMENT OF EARNINGS
<TABLE>
<CAPTION>
Year ended December 31,
----------------------------------------
1993 1992 1991
---- ---- ----
<S> <C> <C> <C>
Interest income:
Interest and fees on loan $4,354,547 $4,385,059 $4,642,644
Interest on federal funds sold 105,922 295,448 1,013,079
Interest on deposits with bank 49,142 70,772 107,992
Interest on investment securities:
Taxable 1,233,135 1,733,891 1,445,787
Exempt from income taxes 1,078,795 788,855 581,690
----------- ----------- -----------
6,821,541 7,274,025 7,791,192
Interest expense on deposits 2,346,637 3,116,916 4,182,321
----------- ----------- -----------
Net interest income 4,474,904 4,157,109 3,608,871
Provision for loan losses 200,000 500,000 345,000
----------- ----------- -----------
Net interest income after provision
for loan losses 4,274,904 3,657,109 3,263,871
----------- ----------- -----------
Other income:
Service charges on deposit accounts 429,662 409,407 424,235
Other 216,911 184,462 116,250
----------- ----------- -----------
646,573 593,869 540,485
----------- ----------- -----------
Other expenses:
Salaries and employee benefits 1,664,337 1,629,222 1,580,509
Interest expense on long-term debt 60,769 77,099 109,492
Occupancy of bank premises 152,806 160,444 138,035
Equipment 109,125 117,438 128,021
Amortization of goodwill 35,765 36,561 35,765
Other operating expenses 1,036,948 904,340 893,911
Write down of other real estate owned 88,745 61,046 --
----------- ----------- -----------
3,148,495 2,986,150 2,885,733
----------- ----------- -----------
Earnings before income taxes, cumulative
effect of accounting change and minority
interest 1,772,982 1,264,828 918,623
Income taxes 349,928 188,985 184,887
----------- ----------- -----------
Earnings before cumulative effect of
accounting change and minority
interest 1,423,054 1,075,843 733,736
(Continued)
</TABLE>
F-6
<PAGE>
COPPER BANCSHARES, INC.
CONSOLIDATED STATEMENT OF EARNINGS
(Continued)
<TABLE>
<CAPTION>
Year ended December 31,
----------------------------------------
1993 1992 1991
---- ---- ----
<S> <C> <C> <C>
Cumulative effect of accounting change $ 45,435 $ -- $ --
----------- ----------- -----------
Earnings before minority interest 1,468,489 1,075,843 733,736
Minority interest in earnings of subsidiary 17,871 13,456 9,745
----------- ----------- -----------
Net earnings $1,450,618 $1,062,387 $ 723,991
----------- ----------- -----------
----------- ----------- -----------
Earnings per common share:
Earnings before cumulative effect of
accounting change $12.78 $9.66 $6.58
Cumulative effect of accounting change .41 -- --
------ ----- -----
Net earnings $13.19 $9.66 $6.58
------ ----- -----
------ ----- -----
</TABLE>
The accompanying notes are an integral
part of the consolidated financial statements.
F-7
<PAGE>
COPPER BANCSHARES, INC.
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Common stock
----------------------- Retained
Shares Amount Surplus earnings
------ ------ ------ --------
<S> <C> <C> <C> <C>
Balance at December 31, 1991 109,980 $109,980 $748,965 $ 7,353,567
Net earnings for the year -- -- -- 1,062,387
Cash dividend paid - $3.00
per share -- -- -- (329,940)
------- -------- -------- -----------
Balance at December 31, 1992 109,980 109,980 748,965 8,086,014
Net earnings for the year -- -- -- 1,450,618
Cash dividend paid - $12.00
per share -- -- -- (1,319,760)
------- -------- -------- -----------
Balance at December 31, 1993 109,980 109,980 748,965 8,216,872
Net earnings for the period -- -- -- 323,573
Cash dividend paid - $13.46
per share -- -- -- (1,480,331)
------- -------- -------- -----------
Balance at March 31, 1994
(unaudited) 109,980 $109,980 $748,965 $ 7,060,114
------- -------- -------- -----------
------- -------- -------- -----------
</TABLE>
The accompanying notes are an integral
part of the consolidated financial statements.
F-8
<PAGE>
COPPER BANCSHARES, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
Three months ended March 31,
----------------------------
1994 1993
---- ----
(Unaudited) (Unaudited)
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 323,573 $ 349,572
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Depreciation and amortization 45,358 49,120
Provision for loan losses 15,000 60,000
Deferred income taxes (credits) (1,353) (45,435)
Minority interest in earnings, net of
dividends paid (14,937) (13,756)
Write down of other real estate owned -- 30,000
Changes in operating assets and liabilities:
Decrease in accrued interest receivable 204,518 197,569
Premium amortization - securities 42,731 48,860
Discount accretion - securities (4,772) (22,577)
Increase in other assets (96,789) (25,666)
Decrease in accrued expenses and other liabilities (55,491) (38,798)
Increase in income taxes payable/refundable 75,288 22,510
----------- -----------
Net cash provided by operating activities 533,126 611,399
----------- -----------
Cash flows from investing activities:
Proceeds from sales/maturities of investment securities 2,118,406 8,801,248
Purchase of investment securities (4,993,456) (5,767,547)
Net (increase) decrease in loans made to customers 455,563 (1,158,312)
Purchase of bank equipment (7,052) (9,644)
Proceeds from sale of equipment and other real estate -- 7,946
Acquisition of other real estate (12,083) --
----------- -----------
Net cash provided (used) by investing activities (2,438,622) 1,873,691
----------- -----------
Cash flows from financing activities:
Net increase (decrease) in demand and savings deposits 3,017,557 (627,110)
Net decrease in time deposits (570,572) (2,814,918)
Dividend paid (1,480,331) (1,319,760)
Payment on long-term debt (120,000) (120,000)
----------- -----------
Net cash provided (used) by financing activities 846,654 (4,881,788)
----------- -----------
Net decrease in cash and cash equivalents (1,058,842) (2,396,698)
Cash and cash equivalents at beginning of period 11,339,286 12,966,707
----------- -----------
Cash and cash equivalents at end of period $10,280,444 $10,570,009
----------- -----------
----------- -----------
</TABLE>
The accompanying notes are an integral
part of the consolidated financial statements.
F-9
<PAGE>
COPPER BANCSHARES, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
Year ended December 31,
------------------------------------------
1993 1992 1991
---- ---- ----
<S> <C> <C> <C>
Cash flows from operating activities:
Net earnings $ 1,450,618 $ 1,062,387 $ 723,991
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Depreciation and amortization 214,915 191,727 175,922
Provision for loan losses 200,000 500,000 345,000
Deferred income taxes (credits) (41,808) (115,582) (4,509)
Minority interest in earnings, net of
dividends paid (128) 9,255 6,280
Write down of other real estate owned 88,745 61,046 --
Changes in operating assets and liabilities:
Decrease (increase) in accrued interest
receivable (53,651) 134,910 (549,383)
Premium amortization - securities 176,375 182,227 120,392
Discount accretion - securities (39,147) (19,310) (30,266)
Decrease (increase) in other assets 35,444 85,986 (16,430)
Decrease in accrued expenses and other
liabilities (11,522) (104,333) (121,654)
Increase (decrease) in income taxes payable/
refundable (45,463) 40,957 89,909
------------ ------------ -----------
Net cash provided by operating activities 1,974,378 2,029,269 559,434
------------ ------------ -----------
Cash flows from investing activities:
Proceeds from sales/maturities of investment
securities 15,343,904 11,864,055 3,733,350
Purchase of investment securities (16,589,409) (21,052,523) (24,789,362)
Net (increase) decrease in loans made to customers 884,198 1,350,389 (3,786,100)
Purchase of bank equipment (224,238) (101,074) (183,616)
Proceeds from sale of equipment and other real
estate 74,201 -- 24,354
------------ ------------ -----------
Net cash used by investing activities (511,344) (7,939,153) (25,001,374)
------------ ------------ -----------
Cash flows from financing activities:
Net increase in demand and savings deposits 3,214,150 8,674,068 742,303
Net increase (decrease) in time deposits (4,824,845) (5,393,200) 5,516,453
Dividend paid (1,319,760) (329,940) --
Payment on long-term debt (160,000) (59,916) (167,000)
------------ ------------ -----------
Net cash provided (used) by financing activities (3,090,455) 2,891,012 6,091,756
------------ ------------ -----------
Net decrease in cash and cash equivalents (1,627,421) (3,018,872) (18,350,184)
Cash and cash equivalents at beginning of period 12,966,707 15,985,579 34,335,763
------------ ------------ -----------
Cash and cash equivalents at end of period $ 11,339,286 $ 12,966,707 $15,985,579
------------ ------------ -----------
------------ ------------ -----------
</TABLE>
The accompanying notes are an integral
part of the consolidated financial statements.
F-10
<PAGE>
COPPER BANCSHARES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Data as of and for the three month periods ended
March 31, 1994 and March 31, 1993 is unaudited)
SIGNIFICANT ACCOUNTING POLICIES
The Company follows generally accepted accounting principles and
reporting practices applicable to the banking industry. Descriptions of the
significant accounting policies followed are summarized below.
INTERIM FINANCIAL STATEMENTS
The balance sheet as of March 31, 1994 and the statements of earnings,
stockholders' equity, and cash flows for the three month periods ended March 31,
1994 and 1993 are unaudited. However, in the opinion of management, these
financial statements include all adjustments, which consist only of normal
recurring adjustments, necessary for fair presentation of the Bank's financial
position. The results of operations for the unaudited three-month period ended
March 31, 1994 are not necessarily indicative of the results which may be
expected for the entire year of 1994.
ORGANIZATIONAL DATA
Copper Bancshares, Inc. is a one-banking holding company formed in
1979 under the regulations of the Bank Holding Company Act of 1956 as amended.
Copper Bancshares, Inc. owns approximately 99% of the capital stock of The
American National Bank of Silver City.
The consolidated financial statements include the accounts of the
company and its subsidiary bank. All material intercompany transactions have
been eliminated.
INVESTMENT SECURITIES
Investment securities represent various investments made in debt
securities with the intent of holding the security until maturity. These
investments are carried at cost adjusted for amortization of premiums and
accretion of discounts.
INTEREST INCOME ON LOANS
Interest on loans is accrued and credited to income based on the
principal amount outstanding. The accrual of interest on loans is discontinued
when, in the opinion of management, there is an indication that the borrower may
be unable to meet payments as they become due. Upon such discontinuance, all
unpaid accrued interest is reversed. The unearned discount on discounted
consumer loans is recognized as income using the sum-of-the-month-digits
method.
LOAN ORIGINATION FEES AND COSTS
Loan origination fees and certain direct origination costs are
capitalized and recognized as an adjustment of the yield on the related loan.
These fees and costs were not material.
F-11
<PAGE>
SIGNIFICANT ACCOUNTING POLICIES (continued)
ALLOWANCE FOR LOAN LOSSES
The provision for loan losses charged to operating expense is
management's judgement of the amount necessary to maintain the allowance for
loan losses at levels sufficient to cover possible losses in the collection of
loans.
BANK PREMISES AND EQUIPMENT
Bank premises and equipment are stated at cost less allowances for
depreciation. Provisions for depreciation are computed by the straight-line
method using estimated useful lives of ten to fifty years for bank buildings and
five to ten years for furniture and equipment.
GOODWILL
Goodwill represents the purchase price of the Company's investment in
The American National Bank of Silver City stock that exceeded the book value of
the shares acquired at the date of acquisition. The amount of goodwill
recognized is being amortized by the straight-line method over a period of forty
years.
INCOME TAXES
Deferred income taxes are provided for items of income and expense
recognized in different time periods for income tax and financial statement
purposes.
Copper Bancshares, Inc. files consolidated income tax returns with its
subsidiary. The subsidiary is charged by Copper Bancshares, Inc. for its share
of the consolidated income taxes on a basis that would have been paid if the
subsidiary had filed on a separate entity basis.
The Company adopted SFASB No. 109, "Accounting for Income Taxes," as
of the beginning of its 1993 fiscal year. This statement requires, among other
things, the recognition of future tax benefits or charges, measured by enacted
tax rates, attributable to temporary differences between financial statement and
income tax basis of assets and liabilities. These temporary differences relate
primarily to depreciable assets (use of different depreciation methods and lives
for financial statement and income tax purposes), allowances for loan losses and
purchase discounts on investment securities. Prior to the adoption of SFASB No.
109, the Company accounted for income taxes according to APB No. 11.
EARNINGS PER COMMON SHARE
Earnings per common share are computed on the average number of shares
outstanding during the year.
CASH AND CASH EQUIVALENTS
For purposes of the statement of cash flows, the Company considers all
highly liquid debt instruments purchased with a maturity of three months or less
to be cash equivalents which includes federal funds sold.
F-12
<PAGE>
INVESTMENT SECURITIES
The carrying amounts of investment securities and their approximate
market values were as follows:
<TABLE>
<CAPTION>
Carrying Unrealized Unrealized Market
amount gains losses value
-------- ---------- ---------- ------
<S> <C> <C> <C> <C>
March 31, 1994:
U.S. Treasury securities $24,057,999 $ 88,401 $ 85,150 $24,061,250
U.S. Government agency
securities 113,818 3,196 -- 117,014
State and political
subdivision securities 23,199,336 367,499 120,259 23,446,576
Other securities 55,000 -- -- 55,000
----------- -------- -------- -----------
$47,426,153 $459,096 $205,409 $47,679,840
----------- -------- -------- -----------
----------- -------- -------- -----------
December 31, 1993:
U.S. Treasury securities $21,079,554 $243,403 $ 2,957 $21,320,000
U.S. Government agency
securities 142,263 6,766 -- 149,029
State and political
subdivision securities 23,312,246 609,988 39,269 23,882,965
Other securities 55,000 -- -- 55,000
----------- -------- -------- -----------
$44,589,063 $860,157 $42,226 $45,406,994
----------- -------- -------- -----------
----------- -------- -------- -----------
December 31, 1992:
U.S. Treasury securities $26,123,165 $336,444 $22,578 $26,437,031
U.S. Government agency
securities 233,532 4,257 -- 237,789
State and political
subdivision securities 17,069,089 532,620 39,590 17,562,119
Other securities 55,000 -- -- 55,000
----------- -------- -------- -----------
$43,480,786 $873,321 $62,168 $44,291,939
----------- -------- -------- -----------
----------- -------- -------- -----------
</TABLE>
Securities with a carrying amount of $19,704,479 at March 31, 1994,
$19,741,879 at December 31, 1993 and $18,534,474 at December 31, 1992, were
pledged as collateral for public deposits. The related market values were
$19,859,601, $20,131,974 and $18,976,277, respectively.
Management views these securities as long-term investments which they
intend to hold until maturity.
F-13
<PAGE>
INVESTMENT SECURITIES (continued)
The maturities of investment securities were as follows:
<TABLE>
<CAPTION>
March 31, 1994 December 31, 1993
--------------------------- ---------------------------
Carrying Carrying
amount Market Value amount Market Value
----------- ------------ ----------- ------------
<S> <C> <C> <C> <C>
Due in one year or less $10,391,986 $10,434,862 $ 9,383,564 $ 9,472,598
Due from one to five years 34,141,214 34,324,190 32,283,897 32,918,734
Due from five to ten years 2,775,008 2,801,031 2,776,070 2,865,798
Due after ten years 117,945 119,757 145,532 149,864
----------- ----------- ----------- -----------
$47,426,153 $47,679,840 $44,589,063 $45,406,994
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
</TABLE>
LOANS
Loans consisted of the following at:
<TABLE>
<CAPTION>
December 31,
March 31, ---------------------------
1994 1993 1992
---------- ---- ----
<S> <C> <C> <C>
Real estate loans $12,264,943 $12,713,938 $16,513,416
Commercial and industrial loans 15,854,811 15,354,133 12,939,104
Installment and personal loans 12,074,791 12,780,026 12,397,512
Overdrafts 44,951 4,939 5,458
----------- ----------- -----------
40,239,496 40,853,036 41,855,490
----------- ----------- -----------
Less:
Unearned discounts 1,581,032 1,727,006 1,686,072
Allowance for loan losses 604,040 601,043 560,233
----------- ----------- -----------
2,185,072 2,328,049 2,246,305
----------- ----------- -----------
$38,054,424 $38,524,987 $39,609,185
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
Loans on which accrual of interest has been discontinued amounted to
$10,815 at March 31, 1994, $177,110 and $255,039 at December 31, 1993 and 1992,
respectively. If interest on those loans had been accrued, such income would
have approximated $726, $12,241 and $18,548, respectively.
Changes in the allowance for loan losses were as follows:
<TABLE>
<CAPTION>
December 31,
March 31, ---------------------------
1994 1993 1992
---------- ---- ----
<S> <C> <C> <C>
Balance at beginning of period $601,043 $ 560,233 $ 341,253
Provision for losses 15,000 200,000 500,000
Loans charged off (22,300) (235,708) (310,211)
Recovery on loans previously charged off 10,297 76,518 29,191
----------- ----------- -----------
Balance at end of period $604,040 $ 601,043 $ 560,233
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
F-14
<PAGE>
BANK PREMISES AND EQUIPMENT
Following is a summary of bank premises and equipment at:
<TABLE>
<CAPTION>
December 31,
March 31, ---------------------------
1994 1993 1992
---------- ---- ----
<S> <C> <C> <C>
Land $ 261,866 $ 261,866 $ 261,866
Bank building 1,600,271 1,600,271 1,600,271
Equipment 984,673 976,618 988,213
----------- ----------- -----------
2,846,810 2,838,755 2,850,350
Less accumulated depreciation 1,252,206 1,214,955 1,264,367
----------- ----------- -----------
$1,594,604 $1,623,800 $1,585,983
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
TIME DEPOSITS
Included in time deposits are certificates of deposit issued in
amounts of $100,000 or more with their remaining maturities as follows:
<TABLE>
<CAPTION>
December 31,
March 31, ---------------------------
1994 1993 1992
---------- ---- ----
<S> <C> <C> <C>
Three months or less $7,116,661 $10,938,559 $12,140,523
Three through six months 938,186 747,492 1,715,194
Six through twelve months 963,837 701,688 450,000
Over twelve months 888,251 782,300 892,684
----------- ----------- -----------
$9,906,935 $13,170,039 $15,198,401
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
INCOME TAXES
Deferred income taxes are recorded for temporary differences between
items of income or expense reported in the financial statements and those
reported for income tax purposes. The differences relate principally to
depreciation deductions, allowance for loan losses and discounts on investment
securities.
Deferred income tax provision (credit) for the three months ended
March 31, 1994 was ($1,353) and for the year ended December 31, 1993 and 1992
$3,627 and ($115,582), respectively.
Accumulated deferred income taxes of $32,766 at March 31, 1994 and
$34,120 and $75,928 at December 31, 1993 and 1992, respectively, are included in
other liabilities.
F-15
<PAGE>
INCOME TAXES (continued)
The total expense for the periods was less than the amount computed by
applying the statutory U.S. Federal income tax rate to income before taxes as a
result of the following:
<TABLE>
<CAPTION>
March 31, December 31,
----------------------- ---------------------------------------
1994 1993 1993 1992 1991
<S> <C> <C> <C> <C> <C>
Federal income tax expense
at statutory rates $136,520 $131,880 $ 602,814 $ 430,042 $ 312,331
Increase (reductions) in taxes
resulting from:
Tax exempt interest (79,837) (74,781) (330,189) (241,343) (143,740)
Other 17,250 22,401 77,303 286 16,296
-------- -------- --------- --------- ---------
Income tax expense $ 73,933 $ 79,500 $ 349,928 $ 188,985 $ 184,887
-------- -------- --------- --------- ---------
-------- -------- --------- --------- ---------
</TABLE>
LONG-TERM DEBT
The long-term debt was refinanced in January 1992 to be paid in semi-
annual payments of $59,916 plus interest to be adjusted annually to the Citibank
prime rate (5.6% at 3/31/94). The debt is secured by all stock owned by the
Company in The American National Bank of Silver City. Payments due under the
refinancing in the next five years are as follows:
<TABLE>
<CAPTION>
Year Amount due
---- ----------
<S> <C>
1995 $119,832
1996 119,832
1997 119,832
1998 119,832
1999 119,832
Thereafter 259,244
--------
$858,404
--------
--------
</TABLE>
RELATED-PARTY TRANSACTIONS
At March 31, 1994 and December 31, 1993 and 1992, directors, officers,
and employees were indebted to the Bank in the amount of $1,827,753, $1,926,018
and $1,626,261, respectively. All such loans were made in the ordinary course
of business.
SUPPLEMENTARY CASH FLOW INFORMATION
<TABLE>
<CAPTION>
March 31, December 31,
----------------------- ---------------------------------------
1994 1993 1993 1992 1991
<S> <C> <C> <C> <C> <C>
Cash and cash equivalents
are summarized as follows:
Cash and due from banks $ 4,440,444 $ 4,525,010 $ 5,699,286 $ 6,146,707 $ 5,695,579
Federal funds sold 5,840,000 6,045,000 5,640,000 6,820,000 10,290,000
----------- ----------- ----------- ----------- -----------
$10,280,444 $10,570,010 $11,339,286 $12,966,707 $15,985,579
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
</TABLE>
F-16
<PAGE>
SUPPLEMENTARY CASH FLOW INFORMATION (continued)
<TABLE>
<CAPTION>
March 31, December 31,
----------------------- ---------------------------------------
1994 1993 1993 1992 1991
<S> <C> <C> <C> <C> <C>
Cash paid during the period/
year for:
Interest $ 608,383 $ 697,086 $ 2,484,763 $ 3,334,890 $ 4,414,785
----------- ----------- ----------- ----------- -----------
Income taxes $ -- $ 56,990 $ 351,408 $ 173,861 $ 274,796
----------- ----------- ----------- ----------- -----------
</TABLE>
SIGNIFICANT CONCENTRATION OF CREDIT RISK
The Bank recognizes its primary market area to be within Grant and
Catron Counties of New Mexico (Silver City is located in Grant County.) The
economical climate of this market area is dependent, to a large degree, upon the
success of its agricultural and copper industry base. The Bank maintains a
diversified loan portfolio with greater concentration in residential, commercial
and consumer loans.
COMMITMENTS
The Bank has outstanding commitments for the extension of credit of
$200,000 and $942,000 at December 31, 1993 and 1992, respectively. There were
no outstanding commitments at March 31, 1994. The Bank has contingent
liabilities arising in the normal course of business which are not reflected in
the accompanying financial statements. There were no standby letters of credit
outstanding at March 31, 1994 or December 31, 1993 and 1992.
CUMULATIVE EFFECT OF ACCOUNTING CHANGE
The Company adopted SFASB No. 109 "Accounting for Income Taxes" as of
the beginning of its 1993 fiscal year. The effect of this change in the method
of accounting for income taxes is reported in these financial statements as
"cumulative effect of accounting change." Under the previous method of
accounting for income taxes (APB 11), deferred income taxes or credits were
computed based upon the difference between taxes computed with and without
temporary differences for the current year. These differences were accumulated
as the total deferred tax asset or liability. Changes in tax law or "rates"
were only reflected in the calculation for the current year.
Under the accounting methods prescribed by SFASB No. 109, the so-
called temporary differences between financial and tax bases of assets and
liabilities are accumulated and the income tax consequences of these differences
are calculated by applying the current applicable tax rates.
401(K) SAVINGS PLAN FOR THE AMERICAN NATIONAL BANK
Effective September 1, 1992, the Bank adopted a 401(K) savings plan
whereby employees may elect to make contributions pursuant to a salary reduction
agreement. The Bank may make discretionary contributions to the plan. A
contribution of $25,000 was made for 1993. No contribution was made for 1992
nor during the three months ended March 31, 1994 and 1993.
F-17
<PAGE>
REGULATORY MATTERS
The Bank, as a National Bank, is subject to the dividend restrictions
set forth by the Comptroller of the Currency. Under such restrictions, the Bank
may not, without the prior approval of the Comptroller of the Currency, declare
dividends in excess of the sum of the current year's earnings (as defined) plus
the retained earnings (as defined) from the prior two years. The dividends, as
of December 31, 1993, that the Bank could declare, without the approval of the
Comptroller of the Currency, amounted to approximately $1,642,000. The Bank is
also required to maintain minimum amounts of capital to total "risk weighted"
assets, as defined by the banking regulators. At March 31, 1994 and December
31, 1993, the Bank is required to have minimum Tier 1 and Total capital ratios
of 8.0%. The Bank's actual ratios at those dates were 8.51 and 17.51, 9.36 and
20.26, respectively.
OTHER OPERATING INFORMATION
<TABLE>
<CAPTION>
Three months ended
March 31, Year Ended December 31,
----------------------- ---------------------------------------
1994 1993 1993 1992 1991
<S> <C> <C> <C> <C> <C>
Other income:
Insurance Commissions $ 10,297 $ 24,451 $ 106,043 $103,306 $102,091
Gain (loss) sale of mortgage
notes (20,781) -- 99,080 58,747 --
Other 26,881 2,049 11,788 22,409 14,159
-------- -------- ---------- -------- --------
$ 16,397 $ 26,500 $ 216,911 $184,462 $116,250
-------- -------- ---------- -------- --------
-------- -------- ---------- -------- --------
Other operating expenses:
Advertising $ 5,582 $ 9,869 $ 33,233 $ 27,677 $ 24,741
Insurance 5,679 9,755 33,779 32,385 35,293
Professional fees 5,452 14,090 53,194 51,830 47,577
Stationery and supplies 27,684 30,129 114,746 109,038 116,701
Data processing 48,045 32,574 151,306 92,522 90,567
Public relations and travel 12,295 16,339 80,321 64,558 45,943
Directors expense 20,670 17,832 79,859 60,321 53,499
Postage 22,278 23,000 82,787 73,796 65,335
FDIC insurance assessment 48,658 49,280 194,738 193,298 171,114
Telephone 12,266 10,220 45,513 41,821 38,509
Examination fees 10,493 10,363 40,468 34,678 29,259
Other 30,680 32,359 127,004 122,416 175,373
-------- -------- ---------- -------- --------
$249,782 $255,810 $1,036,948 $904,340 $893,911
-------- -------- ---------- -------- --------
-------- -------- ---------- -------- --------
</TABLE>
F-18
<PAGE>
CONDENSED FINANCIAL INFORMATION - PARENT COMPANY ONLY
BALANCE SHEET
<TABLE>
<CAPTION>
December 31,
March 31, ---------------------------
1994 1993 1992
--------- ---- ----
<S> <C> <C> <C>
ASSETS
Cash $ 1,693 $ 11,685 $ 29,215
Investment in The American National Bank
of Silver City 7,858,193 9,133,700 9,144,759
Goodwill (net of accumulated amortization) 906,489 915,430 951,195
Other assets 91,883 17,872 26,113
---------- ----------- -----------
$8,858,258 $10,078,687 $10,151,282
---------- ----------- -----------
---------- ----------- -----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Long-term debt $ 858,404 $ 978,404 $ 1,138,404
Accrued interest payable 10,014 24,466 26,963
Federal income taxes payable 70,780 -- 40,956
---------- ----------- -----------
939,198 1,002,870 1,206,323
---------- ----------- -----------
Stockholders' equity:
Common stock 109,980 109,980 109,980
Surplus 748,965 748,965 748,965
Retained earnings 7,060,114 8,216,872 8,086,014
---------- ----------- -----------
7,919,059 9,075,817 8,944,959
---------- ----------- -----------
$8,858,257 $10,078,687 $10,151,282
---------- ----------- -----------
---------- ----------- -----------
</TABLE>
STATEMENT OF EARNINGS
<TABLE>
<CAPTION>
Three months ended March 31,
----------------------------
1994 1993
---- ----
<S> <C> <C>
Income:
Interest $ 18 $ 474
-------- --------
Expenses:
Interest 14,411 16,281
Amortization of goodwill 8,941 8,941
Other 169 239
-------- --------
23,521 25,461
-------- --------
Loss before income taxes and equity
in earnings of subsidiary (23,503) (24,987)
Income taxes - credit 3,400 5,000
-------- --------
(20,103) (19,987)
Equity in earnings of subsidiary 343,677 324,126
-------- --------
Net earnings $323,574 $304,139
-------- --------
-------- --------
</TABLE>
F-19
<PAGE>
CONDENSED FINANCIAL INFORMATION - PARENT COMPANY ONLY (continued)
STATEMENT OF EARNINGS
<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------------------------
1993 1992 1991
---- ---- ----
<S> <C> <C> <C>
Income:
Interest $ 1,274 $ 614 $ 1,432
---------- ---------- ---------
Expenses:
Interest 60,769 77,099 109,492
Amortization of goodwill 35,765 35,766 35,765
Other 745 795 1,595
---------- ---------- ---------
97,279 113,660 146,852
---------- ---------- ---------
Loss before income taxes and equity
in earnings of subsidiary (96,005) (113,046) (145,420)
Income taxes - credit 20,482 26,275 37,191
---------- ---------- ---------
(75,523) (86,771) (108,229)
Equity in earnings of subsidiary 1,526,141 1,149,158 832,220
---------- ---------- ---------
Net earnings $1,450,618 $1,062,387 $ 723,991
---------- ---------- ---------
---------- ---------- ---------
</TABLE>
STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
Three months ended March 31,
----------------------------
1994 1993
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 323,574 $ 304,139
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Equity in earnings of subsidiary net of cash
dividends received 1,275,507 1,213,074
Amortization 9,110 9,110
Increase in other assets (78,687) (49,918)
Decrease in accrued interest (14,452) (15,245)
Increase in income taxes payable 75,287 22,510
------------ ------------
Net cash provided by operating activities 1,590,339 1,483,670
------------ ------------
Cash flows from financing activities:
Dividends paid (1,480,331) (1,319,760)
Payment on long-term debt (120,000) (120,000)
------------ ------------
Net cash used by financing activities (1,600,331) 1,439,760
------------ ------------
Net increase (decrease) in cash (9,992) 43,910
Cash at beginning of period 11,685 29,215
------------ ------------
Cash at end of period $ 1,693 $ 73,125
------------ ------------
------------ ------------
</TABLE>
F-20
<PAGE>
CONDENSED FINANCIAL INFORMATION - PARENT COMPANY ONLY (continued)
STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------------------------
1993 1992 1991
---- ---- ----
<S> <C> <C> <C>
Cash flows from operating activities:
Net earnings $ 1,450,618 $1,062,387 $ 723,991
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Equity in earnings of subsidiary net of
cash dividends received 36,440 36,440 35,765
Amortization 7,566 62,964 (53,224)
Decrease (increase) in other assets (2,497) 22,794 (50,784)
Increase (decrease) in accrued interest (40,956) 23,543 17,255
Increase (decrease) in income taxes payable 11,059 (790,478) (536,309)
------------ ----------- -----------
Net cash provided by operating activities 1,462,230 417,650 136,694
------------ ----------- -----------
Cash flows from financing activities:
Dividends paid (1,319,760) (329,940) --
Payment on long-term debt (160,000) (59,916) (167,000)
------------ ----------- -----------
Net cash used by financing activities (1,479,760) (389,856) (167,000)
------------ ----------- -----------
Net increase (decrease) in cash (17,530) 27,794 (30,306)
Cash at beginning of period 29,215 1,421 (31,727)
------------ ----------- -----------
Cash at end of period $ 11,685 $ 29,215 $ 1,421
------------ ----------- -----------
------------ ----------- -----------
</TABLE>
SUBSEQUENT EVENT
On March 3, 1994, the Company and Norwest Corporation (Norwest)
entered into an Agreement and Plan of Reorganization (the Agreement) whereby a
wholly-owned subsidiary of Norwest will merge into Company. All of the
Company's outstanding common stock will be exchanged for Norwest common stock.
The number of shares of Norwest common stock to be received in exchange for the
Company's common stock is 518,473 shares. The outstanding common stock of the
Company 's subsidiary bank not owned by the Company will be exchanged for 6,527
shares of Norwest common stock.
The Agreement requires that, prior to the effective date of the
merger, the Company shall, among other things, conduct its business and the
business of its subsidiary in its ordinary and usual manner, extend credit in
accordance with existing lending policies, except that aggregated amounts
exceeding an established amount must have prior approval of Norwest and comply
in all material respects with controlling laws, regulations, etc. The Agreement
also, during this time, restrict, without prior written consent of Norwest,
certain actions including the mortgage or pledging of its property, making of
investments, declaration or payment of dividends and selling or otherwise
disposing of its assets or property other than in the ordinary course of
business.
F-21
<PAGE>
RECLASSIFICATION
Certain items of income and expense as reported in prior years have
been reclassified to conform with current classifications.
F-22
<PAGE>
THE AMERICAN NATIONAL BANK OF SILVER CITY
___________________________________
FINANCIAL STATEMENTS
with
INDEPENDENT AUDITOR'S REPORT
YEARS ENDED DECEMBER 31, 1993 AND 1992
_____________________
<PAGE>
THE AMERICAN NATIONAL BANK OF SILVER CITY
___________________________________
FINANCIAL STATEMENTS
and
SUPPLEMENTARY INFORMATION
with
INDEPENDENT AUDITOR'S REPORT
YEARS ENDED DECEMBER 31, 1993 AND 1992
_____________________
<PAGE>
January 6, 1994
INDEPENDENT AUDITOR'S REPORT
The Board of Directors and Stockholders
The American National Bank of Silver City
Silver City, New Mexico
We have audited the accompanying balance sheets of The American
National Bank of Silver City, (a 99% owned subsidiary of Copper Bancshares,
Inc.) as of December 31, 1993 and 1992, and the related statements of earnings,
stockholders' equity, and cash flows for the three years in the period ended
December 31, 1993. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of The American
National Bank of Silver City, (a 99% owned subsidiary of Copper Bancshares,
Inc.) as of December 31, 1993 and 1992, and the results of its operations and
its cash flows for the three years in the period ended December 31, 1993 in
conformity with generally accepted accounting principles.
BOCK, RUTHERFORD & CO.
F-23
<PAGE>
THE AMERICAN NATIONAL BANK OF SILVER CITY
BALANCE SHEET
ASSET
<TABLE>
<CAPTION>
December 31,
March 31, --------------------------
1994 1993 1992
--------- ---- ----
(Unaudited)
<S> <C> <C> <C>
Cash and due from banks $ 4,440,444 $ 5,699,286 $ 6,146,707
Federal funds sold 5,840,000 5,640,000 6,820,000
Interest-bearing deposits with banks 1,500,000 1,500,000 1,500,000
Investment securities 47,426,153 44,589,063 43,480,786
Loans, net of allowance for loan losses
of $604,040, $601,043 and $560,233,
respectively 38,054,424 38,524,987 39,609,185
Bank premises and equipment, net 1,594,604 1,623,800 1,585,983
Interest receivable 851,361 1,055,879 1,002,228
Other real estate 12,083 -- 155,000
Other assets 155,575 58,786 94,230
----------- ----------- ------------
$99,874,644 $98,691,801 $100,394,119
----------- ----------- ------------
----------- ----------- ------------
</TABLE>
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Liabilities:
Deposits:
Demand: Non-interest bearing $17,055,030 $16,450,632 $ 14,618,980
Interest bearing 25,428,513 24,799,501 23,338,974
Savings 16,041,094 14,266,939 14,362,498
Time 32,966,009 33,536,581 38,361,426
----------- ----------- ------------
91,490,646 89,053,653 90,681,878
Accrued interest payable 221,686 241,412 314,999
Other liabilities 212,103 156,083 145,401
----------- ----------- ------------
91,924,435 89,451,148 91,142,278
----------- ----------- ------------
Stockholders' equity:
Common stock, $5 par value
Authorized and issued - 129,600 shares 648,000 648,000 648,000
Surplus 852,000 852,000 852,000
Undivided profits 6,450,209 7,740,653 7,751,841
----------- ----------- ------------
7,950,209 9,240,653 9,251,841
----------- ----------- ------------
$99,874,644 $98,691,801 $100,394,119
----------- ----------- ------------
----------- ----------- ------------
</TABLE>
The accompanying notes are an integral
part of the financial statements.
F-24
<PAGE>
THE AMERICAN NATIONAL BANK OF SILVER CITY
STATEMENT OF EARNINGS
<TABLE>
<CAPTION>
Three months ended March 31,
----------------------------
1994 1993
---- ----
(Unaudited) (Unaudited)
<S> <C> <C>
Interest income:
Interest and fees on loans $ 993,882 $1,021,469
Interest on federal funds sold 54,019 30,516
Interest on deposits with bank 12,866 13,315
Interest on investment securities:
Taxable 284,404 405,243
Exempt from income taxes 263,911 258,910
---------- ----------
1,609,082 1,729,453
Interest expense on deposits 559,813 627,488
---------- ----------
Net interest income 1,049,269 1,101,965
Provision for loan losses 15,000 60,000
---------- ----------
Net interest income after provision for loan losses 1,034,269 1,041,965
---------- ----------
Other income:
Service charges on deposit accounts 107,325 89,425
Other 16,397 26,500
---------- ----------
123,722 115,925
---------- ----------
Other expenses:
Salaries and employee benefits 411,208 398,917
Occupancy of bank premises 48,054 34,547
Equipment 24,084 25,984
Other operating expenses 249,612 255,571
Write-down of other real estate owned -- 30,000
---------- ----------
732,958 745,019
---------- ----------
Earnings before income taxes and cumulative effect
of accounting change 425,033 412,871
Income taxes 77,333 84,500
---------- ----------
Earnings before cumulative effect of accounting
change 347,700 328,371
Cumulative effect of accounting change -- 45,435
---------- ----------
Net earnings $ 347,700 $ 373,806
---------- ----------
---------- ----------
Earnings per common share:
Earnings before cumulative effect of accounting
change $2.68 $2.53
Cumulative effect of accounting change -- .35
---------- ----------
Net earnings $2.68 $2.88
---------- ----------
---------- ----------
</TABLE>
The accompanying notes are an integral
part of the financial statements.
F-25
<PAGE>
THE AMERICAN NATIONAL BANK OF SILVER CITY
STATEMENT OF EARNINGS
<TABLE>
<CAPTION>
Year ended December 31,
----------------------------------------
1993 1992 1991
---- ---- ----
<S> <C> <C> <C>
Interest income:
Interest and fees on loans $4,354,547 $4,385,059 $4,642,644
Interest on federal funds sold 105,922 295,448 1,013,079
Interest on deposits with bank 49,142 70,772 107,992
Interest on investment securities:
Taxable 1,233,135 1,733,891 1,445,787
Exempt from income taxes 1,078,795 788,855 581,690
----------- ---------- ----------
6,821,541 7,274,025 7,791,192
Interest expense on deposits 2,347,911 3,117,530 4,183,753
----------- ---------- ----------
Net interest income 4,473,630 4,156,495 3,607,439
Provision for loan losses 200,000 500,000 345,000
----------- ---------- ----------
Net interest income after provision for
loan losses 4,273,630 3,656,495 3,262,439
----------- ---------- ----------
Other income:
Service charges on deposit accounts 429,662 409,407 424,235
Other 216,911 184,462 116,250
----------- ---------- ----------
646,573 593,869 540,485
----------- ---------- ----------
Other expenses:
Salaries and employee benefits 1,664,337 1,629,222 1,580,509
Occupancy of bank premises 152,806 160,444 138,035
Equipment 109,125 117,438 128,021
Other operating expenses 1,036,203 904,340 892,316
Write-down of other real estate owned 88,745 61,046 --
----------- ---------- ----------
3,051,216 2,872,490 2,738,881
----------- ---------- ----------
Earnings before income taxes and
cumulative effect of accounting change 1,868,987 1,377,874 1,064,043
Income taxes 370,410 215,260 222,078
----------- ---------- ----------
Earnings before cumulative effect of
accounting change 1,498,577 1,162,614 841,965
Cumulative effect of accounting change 45,435 -- --
----------- ---------- ----------
Net earnings $1,544,012 $1,162,614 $ 841,965
----------- ---------- ----------
----------- ---------- ----------
Earnings per common share:
Earnings before cumulative effect of
accounting change $11.56 $8.97 $6.50
Cumulative effect of accounting change .35 -- --
----------- ---------- ----------
Net earnings $11.91 $8.97 $6.50
----------- ---------- ----------
----------- ---------- ----------
</TABLE>
The accompanying notes are an integral
part of the financial statements.
F-26
<PAGE>
THE AMERICAN NATIONAL BANK OF SILVER CITY
STATEMENT OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Common stock
------------------- Undivided
Shares Amount Surplus profits
------ ------ ------- -------
<S> <C> <C> <C> <C>
Balance at December 31, 1991 129,600 $648,000 $852,000 $ 6,952,107
Net earnings for the year -- -- -- 1,162,614
Cash dividend paid - $2.80
per share -- -- -- (362,880)
------- -------- -------- -----------
Balance at December 31, 1992 129,600 648,000 852,000 7,751,841
Net earnings for the year -- -- -- 1,544,012
Cash dividend paid - $12.00
per share -- -- -- (1,555,200)
------- -------- -------- -----------
Balance at December 31, 1993 129,600 648,000 852,000 7,740,653
Net earnings for the period -- -- -- 347,700
Cash dividend paid - $12.64
per share -- -- -- (1,638,144)
------- -------- -------- -----------
Balance at March 31, 1994 (unaudited) 129,600 $648,000 $852,000 $ 6,450,209
------- -------- -------- -----------
------- -------- -------- -----------
</TABLE>
The accompanying notes are an integral
part of the financial statements.
F-27
<PAGE>
THE AMERICAN NATIONAL BANK OF SILVER CITY
STATEMENT OF CASH FLOWS
DECREASE IN CASH AND CASH EQUIVALENTS
<TABLE>
<CAPTION>
Three months ended March 31,
----------------------------
1994 1993
---- ----
(Unaudited) (Unaudited)
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 347,700 $ 373,806
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Depreciation 36,248 40,008
Provision for loan losses 15,000 60,000
Deferred income taxes (credits) (1,354) (45,435)
Write-down of other real estate owned -- 30,000
Changes in operating assets and liabilities:
Decrease in accrued interest receivable 204,518 197,569
Premium amortization - securities 42,731 48,860
Discount accretion - securities (4,772) (22,577)
(Increase) in other assets (96,789) (25,666)
Increase in other liabilities 57,374 64,911
Decrease in accrued interest payable (19,726) (38,547)
----------- -----------
Net cash provided by operating activities 580,930 682,929
----------- -----------
Cash flows from investing activities:
Proceeds from maturities of investment securities 2,118,406 8,801,248
Purchase of investment securities (4,993,456) (5,767,547)
Net (increase) decrease in loans made to customers 455,563 (1,158,312)
Purchase of bank equipment (7,052) (9,644)
Proceeds from sale of equipment and other real
estate owned -- 7,946
Acquisition of other real estate (12,083) --
----------- -----------
Net cash provided (used) by investing activities (2,438,622) 1,873,691
----------- -----------
Cash flows from financing activities:
Net increase (decrease) in demand and savings deposits 3,007,566 (583,200)
Net decrease in time deposits (570,572) (2,814,918)
Dividend paid (1,638,144) (1,555,200)
----------- -----------
Net cash provided (used) by financing activities 798,850 (4,953,318)
----------- -----------
Net decrease in cash and cash equivalents (1,058,842) (2,396,698)
Cash and cash equivalents at beginning of period 11,339,286 12,966,707
----------- -----------
Cash and cash equivalents at end of period $10,280,444 $10,570,009
----------- -----------
----------- -----------
</TABLE>
The accompanying notes are an integral
part of the financial statements.
F-28
<PAGE>
THE AMERICAN NATIONAL BANK OF SILVER CITY
STATEMENT OF CASH FLOWS
DECREASE IN CASH AND CASH EQUIVALENTS
<TABLE>
<CAPTION>
Year ending December 31,
-----------------------------------------
1993 1992 1991
---- ---- ----
<S> <C> <C> <C>
Cash flows from operating activities:
Net earnings $ 1,544,012 $ 1,162,614 $ 841,965
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Depreciation 178,475 155,166 140,157
Provision for loan losses 200,000 500,000 345,000
Deferred income taxes (credits) (41,808) (115,582) (4,509)
Write-down of other real estate owned 88,745 61,046 --
Changes in operating assets and liabilities:
Decrease (increase) in accrued interest
receivable (53,651) 134,910 (549,383)
Premium amortization - securities 176,375 182,227 120,392
Discount accretion - securities (39,147) (19,310) (30,266)
Decrease (increase) in other assets 35,444 3,780 (16,430)
Increase (decrease) in other liabilities 52,490 73,317 (52,622)
Decrease in accrued interest payable (73,587) (163,669) (72,188)
----------- ----------- -----------
Net cash provided by operating activities 2,067,348 1,974,499 722,116
----------- ----------- -----------
Cash flows from investing activities:
Proceeds from maturities of investment securities 15,343,904 11,864,055 3,733,350
Purchase of investment securities (16,589,409) (21,052,523) (24,789,362)
Net (increase) decrease in loans made to
customers 884,198 1,350,389 (3,786,100)
Purchase of bank equipment (224,238) (101,074) (183,616)
Proceeds from sale of equipment and other
real estate owned 74,201 -- 24,354
----------- ----------- -----------
Net cash used by investing activities (511,344) (7,939,153) (25,001,374)
----------- ----------- -----------
Cash flows from financing activities:
Net increase in demand and savings deposits 3,196,620 8,701,862 711,997
Net increase (decrease) in time deposits (4,824,845) (5,393,200) 5,516,453
Dividend paid (1,555,200) (362,880) (299,376)
----------- ----------- -----------
Net cash provided (used) by financing activities (3,183,425) 2,945,782 5,929,074
----------- ----------- -----------
Net decrease in cash and cash equivalents (1,627,421) (3,018,872) (18,350,184)
Cash and cash equivalents at beginning of period 12,966,707 15,985,579 34,335,763
----------- ----------- -----------
Cash and cash equivalents at end of period $11,339,286 $12,966,707 $15,985,579
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
The accompanying notes are an integral
part of the financial statements.
F-29
<PAGE>
THE AMERICAN NATIONAL BANK OF SILVER CITY
NOTES TO FINANCIAL STATEMENTS
(Data as of and for the three months periods ended
March 31, 1994 and 1993 is unaudited)
SIGNIFICANT ACCOUNTING POLICIES
The Bank follows generally accepted accounting principles and
reporting practices applicable to the banking industry. Descriptions of the
significant accounting policies followed are summarized below.
INTERIM FINANCIAL STATEMENTS
The balance sheet as of March 31, 1994 and the statements of earnings,
stockholders' equity, and cash flows for the three month periods ended March 31,
1994 and 1993 are unaudited. However, in the opinion of management, these
financial statements include all adjustments, which consist only of normal
recurring adjustments, necessary for fair presentation of the Bank's financial
position. The results of operations for the unaudited three-month period ended
March 31, 1994 are not necessarily indicative of the results which may be
expected for the entire year of 1994.
INVESTMENT SECURITIES
Investment securities represent various investments made in debt
securities with the intent of holding the security until maturity. These
investments are carried at cost adjusted for amortization of premiums and
accretion of discounts.
INTEREST INCOME ON LOANS
Interest on loans is accrued and credited to income based on the
principal amount outstanding. The accrual of interest on loans is discontinued
when, in the opinion of management, there is an indication that the borrower may
be unable to meet payments as they become due. Upon such discontinuance, all
unpaid accrued interest is reversed. The unearned discount on discounted
consumer loans is recognized as income using the sum-of-the-month- digits
method.
LOAN ORIGINATION FEES AND COSTS
Loan origination fees and certain direct origination costs are
capitalized and recognized as an adjustment of the yield on the related loan.
These fees and costs were not material.
F-30
<PAGE>
SIGNIFICANT ACCOUNTING POLICIES (continued)
ALLOWANCE FOR LOAN LOSSES
The provision for loan losses charged to operating expense is
management's judgement of the amount necessary to maintain the allowance for
loan losses at levels sufficient to cover possible losses in the collection of
loans.
BANK PREMISES AND EQUIPMENT
Bank premises and equipment are stated at cost less allowances for
depreciation. Provisions for depreciation are computed by the straight-line
method using estimated useful lives of ten to fifty years for bank buildings and
five to ten years for furniture and equipment.
INCOME TAXES
The bank files consolidated income tax returns with its parent. The
parent charges the Bank for its share of the income taxes on a basis that would
have been paid had the Bank filed on a separate entity basis.
The Bank adopted SFASB No. 109, "Accounting for Income Taxes," as of
the beginning of its 1993 fiscal year. This statement requires, among other
things, the recognition of future tax benefits or charges, measured by enacted
tax rates, attributable to temporary differences between financial statement and
income tax basis of assets and liabilities. These temporary differences relate
primarily to depreciable assets (use of different depreciation methods and lives
for financial statement and income tax purposes), allowances for loan losses and
purchase discounts on investment securities. Prior to the adoption of SFASB No.
109, the Bank accounted for income taxes according to APB No. 11.
ORGANIZATIONAL DATA
The American National Bank of Silver City is a subsidiary of Copper
Bancshares, Inc., a one-bank holding company founded in 1979 under the
regulations of the Bank Holding Company Act of 1956 as amended. Copper
Bancshares, Inc. owns approximately 99% of The American National Bank of Silver
City.
CASH AND CASH EQUIVALENTS
For purposes of the statement of cash flows, the Company considers all
highly liquid debt instruments purchased with a maturity of three months or less
to be cash equivalents which includes federal funds sold.
EARNINGS PER COMMON SHARE
Earnings per common share are computed on the average number of shares
outstanding during the year.
F-31
<PAGE>
INVESTMENT SECURITIES
The carrying amounts of investment securities and their approximate
market values were as follows:
<TABLE>
<CAPTION>
Carrying Unrealized Unrealized Market
amount gains losses value
-------- ---------- ---------- ------
<S> <C> <C> <C> <C>
March 31, 1994:
U.S. Treasury securities $24,057,999 $ 88,401 $ 85,150 $24,061,250
U.S. Government agency
securities 113,818 3,196 -- 117,014
State and political
subdivision securities 23,199,336 367,499 120,259 23,446,576
Other securities 55,000 -- -- 55,000
----------- -------- -------- -----------
$47,426,153 $459,096 $205,409 $47,679,840
----------- -------- -------- -----------
----------- -------- -------- -----------
December 31, 1993:
U.S. Treasury securities $21,079,554 $243,403 $ 2,957 $21,320,000
U.S. Government agency
securities 142,263 6,766 -- 149,029
State and political
subdivision securities 23,312,246 609,988 39,269 23,882,965
Other securities 55,000 -- -- 55,000
----------- -------- ------- -----------
$44,589,063 $860,157 $42,226 $45,406,994
----------- -------- ------- -----------
----------- -------- ------- -----------
December 31, 1992:
U.S. Treasury securities $26,123,165 $336,444 $22,578 $26,437,031
U.S. Government agency
securities 233,532 4,257 -- 237,789
State and political
subdivision securities 17,069,089 532,620 39,590 17,562,119
Other securities 55,000 -- -- 55,000
----------- -------- ------- -----------
$43,480,786 $873,321 $62,168 $44,291,939
----------- -------- ------- -----------
----------- -------- ------- -----------
</TABLE>
Securities with a carrying amount of $19,704,479 at March 31, 1994,
$19,741,879 at December 31, 1993 and $18,534,474 at December 31, 1992, were
pledged as collateral for public deposits. The related market values were
$19,859,601, $20,131,974 and $18,976,277, respectively.
Management views these securities as long-term investments which they
intend to hold until maturity.
F-32
<PAGE>
INVESTMENT SECURITIES (continued)
The maturities of investment securities were as follows:
<TABLE>
<CAPTION>
March 31, 1994 December 31, 1993
-------------------------- --------------------------
Carrying Carrying
amount Market Value amount Market Value
-------- ------------ -------- ------------
<S> <C> <C> <C> <C>
Due in one year or less $10,391,986 $10,434,862 $ 9,383,564 $ 9,472,598
Due from one to five years 34,141,214 34,324,190 32,283,897 32,918,734
Due from five to ten years 2,775,008 2,801,031 2,776,070 2,865,798
Due after ten years 117,945 119,757 145,532 149,864
----------- ----------- ----------- -----------
$47,426,153 $47,679,840 $44,589,063 $45,406,994
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
</TABLE>
LOANS
Loans consisted of the following at:
<TABLE>
<CAPTION>
December 31,
March 31, --------------------------
1994 1993 1992
-------- ---- ----
<S> <C> <C> <C>
Real estate loans $12,264,943 $12,713,938 $16,513,416
Commercial and industrial loans 15,854,811 15,354,133 12,939,104
Installment and personal loans 12,074,791 12,780,026 12,397,512
Overdrafts 44,951 4,939 5,458
----------- ----------- -----------
40,239,496 40,853,036 41,855,490
----------- ----------- -----------
Less:
Unearned discounts 1,581,032 1,727,006 1,686,072
Allowance for loan losses 604,040 601,043 560,233
----------- ----------- -----------
2,185,072 2,328,049 2,246,305
----------- ----------- -----------
$38,054,424 $38,524,987 $39,609,185
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
Loans on which accrual of interest has been discontinued amounted to
$10,815 at March 31, 1994, $177,110 and $255,039 at December 31, 1993 and 1992,
respectively. If interest on those loans had been accrued, such income would
have approximated $726, $12,241 and $18,548, respectively.
Changes in the allowance for loan losses were as follows:
<TABLE>
<CAPTION>
December 31,
March 31, --------------------------
1994 1993 1992
-------- ---- ----
<S> <C> <C> <C>
Balance at beginning of period $601,043 $ 560,233 $ 341,253
Provision for losses 15,000 200,000 500,000
Loans charged off (22,300) (235,708) (310,211)
Recovery on loans previously charged off 10,297 76,518 29,191
-------- --------- ---------
Balance at end of period $604,040 $ 601,043 $ 560,233
-------- --------- ---------
-------- --------- ---------
</TABLE>
F-33
<PAGE>
BANK PREMISES AND EQUIPMENT
Following is a summary of bank premises and equipment at:
<TABLE>
<CAPTION>
December 31,
March 31, -------------------------
1994 1993 1992
-------- ---- ----
<S> <C> <C> <C>
Land $ 261,866 $ 261,866 $ 261,866
Bank building 1,600,271 1,600,271 1,600,271
Equipment 984,673 976,618 988,213
---------- ---------- ----------
2,846,810 2,838,755 2,850,350
Less accumulated depreciation 1,252,206 1,214,955 1,264,367
---------- ---------- ----------
$1,594,604 $1,623,800 $1,585,983
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
TIME DEPOSITS
Included in time deposits are certificates of deposit issued in
amounts of $100,000 or more with their remaining maturities as follows:
<TABLE>
<CAPTION>
December 31,
March 31, --------------------------
1994 1993 1992
-------- ---- ----
<S> <C> <C> <C>
Three months or less $7,116,661 $10,938,559 $12,140,523
Three through six months 938,186 747,492 1,715,194
Six through twelve months 963,837 701,688 450,000
Over twelve months 888,251 782,300 892,684
---------- ----------- -----------
$9,906,935 $13,170,039 $15,198,401
---------- ----------- -----------
---------- ----------- -----------
</TABLE>
INCOME TAXES
Deferred income taxes are recorded for temporary differences between
items of income or expense reported in the financial statements and those
reported for income tax purposes. The differences relate principally to
depreciation deductions, allowance for loan losses and discounts on investment
securities.
Deferred income tax provision (credit) for the three months ended
March 31, 1994 was ($1,353) and for the year ended December 31, 1993 and 1992
$3,627 and ($115,582), respectively.
Accumulated deferred income taxes of $32,766 at March 31, 1994 and
$34,120 and $75,928 at December 31, 1993 and 1992, respectively, are included in
other liabilities.
F-34
<PAGE>
INCOME TAXES (continued)
The total expense for the periods was less than the amount computed by
applying the statutory U.S. Federal income tax rate to income before taxes as a
result of the following:
<TABLE>
<CAPTION>
March 31, December 31,
----------------------- ---------------------------------------
1994 1993 1993 1992 1991
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Federal income tax expense
at statutory rates $144,511 $140,375 $ 635,456 $ 468,477 $ 361,775
Increase (reductions) in taxes
resulting from:
Tax exempt interest (79,837) (74,781) (330,189) (241,343) (143,740)
Other 12,659 18,906 65,142 (11,874) 4,043
-------- -------- --------- --------- ---------
Income tax expense $ 77,333 $ 84,500 $ 370,409 $ 215,260 $ 222,078
-------- -------- --------- --------- ---------
-------- -------- --------- --------- ---------
</TABLE>
CUMULATIVE EFFECT OF ACCOUNTING CHANGE
The Bank adopted SFASB No. 109 "Accounting for Income Taxes" as of the
beginning of its 1993 fiscal year. The effect of this change in the method of
accounting for income taxes is reported in these financial statements as
"cumulative effect of accounting change." Under the previous method of
accounting for income taxes (APB 11), deferred income taxes or credits were
computed based upon the difference between taxes computed with and without
temporary differences for the current year. These differences were accumulated
as the total deferred tax asset or liability. Changes in tax law or rates were
only reflected in the calculation for the current year.
Under the accounting methods prescribed by SFASB No. 109, the so-
called temporary differences between financial and tax bases of assets and
liabilities are accumulated and the income tax consequences of these differences
are calculated by applying the current applicable tax rates.
RELATED-PARTY TRANSACTIONS
At March 31, 1994 and December 31, 1993 and 1992, directors, officers,
and employees were indebted to the Bank in the amount of $1,827,753, $1,926,018
and $1,626,261, respectively. All such loans were made in the ordinary course
of business.
SUPPLEMENTARY CASH FLOW INFORMATION
<TABLE>
<CAPTION>
March 31, December 31,
-------------------------- -----------------------------------------
1994 1993 1993 1992 1991
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Cash and cash equivalents
are summarized as follows:
Cash and due from banks $ 4,440,444 $ 4,525,010 $ 5,699,286 $ 6,146,707 $ 5,695,579
Federal funds sold 5,840,000 6,045,000 5,640,000 6,820,000 10,290,000
----------- ----------- ----------- ----------- -----------
$10,280,444 $10,570,010 $11,339,286 $12,966,707 $15,985,579
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
Cash paid during the year
for:
Interest $ 579,539 $ 666,034 $ 2,421,498 $ 3,281,199 $ 4,255,941
----------- ----------- ----------- ----------- -----------
Income taxes $ -- $ 34,582 $ 378,855 $ 294,067 $ 271,509
----------- ----------- ----------- ----------- -----------
</TABLE>
F-35
<PAGE>
SIGNIFICANT CONCENTRATION OF CREDIT RISK
The Bank recognizes its primary market area to be within Grant and
Catron Counties of New Mexico (Silver City is located in Grant County.) The
economical climate of this market area is dependent, to a large degree, upon the
success of its agricultural and copper industry base. The Bank maintains a
diversified loan portfolio with greater concentration in residential, commercial
and consumer loans.
COMMITMENTS
The Bank has outstanding commitments for the extension of credit of
$200,000 and $942,000 at December 31, 1993 and 1992, respectively. There were
no outstanding commitments at March 31, 1994. The Bank has contingent
liabilities arising in the normal course of business which are not reflected in
the accompanying financial statements. There were no standby letters of credit
outstanding at March 31, 1994 or December 31, 1993 and 1992.
401(K) SAVINGS PLAN
Effective September 1, 1992, the Bank adopted a 401(K) savings plan
whereby employees may elect to make contributions pursuant to a salary reduction
agreement. The Bank may make discretionary contributions to the plan. A
contribution of $25,000 was made for 1993. No contribution was made for 1992
nor during the three months ended March 31, 1994 and 1993.
REGULATORY MATTERS
The Bank, as a National Bank, is subject to the dividend restrictions
set forth by the Comptroller of the Currency. Under such restrictions, the Bank
may not, without the prior approval of the Comptroller of the Currency, declare
dividends in excess of the sum of the current year's earnings (as defined) plus
the retained earnings (as defined) from the prior two years. The dividends, as
of December 31, 1993, that the Bank could declare, without the approval of the
Comptroller of the Currency, amounted to approximately $1,642,000. The Bank is
also required to maintain minimum amounts of capital to total "risk weighted"
assets, as defined by the banking regulators. At March 31, 1994 and December
31, 1993, the Bank is required to have minimum Tier 1 and Total capital ratios
of 8.0%. The Bank's actual ratios at those dates were 8.51 and 17.51, 9.36 and
20.26, respectively.
OTHER OPERATING INFORMATION
Other income and other expense is as follows:
<TABLE>
<CAPTION>
Three months ended
March 31, Year ended December 31,
----------------------- ----------------------------------------
1994 1993 1993 1992 1991
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Other income:
Insurance Commissions $ 10,297 $ 24,451 $ 106,043 $103,306 $102,091
Gain (loss) sale of
mortgage notes (20,781) -- 99,080 58,747 --
Other 26,881 2,049 11,788 22,409 14,159
-------- -------- ---------- -------- --------
$ 16,397 $ 26,500 $ 216,911 $184,462 $116,250
-------- -------- ---------- -------- --------
-------- -------- ---------- -------- --------
</TABLE>
F-36
<PAGE>
OTHER OPERATING INFORMATION (continued)
<TABLE>
<CAPTION>
Three months ended
March 31, Year ended December 31,
----------------------- -----------------------------------------
1994 1993 1993 1992 1991
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Other operating expenses:
Advertising $ 5,582 $ 9,869 $ 33,233 27,677 24,741
Insurance 5,679 9,755 33,779 32,385 35,293
Professional fees 5,452 14,090 53,194 51,830 47,577
Stationery and supplies 27,684 30,129 114,746 109,038 116,701
Data processing 48,045 32,574 151,306 92,522 90,567
Public relations and travel 12,295 16,339 80,321 64,558 45,943
Directors expense 20,670 17,832 79,859 60,321 53,499
Postage 22,278 23,000 82,787 73,796 65,335
FDIC insurance assessment 48,658 49,280 194,738 193,298 171,114
Telephone 12,266 10,220 45,513 41,821 38,509
Examination fees 10,493 10,363 40,468 34,678 29,259
Other 30,510 32,120 126,259 122,416 173,778
-------- -------- ---------- -------- --------
$249,612 $255,571 $1,036,203 $904,340 $892,316
-------- -------- ---------- -------- --------
-------- -------- ---------- -------- --------
</TABLE>
SUBSEQUENT EVENT
On March 3, 1994, the parent company of the Bank and Norwest
Corporation (Norwest) entered into an Agreement and Plan of Reorganization (the
Agreement) whereby a wholly-owned subsidiary of Norwest will merge into Company.
All of the parent company's outstanding common stock will be exchanged for
Norwest common stock. The number of shares of Norwest common stock to be
received in exchange for the parent company's common stock is 518,473 shares.
The outstanding common stock of the Bank that is not owned by the parent company
is to be exchanged for 6,527 shares of Norwest common stock.
The Agreement requires that, prior to the effective date of the
merger, the Bank and its parent company shall, among other things, conduct their
business in their ordinary and usual manner, extend credit in accordance with
existing lending policies, except that aggregated amounts exceeding an
established amount must have prior approval of Norwest and comply in all
material respects with controlling laws, regulations, etc. The Agreement also,
during this time restrict, without prior written consent of Norwest, certain
actions including the mortgage or pledging of its property, making of
investments, declaration or payment of dividends and selling or otherwise
disposing of its assets or property other than in the ordinary course of
business.
RECLASSIFICATION
Certain items of income and expense as reported in prior years have
been reclassified to conform with current classifications.
F-37
<PAGE>
APPENDIX A
AGREEMENT AND PLAN OF REORGANIZATION,
AND
AGREEMENT AND PLAN OF MERGER
<PAGE>
AGREEMENT
AND
PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") entered into as of
the 3rd day of March, 1994, by and between Copper Bancshares, Inc. ("Company"),
a New Mexico corporation, The American National Bank of Silver City, a national
banking association ("Bank"), and NORWEST CORPORATION ("Norwest"), a Delaware
corporation.
WHEREAS, the parties hereto desire to effect a reorganization whereby a
wholly-owned subsidiary of Norwest will merge with and into Company (the
"Merger") pursuant to an agreement of merger (the "Merger Agreement") in
substantially the form attached hereto as Exhibit A, which provides, among other
things, for the conversion and exchange of the shares of all of the common stock
of Company of the par value of $1.00 per share ("Company Common Stock")
outstanding immediately prior to the time the Merger becomes effective in
accordance with the provisions of the Merger Agreement (the "Effective Time of
the Merger") into shares of voting Common Stock of Norwest of the par value of
$1-2/3 per share ("Norwest Common Stock"),
WHEREAS, Norwest desires that, immediately following the Merger, the Bank
will consolidate with a wholly-owned subsidiary of Norwest ("Norwest Bank")
under the charter of Bank (the "Consolidation") pursuant to an agreement of
consolidation (the "Consolidation Agreement") in substantially the form attached
hereto as Exhibit B, which provides, among other things, for the conversion and
exchange of the shares of voting common stock of the Bank, of the par value of
$100 per share, outstanding immediately prior to the time the Consolidation
becomes effective in accordance with the provisions of the Consolidation
Agreement and owned by shareholders other than Company ("Bank Common Stock")
into shares of Norwest Common Stock.
NOW, THEREFORE, to effect such reorganization and in consideration of the
premises and the mutual covenants and agreements contained herein, the parties
hereto do hereby represent, warrant, covenant and agree as follows:
1. BASIC PLAN OF REORGANIZATION.
(a) EXCHANGE OF SHARES. Shares of Company Common Stock and Bank Common
Stock outstanding immediately prior to the Effective Time of the Merger and the
Effective Time of the Consolidation (as defined below), as the case may be
(other than shares as to which statutory dissenters' appraisal rights have been
exercised) will be converted into and exchanged for 525,000 shares of Norwest
Common Stock ("Aggregate Norwest Shares").
(b) MERGER. Subject to the terms and conditions contained herein on the
Closing Date, a wholly owned subsidiary of Norwest (the "Merger Co.") will be
merged by statutory merger with and into Company pursuant to the Merger
Agreement, with Company as the surviving corporation, in which Merger each share
of Company Common Stock outstanding immediately prior to the Effective Time of
the Merger (other than shares as to which statutory dissenters' rights have been
exercised) will be converted into and exchanged for the number of shares of
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Norwest Common Stock determined by dividing 518,473 by the number of shares of
Company Common Stock outstanding immediately prior to the Effective Time of the
Merger. The Effective Time of the Merger shall occur upon the filing of the
Certificate of Merger with the New Mexico Secretary of State (which filing shall
occur on the Closing Date) or at such time thereafter as Norwest and Company may
agree in writing to provide in the Certificate of Merger referred to in Section
1(f) hereof.
(c) CONSOLIDATION. Following the Effective Time of the Merger and on the
terms and subject to the conditions set forth in this Agreement and the
Consolidation Agreement:
(i) the Bank will consolidate with Norwest Bank under the charter of
Bank.
(ii) Each share of Bank Common Stock outstanding immediately prior to
the Effective Time of the Consolidation owned by shareholders other than
the Company (other than shares as to which statutory dissenters' appraisal
rights have been exercised) will be converted into and exchanged for the
number of shares of Norwest Common Stock determined by dividing 6,527 by
the number of shares of Bank Common Stock outstanding immediately prior to
the Effective Time of the Consolidation.
(iii) The Consolidation shall become effective at 12:01 a.m. on the
date specified in the Certificate of Approval of Consolidation to be issued
by the Office of the Comptroller of the Currency, which date shall be the
first business day after the Effective Date of the Merger (the "Effective
Time of the Consolidation").
(d) NORWEST COMMON STOCK ADJUSTMENTS. If between the date hereof and the
Effective Time of the Merger shares of Norwest Common Stock shall be changed
into a different number of shares or a different class of shares by reason of
any reclassification, recapitalization, split-up, combination, exchange of
shares or readjustment, or if a stock dividend thereon shall be declared with a
record date within such period, then the number of shares of Norwest Common
Stock into which a share of Company Common Stock or Bank Common Stock shall be
converted pursuant to subparagraphs (b) or (c) above, will be appropriately and
proportionately adjusted so that the number of such shares of Norwest Common
Stock or Bank Common Stock as the case may be, into which a share of Company
Common Stock or Bank Common Stock, as the case may be, shall be converted will
equal the number of shares of Norwest Common Stock which holders of shares of
Company Common Stock or Bank common Stock, as the case may be, would have
received pursuant to such reclassification, recapitalization, split-up,
combination, exchange of shares or readjustment, or stock dividend had the
record date therefor been immediately following the Effective Time of Merger.
(e) FRACTIONAL SHARES. No fractional shares of Norwest Common Stock and
no certificates or scrip certificates therefor shall be issued to represent any
such fractional interest, and any holder thereof shall be paid an amount of cash
equal to the product obtained by multiplying the fractional share interest to
which such holder is entitled by the average of the closing prices of a share of
Norwest Common Stock as reported by the consolidated tape of the New York Stock
Exchange for each of the five (5) trading days immediately preceding the
Effective Time of the Merger.
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(f) MECHANICS OF CLOSING MERGER. Subject to the terms and conditions set
forth herein, the Merger Agreement shall be executed and it or Articles of
Merger or a Certificate of Merger shall be filed with the Secretaries of State
of the States of New Mexico and Delaware 10 business days following the
satisfaction or waiver of all conditions precedent set forth in Sections 6 and 7
of this Agreement or on such other date as may be agreed to by the parties (the
"Closing Date"). Each of the parties agrees to use its best efforts to cause
the Merger to be completed as soon as practicable after the receipt of final
regulatory approval of the Merger and the expiration of all required waiting
periods. The time that the filing referred to in the first sentence of this
paragraph is made is herein referred to as the "Time of Filing". The day on
which such filing is made and accepted is herein referred to as the "Effective
Date of the Merger". The Effective Time of the Merger shall be 11:59 p.m., New
Mexico time on the Effective Date of the Merger. At the Effective Time of the
Merger on the Effective Date of the Merger, the separate existence of Merger Co.
shall cease and Merger Co. will be merged with and into Company pursuant to the
Merger Agreement.
The closing of the transactions contemplated by this Agreement and the
Merger Agreement (the "Closing") shall take place on the Closing Date at the
offices of Norwest, Norwest Center, Sixth and Marquette, Minneapolis, Minnesota.
2. REPRESENTATIONS AND WARRANTIES OF COMPANY. Company represents and
warrants to Norwest as follows:
(a) ORGANIZATION AND AUTHORITY. Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of New Mexico,
is duly qualified to do business and is in good standing in all jurisdictions
where its ownership or leasing of property or the conduct of its business
requires it to be so qualified and failure to be so qualified would have a
material adverse effect on Company and the Bank taken as a whole and has
corporate power and authority to own its properties and assets and to carry on
its business as it is now being conducted. Company is registered as a bank
holding company with the Federal Reserve Board under the Bank Holding Company
Act of 1956, as amended (the "BHC Act"). Company has furnished Norwest true and
correct copies of its articles of incorporation and by-laws, as amended.
(b) COMPANY'S SUBSIDIARIES. The only subsidiary of Company is the Bank,
128,100 shares of the outstanding capital stock of which, are owned directly or
indirectly by Company. No equity security of Bank is or may be required to be
issued by reason of any option, warrant, scrip, right to subscribe to, call or
commitment of any character whatsoever relating to, or security or right
convertible into, shares of any capital stock of such subsidiary, and there are
no contracts, commitments, understandings or arrangements by which Bank is bound
to issue additional shares of its capital stock, or any option, warrant or right
to purchase or acquire any additional shares of its capital stock. Subject to
12 U.S.C. Section 55 (1982) and the New Mexico Business Corporation Act, all of
such shares so owned by Company are fully paid and nonassessable and are owned
by it free and clear of any lien, claim, charge, option, encumbrance or
agreement with respect thereto. Bank is a national banking association duly
organized, validly existing, duly qualified to do business and in good standing
under the laws of the United States, and has corporate power and authority to
own or lease its properties and assets and to carry on its business as it is now
being conducted. Except as set forth on Schedule 2(b), Company does not own
beneficially, directly or indirectly, more than 5% of any class of equity
securities or similar interests of any corporation, bank, business trust,
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association or similar organization, and is not, directly or indirectly, a
partner in any partnership or party to any joint venture.
(c) CAPITALIZATION. The authorized capital stock of Company consists of
120,000 shares of common stock, $1.00 par value, of which 109,980 shares were
outstanding and no shares were held in the treasury and the authorized capital
stock of the Bank consists 129,600 of voting common stock, $5.00 par value, of
which 129,600 shares are issued and outstanding which amounts constitutes the
maximum number of shares of Company Common Stock and Bank Common Stock (assuming
for this purpose that phantom shares and other share-equivalents constitute
Company Common Stock or Bank Common Stock) that would be outstanding as of the
Effective Date of the Merger or the Effective Date of the Consolidation, as the
case may be, if all options, warrants, conversion rights and other rights with
respect thereto were exercised. All of the outstanding shares of capital stock
of Company and Bank have been duly and validly authorized and issued and are
fully paid and nonassessable. Except as set forth in Schedule 2(c), there are
no outstanding subscriptions, contracts, conversion privileges, options,
warrants, calls or other rights obligating Company or Bank to issue, sell or
otherwise dispose of, or to purchase, redeem or otherwise acquire, any shares of
capital stock of Company or Bank. Since December 31, 1990 no shares of Company
capital stock or Bank capital stock have been purchased, redeemed or otherwise
acquired, directly or indirectly, by Company or Bank and, except as set forth on
Schedule 2(c), no dividends or other distributions have been declared, set
aside, made or paid to the shareholders of Company or Bank.
(d) AUTHORIZATION. Company and Bank each has the corporate power and
authority to enter into this Agreement and the Merger Agreement and
Consolidation Agreement, as the case may be, and, subject to any required
approvals of its shareholders, to carry out its obligations hereunder and
thereunder. The execution, delivery and performance of this Agreement and the
Merger Agreement and Consolidation Agreement, as the case may be, by Company and
Bank and the consummation of the transactions contemplated hereby and thereby
have been duly authorized by the Board of Directors of Company and Bank.
Subject to such approvals of shareholders and of government agencies and other
governing boards having regulatory authority over Company and Bank as may be
required by statute or regulation, this Agreement and the Merger Agreement and
the Consolidation Agreement are valid and binding obligations of Company or
Bank, as the case may be, enforceable against Company or Bank in accordance with
their respective terms.
Except as set forth on Schedule 2(d), neither the execution, delivery and
performance by Company of this Agreement or the Merger Agreement and
Consolidation Agreement as the case may be, nor the consummation of the
transactions contemplated hereby and thereby, nor compliance by Company or Bank,
as the case may be, with any of the provisions hereof or thereof, will (i)
violate, conflict with, or result in a breach of any provision of, or constitute
a default (or an event which, with notice or lapse of time or both, would
constitute a default) under, or result in the termination of, or accelerate the
performance required by, or result in a right of termination or acceleration of,
or result in the creation of, any lien, security interest, charge or encumbrance
upon any of the properties or assets of Company or Bank under any of the terms,
conditions or provisions of (x) its articles of incorporation or by-laws or (y)
any material note, bond, mortgage, indenture, deed of trust, license, lease,
agreement or other instrument or obligation to which Company or Bank is a party
or by which it may be bound, or to which Company or Bank or any of the
properties or assets of Company or Bank may be
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subject, or (ii) subject to compliance with the statutes and regulations
referred to in the next paragraph, to the best knowledge of Company, violate any
judgment, ruling, order, writ, injunction, decree, statute, rule or regulation
applicable to Company or Bank or any of their respective properties or assets.
Other than in connection or in compliance with the provisions of the
Securities Act of 1933 and the rules and regulations thereunder (the "Securities
Act"), the Securities Exchange Act of 1934 and the rules and regulations
thereunder (the "Exchange Act"), the securities or blue sky laws of the various
states or filings, consents, reviews, authorizations, approvals or exemptions
required under the BHC Act, Bank Merger Act, or the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 ("HSR Act"), and filings required to effect the Merger
under New Mexico and Delaware law, and filings required to effect the
Consolidation with the Office of the Comptroller of the Currency ("OCC"), no
notice to, filing with, exemption or review by, or authorization, consent or
approval of, any public body or authority is necessary for the consummation by
Company of the transactions contemplated by this Agreement, the Merger Agreement
or the Consolidation Agreement.
(e) COMPANY FINANCIAL STATEMENTS. The consolidated statements of
financial condition of Company and Bank as of December 31, 1991 and 1992 and
related consolidated statements of income, shareholders' equity and cash flows
for the three years ended December 31, 1992, together with the notes thereto,
certified by Bock, Rutherford & Co. for the fiscal year ended December 31, 1992
and the unaudited consolidated statements of financial condition of Company and
Bank as of September 30, 1993 and the related unaudited consolidated statements
of income, shareholders' equity and cash flows for the 9 months then ended
(collectively, the "Company Financial Statements"), have been prepared in
accordance with generally accepted accounting principles applied on a consistent
basis and present fairly (subject, in the case of financial statements for
interim periods, to normal recurring adjustments) the consolidated financial
position of Company and Bank at the dates and the consolidated results of
operations and cash flows of Company and Bank for the periods stated therein.
(f) REPORTS. Company and Bank have filed all reports, registrations and
statements, together with any required amendments thereto, that it was required
to file with (i) the SEC, including, but not limited to, Forms 10-K, Forms 10-Q
and proxy statements, (ii) the Federal Reserve Board, (iii) the Federal Deposit
Insurance Corporation (the "FDIC"), (iv) the United States Comptroller of the
Currency (the "Comptroller") and (v) any applicable state securities or banking
authorities. All such reports and statements filed with any such regulatory
body or authority are collectively referred to herein as the "Company Reports".
As of their respective dates, the Company Reports complied in all material
respects with all the rules and regulations promulgated by the SEC, the Federal
Reserve Board, the FDIC, the Comptroller and applicable state securities or
banking authorities, as the case may be, and did not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. Copies of all the
Company Reports have been made available to Norwest by Company.
(g) PROPERTIES AND LEASES. Except as may be reflected in the Company
Financial Statements and except for any lien for current taxes not yet
delinquent, Company and Bank have good title free and clear of any material
liens, claims, charges, options, encumbrances or similar restrictions to all the
real and personal property reflected in Company's consolidated
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balance sheet as of September 30, 1993 for the period then ended, and all real
and personal property acquired since such date, except such real and personal
property as has been disposed of in the ordinary course of business. All leases
of real property and all other leases material to Company or Bank pursuant to
which Company or Bank, as lessee, leases real or personal property, which leases
are described on Schedule 2(g), are valid and effective in accordance with their
respective terms, and there is not, under any such lease, any material existing
default by Company or Bank or any event which, with notice or lapse of time or
both, would constitute such a material default. Substantially all Company's and
Bank's buildings and equipment in regular use have been well maintained and are
in good and serviceable condition, reasonable wear and tear excepted.
(h) TAXES. Each of Company and the Bank has filed all federal, state,
county, local and foreign tax returns, including information returns, required
to be filed by it, and paid all taxes owed by it, including those with respect
to income, withholding, social security, unemployment, workers compensation,
franchise, ad valorem, premium, excise and sales taxes, and no taxes shown on
such returns to be owed by it or assessments received by it are delinquent. The
federal income tax returns of Company and the Bank for the fiscal year ended
December 31, 1990, and for all fiscal years prior thereto, are for the purposes
of routine audit by the Internal Revenue Service closed because of the statute
of limitations, and no claims for additional taxes for such fiscal years are
pending. Except only as set forth on Schedule 2(h), (i) neither Company nor
Bank is a party to any pending action or proceeding, nor is any such action or
proceeding threatened by any governmental authority, for the assessment or
collection of taxes, interest, penalties, assessments or deficiencies and (ii)
no issue has been raised by any federal, state, local or foreign taxing
authority in connection with an audit or examination of the tax returns,
business or properties of Company or Bank which has not been settled, resolved
and fully satisfied. Each of Company and Bank has paid all taxes owed or which
it is required to withhold from amounts owing to employees, creditors or other
third parties. The consolidated balance sheet as of September 30, 1993,
referred to in paragraph 2(e) hereof, includes adequate provision for all
accrued but unpaid federal, state, county, local and foreign taxes, interest,
penalties, assessments or deficiencies of Company and Bank with respect to all
periods through the date thereof.
(i) ABSENCE OF CERTAIN CHANGES. Since September 30, 1993 there has been
no change in the business, financial condition or results of operations of
Company or Bank, which has had, or may reasonably be expected to have, a
material adverse effect on the business, financial condition or results of
operations of Company and Bank taken as a whole.
(j) COMMITMENTS AND CONTRACTS. Except as set forth on Schedule 2(j),
neither Company nor Bank is a party or subject to any of the following (whether
written or oral, express or implied):
(i) any employment contract or understanding (including any
understandings or obligations with respect to severance or termination pay
liabilities or fringe benefits) with any present or former officer,
director, employee or consultant (other than those which are terminable at
will by Company or Bank);
(ii) any plan, contract or understanding providing for any bonus,
pension, option, deferred compensation, retirement payment, profit sharing
or similar
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arrangement with respect to any present or former officer, director,
employee or consultant;
(iii) any labor contract or agreement with any labor union;
(iv) any contract not made in the ordinary course of business
containing covenants which limit the ability of Company or Bank to compete
in any line of business or with any person or which involve any restriction
of the geographical area in which, or method by which, Company or Bank may
carry on its business (other than as may be required by law or applicable
regulatory authorities);
(v) any other contract or agreement which is a "material contract"
within the meaning of Item 601(b)(10) of Regulation S-K; or
(vi) any lease (except as set forth on Schedule 2(g)).
(k) LITIGATION AND OTHER PROCEEDINGS. Company has furnished Norwest
copies of (i) all attorney responses to the request of the independent auditors
for Company with respect to loss contingencies as of September 30, 1993 in
connection with the Company Financial Statements, and (ii) a written list of
legal and regulatory proceedings filed against Company or Bank since said date.
Neither Company nor Bank is a party to any pending or, to the best knowledge of
Company and Bank, threatened, claim, action, suit, investigation or proceeding,
or is subject to any order, judgment or decree, except for matters which, in the
aggregate, will not have, or cannot reasonably be expected to have, a material
adverse effect on the business, financial condition or results of operations of
Company and Bank taken as a whole.
(l) INSURANCE. Company and Bank is presently insured, and during each of
the past five calendar years has been insured, for reasonable amounts with
financially sound and reputable insurance companies against such risks as
companies engaged in a similar business would, in accordance with good business
practice, customarily be insured and has maintained all insurance required by
applicable law and regulation.
(m) COMPLIANCE WITH LAWS. Company and Bank has all permits, licenses,
authorizations, orders and approvals of, and has made all filings, applications
and registrations with, federal, state, local or foreign governmental or
regulatory bodies that are required in order to permit it to own or lease its
properties and assets and to carry on its business as presently conducted and
that are material to the business of Company or Bank; all such permits,
licenses, certificates of authority, orders and approvals are in full force and
effect and, to the best knowledge of Company, no suspension or cancellation of
any of them is threatened; and all such filings, applications and registrations
are current. The conduct by Company and Bank of its business and the condition
and use of its properties does not violate or infringe, in any respect material
to any such business, any applicable domestic (federal, state or local) or
foreign law, statute, ordinance, license or regulation. Except as set forth on
Schedule 2(m), neither Company nor Bank is subject to any cease and desist
order, written agreement or memorandum of understanding with, or is subject to
any order or directive by, or is a recipient of any extraordinary supervisory
letter from, or has adopted any board resolutions at the request of federal or
state governmental authorities charged with the supervision or regulation of
banks or bank holding companies or engaged in the insurance of bank deposits
("Bank Regulators"), nor, to the best of their knowledge, have any of them been
advised by any Bank
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Regulator that it is contemplating issuing or requesting (or is considering the
appropriateness of issuing or requesting) any such order, directive, written
agreement, memorandum of understanding, extraordinary supervisory letter,
commitment letter, or board resolutions. Neither Company nor Bank is in default
under any order, license, regulation or demand of any federal, state, municipal
or other governmental agency or with respect to any order, writ, injunction or
decree of any court. Except for statutory or regulatory restrictions of general
application and except as set forth on Schedule 2(m), no federal, state,
municipal or other governmental authority has placed any restriction on the
business or properties of Company or Bank which reasonably could be expected to
have a material adverse effect on the business or properties of Company and Bank
taken as a whole.
(n) LABOR. No work stoppage involving Company or Bank is pending or, to
the best knowledge of Company, threatened. Neither Company nor Bank is involved
in, or threatened with or affected by, any labor dispute, arbitration, lawsuit
or administrative proceeding which could materially and adversely affect the
business of Company or such Bank. Employees of Company and Bank are not
represented by any labor union nor are any collective bargaining agreements
otherwise in effect with respect to such employees.
(o) MATERIAL INTERESTS OF CERTAIN PERSONS. Except as set forth on
Schedule 2(o), to the best knowledge of Company no officer or director of
Company or Bank, or any "associate" (as such term is defined in Rule l4a-1 under
the Exchange Act) of any such officer or director, has any interest in any
material contract or property (real or personal), tangible or intangible, used
in or pertaining to the business of Company or Bank.
Schedule 2(o) sets forth a correct and complete list of (i) all "covered
transactions" (as defined in 12 U.S.C. Sections 371c and 371c-1) and (ii) any
loan from Company or Bank to any present officer, director, employee, affiliate
or any associate or related interest of any such person which was required under
Regulation O of the Federal Reserve Board to be approved by or reported to
Company's or Bank's Board of Directors.
(p) COMPANY BENEFIT PLANS.
(i) The only "employee benefit plans" within the meaning of Section
3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), for which Company or Bank acts as the plan sponsor as defined in
ERISA Section 3(16)(B), and with respect to which any liability under ERISA
or otherwise exists or may be incurred by Company or Bank are those set
forth on Schedule 2(p) (the "Plans"). No Plan is a "multi-employer plan"
within the meaning of Section 3(37) of ERISA.
(ii) Each Plan is and has been in all material respects operated and
administered in accordance with its provisions and applicable law. Except
as set forth on Schedule 2(p), Company or Bank have received favorable
determination letters from the Internal Revenue Service under the
provisions of the Tax Equity and Fiscal Responsibility Act ("TEFRA"), the
Deficit Reduction Act ("DEFRA") and the Retirement Equity Act ("REA") for
each of the Plans to which the qualification requirements of Section 401(a)
of the Internal Revenue Code of 1986, as amended (the "Code"), apply.
Company knows of no reason that any Plan which is subject to the
qualification provisions of Section 401(a) of the Code is not "qualified"
within the
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meaning of Section 401(a) of the Code and that each related trust is not
exempt from taxation under Section 501(a) of the Code, except that any such
Plan may not have been amended to comply with the Tax Reform Act of 1986
(the "TRA") and other recent legislation and regulations, although each
such Plan is within the remedial amendment period during which retroactive
amendment may be made.
(iii) The present value of all benefits vested and all benefits accrued
under each Plan which is subject to Title IV of ERISA did not, in each
case, as determined for purposes of reporting on Schedule B to the Annual
Report on Form 5500 of each such Plan for the plan year ending December 31,
1992, exceed the value of the assets of the Plan allocable to such vested
or accrued benefits.
(iv) Except as disclosed in Schedule 2(p), and to the best knowledge
of Company, no Plan or any trust created thereunder, nor any trustee,
fiduciary or administrator thereof, has engaged in a "prohibited
transaction", as such term is defined in Section 4975 of the Code or
Section 406 of ERISA or violated any of the fiduciary standards under Part
4 of Title I of ERISA which could subject, to the best knowledge of
Company, such Plan or trust, or any trustee, fiduciary or administrator
thereof, or any party dealing with any such Plan or trust, to the tax or
penalty on prohibited transactions imposed by said Section 4975 or would
result in material liability to Company and Bank taken as a whole.
(v) No Plan which is subject to Title IV of ERISA or any trust
created thereunder has been terminated, nor have there been any "reportable
events" as that term is defined in Section 4043 of ERISA, with respect to
any Plan, other than those events which may result from the transactions
contemplated by this Agreement and the Merger Agreement.
(vi) No Plan or any trust created thereunder has incurred any
"accumulated funding deficiency", as such term is defined in Section 412 of
the Code (whether or not waived), since the effective date of ERISA.
(vii) Except as disclosed in Schedule 2(p), neither the execution and
delivery of this Agreement and the Merger Agreement or Consolidation
Agreement nor the consummation of the transactions contemplated hereby and
thereby will (i) result in any material payment (including, without
limitation, severance, unemployment compensation, golden parachute or
otherwise) becoming due to any director or employee or former employee of
Company or Bank under any Plan or otherwise, (ii) materially increase any
benefits otherwise payable under any Plan or (iii) result in the
acceleration of the time of payment or vesting of any such benefits to any
material extent.
(q) PROXY STATEMENT, ETC. None of the information regarding Company and
Bank supplied or to be supplied by Company for inclusion in (i) a Registration
Statement on Form S-4 to be filed with the SEC by Norwest for the purpose of
registering the shares of Norwest Common Stock to be exchanged for shares of
Company Common Stock and Bank Common Stock pursuant to the provisions of the
Merger Agreement and Consolidation Agreement (the "Registration Statement"),
(ii) the proxy statement to be mailed to Company's and Bank's shareholders in
connection with the meetings to be called to consider the Merger and
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Consolidation (the "Proxy Statement") and (iii) any other documents to be filed
with the SEC or any regulatory authority in connection with the transactions
contemplated hereby or by the Merger Agreement or Consolidation Agreement will,
at the respective times such documents are filed with the SEC or any regulatory
authority and, in the case of the Registration Statement, when it becomes
effective and, with respect to the Proxy Statement, when mailed, be false or
misleading with respect to any material fact, or omit to state any material fact
necessary in order to make the statements therein not misleading or, in the case
of the Proxy Statement or any amendment thereof or supplement thereto, at the
time of the meetings of shareholders referred to in paragraph 4(c), be false or
misleading with respect to any material fact, or omit to state any material fact
necessary to correct any statement in any earlier communication with respect to
the solicitation of any proxy for such meeting. All documents which Company and
Bank are responsible for filing with the SEC and any other regulatory authority
in connection with the Merger and Consolidation will comply as to form in all
material respects with the provisions of applicable law.
(r) REGISTRATION OBLIGATIONS. Except as set forth on Schedule 2(r),
neither Company nor Bank is under any obligation, contingent or otherwise, which
will survive the Merger by reason of any agreement to register any of its
securities under the Securities Act.
(s) BROKERS AND FINDERS. Neither Company nor Bank nor any of their
respective officers, directors or employees has employed any broker or finder or
incurred any liability for any financial advisory fees, brokerage fees,
commissions or finder's fees, and no broker or finder has acted directly or
indirectly for Company or Bank in connection with this Agreement and the Merger
Agreement and Consolidation Agreement or the transactions contemplated hereby
and thereby.
(t) ADMINISTRATION OF TRUST ACCOUNTS. Company and Bank each has properly
administered in all respects material and which could reasonably be expected to
be material to the financial condition of Company and Bank taken as a whole all
accounts for which it acts as a fiduciary, including but not limited to accounts
for which it serves as a trustee, agent, custodian, personal representative,
guardian, conservator or investment advisor, in accordance with the terms of the
governing documents and applicable state and federal law and regulation and
common law. Neither Company, Bank, nor any director, officer or employee of
Company or Bank has committed any breach of trust with respect to any such
fiduciary account which is material to or could reasonably be expected to be
material to the financial condition of Company and Bank taken as a whole, and
the accountings for each such fiduciary account are true and correct in all
material respects and accurately reflect the assets of such fiduciary account.
(u) NO DEFAULTS. Neither Company nor Bank is in default, nor has any
event occurred which, with the passage of time or the giving of notice, or both,
would constitute a default, under any material agreement, indenture, loan
agreement or other instrument to which it is a party or by which it or any of
its assets is bound or to which any of its assets is subject, the result of
which has had or could reasonably be expected to have a material adverse effect
upon Company and Bank, taken as a whole. To the best of Company's knowledge,
all parties with whom Company or Bank has material leases, agreements or
contracts or who owe to Company or Bank material obligations other than with
respect to those arising in the ordinary course of the banking business of Bank
are in compliance therewith in all material respects.
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(v) ENVIRONMENTAL LIABILITY.
(i) There is no legal, administrative, or other proceeding, claim, or
action of any nature seeking to impose, or that could reasonably be
expected to result in the imposition of, on Company or Bank, any liability
arising from the release of hazardous substances under any local, state or
federal environmental statute, regulation or ordinance including, without
limitation, the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended, pending or to the best of Company's
knowledge, threatened against Company or Bank the result of which has had
or could reasonably be expected to have a material adverse effect upon
Company and Bank taken as a whole; to the best of Company's knowledge there
is no reasonable basis for any such proceeding, claim or action; and to the
best of Company's knowledge neither Company nor Bank is subject to any
agreement, order, judgment, or decree by or with any court, governmental
authority or third party imposing any such environmental liability.
(ii) Except as disclosed on Schedule 2(v), neither Company nor Bank
nor any of the buildings or properties owned or leased by Company or Bank
is in violation of any applicable environmental protection laws and
regulations which violations would individually or in the aggregate, have a
material adverse effect on the Company and Bank taken as a whole; and
neither Company nor Bank has received any notice of any such violation. To
the best of the Company's and Bank's knowledge, except as described on
Schedule 2(v), no hazardous substances, hazardous wastes, pollutants or
contaminants have been deposited or disposed of in, on or under Company or
Bank's properties during the period Company or Bank has owned, occupied,
managed, controlled or operated such properties.
(iii) Except as set forth on Schedule 2(v), during the period of time
such properties have been owned by Company or Bank, such properties have
not been used as a dump or gasoline service station, and no hazardous
substances have been deposited, disposed of or allowed to be deposited or
disposed of in, on or under such properties.
(iv) Except as disclosed on Schedule 2(v), the storage,
transportation, handling, use or disposal, if any, of hazardous substances
on or under the Company's and Bank's property and/or disposal elsewhere, if
any, of hazardous substances generated on from such property is currently,
and at all times has been, in compliance with all applicable environmental
laws.
3. REPRESENTATIONS AND WARRANTIES OF NORWEST. Norwest represents and
warrants to Company as follows:
(a) ORGANIZATION AND AUTHORITY. Norwest is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware,
is duly qualified to do business and is in good standing in all jurisdictions
where its ownership or leasing of property or the conduct of its business
requires it to be so qualified and failure to be so qualified would have a
material adverse effect on Norwest and its subsidiaries taken as a whole and has
corporate power and authority to own its properties and assets and to carry on
its business as it
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is now being conducted. Norwest is registered as a bank holding company with
the Federal Reserve Board under the BHC Act.
(b) NORWEST SUBSIDIARIES. Schedule 3(b) sets forth a complete and correct
list as of December 31, 1993, of Norwest's Significant Subsidiaries (as defined
in Regulation S-X promulgated by the SEC) (individually a "Norwest Subsidiary"
and collectively the "Norwest Subsidiaries"), all shares of the outstanding
capital stock of each of which, except as set forth in Schedule 3(b), are owned
directly or indirectly by Norwest. No equity security of any Norwest Subsidiary
is or may be required to be issued to any person or entity other than Norwest by
reason of any option, warrant, scrip, right to subscribe to, call or commitment
of any character whatsoever relating to, or security or right convertible into,
shares of any capital stock of such subsidiary, and there are no contracts,
commitments, understandings or arrangements by which any Norwest Subsidiary is
bound to issue additional shares of its capital stock, or options, warrants or
rights to purchase or acquire any additional shares of its capital stock.
Subject to 12 U.S.C. Section 55 (1982), all of such shares so owned by Norwest
are fully paid and nonassessable and are owned by it free and clear of any lien,
claim, charge, option, encumbrance or agreement with respect thereto. Each
Norwest Subsidiary is a corporation or national banking association duly
organized, validly existing, duly qualified to do business and in good standing
under the laws of its jurisdiction of incorporation, and has corporate power and
authority to own or lease its properties and assets and to carry on its business
as it is now being conducted.
(c) NORWEST CAPITALIZATION. The authorized capital stock of Norwest
consists of (i) 5,000,000 shares of Preferred Stock, without par value, of which
as of the close of business on December 31, 1993, 1,131,250 shares of 10.24%
Cumulative Preferred Stock at $100 stated value and 1,143,750 shares of
Cumulative Convertible Preferred Stock, Series B, at $200 stated value were
outstanding, and (ii) 500,000,000 shares of Common Stock, $1-2/3 par value, of
which as of the close of business on December 31, 1993, 292,174,867 shares were
outstanding and 1,956,803 shares were held in the treasury.
(d) AUTHORIZATION. Norwest has the corporate power and authority to enter
into this Agreement and to carry out its obligations hereunder. The execution,
delivery and performance of this Agreement by Norwest and the consummation of
the transactions contemplated hereby have been duly authorized by the Board of
Directors of Norwest. No approval or consent by the stockholders of Norwest is
necessary for the execution and delivery of this Agreement, the Merger Agreement
or the Consolidation Agreement and the consummation of the transactions
contemplated hereby and thereby. Subject to such approvals of government
agencies and other governing boards having regulatory authority over Norwest as
may be required by statute or regulation, this Agreement is a valid and binding
obligation of Norwest enforceable against Norwest in accordance with its terms.
Neither the execution, delivery and performance by Norwest of this
Agreement, the Merger Agreement or the Consolidation Agreement, nor the
consummation of the transactions contemplated hereby and thereby, nor compliance
by Norwest with any of the provisions hereof or thereof, will (i) violate,
conflict with, or result in a breach of any provision of, or constitute a
default (or an event which, with notice or lapse of time or both, would
constitute a default) under, or result in the termination of, or accelerate the
performance required by, or result in a right of termination or acceleration of,
or result in the creation of, any lien, security interest, charge or encumbrance
upon any of the properties or assets of Norwest or any
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Norwest Subsidiary under any of the terms, conditions or provisions of (x) its
certificate of incorporation or by-laws or (y) any material note, bond,
mortgage, indenture, deed of trust, license, lease, agreement or other
instrument or obligation to which Norwest or any Norwest Subsidiary is a party
or by which it may be bound, or to which Norwest or any Norwest Subsidiary or
any of the properties or assets of Norwest or any Norwest Subsidiary may be
subject, or (ii) subject to compliance with the statutes and regulations
referred to in the next paragraph, to the best knowledge of Norwest, violate any
judgment, ruling, order, writ, injunction, decree, statute, rule or regulation
applicable to Norwest or any Norwest Subsidiary or any of their respective
properties or assets.
Other than in connection with or in compliance with the provisions of the
Securities Act, the Exchange Act, the securities or blue sky laws of the various
states or filings, consents, reviews, authorizations, approvals or exemptions
required under the BHC Act, the Bank Merger Act, or the HSR Act, and filings
required to effect the Merger under New Mexico and Delaware law, and filings
required to effect the Consolidation with the OCC, no notice to, filing with,
exemption or review by, or authorization, consent or approval of, any public
body or authority is necessary for the consummation by Norwest of the
transactions contemplated by this Agreement, the Merger Agreement or the
Consolidation Agreement.
(e) NORWEST FINANCIAL STATEMENTS. The consolidated statements of
financial condition of Norwest and Norwest's subsidiaries as of December 31,
1992 and 1993 and related consolidated statements of income, stockholders'
equity and cash flows for the three years ended December 31, 1993, together with
the notes thereto, certified by KPMG Peat Marwick and included in Norwest's
Annual Report on Form 10-K for the fiscal year ended December 31, 1993 as
amended by Form 8 dated March 3, 1993 (the "Norwest 10-K") as filed with the SEC
(collectively, the "Norwest Financial Statements"), have been prepared in
accordance with generally accepted accounting principles applied on a consistent
basis and present fairly (subject, in the case of financial statements for
interim periods, to normal recurring adjustments) the consolidated financial
position of Norwest and its subsidiaries at the dates and the consolidated
results of operations, changes in financial position and cash flows of Norwest
and its subsidiaries for the periods stated therein.
(f) REPORTS. Since December 31, 1989, Norwest and each Norwest Subsidiary
has filed all reports, registrations and statements, together with any required
amendments thereto, that it was required to file with (i) the SEC, including,
but not limited to, Forms 10-K, Forms 10-Q and proxy statements, (ii) the
Federal Reserve Board, (iii) the FDIC, (iv) the Comptroller and (v) any
applicable state securities or banking authorities. All such reports and
statements filed with any such regulatory body or authority are collectively
referred to herein as the "Norwest Reports". As of their respective dates, the
Norwest Reports complied in all material respects with all the rules and
regulations promulgated by the SEC, the Federal Reserve Board, the FDIC, the
Comptroller and any applicable state securities or banking authorities, as the
case may be, and did not contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading.
(g) PROPERTIES AND LEASES. Except as may be reflected in the Norwest
Financial Statements and except for any lien for current taxes not yet
delinquent, Norwest and each Norwest Subsidiary has good title free and clear of
any material liens, claims, charges, options, encumbrances or similar
restrictions to all the real and personal property reflected in
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Norwest's consolidated balance sheet as of December 31, 1993 included in
Norwest's Quarterly Report on Form 10-Q for the period then ended, and all real
and personal property acquired since such date, except such real and personal
property that has been disposed of in the ordinary course of business. All
leases of real property and all other leases material to Norwest or any Norwest
Subsidiary pursuant to which Norwest or such Norwest Subsidiary, as lessee,
leases real or personal property, are valid and effective in accordance with
their respective terms, and there is not, under any such lease, any material
existing default by Norwest or such Norwest Subsidiary or any event which, with
notice or lapse of time or both, would constitute such a material default.
Substantially all Norwest's and each Norwest Subsidiary's buildings and
equipment in regular use have been well maintained and are in good and
serviceable condition, reasonable wear and tear excepted.
(h) TAXES. Each of Norwest and the Norwest Subsidiaries has filed all
material federal, state, county, local and foreign tax returns, including
information returns, required to be filed by it, and paid or made adequate
provision for the payment of all taxes owed by it, including those with respect
to income, withholding, social security, unemployment, workers compensation,
franchise, ad valorem, premium, excise and sales taxes, and no taxes shown on
such returns to be owed by it or assessments received by it are delinquent. The
federal income tax returns of Norwest and the Norwest Subsidiaries for the
fiscal year ended December 31, 1979, and for all fiscal years prior thereto, are
for the purposes of routine audit by the Internal Revenue Service closed because
of the statute of limitations, and no claims for additional taxes for such
fiscal years are pending. Except only as set forth on Schedule 3(h), (i)
neither Norwest nor any Norwest Subsidiary is a party to any pending action or
proceeding, nor to Norwest's knowledge is any such action or proceeding
threatened by any governmental authority, for the assessment or collection of
taxes, interest, penalties, assessments or deficiencies which could reasonably
be expected to have any material adverse effect on Norwest and its subsidiaries
taken as a whole, and (ii) no issue has been raised by any federal, state, local
or foreign taxing authority in connection with an audit or examination of the
tax returns, business or properties of Norwest or any Norwest Subsidiary which
has not been settled, resolved and fully satisfied, or adequately reserved for.
Each of Norwest and the Norwest Subsidiaries has paid all taxes owed or which it
is required to withhold from amounts owing to employees, creditors or other
third parties.
(i) ABSENCE OF CERTAIN CHANGES. Since December 31, 1993, there has been
no change in the business, financial condition or results of operations of
Norwest or any Norwest Subsidiary which has had, or may reasonably be expected
to have, a material adverse effect on the business, financial condition or
results of operations of Norwest and its subsidiaries taken as a whole.
(j) COMMITMENTS AND CONTRACTS. Except as set forth on Schedule 3(j), as
of the date hereof neither Norwest nor any Norwest Subsidiary is a party or
subject to any of the following (whether written or oral, express or implied):
(i) any labor contract or agreement with any labor union;
(ii) any contract not made in the ordinary course of business
containing covenants which materially limit the ability of Norwest or any
Norwest Subsidiary to compete in any line of business or with any person or
which involve any material restriction of the geographical area in which,
or method by which, Norwest or any
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Norwest Subsidiary may carry on its business (other than as may be required
by law or applicable regulatory authorities);
(iii) any other contract or agreement which is a "material contract"
within the meaning of Item 601(b)(10) of Regulation S-K.
(k) LITIGATION AND OTHER PROCEEDINGS. Neither Norwest nor any Norwest
Subsidiary is a party to any pending or, to the best knowledge of Norwest,
threatened, claim, action, suit, investigation or proceeding, or is subject to
any order, judgment or decree, except for matters which, in the aggregate, will
not have, or cannot reasonably be expected to have, a material adverse effect on
the business, financial condition or results of operations of Norwest and its
subsidiaries taken as a whole.
(l) INSURANCE. Norwest and each Norwest Subsidiary is presently insured
or self insured, and during each of the past five calendar years (or during such
lesser period of time as Norwest has owned such Norwest Subsidiary) has been
insured or self-insured, for reasonable amounts with financially sound and
reputable insurance companies against such risks as companies engaged in a
similar business would, in accordance with good business practice, customarily
be insured and has maintained all insurance required by applicable law and
regulation.
(m) COMPLIANCE WITH LAWS. Norwest and each Norwest Subsidiary has all
permits, licenses, authorizations, orders and approvals of, and has made all
filings, applications and registrations with, federal, state, local or foreign
governmental or regulatory bodies that are required in order to permit it to own
or lease its properties or assets and to carry on its business as presently
conducted and that are material to the business of Norwest or such Subsidiary;
all such permits, licenses, certificates of authority, orders and approvals are
in full force and effect, and to the best knowledge of Norwest, no suspension or
cancellation of any of them is threatened; and all such filings, applications
and registrations are current. The conduct by Norwest and each Norwest
Subsidiary of its business and the condition and use of its properties does not
violate or infringe, in any respect material to any such business, any
applicable domestic (federal, state or local) or foreign law, statute,
ordinance, license or regulation. Neither Norwest nor any Norwest Subsidiary is
in default under any order, license, regulation or demand of any federal, state,
municipal or other governmental agency or with respect to any order, writ,
injunction or decree of any court. Except for statutory or regulatory
restrictions of general application, no federal, state, municipal or other
governmental authority has placed any restrictions on the business or properties
of Norwest or any Norwest Subsidiary which reasonably could be expected to have
a material adverse effect on the business or properties of Norwest and its
subsidiaries taken as a whole.
(n) LABOR. No work stoppage involving Norwest or any Norwest Subsidiary
is pending or, to the best knowledge of Norwest, threatened. Neither Norwest
nor any Norwest Subsidiary is involved in, or threatened with or affected by,
any labor dispute, arbitration, lawsuit or administrative proceeding which could
materially and adversely affect the business of Norwest or such Norwest
Subsidiary. Except as set forth on Schedule 3(j), employees of Norwest and the
Norwest Subsidiaries are not represented by any labor union nor are any
collective bargaining agreements otherwise in effect with respect to such
employees.
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(o) NORWEST BENEFIT PLANS.
(i) As of the date hereof, the only "employee benefit plans" within
the meaning of Section 3(3) of ERISA for which Norwest or any Norwest
Subsidiary acts as plan sponsor as defined in ERISA Section 3(16)(B) with
respect to which any liability under ERISA or otherwise exists or may be
incurred by Norwest or any Norwest Subsidiary are those set forth on
Schedule 3(o) (the "Norwest Plans"). No Norwest Plan is a "multi-employer
plan" within the meaning of Section 3(37) of ERISA.
(ii) Each Norwest Plan is and has been in all material respects
operated and administered in accordance with its provisions and applicable
law. Except as set forth on Schedule 3(o), Norwest or the Norwest
Subsidiaries have received favorable determination letters from the
Internal Revenue Service under the provisions of the Tax Equity and Fiscal
Responsibility Act ("TEFRA"), the Deficit Reduction Act ("DEFRA") and the
Retirement Equity Act ("REA") for each of the Norwest Plans to which the
qualification requirements of Section 401(a) of the Code apply. Norwest
knows of no reason that any Norwest Plan which is subject to the
qualification provisions of Section 401(a) of the Code is not "qualified"
within the meaning of Section 401(a) of the Code and that each related
trust is not exempt from taxation under Section 501(a) of the Code, except
that any such Norwest Plan may not have been amended to comply with TRA and
other recent legislation and regulations, although each such Norwest Plan
is within the remedial amendment period during which retroactive amendment
may be made.
(iii) The present value of all benefits vested and all benefits accrued
under each Norwest Plan which is subject to Title IV of ERISA did not, in
each case, as determined for purposes of reporting on Schedule B to the
Annual Report on Form 5500 of each such Norwest Plan for the plan year
ending December 31, 1993, exceed the value of the assets of the Norwest
Plans allocable to such vested or accrued benefits.
(iv) Except as set forth on Schedule 3(o), and to the best knowledge
of Norwest, no Norwest Plan or any trust created thereunder, nor any
trustee, fiduciary or administrator thereof, has engaged in a "prohibited
transaction", as such term is defined in Section 4975 of the Code or
Section 406 of ERISA or violated fiduciary standards under Part 4 of Title
I of ERISA, which could subject, to the best knowledge of Norwest, such
Norwest Plan or trust, or any trustee, fiduciary or administrator thereof,
or any party dealing with any such Norwest Plan or trust, to the tax or
penalty on prohibited transactions imposed by said Section 4975 or would
result in material liability to Norwest and its subsidiaries taken as a
whole.
(v) Except as set forth on Schedule 3(o), no Norwest Plan which is
subject to Title IV of ERISA or any trust created thereunder has been
terminated, nor have there been any "reportable events" as that term is
defined in Section 4043 of ERISA with respect to any Norwest Plan, other
than those events which may result from the transactions contemplated by
this Agreement and the Merger Agreement.
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(vi) No Norwest Plan or any trust created thereunder has incurred any
"accumulated funding deficiency", as such term is defined in Section 412 of
the Code (whether or not waived), during the last five Norwest Plan years
which would result in a material liability.
(vii) Neither the execution and delivery of this Agreement and the
Merger Agreement nor the consummation of the transactions contemplated
hereby and thereby will (i) result in any material payment (including,
without limitation, severance, unemployment compensation, golden parachute
or otherwise) becoming due to any director or employee or former employee
of Norwest under any Norwest Plan or otherwise, (ii) materially increase
any benefits otherwise payable under any Norwest Plan or (iii) result in
the acceleration of the time of payment or vesting of any such benefits to
any material extent.
(p) REGISTRATION STATEMENT, ETC. None of the information regarding
Norwest and its subsidiaries supplied or to be supplied by Norwest for inclusion
in (i) the Registration Statement, (ii) the Proxy Statement, or (iii) any other
documents to be filed with the SEC or any regulatory authority in connection
with the transactions contemplated hereby or by the Merger Agreement will, at
the respective times such documents are filed with the SEC or any regulatory
authority and, in the case of the Registration Statement, when it becomes
effective and, with respect to the Proxy Statement, when mailed, be false or
misleading with respect to any material fact, or omit to state any material fact
necessary in order to make the statements therein not misleading or, in the case
of the Proxy Statement or any amendment thereof or supplement thereto, at the
time of the meeting of shareholders referred to in paragraph 4(c), be false or
misleading with respect to any material fact, or omit to state any material fact
necessary to correct any statement in any earlier communication with respect to
the solicitation of any proxy for such meeting. All documents which Norwest and
the Norwest Subsidiaries are responsible for filing with the SEC and any other
regulatory authority in connection with the Merger will comply as to form in all
material respects with the provisions of applicable law.
(q) BROKERS AND FINDERS. Neither Norwest nor any Norwest Subsidiary nor
any of their respective officers, directors or employees has employed any broker
or finder or incurred any liability for any financial advisory fees, brokerage
fees, commissions or finder's fees, and no broker or finder has acted directly
or indirectly for Norwest or any Norwest Subsidiary in connection with this
Agreement and the Merger Agreement or the transactions contemplated hereby and
thereby.
(r) NO DEFAULTS. Neither Norwest nor any Norwest Subsidiary is in
default, nor has any event occurred which, with the passage of time or the
giving of notice, or both, would constitute a default under any material
agreement, indenture, loan agreement or other instrument to which it is a party
or by which it or any of its assets is bound or to which any of its assets is
subject, the result of which has had or could reasonably be expected to have a
material adverse effect upon Norwest and its subsidiaries taken as a whole. To
the best of Norwest's knowledge, all parties with whom Norwest or any Norwest
Subsidiary has material leases, agreements or contracts or who owe to Norwest or
any Norwest Subsidiary material obligations other than with respect to those
arising in the ordinary course of the banking business of the Norwest
Subsidiaries are in compliance therewith in all material respects.
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(s) ENVIRONMENTAL LIABILITY. There is no legal, administrative, or other
proceeding, claim, or action of any nature seeking to impose, or that could
reasonably be expected to result in the imposition, on Norwest or any Norwest
Subsidiary of any liability arising from the release of hazardous substances
under any local, state or federal environmental statute, regulation or ordinance
including, without limitation, the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, pending or to the best of
Norwest's knowledge, threatened against Norwest or any Norwest Subsidiary, the
result of which has had or could reasonably be expected to have a material
adverse effect upon Norwest and its subsidiaries taken as a whole; to the best
of Norwest's knowledge there is no reasonable basis for any such proceeding,
claim or action; and to the best of Norwest's knowledge neither Norwest nor any
Norwest Subsidiary is subject to any agreement, order, judgment, or decree by or
with any court, governmental authority or third party imposing any such
environmental liability.
(t) MERGER CO. As of the Closing Date, Merger Co. will be a corporation
duly organized, validly existing, duly qualified to do business and in good
standing under the laws of its jurisdiction of incorporation, and will have
corporate power and authority to own or lease its properties and assets and to
carry on its business.
4. COVENANTS OF COMPANY. Company covenants and agrees with Norwest as
follows:
(a) Except as otherwise permitted or required by this Agreement, from the
date hereof until the Effective Time of the Merger, Company, and Bank will:
maintain its corporate existence in good standing; maintain the general
character of its business and conduct its business in its ordinary and usual
manner; extend credit in accordance with existing lending policies, except that
it shall not, without the prior written consent of Norwest, make any new loan or
modify, restructure or renew any existing loan (except pursuant to commitments
made prior to the date of this Agreement) to any borrower if the amount of the
resulting loan, when aggregated with all other loans or extensions of credit to
such person, would be in excess of $100,000; maintain proper business and
accounting records in accordance with generally accepted principles; maintain
its properties in good repair and condition, ordinary wear and tear excepted;
maintain in all material respects presently existing insurance coverage; use its
best efforts to preserve its business organization intact, to keep the services
of its present principal employees and to preserve its good will and the good
will of its suppliers, customers and others having business relationships with
it; use its best efforts to obtain any approvals or consents required to
maintain existing leases and other contracts in effect following the Merger;
comply in all material respects with all laws, regulations, ordinances, codes,
orders, licenses and permits applicable to the properties and operations of
Company and Bank the non-compliance with which reasonably could be expected to
have a material adverse effect on Company and Bank taken as a whole; and permit
Norwest and its representatives (including KPMG Peat Marwick) to examine its and
its subsidiaries books, records and properties and to interview officers,
employees and agents at all reasonable times when it is open for business. No
such examination by Norwest or its representatives either before or after the
date of this Agreement shall in any way affect, diminish or terminate any of the
representations, warranties or covenants of Company herein expressed.
(b) Except as otherwise contemplated or required by this Agreement, from
the date hereof until the Effective Time of the Merger, Company and Bank will
not (without the prior written consent of Norwest): amend or otherwise change
its articles of incorporation or
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association or by-laws; issue or sell or authorize for issuance or sale, or
grant any options or make other agreements with respect to the issuance or sale
or conversion of, any shares of its capital stock, phantom shares or other
share-equivalents, or any other of its securities; authorize or incur any long-
term debt (other than deposit liabilities); mortgage, pledge or subject to lien
or other encumbrance any of its properties, except in the ordinary course of
business; enter into any material agreement, contract or commitment in excess of
$25,000 except banking transactions in the ordinary course of business and in
accordance with policies and procedures in effect on the date hereof; make any
investments except investments made by bank subsidiaries in the ordinary course
of business for terms of up to one year and in amounts of $100,000 or less;
amend or terminate any Plan except as required by law; make any contributions to
any Plan except as required by the terms of such Plan in effect as of the date
hereof; declare, set aside, make or pay any dividend, except dividends declared
by the Bank for the purpose of and in an amount necessary to make scheduled
payments of principal and interest on debt of the Company; redeem, purchase or
otherwise acquire, directly or indirectly, any of the capital stock of Company;
increase the compensation of any officers, directors or executive employees,
except pursuant to existing compensation plans and practices; sell or otherwise
dispose of any shares of the capital stock of Bank; or sell or otherwise dispose
of any of its assets or properties other than in the ordinary course of
business.
(c) The Board of Directors of Company and Bank will duly call, and will
cause to be held not later than forty-five (45) days following the effective
date of the Registration Statement referred to in paragraph 5(c) hereof, but in
no event later than 22 "business days" (defined as any day on which the SEC
accepts documents for filing) after the date Norwest proposes to mail its
prospectus to shareholders of Company and Bank, a meeting of their respective
shareholders and will direct that this Agreement and the Merger Agreement or
Consolidation Agreement, as the case may be, be submitted to a vote at such
meeting. The Board of Directors of Company and Bank will (i) cause proper
notice of such meeting to be given to its shareholders in compliance with the
New Business Corporation Act and other applicable law and regulation, (ii)
recommend by the affirmative vote of the Board of Directors a vote in favor of
approval of this Agreement and the Merger Agreement or Consolidation Agreement,
as the case may be, and (iii) use its best efforts to solicit from its
shareholders proxies in favor thereof.
(d) Company and Bank will furnish or cause to be furnished to Norwest all
the information concerning Company and Bank and its subsidiaries required for
inclusion in the Registration Statement referred to in paragraph 5(c) hereof, or
any statement or application made by Norwest to any governmental body in
connection with the transactions contemplated by this Agreement. Any financial
statement for any fiscal year provided under this paragraph must include the
audit opinion and the consent of KPMG Peat Marwick to use such opinion in such
Registration Statement. Any interim quarterly financial information provided
under this paragraph must have been reviewed by KPMG Peat Marwick in accordance
with generally accepted auditing standards and Company must provide Norwest with
a copy of such review report.
(e) Company and Bank will take all necessary corporate and other action
and use its best efforts to obtain all approvals of regulatory authorities,
consents and other approvals required of Company and Bank to carry out the
transactions contemplated by this Agreement and will cooperate with Norwest to
obtain all such approvals and consents required of Norwest.
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<PAGE>
(f) Company and Bank will use its best efforts to deliver to the Closing
all opinions, certificates and other documents required to be delivered by it at
the Closing.
(g) Company and Bank will hold in confidence all documents and information
concerning Norwest and its subsidiaries furnished to Company and its
representatives in connection with the transactions contemplated by this
Agreement and will not release or disclose such information to any other person,
except as required by law and except to Company's and Bank's outside
professional advisers in connection with this Agreement, with the same
undertaking from such professional advisers. If the transactions contemplated
by this Agreement shall not be consummated, such confidence shall be maintained
and such information shall not be used in competition with Norwest (except to
the extent that such information can be shown to be previously known to Company,
in the public domain, or later acquired by Company from other legitimate
sources) and, upon request, all such documents, any copies thereof and extracts
therefrom shall immediately thereafter be returned to Norwest.
(h) Neither Company, nor Bank, nor any director, officer, representative
or agent thereof, will, directly or indirectly, solicit, authorize the
solicitation of or enter into any discussions with any corporation, partnership,
person or other entity or group (other than Norwest) concerning any offer or
possible offer (i) to purchase any shares of common stock, any option or warrant
to purchase any shares of common stock, any securities convertible into any
shares of such common stock, or any other equity security of Company or Bank,
(ii) to make a tender or exchange offer for any shares of such common stock or
other equity security, (iii) to purchase, lease or otherwise acquire the assets
of Company or Bank except in the ordinary course of business, or (iv) to merge,
consolidate or otherwise combine with Company or Bank. If any corporation,
partnership, person or other entity or group makes an offer or inquiry to
Company or Bank concerning any of the foregoing, Company or Bank will promptly
disclose such offer or inquiry, including the terms thereof, to Norwest.
(i) Company shall consult with Norwest as to the form and substance of any
proposed press release or other proposed public disclosure of matters related to
this Agreement or any of the transactions contemplated hereby.
(j) Company and Bank will take all action necessary or required (i) to
terminate or amend, if requested by Norwest, all qualified pension and welfare
benefit plans and all non-qualified benefit plans and compensation arrangements
as of the Effective Date of the Merger, (ii) to amend the Plans to comply with
the provisions of the TRA and regulations thereunder and other applicable law,
and (iii) to submit application to the Internal Revenue Service for a favorable
determination letter for each of the Plans which is subject to the qualification
requirements of Section 401(a) of the Code prior to the Effective Date of the
Merger, provided that Company and Bank will not be required to submit such
application to the Internal Revenue Service if the Internal Revenue Service does
not accept such applications prior to the Effective Date of the Merger.
(k) Neither Company nor Bank shall take any action which with respect to
Company would disqualify the Merger as a "pooling of interests" for accounting
purposes.
(l) Company shall use its best efforts to obtain and deliver at least 32
days prior to the Effective Date of the Merger signed representations
substantially in the form attached hereto as Exhibit B to Norwest by each
executive officer, director or shareholder of Company who may
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<PAGE>
reasonably be deemed an "affiliate" of Company within the meaning of such term
as used in Rule 145 under the Securities Act.
(m) Company shall establish such additional accruals and reserves as may
be necessary to conform Company's accounting and credit loss reserve practices
and methods to those of Norwest and Norwest's plans with respect to the conduct
of Company's business following the Merger and to provide for the costs and
expenses relating to the consummation by Company of the Merger and the other
transactions contemplated by this Agreement.
(n) Company will cooperate with and will permit and will cause any leasee
of any property of Company or Bank to cooperate and permit Norwest to obtain
such Phase I and Phase II , underground storage tank leak and seepage tests and
other similar environmental reports as Norwest may request for properties of
Company and Bank, the cost of which shall be the responsibility of Norwest.
Norwest agrees, subject to the timely cooperation of Company and Bank, to
conduct such tests on the property described on Schedule 2(v) within 60 days
after the date of this Agreement.
(o) At the request and direction of Norwest, Company will engage it's CPA
firm or the internal audit department of Norwest to perform a circularization of
Bank customer deposit and loan accounts and a substantiation/reconciliation of
material balance sheet accounts. The fees, scope and timing of these activities
will be subject to advance approval by Norwest.
5. COVENANTS OF NORWEST. Norwest covenants and agrees with Company and
Bank as follows:
(a) From the date hereof until the Effective Time of the Merger, Norwest
will maintain its corporate existence in good standing; conduct, and cause the
Norwest Subsidiaries to conduct, their respective businesses in compliance with
all material obligations and duties imposed on them by all laws, governmental
regulations, rules and ordinances, and judicial orders, judgments and decrees
applicable to Norwest or the Norwest Subsidiaries, their businesses or their
properties; maintain all books and records of it and the Norwest Subsidiaries,
including all financial statements, in accordance with the accounting principles
and practices consistent with those used for the Norwest Financial Statements,
except for changes in such principles and practices required under generally
accepted accounting principles.
(b) Norwest will furnish to Company and Bank all the information
concerning Norwest required for inclusion in a proxy statement or statements to
be sent to the shareholders of Company and Bank, or in any statement or
application made by Company and Bank to any governmental body in connection with
the transactions contemplated by this Agreement.
(c) As promptly as practicable after the execution of this Agreement,
Norwest will file with the SEC a registration statement on Form S-4 (the
"Registration Statement") under the Securities Act and any other applicable
documents, relating to the shares of Norwest Common Stock to be delivered to the
shareholders of Company and Bank pursuant to the Merger Agreement, and will use
its best efforts to cause the Registration Statement to become effective. At
the time the Registration Statement becomes effective, the Registration
Statement will comply in all material respects with the provisions of the
Securities Act and the published
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<PAGE>
rules and regulations thereunder, and will not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not false or misleading, and at the
time of mailing thereof to the Company and Bank shareholders, at the time of the
Company shareholders' and Bank shareholders' meetings referred to in paragraph
4(c) hereof and at the Effective Time of the Merger the prospectus included as
part of the Registration Statement, as amended or supplemented by any amendment
or supplement filed by Norwest (hereinafter the "Prospectus"), will not contain
any untrue statement of a material fact or omit to state any material fact
necessary to make the statements therein not false or misleading; PROVIDED,
HOWEVER, that none of the provisions of this subparagraph shall apply to
statements in or omissions from the Registration Statement or the Prospectus
made in reliance upon and in conformity with information furnished by Company or
Bank for use in the Registration Statement or the Prospectus.
(d) Norwest will file all documents required to be filed to list the
Norwest Common Stock to be issued pursuant to the Merger Agreement and
Consolidation Agreement on the New York Stock Exchange and the Chicago Stock
Exchange and use its best efforts to effect said listings.
(e) The shares of Norwest Common Stock to be issued by Norwest to the
shareholders of Company and Bank pursuant to this Agreement and the Merger
Agreement will, upon such issuance and delivery to said shareholders pursuant to
the Merger Agreement, be duly authorized, validly issued, fully paid and
nonassessable. The shares of Norwest Common Stock to be delivered to the
shareholders of Company and Bank pursuant to the Merger Agreement and
Consolidation Agreement are and will be free of any preemptive rights of the
stockholders of Norwest.
(f) Norwest will file all documents required to obtain prior to the
Effective Time of the Merger and Effective Time of the Consolidation all
necessary Blue Sky permits and approvals, if any, required to carry out the
transactions contemplated by this Agreement, will pay all expenses incident
thereto and will use its best efforts to obtain such permits and approvals.
(g) Norwest will take all necessary corporate and other action and file
all documents required to obtain and will use its best efforts to obtain all
approvals of regulatory authorities, consents and approvals required of it to
carry out the transactions contemplated by this Agreement and will cooperate
with Company to obtain all such approvals and consents required by Company.
(h) Norwest will hold in confidence all documents and information
concerning Company and Bank furnished to it and its representatives in
connection with the transactions contemplated by this Agreement and will not
release or disclose such information to any other person, except as required by
law and except to its outside professional advisers in connection with this
Agreement, with the same undertaking from such professional advisers. If the
transactions contemplated by this Agreement shall not be consummated, such
confidence shall be maintained and such information shall not be used in
competition with Company (except to the extent that such information can be
shown to be previously known to Norwest, in the public domain, or later acquired
by Norwest from other legitimate sources) and, upon request, all such
documents, copies thereof or extracts therefrom shall immediately thereafter be
returned to Company.
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<PAGE>
(i) Norwest will file any documents or agreements required to be filed in
connection with the Merger and Consolidation under the New Mexico Business
Corporation Act and the Delaware General Corporation Law and applicable federal
law.
(j) Norwest will use its best efforts to deliver to the Closing all
opinions, certificates and other documents required to be delivered by it at the
Closing.
(k) Norwest shall consult with Company as to the form and substance of any
proposed press release or other proposed public disclosure of matters related to
this Agreement or any of the transactions contemplated hereby.
(l) Norwest shall give Company written notice of receipt of the regulatory
approvals referred to in paragraph 7(e).
(m) For a period not exceeding fifteen days prior to the Closing Date,
Norwest will permit Company and its representatives to examine its books,
records and properties and interview officers, employees and agents of Norwest
at all reasonable times when it is open for business. No such examination by
Company or its representatives shall in any way affect, diminish or terminate
any of the representations, warranties or covenants of Norwest herein expressed.
6. CONDITIONS PRECEDENT TO OBLIGATION OF COMPANY AND BANK. The
obligation of Company to effect the Merger and of Bank to effect the
Consolidation shall be subject to the satisfaction at or before the Time of
Filing of the following further conditions, which may be waived in writing by
Company:
(a) Except as they may be affected by transactions contemplated hereby and
except to the extent such representations and warranties are by their express
provisions made as of a specified date and except for activities or transactions
after the date of this Agreement made in the ordinary course of business and not
expressly prohibited by this Agreement, the representations and warranties
contained in paragraph 3 hereof shall be true and correct in all respects
material to Norwest and its subsidiaries taken as a whole as if made at the Time
of Filing.
(b) Norwest shall have, or shall have caused to be, performed and observed
in all material respects all covenants, agreements and conditions hereof to be
performed or observed by it and Merger Co. and Norwest Bank at or before the
Time of Filing.
(c) Company shall have received a favorable certificate, dated as of the
Effective Date of the Merger, signed by the Chairman, the President or any
Executive Vice President or Senior Vice President and by the Secretary or
Assistant Secretary of Norwest, as to the matters set forth in subparagraphs (a)
and (b) of this paragraph 6.
(d) This Agreement and the Merger Agreement and Consolidation shall have
been approved by the affirmative vote of the holders of the percentage of the
outstanding shares of Company required for approval of a plan of merger in
accordance with the provisions of Company's or Bank's Articles of Incorporation
and the New Mexico Business Corporation Act and federal law, as the case may be.
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(e) Norwest shall have received approval by the Federal Reserve Board and
by such other governmental agencies as may be required by law of the
transactions contemplated by this Agreement and the Merger Agreement and all
waiting and appeal periods prescribed by applicable law or regulation shall have
expired.
(f) No court or governmental authority of competent jurisdiction shall
have issued an order restraining, enjoining or otherwise prohibiting the
consummation of the transactions contemplated by this Agreement.
(g) The shares of Norwest Common Stock to be delivered to the stockholders
of Company and Bank pursuant to this Agreement and the Merger Agreement shall
have been authorized for listing on the New York Stock Exchange and the Chicago
Stock Exchange upon official notice of issuance.
(h) Company and Bank shall have received an opinion, dated the Closing
Date, of counsel to Company and Bank, substantially to the effect that, for
federal income tax purposes: (i) the Merger (of a wholly owned subsidiary of
Norwest into Company) will constitute a reorganization within the meaning of
Sections 368(a)(1)(A) and 368(a)(2)(E) of the Code and the Consolidation (of
Norwest Bank into Bank) will be a reorganization within the meaning of Section
368(a)(1)(B) of the Code; (ii) no gain or loss will be recognized by the holders
of Company Common Stock or Bank Common Stock upon receipt of Norwest Common
Stock except for cash received in lieu of fractional shares; (iii) the basis of
the Norwest Common Stock received by the shareholders of Company and Bank will
be the same as the basis of Company common Stock or Bank Common Stock, as the
case may be, exchanged therefor; and (iv) the holding period of the shares of
Norwest Common Stock received by the shareholders of Company and Bank will
include the holding period of the Company Common Stock or Bank Common Stock, as
the case may be, provided such shares of Company Common Stock were held as a
capital asset as of the Effective Time of the Merger.
(i) The Registration Statement (as amended or supplemented) shall have
become effective under the Securities Act and shall not be subject to any stop
order, and no action, suit, proceeding or investigation by the SEC to suspend
the effectiveness of the Registration Statement shall have been initiated and be
continuing, or have been threatened and be unresolved. Norwest shall have
received all state securities law or blue sky authorizations necessary to carry
out the transactions contemplated by this Agreement.
(j) No party hereto shall have terminated this Agreement as permitted
herein.
(k) There shall not have occurred (i) any general suspension of, or
limitation on prices for, trading in securities on the New York Stock Exchange
or in the over-the-counter market, or (ii) a declaration of a banking moratorium
or any suspension of payments in respect of banks in the United States.
7. CONDITIONS PRECEDENT TO OBLIGATION OF NORWEST. The obligation of
Norwest to effect the Merger shall be subject to the satisfaction at or before
the Time of Filing of the following conditions, which may be waived in writing
by Norwest:
(a) Except as they may be affected by transactions contemplated hereby and
except to the extent such representations and warranties are by their express
provisions made as of a
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<PAGE>
specified date and except for activities or transactions or events occurring
after the date of this Agreement made in the ordinary course of business and not
expressly prohibited by this Agreement, the representations and warranties
contained in paragraph 2 hereof shall be true and correct in all respects
material to Company and the Bank taken as a whole as if made at the Time of
Filing.
(b) Company shall have, or shall have caused to be, performed and observed
in all material respects all covenants, agreements and conditions hereof to be
performed or observed by it at or before the Time of Filing.
(c) This Agreement and the Merger Agreement and Consolidation Agreement
shall have been approved by the affirmative vote of the holders of the
percentage of the outstanding shares of Company and Bank required for approval
of a plan of merger in accordance with the provisions of Company's Articles of
Incorporation and the New Mexico Business Corporation Act and under federal law.
(d) Norwest shall have received a favorable certificate dated as of the
Effective Date of the Merger signed by the Chairman or President and by the
Secretary or Assistant Secretary of Company, as to the matters set forth in
subparagraphs (a) through (c) of this paragraph 7.
(e) Norwest shall have received approval by all governmental agencies as
may be required by law of the transactions contemplated by this Agreement and
the Merger Agreement and Consolidation Agreement and all waiting and appeal
periods prescribed by applicable law or regulation shall have expired. No
approvals, licenses or consents granted by any regulatory authority shall
contain any condition or requirement relating to Company or Bank that, in the
good faith judgment of Norwest, is unreasonably burdensome to Norwest.
(f) Company and Bank shall have obtained any and all material consents or
waivers from other parties to loan agreements, leases or other contracts
material to Company's or Bank's business required for the consummation of the
Merger and Consolidation, and Company and Bank shall have obtained any and all
material permits, authorizations, consents, waivers and approvals required for
the lawful consummation by it of the Merger and Consolidation.
(g) No court or governmental authority of competent jurisdiction shall
have issued an order restraining, enjoining or otherwise prohibiting the
consummation of the transactions contemplated by this Agreement.
(h) The Merger shall qualify as a "pooling of interests" for accounting
purposes and Norwest shall have received from KPMG Peat Marwick opinions to that
effect.
(i) At any time since the date hereof the total number of shares of
Company Common Stock and Bank Common Stock outstanding and subject to issuance
upon exercise (assuming for this purpose that phantom shares and other share-
equivalents constitute Company Common Stock or Bank Common Stock) of all
warrants, options, conversion rights, phantom shares or other share-equivalents,
other than any option held by Norwest, shall not have exceeded 109,980 and
129,600, respectively.
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<PAGE>
(j) The Registration Statement (as amended or supplemented) shall have
become effective under the Securities Act and shall not be subject to any stop
order, and no action, suit, proceeding or investigation by the SEC to suspend
the effectiveness of the Registration Statement shall have been initiated and be
continuing, or have been threatened or be unresolved. Norwest shall have
received all state securities law or blue sky authorizations necessary to carry
out the transactions contemplated by this Agreement.
(k) Norwest shall have received from the Chief Executive Officer and Chief
Financial Officer of Company a letter, dated as of the effective date of the
Registration Statement and updated through the date of Closing, in form and
substance satisfactory to Norwest, to the effect that:
(i) the interim quarterly financial statements of Company included or
incorporated by reference in the Registration Statement are prepared in
accordance with generally accepted accounting principles applied on a basis
consistent with the audited financial statements of Company;
(ii) the amounts reported in the interim quarterly financial
statements of Company agree with the general ledger of Company;
(iii) the annual and quarterly financial statements of Company and Bank
included in, or incorporated by reference in, the Registration Statement
comply as to form in all material respects with the applicable accounting
requirements of the Securities Act and the published rules and regulations
thereunder;
(iv) from _________, 19___ (or, if later, since the date of the most
recent unaudited consolidated financial statements of Company and Bank as
may be included in the Registration Statement) to a date 5 days prior to
the effective date of the Registration Statement or 5 days prior to the
Closing, there are no increases in long-term debt, changes in the capital
stock or decreases in stockholders' equity of Company and Bank, except in
each case for changes, increases or decreases which the Registration
Statement discloses have occurred or may occur or which are described in
such letters. For the same period, there have been no decreases in
consolidated net interest income, consolidated net interest income after
provision for credit losses, consolidated income before income taxes,
consolidated net income and net income per share amounts of Company and
Bank, or in income before equity in undistributed income of subsidiaries,
in each case as compared with the comparable period of the preceding year,
except in each case for changes, increases or decreases which the
Registration Statement discloses have occurred or may occur or which are
described in such letters;
(v) they have reviewed certain amounts, percentages, numbers of
shares and financial information which are derived from the general
accounting records of Company and Bank, which appear in the Registration
Statement under the certain captions to be specified by Norwest, and have
compared certain of such amounts, percentages, numbers and financial
information with the accounting records of Company and Bank and have found
them to be in agreement with financial records and analyses prepared by
Company included in the annual and quarterly financial statements, except
as disclosed in such letters.
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(l) Company and Bank considered as a whole shall not have sustained since
September 30, 1993 any material loss or interference with their business from
any civil disturbance or any fire, explosion, flood or other calamity, whether
or not covered by insurance.
(m) There shall be no reasonable basis for any proceeding, claim or action
of any nature seeking to impose, or that could reasonably be expected to result
in the imposition on Company or Bank or their respective properties of, any
liability arising from the release of hazardous substances under any local,
state or federal environmental statute, regulation or ordinance including,
without limitation, the Comprehensive Environmental Response, Compensation and
Liability Act of 1980 as amended, which has had or could reasonably be expected
to have a material adverse effect upon Company and Bank taken as a whole, and
the Company and Bank shall not be in violation of any applicable environmental
protection laws and regulations, which violations would individually or in the
aggregate, have a material adverse effect on the Company or Bank taken as a
whole.
(n) No change shall have occurred and no circumstances shall exist which
has had or might reasonably be expected to have a material adverse effect on the
financial condition, results of operations, business or prospects of Company and
Bank taken as a whole (other than changes in banking laws or regulations, or
interpretations thereof, that affect the banking industry generally or changes
in the general level of interest rates).
(o) Company and Bank shall have received an opinion, dated the Closing
Date, of counsel to Company and Bank, substantially to the effect that, for
federal income tax purposes: (i) the Merger (of a wholly owned subsidiary of
Norwest into Company) will constitute a reorganization within the meaning of
Sections 368(a)(1)(A) and 368(a)(2)(E) of the Code and the Consolidation (of
Norwest Bank into Bank) will be a reorganization within the meaning of Section
368(a)(1)(B) of the Code; (ii) no gain or loss will be recognized by the holders
of Company Common Stock or Bank Common Stock upon receipt of Norwest Common
stock except for cash received in lieu of fractional shares; (iii) the basis of
the Norwest Common Stock received by the shareholders of Company and Bank will
be the same as the basis of Company common Stock or Bank Common Stock, as the
case may be, exchanged therefore; and (iv) the holding period of the shares of
Norwest Common Stock received by the shareholders of Company and Bank will
include the holding period of the Company Common Stock or Bank Common Stock, as
the case may be, provided such shares of Company Common Stock or Bank Common
Stock were held as a capital asset as of the Effective Time of the Merger or
Consolidation.
(p) No party hereto shall have terminated this Agreement as permitted
herein.
(q) There shall not have occurred (i) any general suspension of, or
limitation on prices for, trading in securities on the New York Stock Exchange
or in the over-the-counter market, or (ii) a declaration of a banking moratorium
or any suspension of payments in respect of banks in the United States.
8. EMPLOYEE BENEFIT PLANS. Each person who is an employee of Company or
Bank as of the Effective Date of the Merger ("Company Employees") shall be
eligible for participation in the employee welfare and pension plans of Norwest,
as in effect from time to time, as follows:
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(a) EMPLOYEE WELFARE BENEFIT PLANS. Each Company employee shall be
eligible for participation in the employee welfare benefit plans of Norwest
listed below subject to any eligibility requirements applicable to such plans
(but not subject to any pre-existing condition exclusions, except for the Long
Term Care Plan) and shall enter each plan not later than the first day of the
calendar quarter which begins at least 32 days after the Effective Date of the
Merger:
Medical Plan
Dental Plan
Long Term Care Plan
Long Term Disability Plan
Flexible Benefits Plan
Group Basic Life Insurance Plan
Group Optional and Dependent Life Insurance Plan
Business Travel Accident and Accidental Death and
Dismembership Insurance Plan
Short-Term Disability Program
Severance Program
Vacation Program
Vision Plan
For the purpose of determining each Company Employee's benefit for the year in
which the Merger occurs under the Norwest vacation program, vacation taken by an
employee of Company in the year in which the Merger occurs will be deducted from
the total Norwest benefit.
(b) EMPLOYEE PENSION BENEFIT PLANS.
Each Company Employee shall be eligible for participation in the Norwest
Savings-Investment Plan (the "SIP"), subject to any eligibility requirements
applicable to the SIP (with full credit for years of past service to Company and
Bank for the purpose of satisfying any eligibility and vesting periods
applicable to the SIP), and shall enter the SIP not later than the first day of
the calendar quarter which begins at least 32 days after the Effective Date of
the Merger.
Each Company Employee shall be eligible for participation, as a new employee, in
the Norwest Pension Plan under the terms thereof.
9. TERMINATION OF AGREEMENT.
(a) This Agreement may be terminated at any time prior to the Time of
Filing:
(i) by mutual written consent of the parties hereto;
(ii) by either of the parties hereto upon written notice to the other
party if the Merger shall not have been consummated by November 1, 1994
unless such failure of consummation shall be due to the failure of the
party seeking to terminate to perform or observe in all material respects
the covenants and agreements hereof to be performed or observed by such
party; or
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(iii) by Company or Norwest upon written notice to the other party if
any court or governmental authority of competent jurisdiction shall have
issued a final order restraining, enjoining or otherwise prohibiting the
consummation of the transactions contemplated by this Agreement;
(b) Termination of this Agreement under this paragraph 9 shall not
release, or be construed as so releasing, either party hereto from any liability
or damage to the other party hereto arising out of the breaching party's willful
and material breach of the warranties and representations made by it, or willful
and material failure in performance of any of its covenants, agreements, duties
or obligations arising hereunder, and the obligations under paragraphs 4(g),
5(h) and 10 shall survive such termination.
10. EXPENSES. All expenses in connection with this Agreement and the
transactions contemplated hereby, including without limitation legal and
accounting fees, incurred by Company and Bank shall be borne by Company, and all
such expenses incurred by Norwest shall be borne by Norwest.
11. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns, but shall not be assignable by either party hereto without the prior
written consent of the other party hereto.
12. THIRD PARTY BENEFICIARIES. Each party hereto intends that this
Agreement shall not benefit or create any right or cause of action in or on
behalf of any person other than the parties hereto.
13. NOTICES. Any notice or other communication provided for herein or
given hereunder to a party hereto shall be in writing and shall be delivered in
person or shall be mailed by first class registered or certified mail, postage
prepaid, addressed as follows:
If to Norwest:
Norwest Corporation
Sixth and Marquette
Minneapolis, Minnesota 55479-1026
Attention: Secretary
If to Company:
Copper Bancshares, Inc.
P.O. Box 1250
Silver City, NM 88061
Attention: President
If to Bank:
The American National Bank of Silver City
P.O. Box 1250
Silver City, NM 88061
Attention: President
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or to such other address with respect to a party as such party shall notify the
other in writing as above provided.
14. COMPLETE AGREEMENT. This Agreement and the Merger Agreement and
Consolidation Agreement contain the complete agreement between the parties
hereto with respect to the Merger and other transactions contemplated hereby and
supersede all prior agreements and understandings between the parties hereto
with respect thereto.
15. CAPTIONS. The captions contained in this Agreement are for
convenience of reference only and do not form a part of this Agreement.
16. WAIVER AND OTHER ACTION. Either party hereto may, by a signed
writing, give any consent, take any action pursuant to paragraph 9 hereof or
otherwise, or waive any inaccuracies in the representations and warranties by
the other party and compliance by the other party with any of the covenants and
conditions herein.
17. AMENDMENT. At any time before the Time of Filing, the parties hereto,
by action taken by their respective Boards of Directors or pursuant to authority
delegated by their respective Boards of Directors, may amend this Agreement;
provided, however, that no amendment after approval by the shareholders of
Company and Bank shall be made which changes in a manner adverse to such
shareholders the consideration to be provided to said shareholders pursuant to
this Agreement and the Merger Agreement.
18. GOVERNING LAW. This Agreement shall be construed and enforced in
accordance with the laws of the State of Minnesota.
19. NON-SURVIVAL OF REPRESENTATIONS AND WARRANTIES. No representation or
warranty contained in the Agreement or the Merger Agreement or Consolidation
Agreement shall survive the Merger of Merger Co. with and into Company and of
Norwest Bank into Bank or except as set forth in paragraph 9(b), the termination
of this Agreement. Paragraph 10 shall survive the Merger and Consolidation.
20. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which shall
constitute but one instrument.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
NORWEST CORPORATION COPPER BANCSHARES, INC.
By: /s/ Kenneth R. Murray By: /s/ Danny T. Skarka
------------------------------ ----------------------------
Its: Executive Vice President Its: President
------------------------------ ----------------------------
THE AMERICAN NATIONAL BANK
OF SILVER CITY
By: /s/ Danny T. Skarda
----------------------------
Its: President
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EXHIBIT A
AGREEMENT AND PLAN OF MERGER
Between
NORWEST ACQUISITION CORPORATION
a Delaware corporation
(the merged corporation)
AND
COPPER BANCSHARES, INC.
a New Mexico corporation
(the surviving corporation)
This Agreement and Plan of Merger dated as of ________________, 1994,
between NORWEST ACQUISITION CORPORATION, a Delaware corporation (hereinafter
called "Norwest") and COPPER BANCSHARES, INC., a New Mexico corporation
("Copper" and sometimes called the "surviving corporation") (said corporations
being hereinafter sometimes referred to as the "constituent corporations"),
WHEREAS, Copper was incorporated by Articles of Incorporation filed in the
office of the Secretary of State of the State of New Mexico on May 14, 1979, and
said corporation is now a corporation subject to and governed by the provisions
of the New Mexico Business Corporation Act. Copper has authorized capital stock
of 120,000 shares of common stock, divided into 120,000 shares of Common Stock,
par value of $1.00 per share ("Copper Common Stock"). As of __________ 1, 1994,
there were 109,980 shares of Common Stock outstanding and no shares were held in
the treasury; and
WHEREAS, Norwest, a wholly owned subsidiary of Norwest Corporation
("Norwest Corporation") was incorporated by a Certificate of Incorporation filed
in the office of the Secretary of State of the State of Delaware on
______________, 1994 and said corporation is now a corporation subject to and
governed by the provisions of the Delaware General Corporation Law, with an
authorized capital stock of ______ shares of Common Stock, par value _________,
of which _________ shares were outstanding as of ___________, 1993 ("Norwest
Common Stock"); and
WHEREAS, Norwest and Copper are parties to an Agreement and Plan of
Reorganization dated as of _______________, 1994 (the "Reorganization
Agreement"), setting forth certain representations, warranties and covenants in
connection with the merger provided for herein; and
WHEREAS, the directors, or a majority of them, of each of the constituent
corporations respectively deem it advisable for the welfare and advantage of
said corporations and for the best interests of the respective shareholders of
said corporations that said corporation merge and that Norwest be merged with
and into Copper, with Copper continuing as the surviving corporation, on the
terms and conditions hereinafter set forth in accordance with the provisions of
the Delaware General Corporation Law and the New Mexico Business Corporation
Act, which statutes permit such merger; and
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WHEREAS, it is the intent of the parties to effect a merger which qualifies
as a tax-free reorganization pursuant to Sections 368(a)(1)(A) and 368(a)(2)(E)
of the Internal Revenue Code;
NOW, THEREFORE, the parties hereto, subject to the approval of the
shareholders of Norwest and Copper, in consideration of the premises and of the
mutual covenants and agreements contained herein and of the benefits to accrue
to the parties hereto, have agreed and do hereby agree that Norwest shall be
merged with and into Copper pursuant to the laws of the States of Delaware and
New Mexico, and do hereby agree upon, prescribe and set forth the terms and
conditions of the merger of Norwest with and into Copper, the mode of carrying
said merger into effect, the manner and basis of converting the shares of Copper
Common Stock into shares of "Norwest Corporation Common Stock" (as defined
below), and such other provisions with respect to said merger as are deemed
necessary or desirable, as follows:
FIRST: At the time of merger Norwest shall be merged with and into Copper,
one of the constituent corporations, which shall be the surviving corporation,
and the separate existence of Norwest shall cease and the name of the surviving
corporation shall remain Copper Bancshares, Inc.
SECOND: As of the effective date of the Merger, the Articles of
Incorporation of the surviving corporation shall read in their entirety as set
forth in Appendix A attached hereto.
THIRD: The By-Laws of Copper at the time of merger shall be and remain the
By-Laws of the surviving corporation until amended according to the provisions
of the Articles of Incorporation of the surviving corporation or of said By-
Laws.
FOURTH: The directors of Norwest at the time of merger shall be and remain
the directors of the surviving corporation and shall hold office from the time
of merger until their respective successors are elected and qualify.
FIFTH: The officers of Norwest at the time of merger shall be and remain
the officers of the surviving corporation and shall hold office from the time of
merger until their respective successors are elected or appointed and qualify.
SIXTH: The manner and basis of converting the shares of Copper Common
Stock into shares of capital stock of Norwest Corporation, $1 2/3 par value per
share ("Norwest Corporation Common Stock") shall be as follows:
1. Each of the shares of Copper Common Stock outstanding immediately
prior to the time of merger (other than shares as to which statutory
dissenters' rights have been exercised) shall at the time of merger, by
virtue of the merger and without any action on the part of the holder or
holders thereof, be converted into and exchanged for a number of shares of
Norwest Corporation Common Stock determined by dividing 518,473 by the
number of shares of Copper Common Stock outstanding immediately prior to
the Effective Time of the Merger.
2. As soon as practicable after the merger becomes effective, each holder
of a certificate for shares of Copper Common Stock outstanding immediately
prior to the time of merger shall be entitled, upon surrender of such
certificate for cancellation to
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<PAGE>
the surviving corporation or to Norwest Bank Minnesota, National
Association, as the designated agent of the surviving corporation (the
"Agent"), to receive a new certificate for the number of whole shares of
Norwest Corporation Common Stock to which such holder shall be entitled on
the basis above set forth. Until so surrendered each certificate which,
immediately prior to the time of merger, represented shares of Copper
Common Stock shall not be transferable on the books of the surviving
corporation but shall be deemed (except for the payment of dividends as
provided below) to evidence ownership of the number of whole shares of
Norwest Corporation Common Stock into which such shares of Copper Common
Stock have been converted on the basis above set forth; provided, however,
that, until the holder of such certificate shall have surrendered the same
for exchange as above set forth, no dividend payable to holders of record
of Norwest Corporation Common Stock as of any date subsequent to the
effective date of merger shall be paid to such holder with respect to the
Norwest Corporation Common Stock represented by such certificate, but, upon
surrender and exchange thereof as herein provided, there shall be paid by
the surviving corporation or the Agent to the record holder of such
certificate for Norwest Corporation Common Stock issued in exchange
therefor an amount with respect to such shares of Norwest Corporation
Common Stock equal to all dividends that shall have been paid or become
payable to holders of record of Norwest Corporation Common Stock between
the effective date of merger and the date of such exchange.
3. If between the date of the Reorganization Agreement and the time of
merger, shares of Norwest Corporation Common Stock shall be changed into a
different number of shares or a different class of shares by reason of any
reclassification, recapitalization, split-up, combination, exchange of
shares or readjustment, or if a stock dividend thereon shall be declared
with a record date within such period, then the number of shares of Norwest
Corporation Common Stock into which a share of Copper Common Stock shall be
converted on the basis above set forth, will be appropriately and
proportionately adjusted so that the number of such shares of Norwest
Corporation Common Stock into which a share of Copper Common Stock shall be
converted will equal the number of shares of Norwest Corporation Common
Stock which the holders of shares of Copper Common Stock would have
received pursuant to such reclassification, recapitalization, split-up,
combination, exchange of shares or readjustment, or stock dividend had the
record date therefor been immediately following the time of merger.
4. No fractional shares of Norwest Corporation Common Stock and no
certificates or scrip certificates therefor shall be issued to represent
any such fractional interest, and any holder of a fractional interest shall
be paid an amount of cash equal to the product obtained by multiplying the
fractional share interest to which such holder is entitled by the average
of the closing prices of a share of Norwest Common Stock as reported by the
consolidated tape of the New York Stock Exchange for each of the five (5)
trading days immediately preceding the Effective Time of the Merger.
5. Each share of Norwest Common Stock issued and outstanding at the time
of merger shall continue as an outstanding share of the surviving
corporation after the time of merger.
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<PAGE>
6. Each share of Norwest Common Stock held in the treasury of Norwest at
the effective time of merger shall continue as a treasury share of the
surviving corporation after the effective time of merger.
SEVENTH: The merger provided for by this Agreement shall be effective as
follows:
1. The effective date of merger shall be the date on which this Agreement
or the Certificate of Merger (as described in subparagraph 1(c) of this
Article Seventh) shall be delivered to and filed by the Secretary of State
of the State of New Mexico; provided, however, that all of the following
actions shall have been taken in the following order:
a. This Agreement shall be approved and adopted on behalf of Copper
and Norwest in accordance with the New Mexico Business Corporation Act
and the Delaware General Corporation Law; and
b. Articles of merger (with this Agreement attached as part thereof)
with respect to the merger, setting forth the information required by
the New Mexico Business Corporation Act, shall be executed by the
President or a Vice President of Copper and by the Secretary or an
Assistant Secretary of Copper, and by the President or a Vice
President of Norwest and by the Secretary or an Assistant Secretary of
Norwest, and shall be filed in the office of the Secretary of State of
the State of New Mexico in accordance with the New Mexico Business
Corporation Act; and
c. This Agreement or a Certificate of Merger with respect to the
merger setting forth the information required by the Delaware General
Corporation Law shall be executed by the Chairman or the President or
a Vice President of Norwest and by the Secretary or an Assistant
Secretary of Norwest and certified and acknowledged in accordance with
the Delaware General Corporation Law, and shall be filed in the office
of the Secretary of State of the State of Delaware in accordance with
the Delaware General Corporation Law.
2. The merger shall become effective as of 11:59 p.m. (the "time of
merger") on the effective date of merger.
EIGHTH: At the time of merger:
1. The separate existence of Norwest shall cease, and the corporate
existence and identity of Copper shall continue as the surviving
corporation.
2. The merger shall have the other effects prescribed by Section
_________ of the New Mexico Business Corporation Act.
NINTH: The following provisions shall apply with respect to the merger
provided for by this Agreement:
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<PAGE>
1. The surviving corporation shall (i) file with the Secretary of State
of the State of New Mexico an agreement that it may be served with process
within or without the State of New Mexico in the courts of the State of New
Mexico in any proceeding for the enforcement of any obligation of Copper
and in any proceeding for the enforcement of the rights of a dissenting
shareholder of Copper against Copper, and (ii) file with said Secretary of
State an agreement that it will promptly pay to the dissenting shareholders
of Copper the amount, if any, to which such dissenting shareholders will be
entitled under the provisions of the New Mexico Business Corporation Act
with respect to the rights of dissenting shareholders.
2. The registered office of Norwest in the State of New Mexico shall be
________________________________, and the name of the registered agent of
Norwest at such address is The Corporation Trust Company.
3. If at any time the surviving corporation shall consider or be advised
that any further assignment or assurance in law or other action is
necessary or desirable to vest, perfect or confirm in the surviving
corporation the title to any property or rights of Norwest acquired or to
be acquired as a result of the merger provided for herein, the proper
officers and directors of the surviving corporation and Norwest may execute
and deliver such deeds, assignments and assurances in law and take such
other action as may be necessary or proper to vest, perfect or confirm
title to such property or right in Norwest and otherwise carry out the
purposes of this Agreement.
4. For the convenience of the parties and to facilitate the filing of
this Agreement, any number of counterparts hereof may be executed and each
such counterpart shall be deemed to be an original instrument.
5. This Agreement and the legal relations among the parties hereto shall
be governed by and construed in accordance with the laws of the State of
New Mexico, except insofar as the laws of the State of Delaware shall
mandatorily apply to the merger provided for herein.
6. This Agreement cannot be altered or amended except pursuant to an
instrument in writing signed by both of the parties hereto.
7. At any time prior to the filing of Articles of Merger with the
Secretary of State of the State of New Mexico and the filing of this
Agreement or a Certificate of Merger with the Secretary of State of the
State of Delaware, subject to the provisions of the Reorganization
Agreement, this Agreement may be terminated upon approval by the Boards of
Directors of either of the constituent corporations notwithstanding the
approval of the shareholders of either constituent corporation.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have cause this Agreement and
Plan of Merger to be signed in their respective corporate names by the
undersigned officers and their respective corporate seals to be affixed
hereto, pursuant to authority duly given by their respective Boards of
Directors, all as of the day and year first above written.
NORWEST ACQUISITION
CORPORATION
By: ________________________
Its: ________________________
(Corporate Seal)
Attest:
__________________________
Secretary
COPPER BANCSHARES, INC.
By: _________________________
Its: _________________________
(Corporate Seal)
Attest:
___________________________
Secretary
A-37
<PAGE>
EXHIBIT B
SEE APPENDIX B TO THE
PROXY STATEMENT-PROSPECTUS
A-38
<PAGE>
EXHIBIT C
Norwest Corporation
Norwest Center
Sixth and Marquette
Minneapolis, MN 55479-1026
Attn: Secretary
Gentlemen:
I have been advised that I might be considered to be an "affiliate," as that
term is defined for purposes of paragraphs (c) and (d) of Rule 145 ("Rule 145")
promulgated by the Securities and Exchange Commission (the "Commission") under
the Securities Act of 1933, as amended (the "Securities Act") of Copper
Bancshares, Inc., a New Mexico corporation ("Company").
Pursuant to an Agreement and Plan of Reorganization, dated as of ____________,
19___, (the "Reorganization Agreement"), between Company and Norwest
Corporation, a Delaware corporation ("Norwest") it is contemplated that Company
will merge with and into a wholly owned subsidiary of Norwest (the "Merger") and
as a result, I will receive in exchange for each share of Common or Preferred
Stock of Company owned by me immediately prior to the Effective Time of the
Merger (as defined in the Reorganization Agreement), a number of shares of
Common Stock, par value $1 2/3 per share, of Norwest ("Norwest Common Stock"),
as more specifically set forth in the Reorganization Agreement.
I hereby agree as follows:
I will not offer to sell, transfer or otherwise dispose of any of the shares of
Norwest Common Stock held by me during the 30 days prior to the Effective Time
of the Merger.
I will not offer to sell, transfer or otherwise dispose of any of the shares of
Norwest Common Stock issued to me pursuant to the Merger (the "Stock") except
(a) in compliance with the applicable provisions of Rule 145, (b) in a
transaction that is otherwise exempt from the registration requirements of the
Securities Act, or (c) in an offering registered under the Securities Act.
I will not sell, transfer or otherwise dispose of the Stock or in any way reduce
my risk relative to any shares of the Stock issued to me pursuant to the Merger
until such time as financial results covering at least 30 days of post-Merger
combined operations of Company and Norwest have been published.
I consent to the endorsement of the Stock issued to me pursuant to the Merger
with a restrictive legend which will read substantially as follows:
"The shares represented by this certificate were issued in a
transaction to which Rule 145 promulgated under the Securities Act of 1933,
as amended (the "Act"),
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<PAGE>
applies, and may be sold or otherwise transferred only in compliance with
the limitations of such Rule 145, or upon receipt by Norwest Corporation of
an opinion of counsel reasonably satisfactory to it that some other
exemption from registration under the Act is available, or pursuant to a
registration statement under the Act."
Norwest's transfer agent shall be given an appropriate stop transfer order and
shall not be required to register any attempted transfer of the shares of the
Stock, unless the transfer has been effected in compliance with the terms of
this letter agreement.
It is understood and agreed that this letter agreement shall terminate and be of
no further force and effect and the restrictive legend set forth above shall be
removed by delivery of substitute certificate without such legend, and the
related stop transfer restrictions shall be lifted forthwith, if (a) (i) any
such shares of Stock shall have been registered under the Securities Act for
sale, transfer or other disposition by me or on my behalf and are sold,
transferred or otherwise disposed of, or (ii) any such shares of Stock are sold
in accordance with the provisions of paragraphs (c), (e), (f) and (g) of Rule
144 promulgated under the Securities Act, or (iii) I am not at the time an
affiliate of Norwest and have been the beneficial owner of the Stock for at
least two years (or such other period as may be prescribed thereunder) and
Norwest has filed with the Commission all of the reports it is required to file
under the Securities Exchange Act of 1934, as amended, during the preceding
twelve months, or (iv) I am not and have not been for at least three months an
affiliate of Norwest and have been the beneficial owner of the Stock for at
least three years (or such other period as may be prescribed by the Securities
Act, and the rules and regulations promulgated thereunder), or (v) Norwest shall
have received an opinion of counsel acceptable to Norwest to the effect that the
stock transfer restrictions and the legend are not required, and (b) financial
results covering at least 30 days of post-Merger combined operations have been
published.
I have carefully read this letter agreement and the Reorganization Agreement and
have discussed their requirements and other applicable limitations upon my
abilities to offer to sell, transfer or otherwise dispose of shares of the
Stock, to the extent I felt necessary, with my counsel or counsel for Company.
Sincerely,
--------------------------------
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<PAGE>
APPENDIX B
AGREEMENT AND PLAN OF CONSOLIDATION
<PAGE>
AGREEMENT AND PLAN OF CONSOLIDATION
THIS AGREEMENT AND PLAN OF CONSOLIDATION (the "Consolidation Agreement") is
dated as of ___________, 1994, between THE AMERICAN NATIONAL BANK OF SILVER CITY
("American") and NORWEST INTERIM BANK SILVER CITY, NATIONAL ASSOCIATION
("Norwest Bank").
PREAMBLE
American and Norwest Bank acknowledge and confirm the following:
(a) American is a national banking association having its principal office
and place of business at 12th and Pope, Silver City, New Mexico 88062-1250.
(b) As of ______________, 1994, American had a capital of $648,000,
divided into 129,600 shares of common stock, par value $5.00 per share
("American Common Stock"), and surplus of $________ and retained earnings of
$________ .
(c) Norwest Bank is a national banking association having its principal
office and place of business at the corner of 12th and Pope, Silver City, New
Mexico, 88062-1250.
(d) As of _______________, 1994, Norwest Bank had a capital of $100,000,
divided into 1,000 shares of common stock, par value $100 per share ("Norwest
Bank Common Stock"), and surplus of $20,000.
(e) Copper Bancshares, Inc. ("Company"), American and Norwest Corporation
("Norwest") have entered into an Agreement dated as of March 3, 1994 (the
"Reorganization Agreement"), a copy of which is attached hereto as Appendix A,
which Reorganization Agreement contemplates the transactions to be effected by
this Consolidation Agreement.
(f) A majority of the Board of Directors of American and a majority of the
Board of Directors of Norwest Bank have duly approved this Consolidation
Agreement and authorized its execution.
(g) It is the intent of the parties hereto to effect a corporate
reorganization which qualifies as a tax-free reorganization pursuant to Section
368(a)(1)(B) of the Internal Revenue Code.
AGREEMENTS
IN CONSIDERATION OF THE PREMISES, American and Norwest Bank make this
Consolidation Agreement and fix the terms and conditions of the consolidation of
American and Norwest Bank as follows:
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<PAGE>
SECTION 1
1.1 Pursuant to the authority of and in accordance with the provisions of
12 U.S.C. 215, American and Norwest Bank (hereinafter collectively called
"Consolidated or Consolidating Banks") shall be consolidated under the charter
of American.
1.2 The name of the consolidated bank (the "New Bank") shall continue to
be The American National Bank of Silver City.
1.3 The consolidation shall be effective as of 12:01 a.m. on the date
specified in the certificate of approval to be issued by the Comptroller of the
Currency of the United States, under the seal of his office, approving the
consolidation (the "Effective Date").
1.4 The business of the New Bank shall be that of a national banking
association and shall be conducted at the main office of the New Bank, which
shall be located at the corner of 12th and Pope, Silver City, New Mexico
88062-1250, and at its legally established branches.
1.5 As of the Effective Date, the Articles of Association of the New Bank
shall read in their entirety as set forth in Appendix B attached hereto, and the
New Bank shall be authorized under such Articles of Association to issue 129,600
shares of common stock, par value $5.00 per share.
SECTION 2
As of the Effective Date:
2.1 The corporate existence of Norwest Bank and American shall be
consolidated, and the New Bank shall be deemed to be the same corporation as
each of the Consolidating Banks.
2.2 All rights, franchises, and interests of the Consolidating Banks in
and to every type of property (real, personal and mixed) and choses in action
shall be transferred to and vested in the New Bank by virtue of the
consolidation without any deed or other transfer. The New Bank, upon the
consolidation and without any order or other action on the part of any court or
otherwise, shall hold and enjoy all rights of property, franchises, and
interests, including appointments, designations, and nominations, and all other
rights and interests as trustee, executor, administrator, registrar of stocks
and bonds, guardian of estates, assignee, receiver, and in every other fiduciary
capacity, in the same manner and to the same extent as such rights, franchises,
and interests were held or enjoyed by either of the Consolidating Banks at the
time of consolidation.
2.3 The New Bank shall be liable for all liabilities of every kind and
description, including liabilities arising out of the operation of a trust
department, of each of the Consolidating Banks existing as of the Effective
Date.
2.4 The amount of capital stock of the New Bank shall be $648,000, divided
into 129,600 shares of common stock, each of $5.00 par value, and at the time
the consolidation
B-2
<PAGE>
shall become effective, the New Bank shall have a surplus of $________ and
retained earnings which, when combined with the capital and surplus, will be
equal to the combined capital structures of the Consolidating Banks as stated in
the preamble of this Consolidation Agreement, adjusted, however, for the
results of operations, and the payment of dividends, if any, between
________________, 1994 and the Effective Date.
SECTION 3
3.1 Subject to the provisions of 12 USC Section 215 regarding rights of
dissenting shareholders, the shares of common stock of the Consolidating Banks
issued and outstanding immediately prior to the Effective Date shall, as of the
Effective Date, by virtue of the consolidation and without any action on the
part of the holder or holders thereof, be converted as follows:
(a) The shares of American Common Stock outstanding immediately prior to
the time of consolidation and then owned by Company shall at the time of
consolidation be converted and exchanged for 129,600 shares of common stock
of the New Bank, each of $5.00 par value, plus cash in the amount of
$120,000, which shares shall constitute the entire number of shares of
common stock of the New Bank authorized, issued and outstanding after the
consolidation; and, upon surrender of the certificates evidencing the
shares of the American Common Stock owned by Company, the New Bank shall
issue to Company a certificate for 129,600 shares of common stock of the
New Bank, which shares shall be fully-paid and nonassessable.
(b) Each share of American Common Stock outstanding immediately prior to
the time of consolidation and owned by a shareholder other than Company
shall at the time of consolidation, by virtue of the consolidation and
without any action on the part of the holder or holders thereof, be
converted into a number of shares of common stock of Norwest of the par
value of $1 2/3 per share ("Norwest Common Stock") determined by dividing
6,527 by the number of shares of American Common Stock outstanding (other
than shares owned by Company) immediately prior to the Effective Time of
the Consolidation.
(c) As soon as practicable after the consolidation becomes effective, each
holder of a certificate for shares of American Common Stock outstanding
immediately prior to the time of consolidation shall be entitled, upon
surrender of such certificate for cancellation to Norwest Bank Minnesota,
National Association, as the designated agent of the New Bank (the
"Agent"), to receive a new certificate for the number of whole shares of
Norwest Common Stock to which such holder shall be entitled on the basis
above set forth. Until so surrendered each certificate which, immediately
prior to the time of consolidation, represented shares of American Common
Stock shall not be transferable on the books of the New Bank but shall be
deemed (except for the payment of dividends as provided below) to evidence
ownership of the number of whole shares of Norwest Common Stock into which
such shares of American Common Stock have been converted on the basis above
set forth; provided, however, that, until the holder of such certificate
shall have surrendered the same for exchange as above set forth, no
dividend payable to holders of record of Norwest Common Stock as of any
date subsequent to the effective date of consolidation shall be paid to
such holder with
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<PAGE>
respect to the Norwest Common Stock represented by such certificate, but,
upon surrender and exchange thereof as herein provided, there shall be paid
by the New Bank or the Agent to the record holder of such certificate for
Norwest Common Stock issued in exchange therefor an amount with respect to
such shares of Norwest Common Stock equal to all dividends that shall have
been paid or become payable to holders of record of Norwest Common Stock
between the effective date of consolidation and the date of such exchange.
(d) If between the date of the Reorganization Agreement and the Effective
Time of the Merger (as defined in the Reorganization Agreement), shares of
Norwest Common Stock shall be changed into a different number of shares or
a different class of shares by reason of any reclassification,
recapitalization, split-up, combination, exchange of shares or
readjustment, or if a stock dividend thereon shall be declared with a
record date within such period, then the number of shares of Norwest Common
Stock into which a share of American Common Stock shall be converted on the
basis above set forth, will be appropriately and proportionately adjusted
so that the number of such shares of Norwest Common Stock into which a
share of American Common Stock shall be converted will equal the number of
shares of Norwest Common Stock which the holders of shares of American
Common Stock would have received pursuant to such reclassification,
recapitalization, split-up, combination, exchange of shares or
readjustment, or stock dividend had the record date therefor been
immediately following the time of Effective Time of the Merger.
(e) No fractional shares of Norwest Common Stock and no certificates or
scrip certificates therefor shall be issued to represent any such
fractional interest, and any holder of a fractional interest shall be paid
an amount of cash equal to the product obtained by multiplying the
fractional share interest to which such holder is entitled by the average
of the closing prices of a share of Norwest Common Stock as reported by the
consolidated tape of the New York Stock Exchange for each of the five (5)
trading days immediately preceding the Effective Time of the Consolidation.
(f) The presently outstanding 1,000 shares of Norwest Bank Common Stock
shall be deemed canceled. Shares of Norwest Bank Common Stock thereafter
surrendered to the New Bank shall be canceled and no further transfer or
registering of Norwest Bank Common Stock shall occur after the Effective
Date.
3.2 From and after the Effective Date, there shall be no transfers on the
stock transfer books of Consolidated Banks of the shares of American Common
Stock or Norwest Bank Common Stock which were issued and outstanding immediately
prior to the Effective Date.
SECTION 4
4.1 The by-laws of American as they exist at the Effective Date shall
continue in full force as the by-laws of the New Bank until altered, amended, or
repealed as provided therein or as provided by law.
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<PAGE>
4.2 As of the Effective Date, the following named persons shall serve as
the Board of Directors of the New Bank until the next annual meeting of the
shareholders or until such time as their successors have been elected and have
qualified:
Danny T. Skarda Ronald B. Williams
Joseph P. Casey Larry D. Willard
H. Glen McWilliams
4.3 The officers of American holding office at the Effective Date shall
continue as the officers of the New Bank for the term prescribed in the by-laws
or until the Board of Directors otherwise shall determine.
4.4 From and after the Effective Date, the Articles of Association of the
Association shall read in their entirety as set forth in Appendix B attached
hereto and made a part hereof.
SECTION 5
5.1 This Consolidation Agreement shall be submitted to the shareholders of
American and Norwest Bank, respectively, for approval at meetings to be called
and held in accordance with the articles of incorporation of American and the
articles of association of Norwest Bank and in accordance with applicable
provisions of law. Such approval by the shareholders shall require the
affirmative vote of the shareholders of each of the Consolidating Banks owning
at least two-thirds of its capital stock outstanding.
SECTION 6
6.1 The consolidation shall be subject to and conditioned upon the
following:
(a) approval of this Consolidation Agreement by the shareholders of
American and Norwest Bank as required by law;
(b) approval of the consolidation by all appropriate banking and
regulatory authorities and the satisfaction of all other requirements
prescribed by law necessary for consummation of the consolidation; and
(c) consummation of the merger of a wholly owned subsidiary of Norwest
into Company as defined in and contemplated by the Reorganization
Agreement.
6.2 At any time before the Effective Date, if any of the following
circumstances obtain, this Consolidation Agreement may be terminated, at the
election of American or Norwest Bank, by written notice from the party so
electing to the other, or the consummation of the consolidation may be postponed
for such period, and subject to such further rights of American and Norwest
Bank, or either of them, to terminate this Consolidation Agreement as American
and Norwest Bank may agree in writing:
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<PAGE>
(a) by mutual consent of the Boards of Directors of the Consolidating
Banks if consummation of the consolidation would be inadvisable in the
opinion of said Boards; or
(b) by action of the Board of Directors of any party hereto if the
Reorganization Agreement is terminated.
SECTION 7
7.1 American and Norwest Bank, by mutual consent of their respective
Boards of Directors, may amend this Consolidation Agreement before the Effective
Date; provided, however, that after this Consolidation Agreement has been
approved by the shareholders of American, no such amendment shall affect the
rights of such shareholders of American in a manner which is materially adverse
to such shareholders.
7.2 This Consolidation Agreement may be executed in several counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
IN WITNESS WHEREOF, American and Norwest Bank have caused this
Consolidation Agreement to be executed by their respective duly authorized
officers and their corporate seals to be hereunto affixed as of the date first
above written, pursuant to a resolution of each Consolidating Bank's Board of
Directors, acting by a majority thereof.
(SEAL) THE AMERICAN NATIONAL BANK OF
SILVER CITY
ATTEST:
By: ________________________________
_______________________ Its: ________________________________
Secretary
(SEAL) NORWEST INTERIM
BANK SILVER CITY,
NATIONAL ASSOCIATION
ATTEST:
By: ________________________________
_______________________ Its: _______________________________
Secretary
B-6
<PAGE>
STATE OF ____________ )
) ss
COUNTY OF ____________ )
On this _____ day of __________, 1994, before me, a Notary Public for the
State and County aforesaid, personally came ____________________ , as
_________________ , and ____________________ , as __________________ , of THE
AMERICAN NATIONAL BANK OF SILVER CITY, and each in his or her said capacity
acknowledged the foregoing instrument to be the act and deed of said bank and
the seal affixed thereto to be its seal;
WITNESS my official seal and signature this day and year aforesaid.
____________________________
(Seal of Notary) Notary Public, __________ County
My Commission Expires ________
STATE OF ___________ )
) ss
COUNTY OF ____________ )
On this _____ day of __________, 1994, before me, a Notary Public for the
State and County aforesaid, personally came ____________________ , as
_________________ , and ____________________ , as __________________ , of
NORWEST INTERIM BANK SILVER CITY, NATIONAL ASSOCIATION, and each in his or her
said capacity acknowledged the foregoing instrument to be the act and deed of
said bank and the seal affixed thereto to be its seal;
WITNESS my official seal and signature this day and year aforesaid.
____________________________
(Seal of Notary) Notary Public, __________ County
My Commission Expires ________
B-7
<PAGE>
APPENDIX C
NEW MEXICO STATUTES ANNOTATED
SECTION 53-15-4
<PAGE>
53-15-4 RIGHTS OF DISSENTING SHAREHOLDERS.--A. Any shareholder electing to
exercise his right of dissent shall file with the corporation, prior to or at
the meeting of shareholders at which the proposed corporation action is
submitted to a vote, a written objection to the proposed corporate action. If
the proposed corporate action is approved by the required vote and the
shareholder has not voted in favor thereof, the shareholder may, within ten days
after the date on which the vote was taken or if a corporation is to be merged
without a vote of its shareholders into another corporation, any of its
shareholders may, within twenty-five days after the plan of the merger has been
mailed to the shareholders, make written demand on the corporation, or, in the
case of a merger or consolidation, on the surviving or new corporation, domestic
or foreign, for payment of the fair value of the shareholder's shares, and, if
the proposed corporate action is effected, the corporation shall pay to the
shareholder, upon the determination of the fair value, by agreement or judgment
as provided herein, and, in the case of shares represented by certificates, the
surrender of such certificates the fair value thereof as of the day prior to the
date on which the vote was taken approving the proposed corporate action,
excluding any appreciation or depreciation in anticipation of the corporate
action. Any shareholder failing to make demand within the prescribed ten day or
twenty-five day period shall be bound by the terms of the proposed corporate
action. Any shareholder making such demand shall thereafter be entitled only to
payment as in this section provided and shall not be entitled to vote or to
exercise any other rights of a shareholder.
B. No such demand may be withdrawn unless the corporation consents
thereto. If, however, the demand is withdrawn upon consent, or if the proposed
corporate action is abandoned or rescinded or the shareholders revoke the
authority to effect the action, or if, in the case of a merger, on the date of
the filing of the articles of merger the surviving corporation is the owner of
all the outstanding shares of the other corporations, domestic and foreign, that
are parties to the merger, or if no demand or petition for the determination of
fair value by a court has been made or filed within the time provided in this
section, or if a court of competent jurisdiction determines that the shareholder
is not entitled to the relief provided by this section, then the right of the
shareholder to be paid the fair value of his shares ceases and his status as a
shareholder shall be restored, without prejudice, to any corporate proceedings
which may have been taken during the interim.
C. Within ten days after such corporate action is effected, the
corporation, or, in the case of a merger or consolidation, the surviving or new
corporation, domestic of foreign, shall give written notice thereof to each
dissenting shareholder who has made demand as provided in this section and shall
make a written offer to each such shareholder to pay for such shares at a
specified price deemed by the corporation to be the fair value thereof. The
notice and offer shall be accompanied by a balance sheet of the corporation, the
shares of which the dissenting shareholder holds as of the latest available date
and not more than twelve months prior to the making of the offer, and a profit
and loss statement of the corporation for the twelve months period ended on the
date of the balance sheet.
D. If within thirty days after the date on which such corporate action
was effected the fair value of such shares is agreed upon between any such
dissenting shareholder and the corporation, payment therefor shall be made
within ninety days after the date on which the corporate action was effected,
and in the case of shares represented by certificates, upon surrender of the
certificates. Upon payment of the agreed value, the dissenting shareholder
shall cease to have any interest in the shares.
E. If, within the period of thirty days, a dissenting shareholder and the
corporation do not so agree, then the corporation, within thirty days after
receipt of written demand from any dissenting shareholder, given within sixty
days after the date on which such corporate action was effected, shall, or at
its election at any time within the period of sixty days may, file a petition in
any court of competent jurisdiction in the county in this state where the
registered office of the corporation is located praying that the fair value of
such shares be found and determined. If, in the case of a merger or
consolidation, the surviving or new corporation is a
C-1
<PAGE>
foreign corporation without a registered office in this state, the petition
shall be filed in the county where the registered office of the domestic
corporation was last located. If the corporation fails to institute the
proceeding as provided in this section, any dissenting shareholder may do so in
the name of the corporation. All dissenting shareholders, wherever residing,
shall be made parties to the proceeding as an action against their shares quasi
in rem. A copy of the petition shall be served on each dissenting shareholder
who is a resident of this state and shall be served by registered or certified
mail on each dissenting shareholder who is a nonresident. Service on
nonresidents shall also be made by publication as provided by law. The
jurisdiction of the court shall be plenary and exclusive. All shareholders who
are parties to the proceeding shall be entitled to judgment against the
corporation for the amount of the fair value of their shares. The court may, if
it so elects, appoint one or more persons as appraisers to receive evidence and
recommend a decision on the question of fair value. The appraisers shall have
such power and authority as specified in the order of their appointment or on
amendment thereof. The judgment shall be payable to the holders of uncertified
shares immediately, but to the holders of shares represented by certificates
only upon and concurrently with the surrender to the corporation of
certificates. Upon payment of the judgment, the dissenting shareholder shall
cease to have any interest in such shares.
F. The judgment shall include an allowance for interest at such rate as
the court may find to be fair and equitable, in all the circumstances, from the
date on which the vote was taken on the proposed corporate action to the date of
payment.
G. The costs and expenses of any such proceeding shall be determined by
the court and shall be assessed against the corporation, but all or any part of
the costs and expenses may be apportioned and assessed as the court deems
equitable against any or all of the dissenting shareholders who are parties to
the proceeding to whom the corporation shall have made an offer to pay for the
shares if the court shall find that the action of such shareholders in failing
to accept such offer was arbitrary or vexatious or not in good faith. Such
expenses shall include reasonable compensation for and reasonable expenses of
the appraisers, but exclude the fees and expenses of counsel for and experts
employed by any party; but if the fair value of the shares as determined
materially exceeds the amount which the corporation offered to pay therefor, or
if no offer was made, the court in the discretion may award to any shareholder
who is a party to the proceeding such sum as the court determines to be
reasonable compensation to any expert employed by the shareholder in the
proceeding, together with reasonable fees of legal counsel.
H. Upon receiving a demand for payment from any dissenting shareholder,
the corporation shall make an appropriate notation thereof in its shareholder
records. Within twenty days after demanding payment for his shares, each holder
of shares represented by certificates demanding payment shall submit the
certificates to the corporation for notation thereon that such demand has been
made. His failure to do so shall, at the option of the corporation, terminate
his rights under this section unless a court of competent jurisdiction for good
and sufficient cause shown, otherwise directs. If uncertificated shares for
which payment has been demanded or shares represented by a certificate on which
notation has been so made is transferred, any new certificate issued therefore
shall bear similar notation, together with the name of the original dissenting
holder of the shares, and a transferee of the shares acquires by such transfer
no rights in the corporation other than those which the original dissenting
shareholder had after making demand for payment of the fair value thereof.
I. Shares acquired by a corporation pursuant to payment of the agreed
value therefor or to payment of the judgment entered therefor, as in this
section provided, may be held and disposed of by the corporation as in the case
of other treasury shares, except that, in the case of a merger or consolidation,
they may be held and disposed of as the plan of merger or consolidation may
otherwise provide.
C-2
<PAGE>
APPENDIX D
UNITED STATES CODE
TITLE 12
SECTION 215
<PAGE>
* * * * *
(b) LIABILITY OF CONSOLIDATED ASSOCIATION; CAPITAL STOCK; DISSENTING
SHAREHOLDERS
The consolidated association shall be liable for all liabilities of the
respective consolidating banks or associations. The capital stock of such
consolidated association shall not be less than that required under existing law
for the organization of a national bank in the place in which it is located:
PROVIDED, That if such consolidation shall be voted for at such meetings by the
necessary majorities of the shareholders of each association and State bank
proposing to consolidate, and thereafter the consolidation shall be approved by
the Comptroller, any shareholder of any of the associations or State banks so
consolidated who has voted against such consolidation at the meeting of the
association or bank of which he is a stockholder or who has given notice in
writing at or prior to such meeting to the presiding officer that he dissents
from the plan of consolidation, shall be entitled to receive the value of the
shares so held by him when such consolidation is approved by the Comptroller
upon written request made to the consolidated association at any time before
thirty days after the date of consummation of the consolidation, accompanied by
the surrender of his stock certificates.
(c) VALUATION OF SHARES
The value of the shares of any dissenting shareholder shall be ascertained,
as of the effective date of the consolidation, by an appraisal made by a
committee of three persons, composed of (1) one selected by the vote of the
holders of the majority of the stock, the owners of which are entitled to
payment in cash; (2) one selected by the directors of the consolidated banking
association; and (3) one selected by the two so selected. The valuation agreed
upon by any two of the three appraisers shall govern. If the value so fixed
shall not be satisfactory to any dissenting shareholder who has requested
payment, that shareholder may, within five days after being notified of the
appraised value of his shares, appeal to the Comptroller, who shall cause a
reappraisal to be made which shall be final and binding as to the value of the
shares of the appellant.
(d) APPRAISAL BY COMPTROLLER; EXPENSES OF CONSOLIDATED ASSOCIATION; SALE AND
RESALE OF SHARES; STATE APPRAISAL AND CONSOLIDATION LAW
If, within ninety days from the date of consummation of the consolidation,
for any reason one or more of the appraisers is not selected as herein provided,
or the appraisers fail to determine the value of such shares, the Comptroller
shall upon written request of any interested party cause an appraisal to be made
which shall be final and binding on all parties. The expenses of the
Comptroller in making the reappraisal or the appraisal, as the case may be,
shall be paid by the consolidated banking association. The value of the shares
ascertained shall be promptly paid to the dissenting shareholders by the
consolidated banking association. Within thirty days after payment has been
made to all dissenting shareholders as provided for in this section the shares
of stock of the consolidated banking association which would have been delivered
to such dissenting shareholders had they not requested payment shall be sold by
the consolidated banking association at an advertised public auction, unless
some other method of sale is approved by the Comptroller, and the consolidated
banking association shall have the rights to purchase any of such shares at such
public auction, if it is the highest bidder therefor, for the purpose of
reselling such shares within thirty days thereafter to such person or persons
and at such price not less than par as its board of directors by resolution may
determine. If the shares are sold at public auction at a price greater than the
amount paid to the dissenting shareholder the excess in such sale price shall be
determined in the manner prescribed by the
D-1
<PAGE>
law of the State in such cases, rather than as provided in this section, if such
provision is made in the State law; and no such consolidation shall be in
contravention of the law of the State under which such bank is incorporated.
D-2
<PAGE>
APPENDIX E
BANKING CIRCULAR 259
<PAGE>
BC-259
BANKING ISSUANCE
- -------------------------------------------------------------------------------
COMPTROLLER OF THE CURRENCY
ADMINISTRATOR OF NATIONAL BANKS
- -------------------------------------------------------------------------------
Type: Banking Circular Subject: Stock Appraisals
- -------------------------------------------------------------------------------
TO: Chief Executive Officers of National Banks, Deputy
Comptrollers (District), Department and Division Heads, and
Examining Personnel
PURPOSE
This banking circular informs all national banks of the valuation methods used
by the Office of the Comptroller of the Currency (OCC) to estimate the value of
a bank's shares when requested to do so by a shareholder dissenting to the
conversion, merger, or consolidation of its bank. The results of appraisals
performed by the OCC between January 1, 1985 and September 30, 1991 are also
summarized.
References: 12 U.S.C. 214a, 215 and 215a; 12 CFR 11.590 (Item 2)
BACKGROUND
Under 12 U.S.C. Sections 214a, a shareholder dissenting from a conversion,
consolidation, or merger involving a national bank is entitled to receive the
value of his or her shares from the resulting bank. A valuation of the shares
shall be made by a committee of three appraisers (a representative of the
dissenting shareholder, a representative of the resulting bank, and a third
appraiser selected by the other two). If the committee is formed and renders an
appraisal that is acceptable to the dissenting shareholder, the process is
complete and the appraised value of the shares is paid to the dissenting
shareholder by the resulting bank. If, for any reason, the committee is not
formed or if it renders an appraisal that is not acceptable to the dissenting
shareholder, an interested party may request an appraisal by the Office of the
Comptroller of the Currency (OCC). 12 U.S.C. Section 215 provides these
appraisal rights to any shareholder dissenting to a consolidation. Any
dissenting shareholder of a target bank in a merger is also entitled to these
appraisal rights pursuant to 12 U.S.C. Section 215a.
- -------------------------------------------------------------------------------
Date: March 5, 1992
E-1
<PAGE>
The above provides only a general overview of the appraisal process. The
specific requirements of the process are set forth in the statutes themselves.
METHODS OF VALUATION USED
Through its appraisal process, the OCC attempts to arrive at a fair estimate of
the value of a bank's shares. After reviewing the particular facts in each case
and the available information on a bank's shares, the OCC selects an appropriate
valuation method, or combination of methods, to determine a reasonable estimate
of the shares' value.
MARKET VALUE
The OCC uses various methods to establish the market value of shares being
appraised. If sufficient trading in the shares exists and the prices are
available from direct quotes from the Wall Street Journal or a market-maker,
those quotes are considered in determining the market value. If no market value
is readily available, or if the market value is not well established, other
methods of estimating market value can be used, such as the investment value and
adjusted book value methods.
INVESTMENT VALUE
Investment value requires an assessment of the value to investors of a share in
the future earnings of the target bank. Investment value is estimated by
applying an average price/earnings ratio of banks with similar earnings
potential to the earnings capacity of the target bank.
The peer group selection is based on location, size, and earnings patterns. If
the state in which the subject bank is located provides a sufficient number of
comparable banks using location, size and earnings patterns as the criteria for
selection, the price/earnings ratios assigned to the banks are applied to the
earnings per share estimated for the subject bank. In order to select a
reasonable peer group when there are too few comparable independent banks in a
location that is comparable to that of the subject bank, the pool of banks from
which a peer group is selected is broadened by including one-bank holding
company banks in a comparable location, and/or by selecting banks in less
comparable locations, including adjacent states, that have earnings patterns
similar to the subject bank.
ADJUSTED BOOK VALUE
The OCC also uses an "adjusted book value" method for estimating value.
Historically, the OCC has not placed any weight on the bank's "unadjusted book
value", since the value is based on historical acquisition costs of the bank's
assets, and does not reflect investors' perceptions of the value of the bank as
an ongoing concern. Adjusted book value is calculated by multiplying the book
value of the target bank's assets per share times the average market price to
book value ratio of comparable banking organizations. The average market price
to book value ratio measures the premium or discount to book value which
investors attribute to shares of similarly situated banking organizations.
Both the investment value method and the adjusted book value method present
appraised values which are based on the target bank's value as a going concern.
These techniques provide estimates of the market value of the shares of the
subject bank.
E-2
<PAGE>
OVERALL VALUATION
The OCC may use more than one of the above-described methods in deriving the
value of shares of stock. If more than one method is used, varying weights may
be applied in reaching an overall valuation. The weight given to the value by a
particular valuation method is based on how accurately the given method is
believed to represent market value. For example, the OCC may give more weight
to a market value representing infrequent trading by shareholders than to the
value derived from the investment value method when the subject bank's earnings
trend is so irregular that it is considered to be a poor predictor of future
earnings.
PURCHASE PREMIUMS
For mergers and consolidations, the OCC recognizes that purchase premiums do
exist and may, in some instances, be paid in the purchase of small blocks of
shares. However, the payment of purchase premiums depends entirely on the
acquisition or control plans of the purchasers, and such payment are not regular
or predictable elements of market value. Consequently, the OCC's valuation
methods do not include consideration of purchase premiums in arriving at the
value of shares.
STATISTICAL DATA
The chart below lists the results of appraisals the OCC performed between
January 1, 1985 and September 30, 1991. The OCC provides statistical data on
book value and price/earnings ratios for comparative purposes, but does not
necessarily rely on such data in determining the value of the banks' shares.
Dissenting shareholders should not view these statistics as determinative for
future appraisals.
In connection with disclosures given to shareholders under 12 CFR 11.590 (Item
2), banks may provide shareholders a copy of this banking circular or disclose
the information contained herein, including the past results of OCC appraisals.
If the bank discloses the past results of the OCC appraisals, it should advise
shareholders that: (1) the OCC did not rely on all the information set forth in
the chart in performing each appraisal; and (2) the OCC's past appraisals are
not necessarily determinative of its future appraisals of a particular bank's
shares.
E-3
<PAGE>
APPRAISAL RESULTS
<TABLE>
<CAPTION>
OCC AVERAGE PRICE/
APPRAISAL APPRAISAL PRICE BOOK EARNINGS RATIO
DATE* VALUE OFFERED VALUE OF PEER GROUP
<S> <C> <C> <C> <C>
1/1/85 107.25 110.00 178.29 5.3
1/2/85 73.16 NA 66.35 6.8
1/15/85 53.41 60.00 83.95 4.8
1/31/85 22.72 20.00 38.49 5.4
2/1/85 30.63 24.00 34.08 5.7
2/25/85 27.74 27.55 41.62 5.9
4/30/85 25.98 35.00 42.21 4.5
7/30/85 3,153.10 2,640.00 6,063.66 NC
9/1/85 17.23 21.00 21.84 4.7
11/22/85 316.74 338.75 519.89 5.0
11/22/85 30.28 NA 34.42 5.9
12/16/85 66.29 77.00 89.64 5.6
12/27/85 60.85 57.00 119.36 5.3
12/31/85 61.77 NA 73.56 5.9
12/31/85 75.79 40.00 58.74 12.1
1/12/86 19.93 NA 26.37 7.0
3/14/86 59.02 200.00 132.20 3.1
4/21/86 40.44 35.00 43.54 6.4
5/2/86 15.50 16.50 23.69 5.0
7/3/86 405.74 NA 612.82 3.9
7/31/86 297.34 600.00 650.63 4.4
8/22/86 103.53 106.67 136.23 NC
12/26/86 16.66 NA 43.57 4.0
12/31/86 53.39 95.58 69.66 7.1
5/1/87 186.42 NA 360.05 5.1
6/11/87 50.46 70.00 92.35 4.5
6/11/87 38.53 55.00 77.75 4.5
7/31/87 13.10 NA 20.04 6.7
8/26/87 55.92 57.52 70.88 NC
8/31/87 19.55 23.75 30.64 5.0
8/31/87 10.98 NA 17.01 4.2
10/6/87 56.48 60.00 73.11 5.6
3/15/88 297.63 NA 414.95 6.1
6/2/88 27.26 NA 28.45 5.4
6/30/88 137.78 NA 215.36 6.0
8/30/88 768.62 677.00 1,090.55 10.7
3/31/89 773.62 NA 557.30 7.9
5/26/89 136.47 180.00 250.42 4.5
5/29/90 9.87 NA 11.04 9.9
- -------------------------------------------------------------------------------
<FN>
* The "Appraisal Date" is the consummation date for the conversion,
consolidation, or merger.
NA - Not Available
NC - Not Computed
- -------------------------------------------------------------------------------
</TABLE>
E-4
<PAGE>
For more information regarding the OCC's stock appraisal process, contact the
Office of the Comptroller of the Currency, 490 L'Enfant Plaza East, S.W.,
Washington, D.C. 20219, Director for Corporate Activity, Bank Organization and
Structure.
/s/ Frank McGuire
- -----------------------------------
Frank McGuire
Acting Corporate Policy and Economic Analysis
E-5
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law authorizes indemnification
of directors and officers of a Delaware corporation under certain circumstances
against expenses, judgments, and the like in connection with an action, suit, or
proceeding. Article Fourteenth of the Certificate of Incorporation of the
registrant provides for broad indemnification of directors and officers of the
registrant.
Item 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
EXHIBITS:
2(a) -- Agreement and Plan of Reorganization, dated as of March 3, 1994,
among Copper Bancshares, Inc., The American National Bank of
Silver City, and Norwest Corporation, and form of Agreement and
Plan of Merger between Norwest Corporation and Copper Bancshares,
Inc. (included in Proxy Statement-Prospectus as Appendix A).
2(b) -- Form of Agreement and Plan of Consolidation between The American
National Bank of Silver City and Norwest Interim Bank Silver
City, National Association (included in Proxy Statement-
Prospectus as Appendix B).
4(a) -- Restated Certificate of Incorporation, as amended (incorporated
by reference to Exhibit 3(b) to the Registrant's Current Report
on Form 8-K dated June 28, 1993 (File No. 1-2979)).
4(b) -- Certificate of Designations of Powers, Preferences, and Rights
relating to the Registrant's 10.24% Cumulative Preferred Stock
(incorporated by reference to Exhibit 4(a) to the Registrant's
Registration Statement No. 33-38806).
4(c) -- Certificate of Designations of Powers, Preferences, and Rights
relating to the Registrant's Cumulative Convertible Preferred
Stock, Series B (incorporated by reference to Exhibit 2 to the
Registrant's Form 8-A dated August 8, 1991 (File No. 1-2979)).
4(d) -- Certificate of Designations of Powers, Preferences, and Rights
relating to the Registrant's ESOP Cumulative Convertible
Preferred Stock (incorporated by reference to Exhibit 4 to the
Registrant's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1994 (File No. 1-2979)).
4(e) -- By-Laws of the Norwest Corporation, as amended (incorporated
herein by reference to Exhibit 4(c) to the Registrant's Quarterly
Report on Form 10-Q for the quarter ended March 31, 1991 (File
No. 1-2979)).
II-1
<PAGE>
4(f) -- Rights Agreement, dated as of November 22, 1988, between Norwest
Corporation and Citibank, N.A., including as Exhibit A the form
of Certificate of Designation of Powers, Preferences and Rights
setting forth the terms of the Series A Junior Participating
Preferred Stock, without par value, (incorporated herein by
reference to Exhibit 1 to the Registrant's Form 8-A dated
December 6, 1988 (File No. 1-2979)) and Certificates of
Adjustment pursuant to Section 12 of the Rights Agreement
(incorporated herein by reference to Exhibit 3 to the
Registrant's Form 8 dated July 21, 1989, and to Exhibit 4 to the
Registrant's Form 8-A/A dated June 28, 1993 (File No. 1-2979)).
5 -- Opinion of General Counsel of the Registrant.
8 -- Opinion of Rothgerber, Appel, Powers & Johnson
23(a) -- Consent of General Counsel of the Registrant (included as part of
Exhibit 5 filed herewith).
23(b) -- Consent of Rothgerber, Appel, Powers & Johnson (included as part
of Exhibit 8 filed herewith).
23(c) -- Consent of KPMG Peat Marwick.
23(d) -- Consent of Bock, Rutherford & Company.
24 -- Powers of Attorney.
99 -- Form of proxy for Special Meeting of Shareholders of Copper
Bancshares, Inc.
Item 22. UNDERTAKINGS
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period, in which offers or sales are being
made, a posteffective amendment to this registration statement
(i) to include any prospectus required by section 10(a)(3) of the
Securities Act of 1933, (ii) to reflect in the prospectus any
facts or events arising after the effective date of the
registration statement (or the most recent posteffective
amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in
the registration statement, and (iii) to include any material
information with respect to the plan of distribution not
previously disclosed in the registration statement or any
material change to such information in the registration
statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such posteffective amendment shall
be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering
thereof.
(3) To remove from registration by means of a posteffective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
II-2
<PAGE>
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) The undersigned registrant hereby undertakes as follows: that prior to
any public reoffering of the securities registered hereunder through use of a
prospectus which is a part of this registration statement, by any person or
party who is deemed to be an underwriter within the meaning of Rule 145(c), the
issuer undertakes that such reoffering prospectus will contain the information
called for by the applicable registration form with respect to reofferings by
persons who may be deemed underwriters, in addition to the information called
for by the other items of the applicable form.
(d) The registrant undertakes that every prospectus: (i) that is filed
pursuant to paragraph (c) immediately preceding, or (ii) that purports to meet
the requirements of Section 10(a)(3) of the Act and is used in connection with
an offering of securities subject to Rule 415, will be filed as a part of an
amendment to the registration statement and will not be used until such
amendment is effective, and that, for purposes of determining any liability
under the Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(e) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers, and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer, or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer, or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
(f) The undersigned registrant hereby undertakes to respond to requests
for information that is incorporated by reference into the prospectus pursuant
to Item 4, 10(b), 11, or 13 of this form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through the
date of responding to the request.
(g) The undersigned registrant hereby undertakes to supply by means of a
posteffective amendment all information concerning a Reorganization, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Minneapolis, State of
Minnesota, on the 15th day of June, 1994.
NORWEST CORPORATION
By: /s/ Richard M. Kovacevich
---------------------------------------
Richard M. Kovacevich
President and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed on the 15th day of June, 1994,
by the following persons in the capacities indicated:
/s/ Richard M. Kovacevich President and Chief Executive Officer
- ------------------------------ (Principal Executive Officer)
Richard M. Kovacevich
/s/ John T. Thornton Executive Vice President and Chief
- ------------------------------ Financial Officer
John T. Thornton (Principal Financial Officer)
/s/ Michael A. Graf Senior Vice President and Controller
- ------------------------------ (Principal Accounting Officer)
Michael A. Graf
DAVID A. CHRISTENSEN )
PIERSON M. GRIEVE )
CHARLES M. HARPER )
N. BERNE HART ) A majority of the
WILLIAM A. HODDER ) Board of Directors*
GEORGE C. HOWE )
LLOYD P. JOHNSON )
REATHA CLARK KING )
RICHARD M. KOVACEVICH )
RICHARD S. LEVITT )
RICHARD D. McCORMICK )
CYNTHIA H. MILLIGAN )
JOHN E. PEARSON )
IAN M. ROLLAND )
STEPHEN E. WATSON )
MICHAEL W. WRIGHT )
- ---------------
*Richard M. Kovacevich, by signing his name hereto, does hereby sign this
document on behalf of each of the directors named above pursuant to powers of
attorney duly executed by such persons.
/s/ Richard M. Kovacevich
---------------------------------------
Richard M. Kovacevich
Attorney-in-Fact
II-4
<PAGE>
INDEX TO EXHIBITS
Exhibit Form
Number Description of Filing
- ------ ----------- ---------
2(a) Agreement and Plan of Reorganization, dated as of
March 2, 1994, among Copper Bancshares, Inc., The
American National Bank of Silver City, and Norwest
Corporation, and form of Agreement and Plan of Merger
between Norwest Corporation and Copper Bancshares, Inc.
(included in Proxy Statement-Prospectus as Appendix A)
2(b) Form of Agreement and Plan of Merger between The American
National Bank of Silver City and Norwest Interim Bank
Silver City, National Association (included in Proxy
Statement-Prospectus as Appendix B).
4(a) Restated Certificate of Incorporation, as amended
(incorporated by reference to Exhibit 3(b) to the
Registrant's Current Report on Form 8-K dated June 28,
1993 (File No. 1-2979)).
4(b) Certificate of Designations of Powers, Preferences, and
Rights relating to the Registrant's 10.24% Cumulative
Preferred Stock (incorporated by reference to Exhibit
4(a) to the Registrant's Registration Statement No.
33-38806).
4(c) Certificate of Designations of Powers, Preferences, and
Rights relating to the Registrant's Cumulative Convertible
Preferred Stock, Series B (incorporated by reference to
Exhibit 2 to the Registrant's Form 8-A dated August 8,
1991 (File No. 1-2979)).
4(d) Certificate of Designations of Powers, Preferences, and
Rights relating to the Registrant's ESOP Cumulative
Convertible Preferred Stock (incorporated by reference to
Exhibit 4 to the Registrant's Quarterly Report on Form 10-Q
for the quarter ended March 31, 1994 (File No. 1-2979)).
4(e) By-Laws, as amended (incorporated by reference to Exhibit
4(c) to the Registrant's Quarterly Report on Form 10-Q for
the quarter ended March 31, 1991 (File No. 1-2979)).
4(f) Rights Agreement, dated as of November 22, 1988, between
Norwest Corporation and Citibank, N.A., including as
Exhibit A the form of Certificate of Designation of Powers,
Preferences and Rights setting forth the terms of the
Series A Junior Participating Preferred Stock, without par
value, (incorporated by reference to Exhibit 1 to the
Registrant's Form 8-A dated December 6, 1988 (File No.
1-2979)) and Certificates of Adjustment pursuant to
Section 12 of the Rights Agreement (incorporated by
reference to Exhibit 3 to the Registrant's Form 8 dated
July 21, 1989, and to Exhibit 4 to the Registrant's
Form 8-A/A dated June 28, 1993 (File No. 1-2979)).
<PAGE>
Exhibit Form
Number Description of Filing
- ------ ----------- ---------
5 Opinion of General Counsel of the Registrant. Electronic
Transmission
8 Opinion of Rothgerber, Appel, Powers & Johnson. Electronic
Transmission
23(a) Consent of General Counsel of Norwest Corporation
(included as part of Exhibit 5 filed herewith).
23(b) Consent of Rothgerber, Appel, Powers & Johnson.
(included as part of Exhibit 8 filed herewith).
23(c) Consent of KPMG Peat Marwick. Electronic
Transmission
23(d) Consent of Bock, Rutherford & Company. Electronic
Transmission
24 Powers of Attorney. Electronic
Transmission
99 Form of proxy for Special Meeting of Shareholders of Electronic
Copper Bancshares, Inc. Transmission
<PAGE>
EXHIBIT 5
June 15, 1994
Board of Directors
Norwest Corporation
Norwest Center
Sixth and Marquette
Minneapolis, Minnesota 55479-1000
Ladies and Gentlemen:
In connection with the proposed registration under the Securities Act of
1933, as amended, of 525,000 shares of the common stock (the "Shares"), par
value $1 2/3 per share, of Norwest Corporation (the "Corporation"), a Delaware
corporation, which are proposed to be issued by the Corporation in connection
with the merger of a wholly owned subsidiary of the Corporation with Copper
Bancshares, Inc., a New Mexico corporation, (the "Merger") and the related
consolidation of The American National Bank of Silver City, a national banking
association, with a wholly owned subsidiary of the Corporation (the
"Consolidation"), I have examined such corporate records and other documents,
including the Registration Statement on Form S-4 relating to the Shares and have
reviewed such matters of law as I have deemed necessary for this opinion, and I
advise you that in my opinion:
1. The Corporation is a corporation duly organized and existing under the
laws of the State of Delaware.
2. All necessary corporate action on the part of the Corporation has been
taken to authorize the issuance of the Shares in connection with the Merger and
the Consolidation, and, when issued as described in the Registration Statement,
the Shares will be legally and validly issued, fully paid, and nonassessable.
I consent to the filing of this opinion as an exhibit to the Registration
Statement.
Very truly yours,
<PAGE>
June 13, 1994
Copper Bancshares, Inc.
The American National Bank
P.O. Box 1250
Silver City, NM 88062-1250
Ladies and Gentlemen:
We have acted as counsel to Copper Bancshares, Inc. ("Copper"), and the
American National Bank (the "Bank") in connection with the negotiation,
preparation and execution of an Agreement Plan of Reorganization dated as of
March __, 1994 (the "Agreement") by and among Copper, the Bank and Norwest
Corporation ("Norwest"). The agreement provides for the merger of a wholly
owned subsidiary of Norwest with and into Copper (the "Merger") and the
consolidation of the Bank with a wholly owned subsidiary of Norwest ("Norwest
Bank"), under the charter of Bank pursuant to the Agreement and an Agreement of
Consolidation (the "Consolidation). This opinion is delivered to you pursuant
to Section 6(h) of the Agreement. Unless otherwise defined herein, capitalized
terms shall have the meanings given to them in the Agreement. Further, all
references to the Code are to the Internal Revenue Code of 1986, as amended. In
addition, in connection with this opinion we have reviewed a signed copy of the
Agreement, together with all exhibits thereto, and the Registration Statement on
Form S-4 filed by Norwest with the Securities and Exchange Commission in
connection with the Merger and Consolidation on ____________, 1994 and the
amendments thereto (the "Registration Statement"), as well as all other
documents we have deemed necessary or appropriate for purposes of this opinion.
We have relied upon certain representations and facts set forth in the
Agreement, the Registration Statement, and a Certificate of the President of
Copper (the "Certificate"). If any of the representations and facts set forth
in the Agreement, the Registration Statement or the Certificate is not true and
accurate, both on the date of this letter and at the Effective Time of the
Merger and the Consolidation, then we express no opinion. Further, our opinion
assumes that the Merger and Consolidation will occur fully in accordance with
the terms and provisions of the Agreement. If it does not, then we express no
opinion.
Based upon the foregoing and subject to the qualifications and exceptions
heretofore and hereafter set forth, it is our opinion that for federal income
tax purposes:
<PAGE>
1. The Merger and the Consolidation will each constitute a reorganization
within the meaning of Code Section 368(a).
2. Copper and the Bank will each be a "party to the reorganization"
within the meaning of Code Section 368(b).
3. No gain or loss will be recognized by the holders of Copper Common
Stock and Bank Common Stock on the receipt of Norwest Common Stock in
the Merger and Consolidation, respectively, except to the extent of
cash received in lieu of fractional share interests in Norwest Common
Stock.
4. The aggregate adjusted tax basis of the shares of Norwest Common Stock
received by a holder of Copper or Bank Common Stock pursuant to the
Merger or Consolidation will be same as the aggregate adjusted tax
basis of the shares of Copper Common Stock or Bank Common Stock
surrendered in exchange therefor reduced by the amount of cash
received in lieu of fractional share interests.
5. The holding period of the Norwest Common Stock received by a holder of
Copper or Bank Common Stock pursuant to the Merger and Consolidation
will include the holding period of the Copper or Bank Common Stock
surrendered in exchange therefor, provided that the Copper or Bank
Common Stock surrendered was held as a capital asset at the time of
the exchange.
The opinions set forth above are predicated upon and limited by the
assumptions set forth herein and are further subject to the qualifications,
assumptions, exceptions and limitations set forth below:
(a) The opinions and conclusions set forth herein are based upon the
federal income tax laws of the United States, including the Code
Treasury regulations and judicial and administrative
interpretations thereof as they exist on the date of this letter.
There can be no assurance that the legal authorities upon which
our opinion is based will not be modified, revoked, supplemented
or otherwise changed. To the extent of any such changes, our
opinion is not applicable. Furthermore, we undertake no
obligations to reexamine or in any way revise our opinion in the
light of such changes.
(b) The opinions set forth herein are limited to those federal income
tax consequences of the Merger and Consolidation which are
specifically addressed in the above. In particular, no opinion
is expressed with respect to the tax consequences of the Merger
and Consolidation under Code Sections 55 through 59 and the
regulations thereunder (providing for alternative minimum tax).
We also express no opinion or conclusion with regard to state or
local income tax consequences.
(c) Among the representations upon which we have relied is that
representation that, to the best knowledge of management of
Copper and the Bank, the holders of Copper and Bank Common Stock
have no plan or intention to sell, exchange or otherwise dispose
of the amount of shares of Norwest Common Stock to be received in
the
<PAGE>
Merger and Consolidation that would reduce their aggregate
ownership of Norwest Common Stock to a number of shares having in
the aggregate a value as of the Effective Time of the Merger and
Consolidation of less than 50% of the total value of all Copper
and Bank Common Stock outstanding immediately prior to the Merger
and Consolidation. For purposes of this assumption, Copper or
Bank Common Stock exchanged for cash in lieu of fractional shares
of Norwest Common Stock, or surrendered by dissenters will be
treated as Copper or Bank Common Stock outstanding immediately
prior to the Merger and Consolidation.
(d) We express no opinion as to the tax consequences of holders of
any stock options of Copper or the Bank.
(e) The opinions set forth are only as of the date hereof. We
undertake no obligation to advise you of changes of law or fact
that occur after the date of this opinion letter.
(f) The opinions set forth herein are given solely for the persons to
whom they are addressed and are given solely in connection with
the Merger and Consolidation and shall not be deemed binding for
any other purpose and you shall not have the right to rely
thereon for any other purpose.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to reference our firm under the heading "Certain
Federal Income Tax Consequences" in the Prospectus/Proxy Statement, which is
part of the Registration Statement. In so consenting, we do not thereby admit
that we are within the category of persons whose consent is required under
Section 7 of the Securities Act.
Very truly yours,
ROTHGERBER, APPEL, POWERS & JOHNSON
<PAGE>
EXHIBIT 23(c)
[LETTERHEAD OF KPMG PEAT MARWICK]
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
Norwest Corporation:
We consent to the use of our report dated January 19, 1994 incorporated herein
by reference and to the reference to our firm under the heading "EXPERTS" in the
prospectus. Our report refers to the Corporation's adoption of Financial
Accounting Standards Board's Statement of Financial Accounting Standards No.
106, "Employers' Accounting for Postretirement Benefits Other Than Pensions."
/s/ KPMG Peat Marwick
Minneapolis, Minnesota
June 15, 1994
<PAGE>
EXHIBIT 23(d)
[LETTERHEAD OF BOCK, RUTHERFORD & CO.]
INDEPENDENT AUDITORS' CONSENT
The Boards of Directors
Copper Bancshares, Inc. and
American National Bank of Silver City:
We consent to the use of our reports dated January 6, 1994 included herein and
to the reference to our firm under the heading "EXPERTS" in the prospectus.
/s/ Bock, Rutherford & Co.
El Paso, Texas
June 14, 1994
<PAGE>
EXHIBIT 24
NORWEST CORPORATION
Power of Attorney
of Director and/or Officer
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director and/or
officer of NORWEST CORPORATION, a Delaware corporation, does hereby make,
constitute and appoint LLOYD P. JOHNSON, RICHARD M. KOVACEVICH, STANLEY S.
STROUP, JOHN T. THORNTON, AND LAUREL A. HOLSCHUH, and each or any one of them,
the undersigned's true and lawful attorneys-in-fact, with power of substitution,
for the undersigned and in the undersigned's name, place and stead, to sign and
affix the undersigned's name as such director and/or officer of said Corporation
to a Registration Statement or Registration Statements, on Form S-4 or other
applicable form, and all amendments, including post-effective amendments,
thereto, to be filed by said Corporation with the Securities and Exchange
Commission, Washington, D.C., in connection with the registration under the
Securities Act of 1933, as amended, of up to 550,000 shares of Common Stock of
the Corporation to be issued in connection with the acquisition of Copper
Bancshares, Inc., and to file the same, with all exhibits thereto and other
supporting documents, with said Commission, granting unto said attorneys-in-
fact, and each of them, full power and authority to do and perform any and all
acts necessary or incidental to the performance and execution of the powers
herein expressly granted.
IN WITNESS WHEREOF, the undersigned has executed this power of attorney
this 22nd day of February, 1994.
/s/ David A. Christensen
-----------------------------------------
David A. Christensen
<PAGE>
NORWEST CORPORATION
Power of Attorney
of Director and/or Officer
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director and/or
officer of NORWEST CORPORATION, a Delaware corporation, does hereby make,
constitute and appoint LLOYD P. JOHNSON, RICHARD M. KOVACEVICH, STANLEY S.
STROUP, JOHN T. THORNTON, AND LAUREL A. HOLSCHUH, and each or any one of them,
the undersigned's true and lawful attorneys-in-fact, with power of substitution,
for the undersigned and in the undersigned's name, place and stead, to sign and
affix the undersigned's name as such director and/or officer of said Corporation
to a Registration Statement or Registration Statements, on Form S-4 or other
applicable form, and all amendments, including post-effective amendments,
thereto, to be filed by said Corporation with the Securities and Exchange
Commission, Washington, D.C., in connection with the registration under the
Securities Act of 1933, as amended, of up to 550,000 shares of Common Stock of
the Corporation to be issued in connection with the acquisition of Copper
Bancshares, Inc., and to file the same, with all exhibits thereto and other
supporting documents, with said Commission, granting unto said attorneys-in-
fact, and each of them, full power and authority to do and perform any and all
acts necessary or incidental to the performance and execution of the powers
herein expressly granted.
IN WITNESS WHEREOF, the undersigned has executed this power of attorney
this 22nd day of February, 1994.
/s/ Pierson M. Grieve
-----------------------------------------
Pierson M. Grieve
<PAGE>
NORWEST CORPORATION
Power of Attorney
of Director and/or Officer
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director and/or
officer of NORWEST CORPORATION, a Delaware corporation, does hereby make,
constitute and appoint LLOYD P. JOHNSON, RICHARD M. KOVACEVICH, STANLEY S.
STROUP, JOHN T. THORNTON, AND LAUREL A. HOLSCHUH, and each or any one of them,
the undersigned's true and lawful attorneys-in-fact, with power of substitution,
for the undersigned and in the undersigned's name, place and stead, to sign and
affix the undersigned's name as such director and/or officer of said Corporation
to a Registration Statement or Registration Statements, on Form S-4 or other
applicable form, and all amendments, including post-effective amendments,
thereto, to be filed by said Corporation with the Securities and Exchange
Commission, Washington, D.C., in connection with the registration under the
Securities Act of 1933, as amended, of up to 550,000 shares of Common Stock of
the Corporation to be issued in connection with the acquisition of Copper
Bancshares, Inc., and to file the same, with all exhibits thereto and other
supporting documents, with said Commission, granting unto said attorneys-in-
fact, and each of them, full power and authority to do and perform any and all
acts necessary or incidental to the performance and execution of the powers
herein expressly granted.
IN WITNESS WHEREOF, the undersigned has executed this power of attorney
this 22nd day of February, 1994.
/s/ Charles M. Harper
-----------------------------------------
Charles M. Harper
<PAGE>
NORWEST CORPORATION
Power of Attorney
of Director and/or Officer
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director and/or
officer of NORWEST CORPORATION, a Delaware corporation, does hereby make,
constitute and appoint LLOYD P. JOHNSON, RICHARD M. KOVACEVICH, STANLEY S.
STROUP, JOHN T. THORNTON, AND LAUREL A. HOLSCHUH, and each or any one of them,
the undersigned's true and lawful attorneys-in-fact, with power of substitution,
for the undersigned and in the undersigned's name, place and stead, to sign and
affix the undersigned's name as such director and/or officer of said Corporation
to a Registration Statement or Registration Statements, on Form S-4 or other
applicable form, and all amendments, including post-effective amendments,
thereto, to be filed by said Corporation with the Securities and Exchange
Commission, Washington, D.C., in connection with the registration under the
Securities Act of 1933, as amended, of up to 550,000 shares of Common Stock of
the Corporation to be issued in connection with the acquisition of Copper
Bancshares, Inc., and to file the same, with all exhibits thereto and other
supporting documents, with said Commission, granting unto said attorneys-in-
fact, and each of them, full power and authority to do and perform any and all
acts necessary or incidental to the performance and execution of the powers
herein expressly granted.
IN WITNESS WHEREOF, the undersigned has executed this power of attorney
this 22nd day of February, 1994.
/s/ N. Berne Hart
-----------------------------------------
N. Berne Hart
<PAGE>
NORWEST CORPORATION
Power of Attorney
of Director and/or Officer
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director and/or
officer of NORWEST CORPORATION, a Delaware corporation, does hereby make,
constitute and appoint LLOYD P. JOHNSON, RICHARD M. KOVACEVICH, STANLEY S.
STROUP, JOHN T. THORNTON, AND LAUREL A. HOLSCHUH, and each or any one of them,
the undersigned's true and lawful attorneys-in-fact, with power of substitution,
for the undersigned and in the undersigned's name, place and stead, to sign and
affix the undersigned's name as such director and/or officer of said Corporation
to a Registration Statement or Registration Statements, on Form S-4 or other
applicable form, and all amendments, including post-effective amendments,
thereto, to be filed by said Corporation with the Securities and Exchange
Commission, Washington, D.C., in connection with the registration under the
Securities Act of 1933, as amended, of up to 550,000 shares of Common Stock of
the Corporation to be issued in connection with the acquisition of Copper
Bancshares, Inc., and to file the same, with all exhibits thereto and other
supporting documents, with said Commission, granting unto said attorneys-in-
fact, and each of them, full power and authority to do and perform any and all
acts necessary or incidental to the performance and execution of the powers
herein expressly granted.
IN WITNESS WHEREOF, the undersigned has executed this power of attorney
this 22nd day of February, 1994.
/s/ William A. Hodder
-----------------------------------------
William A. Hodder
<PAGE>
NORWEST CORPORATION
Power of Attorney
of Director and/or Officer
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director and/or
officer of NORWEST CORPORATION, a Delaware corporation, does hereby make,
constitute and appoint LLOYD P. JOHNSON, RICHARD M. KOVACEVICH, STANLEY S.
STROUP, JOHN T. THORNTON, AND LAUREL A. HOLSCHUH, and each or any one of them,
the undersigned's true and lawful attorneys-in-fact, with power of substitution,
for the undersigned and in the undersigned's name, place and stead, to sign and
affix the undersigned's name as such director and/or officer of said Corporation
to a Registration Statement or Registration Statements, on Form S-4 or other
applicable form, and all amendments, including post-effective amendments,
thereto, to be filed by said Corporation with the Securities and Exchange
Commission, Washington, D.C., in connection with the registration under the
Securities Act of 1933, as amended, of up to 550,000 shares of Common Stock of
the Corporation to be issued in connection with the acquisition of Copper
Bancshares, Inc., and to file the same, with all exhibits thereto and other
supporting documents, with said Commission, granting unto said attorneys-in-
fact, and each of them, full power and authority to do and perform any and all
acts necessary or incidental to the performance and execution of the powers
herein expressly granted.
IN WITNESS WHEREOF, the undersigned has executed this power of attorney
this 22nd day of February, 1994.
/s/ George C. Howe
-----------------------------------------
George C. Howe
<PAGE>
NORWEST CORPORATION
Power of Attorney
of Director and/or Officer
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director and/or
officer of NORWEST CORPORATION, a Delaware corporation, does hereby make,
constitute and appoint LLOYD P. JOHNSON, RICHARD M. KOVACEVICH, STANLEY S.
STROUP, JOHN T. THORNTON, AND LAUREL A. HOLSCHUH, and each or any one of them,
the undersigned's true and lawful attorneys-in-fact, with power of substitution,
for the undersigned and in the undersigned's name, place and stead, to sign and
affix the undersigned's name as such director and/or officer of said Corporation
to a Registration Statement or Registration Statements, on Form S-4 or other
applicable form, and all amendments, including post-effective amendments,
thereto, to be filed by said Corporation with the Securities and Exchange
Commission, Washington, D.C., in connection with the registration under the
Securities Act of 1933, as amended, of up to 550,000 shares of Common Stock of
the Corporation to be issued in connection with the acquisition of Copper
Bancshares, Inc., and to file the same, with all exhibits thereto and other
supporting documents, with said Commission, granting unto said attorneys-in-
fact, and each of them, full power and authority to do and perform any and all
acts necessary or incidental to the performance and execution of the powers
herein expressly granted.
IN WITNESS WHEREOF, the undersigned has executed this power of attorney
this 22nd day of February, 1994.
/s/ Lloyd P. Johnson
-----------------------------------------
Lloyd P. Johnson
<PAGE>
NORWEST CORPORATION
Power of Attorney
of Director and/or Officer
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director and/or
officer of NORWEST CORPORATION, a Delaware corporation, does hereby make,
constitute and appoint LLOYD P. JOHNSON, RICHARD M. KOVACEVICH, STANLEY S.
STROUP, JOHN T. THORNTON, AND LAUREL A. HOLSCHUH, and each or any one of them,
the undersigned's true and lawful attorneys-in-fact, with power of substitution,
for the undersigned and in the undersigned's name, place and stead, to sign and
affix the undersigned's name as such director and/or officer of said Corporation
to a Registration Statement or Registration Statements, on Form S-4 or other
applicable form, and all amendments, including post-effective amendments,
thereto, to be filed by said Corporation with the Securities and Exchange
Commission, Washington, D.C., in connection with the registration under the
Securities Act of 1933, as amended, of up to 550,000 shares of Common Stock of
the Corporation to be issued in connection with the acquisition of Copper
Bancshares, Inc., and to file the same, with all exhibits thereto and other
supporting documents, with said Commission, granting unto said attorneys-in-
fact, and each of them, full power and authority to do and perform any and all
acts necessary or incidental to the performance and execution of the powers
herein expressly granted.
IN WITNESS WHEREOF, the undersigned has executed this power of attorney
this 22nd day of February, 1994.
/s/ Reatha Clark King
-----------------------------------------
Reatha Clark King
<PAGE>
NORWEST CORPORATION
Power of Attorney
of Director and/or Officer
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director and/or
officer of NORWEST CORPORATION, a Delaware corporation, does hereby make,
constitute and appoint LLOYD P. JOHNSON, RICHARD M. KOVACEVICH, STANLEY S.
STROUP, JOHN T. THORNTON, AND LAUREL A. HOLSCHUH, and each or any one of them,
the undersigned's true and lawful attorneys-in-fact, with power of substitution,
for the undersigned and in the undersigned's name, place and stead, to sign and
affix the undersigned's name as such director and/or officer of said Corporation
to a Registration Statement or Registration Statements, on Form S-4 or other
applicable form, and all amendments, including post-effective amendments,
thereto, to be filed by said Corporation with the Securities and Exchange
Commission, Washington, D.C., in connection with the registration under the
Securities Act of 1933, as amended, of up to 550,000 shares of Common Stock of
the Corporation to be issued in connection with the acquisition of Copper
Bancshares, Inc., and to file the same, with all exhibits thereto and other
supporting documents, with said Commission, granting unto said attorneys-in-
fact, and each of them, full power and authority to do and perform any and all
acts necessary or incidental to the performance and execution of the powers
herein expressly granted.
IN WITNESS WHEREOF, the undersigned has executed this power of attorney
this 22nd day of February, 1994.
/s/ Richard M. Kovacevich
-----------------------------------------
Richard M. Kovacevich
<PAGE>
NORWEST CORPORATION
Power of Attorney
of Director and/or Officer
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director and/or
officer of NORWEST CORPORATION, a Delaware corporation, does hereby make,
constitute and appoint LLOYD P. JOHNSON, RICHARD M. KOVACEVICH, STANLEY S.
STROUP, JOHN T. THORNTON, AND LAUREL A. HOLSCHUH, and each or any one of them,
the undersigned's true and lawful attorneys-in-fact, with power of substitution,
for the undersigned and in the undersigned's name, place and stead, to sign and
affix the undersigned's name as such director and/or officer of said Corporation
to a Registration Statement or Registration Statements, on Form S-4 or other
applicable form, and all amendments, including post-effective amendments,
thereto, to be filed by said Corporation with the Securities and Exchange
Commission, Washington, D.C., in connection with the registration under the
Securities Act of 1933, as amended, of up to 550,000 shares of Common Stock of
the Corporation to be issued in connection with the acquisition of Copper
Bancshares, Inc., and to file the same, with all exhibits thereto and other
supporting documents, with said Commission, granting unto said attorneys-in-
fact, and each of them, full power and authority to do and perform any and all
acts necessary or incidental to the performance and execution of the powers
herein expressly granted.
IN WITNESS WHEREOF, the undersigned has executed this power of attorney
this 22nd day of February, 1994.
/s/ Richard S. Levitt
-----------------------------------------
Richard S. Levitt
<PAGE>
NORWEST CORPORATION
Power of Attorney
of Director and/or Officer
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director and/or
officer of NORWEST CORPORATION, a Delaware corporation, does hereby make,
constitute and appoint LLOYD P. JOHNSON, RICHARD M. KOVACEVICH, STANLEY S.
STROUP, JOHN T. THORNTON, AND LAUREL A. HOLSCHUH, and each or any one of them,
the undersigned's true and lawful attorneys-in-fact, with power of substitution,
for the undersigned and in the undersigned's name, place and stead, to sign and
affix the undersigned's name as such director and/or officer of said Corporation
to a Registration Statement or Registration Statements, on Form S-4 or other
applicable form, and all amendments, including post-effective amendments,
thereto, to be filed by said Corporation with the Securities and Exchange
Commission, Washington, D.C., in connection with the registration under the
Securities Act of 1933, as amended, of up to 550,000 shares of Common Stock of
the Corporation to be issued in connection with the acquisition of Copper
Bancshares, Inc., and to file the same, with all exhibits thereto and other
supporting documents, with said Commission, granting unto said attorneys-in-
fact, and each of them, full power and authority to do and perform any and all
acts necessary or incidental to the performance and execution of the powers
herein expressly granted.
IN WITNESS WHEREOF, the undersigned has executed this power of attorney
this 22nd day of February, 1994.
/s/ Richard D. McCormick
-----------------------------------------
Richard D. McCormick
<PAGE>
NORWEST CORPORATION
Power of Attorney
of Director and/or Officer
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director and/or
officer of NORWEST CORPORATION, a Delaware corporation, does hereby make,
constitute and appoint LLOYD P. JOHNSON, RICHARD M. KOVACEVICH, STANLEY S.
STROUP, JOHN T. THORNTON, AND LAUREL A. HOLSCHUH, and each or any one of them,
the undersigned's true and lawful attorneys-in-fact, with power of substitution,
for the undersigned and in the undersigned's name, place and stead, to sign and
affix the undersigned's name as such director and/or officer of said Corporation
to a Registration Statement or Registration Statements, on Form S-4 or other
applicable form, and all amendments, including post-effective amendments,
thereto, to be filed by said Corporation with the Securities and Exchange
Commission, Washington, D.C., in connection with the registration under the
Securities Act of 1933, as amended, of up to 550,000 shares of Common Stock of
the Corporation to be issued in connection with the acquisition of Copper
Bancshares, Inc., and to file the same, with all exhibits thereto and other
supporting documents, with said Commission, granting unto said attorneys-in-
fact, and each of them, full power and authority to do and perform any and all
acts necessary or incidental to the performance and execution of the powers
herein expressly granted.
IN WITNESS WHEREOF, the undersigned has executed this power of attorney
this 22nd day of February, 1994.
/s/ Cynthia H. Milligan
-----------------------------------------
Cynthia H. Milligan
<PAGE>
NORWEST CORPORATION
Power of Attorney
of Director and/or Officer
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director and/or
officer of NORWEST CORPORATION, a Delaware corporation, does hereby make,
constitute and appoint LLOYD P. JOHNSON, RICHARD M. KOVACEVICH, STANLEY S.
STROUP, JOHN T. THORNTON, AND LAUREL A. HOLSCHUH, and each or any one of them,
the undersigned's true and lawful attorneys-in-fact, with power of substitution,
for the undersigned and in the undersigned's name, place and stead, to sign and
affix the undersigned's name as such director and/or officer of said Corporation
to a Registration Statement or Registration Statements, on Form S-4 or other
applicable form, and all amendments, including post-effective amendments,
thereto, to be filed by said Corporation with the Securities and Exchange
Commission, Washington, D.C., in connection with the registration under the
Securities Act of 1933, as amended, of up to 550,000 shares of Common Stock of
the Corporation to be issued in connection with the acquisition of Copper
Bancshares, Inc., and to file the same, with all exhibits thereto and other
supporting documents, with said Commission, granting unto said attorneys-in-
fact, and each of them, full power and authority to do and perform any and all
acts necessary or incidental to the performance and execution of the powers
herein expressly granted.
IN WITNESS WHEREOF, the undersigned has executed this power of attorney
this 22nd day of February, 1994.
/s/ John E. Pearson
-----------------------------------------
John E. Pearson
<PAGE>
NORWEST CORPORATION
Power of Attorney
of Director and/or Officer
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director and/or
officer of NORWEST CORPORATION, a Delaware corporation, does hereby make,
constitute and appoint LLOYD P. JOHNSON, RICHARD M. KOVACEVICH, STANLEY S.
STROUP, JOHN T. THORNTON, AND LAUREL A. HOLSCHUH, and each or any one of them,
the undersigned's true and lawful attorneys-in-fact, with power of substitution,
for the undersigned and in the undersigned's name, place and stead, to sign and
affix the undersigned's name as such director and/or officer of said Corporation
to a Registration Statement or Registration Statements, on Form S-4 or other
applicable form, and all amendments, including post-effective amendments,
thereto, to be filed by said Corporation with the Securities and Exchange
Commission, Washington, D.C., in connection with the registration under the
Securities Act of 1933, as amended, of up to 550,000 shares of Common Stock of
the Corporation to be issued in connection with the acquisition of Copper
Bancshares, Inc., and to file the same, with all exhibits thereto and other
supporting documents, with said Commission, granting unto said attorneys-in-
fact, and each of them, full power and authority to do and perform any and all
acts necessary or incidental to the performance and execution of the powers
herein expressly granted.
IN WITNESS WHEREOF, the undersigned has executed this power of attorney
this 22nd day of February, 1994.
/s/ Ian M. Rolland
-----------------------------------------
Ian M. Rolland
<PAGE>
NORWEST CORPORATION
Power of Attorney
of Director and/or Officer
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director and/or
officer of NORWEST CORPORATION, a Delaware corporation, does hereby make,
constitute and appoint LLOYD P. JOHNSON, RICHARD M. KOVACEVICH, STANLEY S.
STROUP, JOHN T. THORNTON, AND LAUREL A. HOLSCHUH, and each or any one of them,
the undersigned's true and lawful attorneys-in-fact, with power of substitution,
for the undersigned and in the undersigned's name, place and stead, to sign and
affix the undersigned's name as such director and/or officer of said Corporation
to a Registration Statement or Registration Statements, on Form S-4 or other
applicable form, and all amendments, including post-effective amendments,
thereto, to be filed by said Corporation with the Securities and Exchange
Commission, Washington, D.C., in connection with the registration under the
Securities Act of 1933, as amended, of up to 550,000 shares of Common Stock of
the Corporation to be issued in connection with the acquisition of Copper
Bancshares, Inc., and to file the same, with all exhibits thereto and other
supporting documents, with said Commission, granting unto said attorneys-in-
fact, and each of them, full power and authority to do and perform any and all
acts necessary or incidental to the performance and execution of the powers
herein expressly granted.
IN WITNESS WHEREOF, the undersigned has executed this power of attorney
this 22nd day of February, 1994.
/s/ Stephen E. Watson
-----------------------------------------
Stephen E. Watson
<PAGE>
NORWEST CORPORATION
Power of Attorney
of Director and/or Officer
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director and/or
officer of NORWEST CORPORATION, a Delaware corporation, does hereby make,
constitute and appoint LLOYD P. JOHNSON, RICHARD M. KOVACEVICH, STANLEY S.
STROUP, JOHN T. THORNTON, AND LAUREL A. HOLSCHUH, and each or any one of them,
the undersigned's true and lawful attorneys-in-fact, with power of substitution,
for the undersigned and in the undersigned's name, place and stead, to sign and
affix the undersigned's name as such director and/or officer of said Corporation
to a Registration Statement or Registration Statements, on Form S-4 or other
applicable form, and all amendments, including post-effective amendments,
thereto, to be filed by said Corporation with the Securities and Exchange
Commission, Washington, D.C., in connection with the registration under the
Securities Act of 1933, as amended, of up to 550,000 shares of Common Stock of
the Corporation to be issued in connection with the acquisition of Copper
Bancshares, Inc., and to file the same, with all exhibits thereto and other
supporting documents, with said Commission, granting unto said attorneys-in-
fact, and each of them, full power and authority to do and perform any and all
acts necessary or incidental to the performance and execution of the powers
herein expressly granted.
IN WITNESS WHEREOF, the undersigned has executed this power of attorney
this 22nd day of February, 1994.
/s/ Michael W. Wright
-----------------------------------------
Michael W. Wright
<PAGE>
EXHIBIT 99
COPPER BANCSHARES, INC.
PROXY FOR SPECIAL MEETING OF SHAREHOLDERS
The undersigned hereby appoints _______________, _______________, and
_______________, and each of them, proxies, with full power of substitution, to
vote all shares of Common Stock the undersigned is entitled to vote at the
Special Meeting of Shareholders of Copper Bancshares, Inc. ("Bancshares") to be
held at _______________, _______________, Silver City, New Mexico, at __:__ _.m.
on _________, August __, 1994, or at any adjournment thereof, as follows, hereby
revoking any proxy previously given:
(1) The adoption of the Agreement and Plan of Reorganization among
Bancshares, The American National Bank of Silver City (the"Bank"), and Norwest
Corporation ("Norwest"), dated as of March 2, 1994, pursuant to which (i) a
wholly owned subsidiary of Norwest will be merged with Bancshares, with
Bancshares as the surviving entity, and each outstanding share of the common
stock of Bancshares will be exchanged for shares of the common stock, par value
$1 2/3 per share, of Norwest, and (ii) the Bank will be consolidated with a
wholly owned subsidiary of Norwest, as more fully described in the Proxy
Statement-Prospectus accompanying this Proxy.
FOR / / AGAINST / / ABSTAIN / /
(2) In their discretion on such matters as may properly come before the
meeting or any adjournment thereof; all as set out in the Notice and Proxy
Statement-Prospectus relating to the meeting, receipt of which are hereby
acknowledged.
Shares represented by this proxy will be voted as directed by the
shareholder. The Board of Directors recommends a vote "FOR" proposal 1. If no
direction is supplied, the proxy will be voted "FOR" proposal 1.
Dated: ________________________, 1994.
____________________________________
(Please sign exactly as name appears at left.)
____________________________________
(If stock is owned by more than one person, all
owners should sign. Persons signing as executors,
administrators, trustees, or in similar capacities
should so indicate.)
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
