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As filed with the Securities and Exchange Commission on April 24, 1995
Registration No. 033-58581
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------------------
Amendment No. 1
to
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 (Primary Standard Industrial (I.R.S. Employer
jurisdiction of Classification Code Number) Identification No.)
incorporation or
organization)
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
Executive Vice President and General Counsel Copy to:
Norwest Corporation H. Bernt von Ohlen
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. [_]
- ------------------------------------------------------------------------------
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UNITED TEXAS FINANCIAL CORPORATION
2301 Kell Boulevard, Suite 207
Wichita Falls, Texas 76308
April 24, 1995
Dear Shareholder:
You are cordially invited to attend a Special Meeting of Shareholders of
United Texas Financial Corporation ("UTFC") to be held at the Parker Square
Bank Building, Suite 207, 2301 Kell Boulevard, Wichita Falls, Texas, on
Tuesday, May 23, 1995, at 10:00 a.m., local time. At the Special Meeting
you will be asked to consider and vote upon a proposal to approve the
Agreement and Plan of Reorganization, dated as of October 28, 1994, between
UTFC and Norwest Corporation ("Norwest"), providing for the merger of a wholly
owned subsidiary of Norwest into UTFC (the "Merger").
Under the terms of the Agreement and Plan of Reorganization, upon consummation
of the Merger each share of UTFC Common Stock outstanding immediately prior to
the time the Merger becomes effective will be either converted into shares of
Norwest Common Stock or exchanged for cash. All shareholders of UTFC will
receive the same form of consideration. The form of the consideration to be
received by UTFC's shareholders upon consummation of the Merger will be
determined as follows: if the average price per share of Norwest Common Stock
during a specified period commencing on April 24, 1995, and ending shortly
before the Special Meeting is greater than $23.00, each share of UTFC Common
Stock will be converted into shares of Norwest Common Stock; if the average
price during that period of time is less than or equal to $23.00, UTFC's
shareholders will vote at the Special Meeting on whether to receive cash or
Norwest Common Stock for their UTFC shares. Shareholders of UTFC should
recognize that the vote of Mr. A. R. Dillard, Jr., UTFC's controlling
shareholder, will determine the outcome of all votes taken at the Special
Meeting.
The enclosed Proxy Statement-Prospectus contains a complete description of the
terms of the Merger, including a more detailed explanation of the form and
amount of consideration that UTFC's shareholders will receive. You are urged
to read the Proxy Statement-Prospectus carefully.
The Board of Directors has approved the Agreement and Plan of Reorganization
as being in the best interests of UTFC and its shareholders and recommends
that you vote in favor of the Agreement and Plan of Reorganization, but makes
no recommendation as to whether the consideration for UTFC shares should be
Norwest Common Stock or cash, if this option is available. Consummation of
the Merger is subject to a number of conditions including approval of the
Agreement and Plan of Reorganization by UTFC's shareholders and, in the event
that the UTFC Common Stock is exchanged for Norwest Common Stock, receipt by
UTFC of an opinion of counsel to the effect that the Merger will be treated as
a tax-free reorganization for federal income tax purposes. You should consult
your own tax advisor concerning the federal, and any applicable foreign,
state, and local, income tax consequences of the Merger.
It is important that your shares be represented at the Special Meeting,
regardless of whether you plan to attend in person. Therefore, 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 Special Meeting, you may vote in person if you wish, even though you have
previously returned your proxy.
Robert K. Pace
Chairman of the Board
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UNITED TEXAS FINANCIAL CORPORATION
2301 Kell Boulevard, Suite 207
Wichita Falls, Texas 76308
---------------------------------------------
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 23, 1995
---------------------------------------------
NOTICE IS HEREBY GIVEN that a special meeting of the shareholders (the
"Special Meeting") of United Texas Financial Corporation ("UTFC"), a Texas
corporation, will be held at the Parker Square Bank Building, Suite 207, 2301
Kell Boulevard, Wichita Falls, Texas, on Tuesday, May 23, 1995, at 10:00
a.m., local time, for the following purposes:
1. To consider and vote upon a proposal to approve the Agreement and
Plan of Reorganization, dated as of October 28, 1994, between UTFC 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 wholly owned subsidiary of Norwest would be
merged with UTFC (the "Merger"), with UTFC as the surviving corporation,
and each outstanding share of common stock, par value $10.00 per share, of
UTFC ("UTFC Common Stock"), depending upon (i) the Norwest Measurement
Price (as defined in the Agreement and Plan of Reorganization) and (ii)
whether the shareholders of UTFC vote to receive cash or shares of the
common stock, par value $1 2/3 per share, of Norwest ("Norwest Common
Stock") as consideration in the event that such average price is equal to
or less than $23.00, would be either (a) converted into shares of Norwest
Common Stock (pursuant to the stock-for-stock version of the Agreement and
Plan of Merger, attached to the Agreement and Plan of Reorganization as
Exhibit A1) or (b) exchanged for cash (pursuant to the cash-for-stock
version of the Agreement and Plan of Merger, attached to the Agreement and
Plan of Reorganization as Exhibit A2); and to authorize such further
action by the Board of Directors and officers of UTFC as may be necessary
or appropriate to carry out the intent and purposes of the Merger.
2. In the event that the Norwest Measurement Price is less than or
equal to $23.00, to determine whether each outstanding share of UTFC
Common Stock shall be exchanged for cash or for a number of shares of
Norwest Common Stock determined in accordance with the provisions of the
Agreement and Plan of Reorganization.
3. To transact such other business as may properly come before the
Special Meeting or any adjournments thereof.
Only shareholders of record on the books of UTFC at the close of business
on April 10, 1995, 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
R. Kevin Isbell
Secretary
April 24, 1995
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THE BOARD OF DIRECTORS OF UTFC RECOMMENDS THAT YOU VOTE TO APPROVE PROPOSAL
1, BUT MAKES NO RECOMMENDATION WITH RESPECT TO PROPOSAL 2.
HOLDERS OF UTFC 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>
PROXY STATEMENT OF
UNITED TEXAS FINANCIAL CORPORATION
FOR A SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 23, 1995
---------------------
PROSPECTUS
OF
NORWEST CORPORATION
Common Stock
This Proxy Statement-Prospectus relates to up to 1,786,957 shares of the
common stock ("Norwest Common Stock"), par value $1 2/3 per share, of Norwest
Corporation ("Norwest") issuable to the shareholders of United Texas Financial
Corporation ("UTFC") upon consummation of the merger (the "Merger") of a
wholly owned subsidiary of Norwest ("Merger Co.") with UTFC, with UTFC as the
surviving corporation, pursuant to the terms of an Agreement and Plan of
Reorganization dated as of October 28, 1994, between UTFC and Norwest
(together with the two alternate forms, stock-for-stock or cash-for-stock, of
Agreement and Plan of Merger attached thereto as Exhibits A1 and A2,
respectively, the "Merger Agreement"). A copy of the Merger Agreement is
attached as Appendix A to this Proxy Statement-Prospectus and incorporated by
reference herein.
This Proxy Statement-Prospectus is being furnished to the shareholders of
UTFC in connection with the solicitation of proxies by the Board of Directors
of UTFC (the "UTFC Board") for use at the special meeting of shareholders of
UTFC to be held on May 23, 1995, and at any adjournments or postponements
thereof (the "Special Meeting").
At the Special Meeting, the holders of record of the common stock of UTFC
on April 10, 1995, will consider and vote upon a proposal to approve the
Merger Agreement. Upon consummation of the Merger, each outstanding share of
common stock, par value $10.00 per share, of UTFC ("UTFC Common Stock") will
be either (i) converted into shares of Norwest Common Stock or (ii) exchanged
for cash, in accordance with the provisions of the Merger Agreement. All
shareholders of UTFC will receive the same form of consideration. The form of
the consideration to be received by UTFC's shareholders upon consummation of
the Merger will be determined as follows: if the average price per share of
Norwest Common Stock during a specified period commencing on April 24, 1995,
and ending shortly before the Special Meeting is greater than $23.00, each
share of UTFC Common Stock will be converted into shares of Norwest Common
Stock; if the average price during that period of time is less than or equal
to $23.00, UTFC's shareholders will vote at the Special Meeting on whether to
receive cash or Norwest Common Stock for their UTFC shares. UTFC's
controlling shareholder is the beneficial owner of a sufficient number of
shares to determine, without the vote of any other UTFC shareholder, the
outcome of the vote on whether to approve the Merger as well as the vote, if
needed, on the form of consideration. In addition, UTFC's controlling
shareholder has entered into an agreement with Norwest to vote in favor of
approval of the Merger. See "MEETING INFORMATION--Record Date; Vote
Required." For a more complete description of the Merger Agreement and the
terms of the Merger, see "THE MERGER."
This Proxy Statement-Prospectus and the form of proxy are first being
mailed to shareholders of UTFC on or about April 25, 1995.
---------------------
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 April 24, 1995.
1
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AVAILABLE INFORMATION
Norwest is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") and, in accordance
therewith, files reports, proxy statements, and other information with the
Securities and Exchange Commission (the "Commission").
The reports, proxy statements, and other information filed by Norwest
with the Commission 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 also 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 the 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, UTFC, and the securities offered hereby.
---------------------
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 UTFC SINCE THE DATE OF THIS PROXY
STATEMENT-PROSPECTUS.
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INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
This Proxy Statement-Prospectus incorporates by reference documents of
Norwest which are not presented herein or delivered herewith. Such documents,
excluding exhibits, unless specifically incorporated therein, are available
without charge, upon written or oral 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 May 16, 1995.
The following documents filed with the Commission by Norwest (File No.
1-2979) pursuant to the Exchange Act are incorporated by reference in this
Proxy Statement-Prospectus:
1. Norwest's Annual Report on Form 10-K for the year ended December 31,
1994; and
2. Norwest's Current Reports on Form 8-K dated January 9, 1995, January
27, 1995, February 17, 1995, and April 21, 1995.
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
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TABLE OF CONTENTS
Page
----
AVAILABLE INFORMATION.................................. 2
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE........ 3
SUMMARY................................................ 6
The Companies...................................... 6
Terms of the Merger................................ 7
Special Meeting and Vote Required.................. 7
Reasons for the Merger; Recommendation of the
Board of Directors of UTFC........................ 8
Effective Date and Time of the Merger.............. 8
Conditions and Termination......................... 8
Regulatory Approvals............................... 9
Accounting Treatment............................... 9
Management and Operations After the Merger......... 9
Rights of Dissenting UTFC Shareholders............. 9
Certain Federal Income Tax Consequences............ 9
Market Information................................. 10
Certain Differences in Rights of Shareholders...... 10
Comparative Unaudited Per Share Data............... 11
Selected Financial Data............................ 13
MEETING INFORMATION.................................... 17
General............................................ 17
Date, Place, and Time.............................. 17
Record Date; Vote Required......................... 17
Principal Shareholders and Security Ownership of
Management of UTFC................................ 18
Voting and Revocation of Proxies................... 19
Solicitation of Proxies............................ 20
THE MERGER............................................. 21
Background of and Reasons for the Merger........... 21
Terms of the Merger................................ 22
Effective Date and Time of the Merger.............. 24
Surrender of Certificates.......................... 24
Conditions to the Merger........................... 25
Regulatory Approvals............................... 25
Conduct of Business Pending the Merger............. 26
Certain Covenants.................................. 26
No Solicitation.................................... 27
Waiver, Amendment, and Termination................. 27
Effect on Employee Benefit Plans................... 28
Management and Operations After the Merger......... 28
Certain Differences in Rights of Shareholders...... 28
Rights of Dissenting UTFC Shareholders............. 36
Certain Federal Income Tax Consequences............ 38
Resale of Norwest Common Stock..................... 40
Stock Exchange Listing............................. 40
Dividend Reinvestment and Optional Cash Payment
Plan.............................................. 41
Accounting Treatment............................... 41
Expenses........................................... 41
4
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INFORMATION ABOUT UTFC AND THE BANKS................... 42
General........................................... 42
Properties........................................ 42
Regulation and Supervision........................ 44
Competition....................................... 44
Legal Proceedings................................. 44
Market Information and Dividends.................. 44
Management's Discussion and Analysis of Financial
Condition and Results of Operations.............. 45
CERTAIN REGULATORY CONSIDERATIONS...................... 64
General........................................... 64
Dividend Restrictions............................. 64
Holding Company Structure......................... 64
Capital Requirements.............................. 65
Federal Deposit Insurance Corporation Improvement
Act of 1991...................................... 66
FDIC Insurance.................................... 67
EXPERTS................................................ 69
LEGAL OPINION.......................................... 69
MANAGEMENT OF NORWEST AND ADDITIONAL INFORMATION....... 69
FINANCIAL STATEMENTS OF UTFC........................... F-1
APPENDIX A AGREEMENT AND PLAN OF REORGANIZATION, FORM OF AGREEMENT AND PLAN
OF MERGER (STOCK-FOR-STOCK VERSION), AND FORM OF AGREEMENT AND
PLAN OF MERGER (STOCK-FOR-CASH VERSION)
APPENDIX B TEXAS BUSINESS CORPORATION ACT, ARTICLES 5.11, 5.12, AND 5.13
5
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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 "UTFC" 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 for inclusion or incorporation herein, and all
information concerning UTFC included in this Proxy Statement-Prospectus has
been furnished by UTFC to Norwest for inclusion herein.
The Companies
Norwest Corporation
Norwest Corporation is a diversified financial services company which was
organized under the laws of Delaware in 1929 and is 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 agency services,
computer and data processing services, trust services, and venture capital
investment.
At December 31, 1994, Norwest had consolidated total assets of $59.3
billion, total deposits of $36.4 billion, and total stockholders' equity of
$3.8 billion. Based on total assets at December 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, including UTFC, having
aggregate total assets at December 31, 1994, of $4.4 billion. Certain of
these acquisitions were consummated subsequent to December 31, 1994, and the
others remain subject to regulatory approval and are expected to be completed
by the end of the third quarter of 1995. 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
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United Texas Financial Corporation
UTFC, headquartered in Wichita Falls, Texas, is a registered bank holding
company. UTFC is the sole shareholder for its two commercial banking
subsidiaries, Parker Square Bank, N.A. ("Parker Square Bank") and First State
Bank in Archer City (collectively, the "Banks"), which have a total of six
banking offices located in Wichita Falls, Archer City, Iowa Park, and Nocona,
Texas. UTFC has no nonbank subsidiaries. UTFC was incorporated in 1979 under
the laws of the State of Texas. UTFC and its consolidated subsidiaries had
total assets of $298.5 million, total deposits of $272.7 million, and
shareholders' equity of $21.5 million, at December 31, 1994. Through the
Banks, UTFC is engaged in the general banking business, offering individuals
and businesses a variety of deposit accounts, safe deposit facilities, access
cards, and other specialized services. In addition, the Banks offer consumer,
commercial, real estate, and mortgage loans at all locations and trust
services at Parker Square Bank's main facility. At December 31, 1994, UTFC
and the Banks employed 131 full-time equivalent employees. See "INFORMATION
ABOUT UTFC AND THE BANKS" and "FINANCIAL STATEMENTS OF UTFC."
Terms of the Merger
The Merger Agreement provides for the merger of Merger Co., a wholly
owned subsidiary of Norwest, with UTFC, with UTFC as the surviving
corporation. Upon consummation of the Merger, each outstanding share of UTFC
Common Stock will be either converted into shares of Norwest Common Stock or
exchanged for cash, in accordance with the provisions of the Merger Agreement.
The consideration to be received by UTFC's shareholders upon consummation of
the Merger will be determined as follows: (a) if the Norwest Measurement
Price (as defined below) is greater than $23.00 or if the Norwest Measurement
Price is less than or equal to $23.00 and holders of a majority of the
outstanding shares of UTFC Common Stock vote in favor of receiving shares of
Norwest Common Stock for their UTFC shares, then UTFC's shareholders will
receive a number of shares of Norwest Common Stock determined in accordance
with the provisions of the Merger Agreement for each share of UTFC Common
Stock they hold; (b) if the Norwest Measurement Price is less than or equal to
$23.00 and holders of a majority of the outstanding shares of UTFC Common
Stock vote in favor of receiving cash consideration, then UTFC's shareholders
will receive $120.72 for each share of UTFC Common Stock they hold. All
shareholders of UTFC will receive the same form of consideration. The
"Norwest Measurement Price" is the average of the closing prices of a share of
Norwest Common Stock as reported on the consolidated tape of the New York
Stock Exchange during the period of 20 trading days commencing on the trading
day immediately following the day on which the Registration Statement of which
this Proxy Statement-Prospectus is a part is declared effective by the
Commission. If Norwest Common Stock is issued in the Merger, cash will be
paid in lieu of issuing fractional shares. See "THE MERGER--Terms of the
Merger."
Special Meeting and Vote Required
Special Meeting
The Special Meeting of UTFC shareholders to consider and vote on a
proposal to approve the Merger Agreement will be held on Tuesday, May 23,
1995, at 10:00 a.m., local time, at the Parker Square Bank Building, Suite
207, 2301 Kell Boulevard, Wichita Falls, Texas. Only holders of record of UTFC
Common Stock at the close of business on April 10, 1995, will be
7
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entitled to receive notice of and to vote at the Special Meeting. At such
date, there were 340,467 shares of UTFC Common Stock outstanding. Each share
of UTFC Common Stock is entitled to one vote. For additional information
relating to the Special Meeting, see "MEETING INFORMATION."
Vote Required
Approval of the Merger requires the affirmative vote of the holders of a
majority of the outstanding shares of UTFC Common Stock. As of the record
date for the Special Meeting, directors and executive officers of UTFC and
their affiliates owned beneficially an aggregate of 288,456 shares, or
approximately 84.7%, of the UTFC Common Stock outstanding on that date. Mr.
A.R. Dillard, Jr., a director and UTFC's controlling shareholder, has entered
into an agreement with Norwest to vote in favor of approval of the Merger.
Accordingly, approval of the Merger is assured, even without the vote of any
other shareholder of UTFC. At the record date, directors and executive
officers of Norwest did not own beneficially any shares of UTFC Common Stock.
See "MEETING INFORMATION--Record Date; Vote Required" and "--Principal
Shareholders and Security Ownership of Management of UTFC."
Reasons for the Merger; Recommendation of the Board of Directors of UTFC
The Board of Directors of UTFC (the "UTFC Board"), with Mr. A.R. Dillard,
Jr., abstaining from the vote, has unanimously approved the Merger and has
determined that the Merger is fair to and in the best interests of UTFC and
its shareholders. Consequently, the UTFC Board recommends that UTFC
shareholders vote FOR approval of the Merger, but makes no recommendation as
to whether the consideration to be received by the UTFC shareholders upon
consummation of the Merger should be Norwest Common Stock or cash, if the
option is available. In any event, UTFC shareholders should realize that Mr.
Dillard's vote alone will determine the outcome of the vote, if required, on
the form of consideration. See "THE MERGER--Background of and Reasons for the
Merger" and "MEETING INFORMATION--Record Date; Vote Required" and "--Principal
Shareholders and Security Ownership of Management of UTFC."
Effective Date and Time of the Merger
Subject to the terms and conditions of the Merger Agreement, the Merger
will be effective on the date on which the appropriate filing is made with the
Secretary of State of the State of Texas (the "Effective Date") at 11:59 p.m.,
Wichita Falls, Texas time (the "Effective Time"). Such filing will be made on
a mutually agreed upon date, but no later than ten business days following the
satisfaction or waiver of all conditions set forth in the Merger Agreement.
The closing of the Merger will occur on the Effective Date (the "Closing
Date"). See "THE MERGER--Effective Date and Time of the Merger" and "--
Conditions to the Merger."
Conditions and Termination
The respective obligations of Norwest and UTFC to consummate the Merger
are subject to certain conditions, including the receipt of regulatory
approvals, approval of the Merger by the shareholders of UTFC, and certain
other conditions customary in transactions of this nature. In the event that
UTFC Common Stock is exchanged for Norwest Common Stock, consummation of the
Merger will also be subject to receipt by UTFC of an opinion regarding the tax
consequences to UTFC shareholders of the Merger and receipt by Norwest of
opinions that the Merger qualifies for
8
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pooling-of-interests accounting treatment. Norwest will waive the condition
that the Merger be accounted for as a pooling of interests if the Merger is a
stock-for-stock transaction. See "THE MERGER--Conditions to the Merger," "--
Regulatory Approvals," and "--Certain Federal Income Tax Consequences."
The Merger Agreement may be terminated at any time prior to the time at
which the appropriate filing is made with the Secretary of State of the State
of Texas, whether prior to or after approval by the UTFC shareholders, by
either party under specified conditions, including if the Merger shall not
have been consummated by July 31, 1995, unless failure to consummate is due to
the failure of the party seeking termination to perform its respective
covenants and agreements under the Merger Agreement. See "THE MERGER--Waiver,
Amendment, and Termination."
Regulatory Approvals
The Merger is subject to the approval of the Board of Governors of the
Federal Reserve System (the "Federal Reserve Board"). Such approval has been
received. In addition, as required by Texas law, Norwest has notified the
Texas Department of Banking of its intent to make an interstate acquisition.
See "THE MERGER--Regulatory Approvals."
Accounting Treatment
It is anticipated that the Merger will be accounted for as a purchase
by Norwest under generally accepted accounting principles. See
"THE MERGER--Accounting Treatment."
Management and Operations After the Merger
Following the Merger, Norwest intends to operate at the present locations
of the Banks and to offer products and services offered by Norwest affiliates.
See "THE MERGER--Management and Operations After the Merger."
Rights of Dissenting UTFC Shareholders
Texas law provides a shareholder of a Texas corporation who dissents from
a merger is generally entitled to receive payment of the appraised value of
his or her stock. See "THE MERGER--Rights of Dissenting UTFC Shareholders."
Certain Federal Income Tax Consequences
If the consideration issued to the UTFC shareholders in the Merger is
Norwest Common Stock, for federal income tax purposes the Merger will be
treated as a reorganization within the meaning of Section 368(a) of the
Internal Revenue Code of 1986, as amended (the "Code"). Accordingly, (i) no
gain or loss will be recognized by UTFC, Norwest, or Merger Co. as a result of
9
<PAGE>
the Merger, (ii) no gain or loss will be recognized by the shareholders of
UTFC who exchange all of their shares of UTFC Common Stock solely for shares
of Norwest Common Stock in the Merger, except with respect to any cash
received in lieu of a fractional share interest in Norwest Common Stock, (iii)
the basis of the Norwest Common Stock received by the shareholders of UTFC
will be the same as the basis of the UTFC Common Stock exchanged therefor, and
(iv) the holding period of the shares of Norwest Common Stock received by the
shareholders of UTFC will include the holding period of the UTFC Common Stock
if the UTFC Common Stock is held as a capital asset. Consummation of the
Merger under such circumstances is dependent upon, among other conditions,
receipt by UTFC of an opinion of counsel, substantially to the effect set
forth above.
If the consideration issued to the UTFC shareholders in the Merger is
cash, the exchange by such shareholders of their UTFC Common Stock for cash
will be treated as a taxable transaction for federal income tax purposes, and
a UTFC shareholder will recognize gain or loss equal to the difference between
the amount of cash received pursuant to the Merger and the tax basis of the
shares exchanged therefor. Such gain or loss will constitute capital gain or
loss if the shares exchanged in the Merger were held as capital assets.
Capital gain or loss will constitute long-term capital gain or loss if the
shareholder's holding period with respect to the shares is greater than one
year and otherwise will constitute short-term gain or loss. See "THE MERGER--
Certain Federal Income Tax Consequences."
Market Information
Norwest Common Stock is listed on the New York Stock Exchange (the
"NYSE") and the Chicago Stock Exchange (the "CHX"). On October 27, 1994, the
last trading day preceding the signing of the Merger Agrement, the closing
price per share of Norwest Common Stock was $24.375, and on April 21, 1995,
the price was $25.625. There is no public market for UTFC Common Stock. UTFC
shareholders 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 Date,
which may be a period of several weeks or more. As a result, if the
consideration in the Merger is Norwest Common Stock, the market value per
share of the Norwest Common Stock that UTFC shareholders ultimately receive in
the Merger 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 Date. See
"INFORMATION ABOUT UTFC AND THE BANKS."
Certain Differences in Rights of Shareholders
If the consideration in the Merger is Norwest Common Stock, upon
consummation of the Merger, shareholders of UTFC will become stockholders of
Norwest. As a result, such shareholders' rights will change significantly.
See "THE MERGER--Certain Differences in Rights of Shareholders."
10
<PAGE>
Comparative Unaudited Per Share Data
The following table presents selected comparative unaudited per share
data for Norwest Common Stock on a historical and a pro forma combined basis
and for UTFC Common Stock on a historical and a pro forma equivalent basis
giving effect to the Merger using the purchase method of accounting. See "THE
MERGER--Accounting Treatment." This information is derived from the
consolidated historical financial statements of Norwest, including the related
notes thereto, incorporated by reference into this Proxy Statement-Prospectus
and the consolidated historical financial statements of UTFC, including the
notes thereto, appearing elsewhere in this Proxy Statement-Prospectus. This
information should be read in conjunction with such consolidated historical
financial statements and the related notes thereto. See "INCORPORATION OF
CERTAIN DOCUMENTS BY REFERENCE" and "FINANCIAL STATEMENTS OF UTFC."
The pro forma 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 Merger been consummated prior to the periods indicated.
11
<PAGE>
COMPARATIVE UNAUDITED PER SHARE DATA
<TABLE>
<CAPTION>
Norwest Common Stock UTFC Common Stock
--------------------- ----------------------
Pro Forma Pro Forma
Historical Combined Historical Equivalent
---------- --------- ---------- ----------
<S> <C> <C> <C> <C>
BOOK VALUE(1):
December 31, 1994 $10.79 10.80 65.73 52.15
DIVIDENDS DECLARED(2):
Year Ended
December 31, 1994 0.765 0.765 - 3.69
December 31, 1993 0.640 0.640 - 3.09
December 31, 1992 0.540 0.540 - 2.61
NET INCOME(3):
Year Ended
December 31, 1994 2.41 2.40 7.01 11.59
December 31, 1993 1.86 1.86 9.30 8.96
December 31, 1992 1.19 1.19 9.82 5.74
</TABLE>
(1) The pro forma combined book value per share of Norwest Common Stock is
based upon the historical total combined common stockholders' equity for Norwest
and UTFC divided by total pro forma common shares of the combined entities
assuming conversion of the outstanding UTFC Common Stock at an exchange ratio
factor of 4.8287 (the "Exchange Ratio"). The pro forma equivalent book value
per share of UTFC represents the pro forma combined amount multiplied by the
Exchange Ratio. The Exchange Ratio is based on an assumed aggregate number of
shares of Norwest Common Stock to be issued in the Merger of 1,644,000, based on
an assumed Norwest Measurement Price of $25.00 per share. See "THE MERGER--
Terms of the Merger."
(2) Assumes no changes in cash dividends per share. The pro forma equivalent
dividends per share of UTFC Common Stock represent cash dividends declared per
share of Norwest Common Stock multiplied by the Exchange Ratio.
(3) The pro forma combined net income per share of Norwest Common Stock (based
on fully diluted net income and weighted average shares outstanding) is based
upon the combined historical net income for Norwest and UTFC divided by the
average pro forma common shares of the combined entities. The pro forma
equivalent net income per share of UTFC Common Stock represents the pro forma
combined net income per share multiplied by the Exchange Ratio.
12
<PAGE>
Selected Financial Data
The following table sets forth certain selected historical consolidated
financial information for Norwest and UTFC. The income statement and balance
sheet data included in the selected financial data for the five years ended
December 31, 1994, are derived from audited consolidated financial statements
of Norwest and UTFC for such five-year periods. 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 the consolidated financial statements of
UTFC, including the notes thereto, appearing elsewhere in this Proxy
Statement-Prospectus. See "INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE"
and "FINANCIAL STATEMENTS OF UTFC."
13
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
NORWEST CORPORATION AND SUBSIDIARIES
<TABLE>
<CAPTION>
Year Ended December 31
-------------------------------------------------------
1994 1993(1) 1992(2) 1991 1990(3)
--------- -------- -------- -------- --------
(In millions except per share amounts)
INCOME STATEMENT DATA
- ---------------------
<S> <C> <C> <C> <C> <C>
Interest income $ 4,393.7 3,946.3 3,806.4 4,025.9 3,885.8
Interest expense 1,590.1 1,442.9 1,610.6 2,150.3 2,320.1
--------- -------- -------- -------- --------
Net interest income 2,803.6 2,503.4 2,195.8 1,875.6 1,565.7
Provision for credit losses 164.9 158.2 270.8 406.4 433.0
Non-interest income 1,638.3 1,585.0 1,273.7 1,064.0 896.3
Non-interest expense 3,096.4 3,050.4 2,553.1 2,041.5 1,744.5
--------- -------- -------- -------- --------
Income before income taxes 1,180.6 879.8 645.6 491.7 284.5
Income tax expense 380.2 266.7 175.6 73.4 115.1
--------- -------- -------- -------- --------
Income before cumulative effect
of a change in accounting method 800.4 613.1 470.0 418.3 169.4
Cumulative effect on years prior
to 1992 of change in accounting method -- -- (76.0) -- --
--------- -------- -------- -------- --------
Net income $ 800.4 613.1 394.0 418.3 169.4
========= ======== ======== ======== ========
<CAPTION>
PER SHARE DATA
- --------------
<S> <C> <C> <C> <C> <C>
Net income per share:
Primary:
Before cumulative effect of a
change in accounting method $ 2.45 1.89 1.44 1.33 0.59
Cumulative effect on years prior
to 1992 of change in accounting method -- -- (0.25) -- --
--------- -------- -------- -------- --------
Net income $ 2.45 1.89 1.19 1.33 0.59
========= ======== ======== ======== ========
Fully diluted:
Before cumulative effect of a
change in accounting method $ 2.41 1.86 1.42 1.32 0.59
Cumulative effect on years prior
to 1992 of change in accounting method -- -- (0.23) -- --
--------- -------- -------- -------- --------
Net income $ 2.41 1.86 1.19 1.32 0.59
========= ======== ======== ======== ========
Dividends declared per common share $ 0.765 0.640 0.540 0.470 0.423
<CAPTION>
BALANCE SHEET DATA
- ------------------
<S> <C> <C> <C> <C> <C>
At period end:
Total assets $59,315.9 54,665.0 50,037.0 45,974.5 43,523.0
Long-term debt 9,186.3 6,850.9 4,553.2 3,686.6 3,066.0
Total stockholders' equity 3,846.4 3,760.9 3,371.8 3,192.3 2,434.0
</TABLE>
14
<PAGE>
(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.
15
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
UNITED TEXAS FINANCIAL CORPORATION
<TABLE>
<CAPTION>
Year Ended December 31
----------------------------------------------
1994 1993 1992 1991 1990
-------- ------- ------- -------- --------
(In thousands except per share amounts)
INCOME STATEMENT DATA
- ---------------------
<S> <C> <C> <C> <C> <C>
Interest income $ 19,345 18,024 19,699 22,899 23,407
Interest expense 7,741 7,519 9,289 13,408 14,897
-------- ------- ------- ------- -------
Net interest income 11,604 10,505 10,410 9,491 8,510
Provision for credit losses 90 176 135 (169) 2,964
Non-interest income 2,557 2,768 2,353 1,596 1,738
Non-interest expense 10,469 9,794 9,358 9,067 9,984
-------- ------- ------- ------- -------
Income (loss) before income
taxes 3,602 3,303 3,270 2,189 (2,700)
Income tax expense 1,314 1,108 1,066 743 -
-------- ------- ------- ------- -------
Income (loss) before
extraordinary item
and cumulative effect of a
change in accounting method 2,288 2,195 2,204 1,446 (2,700)
Extraordinary item - tax
benefit of net
operating loss carryforwards - - 1,003 699 -
Cumulative effect of a
change in
accounting method - 841 - - -
-------- ------- ------- ------- -------
Net income (loss) $ 2,288 3,036 3,207 2,145 (2,700)
======== ======= ======= ======= =======
<CAPTION>
PER SHARE DATA
- --------------
<S> <C> <C> <C> <C> <C>
Income before cumulative
effect of a
change in accounting method $7.01 6.73 6.76 4.43 (8.27)
Extraordinary item - tax
benefit of net operating
loss carryforwards - - 3.07 2.14 -
Cumulative effect of a
change in
accounting method - 2.58 - - -
-------- ------- ------- ------- -------
Net income $ 7.01 9.31 9.83 6.57 (8.27)
======== ======= ======= ======= =======
Dividends $ - - - - -
<CAPTION>
BALANCE SHEET DATA
- ------------------
<S> <C> <C> <C> <C> <C>
At period end:
Total assets $298,501 308,226 289,942 285,176 258,012
Long-term debt - - 1,167 2,400 5,030
Total stockholders' equity 21,460 20,360 17,324 14,117 11,973
</TABLE>
16
<PAGE>
MEETING INFORMATION
General
This Proxy Statement-Prospectus is being furnished to holders of UTFC
Common Stock in connection with the solicitation of proxies by the UTFC Board
for use at the Special Meeting, to be held on Tuesday, May 23, 1995, and any
adjournments or postponements thereof, to consider and take action upon a
proposal to approve the Merger, to determine, if necessary, whether the
consideration to be received by UTFC shareholders upon consummation of the
Merger will be Norwest Common Stock or cash, and such other business as may
properly come before the Special Meeting or any adjournments thereof. Each
copy of this Proxy Statement-Prospectus mailed to holders of UTFC Common Stock
is accompanied by a form of proxy for use at the Special Meeting.
This Proxy Statement-Prospectus is also being furnished by Norwest to the
shareholders of UTFC as a prospectus in connection with the issuance by
Norwest of shares of Norwest Common Stock upon consummation of the Merger.
This Proxy Statement-Prospectus, the attached Notice of Special Meeting,
and the form of proxy for UTFC shareholders enclosed herewith are first being
mailed to shareholders of UTFC on or about April 25, 1995.
Date, Place, and Time
The Special Meeting will be held at the Parker Square Bank Building,
Suite 207, 2301 Kell Boulevard, Wichita Falls, Texas, on Tuesday, May 23,
1995, at 10:00 a.m., local time.
Record Date; Vote Required
The UTFC Board has fixed the close of business on April 10, 1995, as the
record date for the determination of shareholders of UTFC entitled to receive
notice of, and to vote at, the Special Meeting. On the record date there were
340,467 shares of UTFC Common Stock outstanding and entitled to vote at the
Special Meeting. Approval of the Merger requires the affirmative vote of the
holders of a majority of the outstanding shares of UTFC Common Stock. The
Merger cannot be consummated without the requisite approval of the Merger by
the holders of UTFC Common Stock.
As of the record date for the Special Meeting, directors and officers of
UTFC and their affiliates owned beneficially an aggregate of 288,456 shares,
or approximately 84.7%, of the UTFC Common Stock outstanding on that date.
Mr. A.R. Dillard, Jr., a director and UTFC's controlling shareholder, has
entered into an agreement with Norwest to vote in favor of approval of the
Merger. Accordingly, approval of the Merger is assured, even without the vote
of any other UTFC shareholder.
Information regarding the shares of UTFC Common Stock beneficially owned,
directly or indirectly, by certain shareholders, by each director and
executive officer of UTFC, 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 UTFC" below.
17
<PAGE>
At the record date, directors and executive officers of Norwest did not
own beneficially any shares of UTFC Common Stock.
Principal Shareholders and Security Ownership of Management of UTFC
Principal Shareholders
The following persons are known to be beneficial owners of more than 5%
of the outstanding shares of UTFC Common Stock as of April 10, 1995:
<TABLE>
<CAPTION>
Number of Shares
Beneficially Percent of
Name and Address Owned Total Shares
---------------- ----------------- -------------
<S> <C> <C>
A.R. Dillard, Jr. 245,116 (1) 71.99%
P.O. Box 8206
Wichita Falls, Texas 76307
A.R. Dillard, Jr. "C" Trust 69,900 (2) 20.53%
P.O. Box 8206
Wichita Falls, Texas 76307
Robert K. Pace 19,287 (3) 5.66%
P.O. Box 4396
Wichita Falls, Texas 76308
____________________________
</TABLE>
(1) Includes all of the shares owned of record by the A.R. Dillard, Jr. "C"
Trust, of which Mr. Dillard is a beneficiary. Mr. Dillard has no power to
vote such shares. Excludes 8,727 shares owned of record by the Nancy Jane
Dillard "A" Trust, of which Mr. Dillard is a co-trustee. Mr. Dillard
disclaims any beneficial ownership of such shares.
(2) The trustees of the A.R. Dillard, Jr. "C" Trust are Robert W. Osborne and
Nancy Dillard Harvey, both of whom disclaim any beneficial ownership of
the shares held by such Trust.
(3) Includes (i) 3,475 shares owned of record by Mr. Pace as Trustee of the
Interoil, Inc. Profit Sharing Trust and (ii) 1,470 shares owned of record
by the R.K. Pace Family Trusts, of which Mr. Pace is a beneficiary.
To the best knowledge of the management of UTFC and the UTFC Board, no
person other than those identified above owns beneficially more than 5% of the
outstanding shares of UTFC Common Stock as of April 10, 1995.
Management
The following table shows the number of shares of UTFC Common Stock
beneficially owned, as of April 10, 1995, by (i) each director of UTFC, (ii)
the two executive officers of UTFC whose total annual salary and bonus exceeds
$100,000, and (iii) all directors and officers of UTFC as a group.
18
<PAGE>
<TABLE>
<CAPTION>
Number of Shares
Beneficially Percent of
Name Owned Total Shares
--------------- ----------------- ------------
<S> <C> <C>
A.R. Dillard, Jr. (1) 245,116 (2) 71.99%
A.R. Dillard, III (1) 100 .03%
Jeff R. Dillard (1) 106 (3) .03%
John T. Gavin (4) 465 .14%
Lyndell Haigood 60 .02%
Bill Hendrickson (1) 642 .19%
Ralph Hines, Jr. (1) 1,000 .29%
F.T. Johnson, Jr. (1) 1,688 .50%
Clarence W. Muehlberger (1) 1,680 .49%
Robert W. Osborne (1) 3,312 (5) .97%
Robert K. Pace (6) 19,287 (7) 5.66%
Thomas F. Smead (1) 15,000 4.41%
Directors and Officers of
UTFC as a Group
(14 individuals) 288,456 (2)(3)(5)(7) 84.72%
_________________________
</TABLE>
(1) Serves as a director of UTFC.
(2) See note (1) to the immediately preceding table.
(3) Excludes 8,727 shares owned of record by the Nancy Jane Dillard "A"
Trust, of which Mr. Dillard is a co-trustee. Mr. Dillard disclaims any
beneficial ownership of such shares.
(4) Mr. Gavin serves as President and a director of UTFC.
(5) See note (2) to the immediately preceding table.
(6) Mr. Pace serves as Chairman and a director of UTFC.
(7) See note (3) to the immediately preceding table.
Voting and Revocation of Proxies
Shares of UTFC Common Stock represented by a proxy properly signed and
received at, or prior to, the Special Meeting, unless subsequently revoked,
will be voted at the Special Meeting
19
<PAGE>
in accordance with the instructions thereon. If a proxy is signed and returned
without indicating any voting instructions, shares of UTFC Common Stock
represented by such proxy will be voted FOR approval of the Merger, but will
not be voted on the second proposal if a vote on such proposal is needed. 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 UTFC prior to or at the Special Meeting or by voting the shares subject to
the proxy in person at the Special Meeting. Attendance at the Special Meeting
will not in and of itself constitute a revocation of a proxy.
A proxy may indicate that all or a portion of the shares represented
thereby are not being voted with respect to a specific proposal. This could
occur, for example, when a broker is not permitted to vote shares held in
street name on certain proposals in the absence of instructions from the
beneficial owner. Shares that are not voted with respect to a specific
proposal will be considered as not present for such proposal, even though such
shares will be considered present for purposes of determining a quorum and
voting on other proposals. Abstentions on a specific proposal will be
considered as present, but not as voting in favor of such proposal. Approval
of the Merger requires the affirmative vote of the holders of a majority of
the outstanding UTFC Common Stock. Because this proposal requires the
affirmative vote of a specified percentage of outstanding shares, the
nonvoting of shares or abstentions with regard to this proposal will have the
same effect as votes against the proposal.
The UTFC Board is not aware of any business to be acted upon at the
Special Meeting other than the business described herein. If, however, other
matters are properly brought before the Special Meeting, or any adjournments
or postponements thereof, the persons appointed as proxies will have
discretion to vote or act on such matters according to their best judgment.
Solicitation of Proxies
In addition to solicitation by mail, directors, officers, and employees
of UTFC may solicit proxies from the shareholders of UTFC, either personally
or by telephone, or other form of communication. None of the foregoing
persons who solicit proxies will be specifically compensated for such
services. Nominees, fiduciaries, and other 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. UTFC will bear its own expenses in connection with any solicitation
of proxies for the Special Meeting. See "THE MERGER--Expenses."
ALL SHAREHOLDERS OF UTFC ARE REQUESTED TO COMPLETE, DATE, AND SIGN THE
ACCOMPANYING PROXY AND RETURN IT PROMPTLY TO UTFC IN THE ENCLOSED POSTAGE-
PREPAID ENVELOPE.
20
<PAGE>
THE MERGER
This section of the Proxy Statement-Prospectus describes certain aspects
of the Merger. The following description does not purport to be complete and
is qualified in its entirety by reference to the Merger Agreement, which is
attached as Appendix A to this Proxy Statement-Prospectus and is incorporated
by reference herein. All shareholders are urged to read the Merger Agreement
in its entirety.
Background of and Reasons for the Merger
From time to time in the last few years, UTFC received informal inquiries
from bank holding companies and other financial institutions concerning a
possible acquisition of UTFC. In addition, one offer was received. UTFC
declined to pursue discussions with any of such parties.
With this background, early in 1994 UTFC was contacted by Norwest to
discuss its possible acquisition of UTFC. Although UTFC's principal
shareholder and management were initially not interested in an acquisition of
UTFC by Norwest, over a period of approximately four months financial and
other information was exchanged by UTFC and Norwest, which resulted in
Norwest's making its initial merger proposal to UTFC in July 1994. In
response to Norwest's proposal, UTFC requested that Norwest analyze UTFC's
internal five-year projection of earnings and dividends and to compare the
position of UTFC's shareholders at the end of 1999 if they then held the
shares of Norwest Common Stock offered by Norwest in its proposal with their
position if they retained their shares of UTFC Common Stock. Norwest agreed
to do so and subsequently furnished to UTFC a letter in August 1994 with
attached schedules reflecting the requested information. Upon receipt of this
letter, further negotiations ensued between UTFC and Norwest which ultimately
led to execution of a letter of intent on August 24, 1994, by UTFC and Norwest
providing for the acquisition by Norwest of UTFC in a merger in exchange for
1,550,943 shares of Norwest Common Stock. Based on the price of Norwest
Common Stock around the time that the letter of intent was executed, the total
value of the consideration offered for UTFC was approximately $41,100,000.
Norwest then conducted detailed due diligence of UTFC. Upon completion
of the due diligence, Norwest and UTFC entered into negotiations relating to
the Merger Agreement. During this period of time, the market price of Norwest
Common Stock declined significantly and, at UTFC's insistence, further
discussions were held concerning changing the method of determining the number
of shares of Norwest Common Stock to be issued in the Merger. As a result,
the final Merger Agreement dated October 28, 1994, provided that the UTFC
shareholders shall, depending upon the Norwest Measurement Price, receive in
the aggregate between 1,467,857 and 1,786,957 shares of Norwest Common Stock
and may elect to receive cash as an alternative form of consideration in the
Merger if the Norwest Measurement Price is $23.00 or less.
In unanimously approving the Merger, with Mr. Dillard abstaining, the
UTFC Board considered the price offered for the UTFC Common Stock in absolute
terms, the alternative forms of consideration, cash or Norwest Common Stock,
which could be received by UTFC shareholders, the greater liquidity of Norwest
Common Stock, if it is issued in the Merger, and of cash, if Norwest Common
Stock is not issued, and the respective businesses, services, current and
prospective earnings, financial condition, and growth expectations of UTFC and
Norwest. After reviewing all these factors, the UTFC Board concluded that the
Merger would be in the best interest of UTFC's shareholders. In addition, if
Norwest Common Stock is issued in the Merger,
21
<PAGE>
UTFC shareholders will receive, in a tax-free exchange, the stock of a much
larger and more diversified enterprise which is actively traded on national
exchanges and more widely held than UTFC Common Stock.
After the Merger, the Banks will be able to provide a broader range of
services to their customers and will have access to the greater resources of
Norwest in several important operational areas. The Directors believe that
the Merger will increase the Banks' financial strength and provide greater
geographical diversity. Finally, the Directors concluded that many of the
employees of the Banks will have the opportunity for greater career
advancement in a larger organization.
THE UTFC BOARD RECOMMENDS THAT SHAREHOLDERS VOTE IN FAVOR OF APPROVAL OF
THE MERGER AGREEMENT, BUT MAKES NO RECOMMENDATION WITH RESPECT TO PROPOSAL 2.
Terms of the Merger
At the Effective Time, a wholly owned subsidiary of Norwest to be
organized as a corporation under Texas law ("Merger Co.") will merge into
UTFC, with UTFC as the surviving corporation, and each outstanding share of
UTFC Common Stock will be either (i) converted into shares of Norwest Common
Stock or (ii) exchanged for cash in accordance with the provisions of the
Merger Agreement:
1. If the Norwest Measurement Price is less than or equal to $23.00, each
share of UTFC Common Stock will be converted into either (i) an amount of
cash equal to $41,100,000 divided by the number of shares of UTFC Common
Stock outstanding as of the Effective Time or (ii) a number of shares of
Norwest Common Stock equal to 1,786,957 divided by the number of shares
of UTFC Common Stock outstanding as of the Effective Time. Whether the
consideration for the UTFC shares will be cash or stock will be
determined by a vote of the UTFC shareholders at the Special Meeting. If
the Norwest Measurement Price is greater than $23.00, there will be no
cash option, and no vote on the form of consideration will be taken at
the Special Meeting. ALL UTFC SHAREHOLDERS WILL RECEIVE THE SAME FORM OF
CONSIDERATION.
2. If the Norwest Measurement Price is greater than $23.00 and less than
$28.00, each share of UTFC Common Stock will be converted into a number
of shares of Norwest Common Stock determined by dividing $41,100,000 by
the Norwest Measurement Price and then dividing the result by the number
of shares of UTFC Common Stock outstanding at the Effective Time.
3. If the Norwest Measurement Price is equal to or greater than $28.00,
each share of UTFC Common Stock will be converted into a number of shares
of Norwest Common Stock equal to 1,467,857 divided by the number of
shares of UTFC Common Stock outstanding at the Effective Time.
The "Norwest Measurement Price" is the average of the closing prices of a
share of Norwest Common Stock as reported on the consolidated tape of the NYSE
during the period of 20 trading days commencing on the trading day immediately
following the day on which the Registration
22
<PAGE>
Statement of which this Proxy Statement-Prospectus is a part is declared
effective by the Commission.
Mr. A.R. Dillard, Jr., a director and UTFC's controlling shareholder, is
the beneficial owner of 245,116 shares, or 71.99%, of the UTFC Common Stock
outstanding on the record date. See "MEETING INFORMATION--Record Date; Vote
Required." If the Norwest Measurement Price is less than or equal to $23.00,
Mr. Dillard's vote, without the vote of any other UTFC shareholder, will
determine whether the consideration to be received at the closing of the
Merger will be Norwest Common Stock or cash. Neither Mr. Dillard nor any
other UTFC shareholder will know until shortly before the Special Meeting
whether a vote on the form of consideration will be required. In addition,
because Mr. Dillard's agreement with Norwest does not govern how he votes on
that contingency, Mr. Dillard will not be required to decide how to vote prior
to the Special Meeting. Accordingly, without attending the Special Meeting
other UTFC shareholders will not know until after the Closing Date whether
they will receive shares of Norwest Common Stock or cash for their UTFC
shares.
If the Registration Statement had gone effective on March 23, 1995, the
period for computing the Norwest Measurement Price would have ended on
April 21, 1995, the Norwest Measurement Price would have been $25.79, there
would have been no cash option, and, assuming no change in the number of
shares of UTFC Common Stock outstanding, each share of UTFC Common Stock
outstanding would have been converted into 4.68075 shares of Norwest Common
Stock. The foregoing information is provided for purposes of illustration
only. There can be no assurance concerning the amount or form of consideration
that UTFC shareholders will receive at the Closing. The market price for
Norwest Common Stock, and accordingly, the Norwest Measurement Price, will
fluctuate between the effective date of the Registration Statement of which
this Proxy Statement-Prospectus is a part and the Effective Date, which may be
a period of several weeks or more. The market value of each share of Norwest
Common Stock that shareholders of UTFC ultimately receive in the Merger, in
the event that the consideration is Norwest Common Stock, could 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, 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, readjustment, or
similar transaction, or if a stock dividend thereon is declared with a record
date within the same period, and the consideration to be received by the UTFC
shareholders is stock, the amount of such consideration will be adjusted
appropriately.
No fractional shares of Norwest Common Stock will be issued in the
Merger. Instead, Norwest will pay to each holder of UTFC 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
UTFC would otherwise be entitled multiplied by the average of the closing
prices of a share of Norwest Common Stock on the NYSE for each of the five
trading days ending on the day immediately preceding the Special Meeting.
As of the Effective Time, each share of the common stock of Merger Co.
outstanding will be converted into and exchanged for one share of UTFC Common
Stock. Thereafter, UTFC will be a wholly owned subsidiary of Norwest.
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Shares of Norwest Common Stock issued and outstanding immediately prior
to the Effective Time will remain issued and outstanding.
Effective Date and Time of the Merger
Subject to the terms and conditions of the Merger Agreement, the
Effective Date will be the date on which Articles of Merger are filed with the
Secretary of State of the State of Texas. The filing will be made on a date
agreed upon by the parties which will be no later than 10 business days
following the satisfaction or waiver of all conditions of the Merger
Agreement, and the time at which such filing will be made is hereinafter
referred to as the "Time of Filing." The Effective Time will be 11:59 p.m.,
Wichita Falls, Texas time, on the Effective Date. Norwest and UTFC anticipate
that the closing will occur as soon as practicable following the Special
Meeting. See "Terms of the Merger," "Conditions to the Merger," and
"Regulatory Approvals."
Surrender of Certificates
As soon as practicable after the Effective Time, 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
UTFC Common Stock a form of letter of transmittal, together with instructions
for the exchange of such holder's stock certificates (i) for a certificate
representing Norwest Common Stock or, (ii) in the event that the consideration
for UTFC Common Stock in the Merger is cash, for a check for the amount of
cash consideration to which such holder is entitled.
SHAREHOLDERS OF UTFC 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 UTFC
Common Stock, together with a properly completed letter of transmittal,
assuming that the consideration in the Merger is stock, 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 Merger will be deemed
issued as of the Effective Time. No dividends in respect of the Norwest
Common Stock with a record date after the Effective Time will be paid to the
former shareholders of UTFC entitled to receive certificates for shares of
Norwest Common Stock until such shareholders surrender their certificates
representing shares of UTFC Common Stock. 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 Time and before the date of
such surrender. After 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
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shall have a record date after the Effective Time, as the case may be, 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 Merger
The Merger will occur only if the Merger Agreement is approved by the
requisite vote of the holders of UTFC Common Stock. Consummation of the
Merger is subject to the satisfaction of certain conditions, most of which are
customary in transactions such as the Merger. Such conditions may be waived
by the parties to the extent that waiver is permitted by applicable law.
Conditions to the obligations of both parties to consummate the Merger
include, but are not limited to, (i) approval of the Merger Agreement by the
requisite vote of shareholders of UTFC, (ii) the receipt of all necessary
regulatory approvals, including the approval of the Merger by the Federal
Reserve Board, and the expiration of all applicable waiting and appeal
periods, and (iii) 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.
In the event that the consideration to be received by UTFC shareholders
is Norwest Common Stock, UTFC's obligation to consummate the Merger is also
subject, among other things, to the receipt of an opinion of counsel to UTFC
to the effect that for federal income tax purposes the Merger will be a tax-
free reorganization
Norwest's obligation to consummate the Merger is also subject, among
other things, to (i) in the event that UTFC Common Stock is exchanged for
Norwest Common Stock, the qualification of the Merger as a pooling-of-
interests for accounting purposes and the receipt from KPMG Peat Marwick LLP
and Coopers & Lybrand L.L.P., Norwest's and UTFC's respective independent
auditors, of letters to that effect; (ii) the total number of shares of UTFC
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 340,467; (iii) the receipt of a certificate from the UTFC's Chief
Executive Officer and UTFC's Chief Financial Officer concerning the financial
information of UTFC included in this Proxy Statement-Prospectus; (iv) the
requirement that UTFC and its subsidiaries taken as a whole shall not have
sustained since June 30, 1994, any material loss or interference with its
business from any civil disturbance or any fire, explosion, flood, or other
calamity, whether or not covered by insurance; (v) the absence of any
reasonable basis for any proceeding, claim, or action seeking to impose, or
that could result in the imposition, on UTFC or any of its subsidiaries 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 on UTFC
and its subsidiaries taken as a whole; and (vi) the absence, since October 28,
1994, of any change, other than changes in banking laws or regulations that
affect the banking industry generally or changes in the general level of
interest rates, or any circumstance 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 UTFC and its subsidiaries taken as a
whole. Norwest will waive the condition that the Merger be accounted for as a
pooling of interests if the Merger is a stock-for-stock transaction.
Regulatory Approvals
Transactions such as the Merger are subject to prior approval by the
Federal Reserve Board under 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
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institutions and the convenience and needs of the communities to be served. By
letter dated March 1, 1995, the Federal Reserve Board informed Norwest that it
had approved the Merger. By letter dated March 9, 1995, the Texas Department
of Banking notified Norwest that Norwest was in compliance with applicable
Texas law concerning the Merger.
The approval of any application merely implies satisfaction of regulatory
criteria for approval, which do not include review of the Merger 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 Merger.
Norwest and UTFC are not aware of any governmental approvals or
compliance with banking laws and regulations that are required for
consummation of the Merger 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. The
Merger cannot proceed in the absence of all requisite regulatory approvals.
See "Conditions to the Merger," "Effective Date and Time of the Merger," and
"Waiver, Amendment, and Termination."
Conduct of Business Pending the Merger
Under the Merger Agreement, each of UTFC and its subsidiaries is
obligated to maintain the general character of its business and conduct its
business in the ordinary and usual manner; and Norwest is obligated to conduct
and to cause its largest subsidiaries to conduct their respective businesses
in compliance with all material obligations and duties imposed by laws,
regulations, rules, and ordinances, and by judicial orders, judgments, and
decrees applicable to them, their businesses, or their properties.
Certain Covenants
The Merger Agreement includes a number of covenants which are customary
in transactions such as the Merger. The Merger Agreement provides, among
other things, that, prior to the Closing Date, neither UTFC nor any of its
subsidiaries will pay dividends or make any other distribution with respect to
its capital stock except as specifically permitted by the Merger Agreement,
and that UTFC will (i) establish such additional accruals and reserves as may
be necessary to conform UTFC's accounting and credit loss practices to those
of Norwest and Norwest's plans with respect to the conduct of UTFC's business
following the Merger and to provide for costs and expenses related to the
consummation of the transactions contemplated by the Merger Agreement; (ii)
obtain and deliver environmental assessment reports (the "Environmental
Reports") on certain properties; (iii) obtain and deliver title commitments
and boundary surveys (the "Commitments and Surveys") for each of its bank
facilities; (iv) terminate an employment agreement between Robert K. Pace and
Parker Square Bank; (v) use its best efforts to sell certain oil and gas
interests; and (vi) to terminate certain insurance plans maintained by the
Banks.
UTFC has also agreed, without the prior written consent of Norwest, not
to (i) make any new loan or modify, restructure, or renew any existing loan,
with certain exceptions, if the resulting loan, when aggregated with all other
extensions of credit to such borrower, would exceed $250,000; (ii) enter into
any material contracts in excess of $25,000 except for banking transactions in
the ordinary course of business and in accordance with existing policies and
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procedures; and (iii) make any investments except investments by banking
subsidiaries in the ordinary course of business for terms of up to one year
and in amounts of $100,000 or less; (iv) authorize or incur any long-term debt
other than deposit liabilities; or (v) remodel, renovate, rebuild, or alter,
or sell, lease, or transfer, certain of its real properties, or to alter the
plans or schedule for the construction of certain structures on such real
properties.
The Merger Agreement also includes a number of covenants of Norwest which
are customary in transactions such as the Merger. The Merger Agreement
provides, among other things, that, prior to the Closing Date, Norwest will
(i) give UTFC written notice of the receipt of all regulatory approvals; (ii)
permit UTFC and its representatives to examine Norwest's books, records, and
properties, and to interview Norwest's officers, employees, and agents, for a
period of up to 15 days prior to the Closing Date; and (iii) pay for the cost
of the Environmental Reports and of the Commitments and Surveys.
No Solicitation
UTFC has agreed in the Merger Agreement that neither it nor any of its
subsidiaries, nor any director, officer, representative, or agent of UTFC or
any of its subsidiaries, will directly or indirectly solicit, authorize the
solicitation of, or enter into any discussions with any party 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 UTFC or any of its subsidiaries; (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 UTFC or any of
its subsidiaries except in the ordinary course of business; or (iv) to merge,
consolidate, or otherwise combine with UTFC or any of its subsidiaries.
Waiver, Amendment, and Termination
The parties may, in writing, give any consent, take any action with
respect to termination of the Merger Agreement or otherwise, 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 Time of Filing 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 shall be made after approval of the Merger by
UTFC shareholders which might adversely affect the consideration to be
received by UTFC shareholders.
The Merger Agreement provides that it may be terminated at any time prior
to the Time of Filing (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 July 31, 1995, 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.
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Effect on Employee Benefit Plans
The Merger Agreement provides that, following the Effective Time, subject
to any eligibility requirements applicable to such plans, employees of UTFC
shall be entitled to participate in those Norwest employee benefit and welfare
plans specified in the Merger Agreement. The eligible employees of UTFC shall
enter each of such plans no later than the first day of the calendar quarter
which begins at least 32 days after the Effective Date. Generally, UTFC
employees will continue to participate in certain of UTFC's employee benefit
plans until entering the Norwest plans to avoid gaps in coverage.
Eligible UTFC employees shall receive credit for past service for the
purpose of determining certain benefits under Norwest's benefit plans.
Management and Operations After the Merger
As of the Effective Time, UTFC will become a subsidiary of Norwest and
the banking subsidiaries of UTFC will become indirect subsidiaries of Norwest.
After the Closing, the banking subsidiaries of UTFC will continue to operate
at their present locations, providing products and services offered by Norwest
affiliates. See "Terms of the Merger."
Certain Differences in Rights of Shareholders
If the holders of UTFC Common Stock approve the Merger, if the
consideration for their UTFC shares is Norwest Common Stock, and if the Merger
is subsequently consummated, all shareholders of UTFC will become stockholders
of Norwest. UTFC is incorporated under the laws of Texas, and Norwest is
incorporated under the laws of Delaware. The rights of the shareholders of
UTFC are governed by UTFC's Articles of Incorporation (the "UTFC Articles")
and Bylaws and by the Texas Business Corporation Act (the "TBCA"). The rights
of the stockholders of Norwest are governed by Norwest's Certificate of
Incorporation (the "Norwest Certificate"), By-Laws, and rights plan, and by
the Delaware General Corporation Law (the "DGCL"). The following summary
describes certain significant differences between holding Norwest Common Stock
and UTFC Common Stock. This summary is qualified in its entirety by reference
to the DGCL, the Norwest Certificate, Norwest's By-Laws and rights plan, and
the UTFC Articles and Bylaws.
Authorized Stock
UTFC. The UTFC Articles authorize the issuance of 1,000,000 shares of
common stock, par value $10.00 per share. As of April 10, 1995, there were
340,467 shares of UTFC Common Stock issued and outstanding. The UTFC Board is
not authorized to issue preferred stock.
Norwest. The Norwest Certificate 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, without par value ("Preferred Stock"). At December 31, 1994,
323,084,474 shares of Common Stock were issued, of which 309,144,857 were
outstanding, and 13,939,617 were held as treasury shares, and 3,265,065 shares
of Preferred Stock were outstanding, consisting of 1,127,125 shares of 10.24%
Cumulative Preferred Stock, 980,000 shares of Cumulative Tracking Preferred
Stock (of which 125,000 shares are held by a subsidiary of Norwest), 1,143,675
shares of Cumulative Convertible Preferred Stock, Series B, and 14,265 shares
of ESOP Cumulative Convertible Preferred Stock. In
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addition, 1,250,000 shares of Preferred Stock are reserved for issuance under
the Rights Agreement dated as of November 22, 1988, between Citibank, N.A. as
Rights Agent, and Norwest (the "Rights Agreement"). Norwest has also
authorized for issuance from time to time and registered with the Commission
an additional 1,700,000 shares of Preferred Stock. Norwest has also authorized
for issuance from time to time and registered or filed for registration with
the Commission, pursuant to two universal shelf registration statements, an
indeterminate number of securities (the "Shelf Securities") with an aggregate
initial offering price, as of December 31, 1994, not to exceed $1,825,000,000.
The Shelf Securities may be issued as Preferred Stock or as securities
convertible into shares of Preferred Stock or Common Stock. Based on the
number of shares of Preferred Stock authorized for issuance under the Norwest
Certificate as of December 31, 1994, the maximum number of shares of Preferred
Stock and Common Stock, respectively, that could be issued pursuant to the
effective shelf registration statements, when added to shares of Preferred
Stock and Common Stock already reserved for issuance, issued, or outstanding,
could not exceed respectively, 5,000,000 shares of Preferred Stock and
500,000,000 shares of Common Stock. All or any portion of the authorized but
unissued Preferred Stock or Shelf Securities issuable as Preferred Stock or
convertible into Preferred Stock or Common Stock, may be issued by the Norwest
Board without further action by stockholders. Holders of Preferred Stock have
certain rights and preferences with respect to dividends and upon liquidation
that are superior to those of holders of Common Stock. The relative rights and
preferences of any Preferred Stock issued in the future may be established by
the Norwest Board without stockholder action. Although Norwest has no current
plans for the issuance of any shares of Preferred Stock, except as disclosed
in this Prospectus, such shares, when and if issued, could have dividend,
liquidation, voting, and other rights superior to those of the Common Stock.
Subject to any prior rights of any Preferred Stock then outstanding,
holders of Common Stock are entitled to receive such dividends as are declared
by the Norwest Board out of funds legally available for that purpose. For
information concerning legal limitations on the ability of Norwest's banking
subsidiaries to supply funds to Norwest, see "CERTAIN REGULATORY
CONSIDERATIONS." Subject to the rights, if any, of any Preferred Stock then
outstanding, all voting rights are vested in the holders of Common Stock, each
share being entitled to one vote. Subject to any prior rights of any
Preferred Stock, in the event of liquidation, dissolution, or winding up of
Norwest, holders of shares of Common Stock are entitled to receive pro rata
any assets distributable to shareholders in respect of shares held by them.
Holders of shares of Common Stock do not have any preemptive right to
subscribe for any additional securities which may be issued by Norwest. The
outstanding shares of Common Stock are, and the shares offered hereby will be,
fully paid and nonassessable. The transfer agent and registrar for the Common
Stock is Norwest Bank Minnesota, N.A. Each share of Common Stock also
includes, and each share offered hereby will include, a right to purchase
certain Preferred Stock. See "Rights Plans--Norwest" below.
The foregoing description of the material terms of the Common Stock does
not purport to be complete and is qualified in its entirety by reference to
Article Fourth of the Norwest Certificate.
Rights Plans
UTFC. Unlike Norwest, UTFC has not adopted any shareholder rights plan
or issued any similar rights to the holders of UTFC Common Stock. One Norwest
Right (as defined below) will be attached to each share of Norwest Common
Stock issued in the Merger to UTFC shareholders.
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Norwest. On November 22, 1988, the Norwest Board declared a dividend of
one preferred share purchase right (collectively, the "Norwest Rights") for
each outstanding share of Norwest Common Stock. The dividend was paid on
December 9, 1988, to shareholders of record on that date. Holders of shares
of Norwest Common stock issued subsequent to that date, including those to be
issued in the Merger, receive the Norwest Rights with their shares. The
Norwest Rights trade automatically with shares of Norwest Common Stock and
become exercisable only under certain circumstances. The Norwest Rights are
designed to protect the interests of Norwest and its shareholders against
coercive takeover tactics. The purpose of the Norwest Rights is to encourage
potential acquirors to negotiate with Norwest's Board of Directors prior to
attempting a takeover and to give the Norwest Board leverage in negotiating on
behalf of all shareholders the terms of any proposed takeover. The Norwest
Rights may, but are not intended to, deter takeover proposals.
Until exercised, the Norwest Rights, in and of themselves, do not confer
any rights on their holders as shareholders of Norwest including, without
limitation, the right to vote or receive dividends. Upon becoming
exercisable, each Norwest 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 purchase price for each one four-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 Norwest Rights outstanding and the
number of Junior Preferred Shares issuable upon exercise of the Norwest Rights
are subject to adjustment in the event of a stock split of, or a stock
dividend on, Norwest Common Stock.
The Norwest 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 Norwest Board prior to the time the Norwest Rights
become exercisable. The Norwest 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 Norwest Rights permit holders of the Norwest
Rights, other than such person or group, to acquire shares of Norwest
Common Stock at 50% of such shares' 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 Directors may exchange each Norwest
Right, other than Norwest 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
Norwest Rights permit holders of the Norwest Rights to purchase the stock
of the acquiror at 50% of such shares' market value.
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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 transaction 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 Norwest Board may redeem the Norwest Rights in whole, but not in
part, at a price of $.0025 per Norwest Right (the "Redemption Price"). The
redemption of the Norwest Rights may be made effective at such time, on such
basis and with such conditions as the Norwest Board in its sole discretion may
establish. Immediately upon any redemption of the Norwest Rights, the right
to exercise such Rights will terminate and the only remaining right of the
holders of Norwest Rights will be to receive the Redemption Price.
The Norwest Rights will expire on November 23, 1998, unless extended or
earlier redeemed by Norwest. Generally, the terms of the Norwest Rights may
be amended by the Norwest Board without the consent of the holders of the
Norwest Rights.
Election and Removal of Directors
UTFC. UTFC currently has 11 directors who serve for one-year terms. The
UTFC Articles do not provide for cumulative voting in the election of
directors to the UTFC Board, and each shareholder of UTFC may cast one vote in
the election of directors for each share held of record by such shareholder.
Under UTFC's Bylaws, any or all directors may be removed, with or without
cause, by a vote of the holders of a majority of the shares then entitled to
vote on the election of directors. Vacancies on the UTFC Board may be filled
by a majority vote of the remaining directors, even if the number of remaining
directors is less than a quorum of the whole Board.
Norwest. Norwest currently has 17 directors who serve for one-year
terms. Norwest's Certificate does not permit cumulative voting in the election
of directors to the Norwest Board, and each stockholder of Norwest may cast
one vote in the election of directors for each share held of record by such
stockholder. Under Norwest's By-Laws, any or all directors may be removed,
with or without cause, by the holders of a majority of the shares then
entitled to vote at an election of directors. Vacancies on the Norwest Board
may be filled by a majority vote of the directors then in office.
Amendment of Corporate Charter and Bylaws
UTFC. Generally, under the TBCA, amendments to articles of incorporation
require the affirmative vote of the holders of two-thirds of the shares
entitled to vote on the proposed amendment. Where class voting is required by
the TBCA, approval requires the affirmative vote of the holders of both two-
thirds of the shares of each class entitled to vote on the proposed amendment
and two-thirds of the total shares entitled to vote thereon. However, as
permitted by
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the TBCA, the UTFC Articles provide that only a majority vote is required to
approve an amendment. The UTFC Articles and UTFC's Bylaws provide that both
the UTFC Board and UTFC's shareholders have the power to alter, amend, or
repeal its Bylaws, or adopt new Bylaws, subject to the shareholders' right to
repeal the UTFC Board's authority with respect to the Bylaws.
Norwest. The provisions of the DGCL governing the amendment of the
Norwest Certificate are essentially the same as those of Texas law, except
that the DGCL requires only a majority vote for approval. However, Norwest's
By-Laws provide that they may be altered or amended by the affirmative vote of
a majority of the Norwest Board or the holders of a majority of the
outstanding Norwest stock entitled to vote on the amendment under the DCGL.
Required Vote for Authorization of Corporate Actions
UTFC. Under Texas law generally, the vote of two-thirds of the
outstanding shares of UTFC Common Stock entitled to vote thereon is required
to approve a merger, share exchange, or the sale, lease, or exchange of all or
substantially all of UTFC's property and assets. However, as permitted by the
TBCA, the UTFC Articles provide that only a majority vote is required to
approve such transactions.
Norwest. Under Delaware law, the vote of a majority of the outstanding
shares of Norwest Common Stock entitled to vote thereon is required to approve
a merger, consolidation, or the sale, lease, or exchange of substantially all
of Norwest's corporate assets.
In addition to being subject to the respective laws of Texas and
Delaware, both UTFC and Norwest, as bank holding companies, are subject to
various provisions of federal law with respect to mergers, consolidations and
certain other corporate transactions. See "CERTAIN REGULATORY
CONSIDERATIONS."
Dissenters' Rights
UTFC. Under the TBCA, with certain enumerated exceptions, shareholders
of a Texas corporation are entitled to exercise dissenters' rights and obtain
payment of the fair value of their shares in cash if the corporation engages
in certain transactions. The transactions which give rise to dissenters'
rights under Texas law are (i) any plan of merger to which the corporation is
a party (unless the shareholders of the surviving corporation are not entitled
to a vote with respect thereto); (ii) any sale, lease, exchange, or other
disposition or exchange of all or substantially all of the property and assets
of the corporation requiring shareholder authorization under the TBCA; and
(iii) any plan of exchange pursuant to which the shares of the corporation are
to be acquired. For further information concerning UTFC shareholders'
dissenters' rights with respect to the Merger, see the more detailed
discussion below under "Rights of Dissenting UTFC Shareholders."
Norwest. Under the DCGL, a shareholder is generally entitled to receive
payment of the appraised value of such shareholder's shares if the shareholder
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
shareholders 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
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than 2,000 holders, or (iii) cash in lieu of fractional shares of such stock.
Appraisal rights are not available to Norwest shareholders for a sale of
assets or an amendment to Norwest's Certificate. Because Norwest Common Stock
is listed on both the NYSE and the CHX, and Norwest has more than 2,000
shareholders of record, its shareholders are not, subject to the
aforementioned exceptions, entitled to any rights of appraisal in connection
with mergers or consolidations involving Norwest.
Special Meetings of Shareholders
UTFC. Under the TBCA, a special meeting of shareholders may be called by
UTFC's president, the UTFC Board, the holders of at least ten percent of all
of the shares entitled to vote at the meeting, and such other persons as may
be authorized by the articles of incorporation or bylaws. UTFC's Bylaws
permit special meetings of shareholders to be called by parties other than
those specifically enumerated in the TBCA.
Norwest. Under the DCGL and the By-Laws of Norwest, a special meeting of
shareholders may be called only by the Chairman of the Board, a Vice Chairman,
the President, or a majority of the Board of Directors.
Limitation of Directors' Liability and Indemnification
UTFC. Under the TBCA and the UTFC's Articles, a director of UTFC is not
liable for any act or omission in his or her capacity as a director, provided
that the act or omission did not (i) involve a breach of the director's duty
of loyalty, (ii) involve bad faith that constitutes a breach of duty,
intential misconduct, or a knowing violation of law, (iii) involve a
transaction from which the director received an improper benefit, or (iv) give
rise to liability which is expressly provided for in an applicable statute.
The UTFC Articles provide that UTFC shall indemnify its officers and
directors who are made a party to any action, suit, or proceeding (all such
actions, "Proceeding") from any judgments, fines, settlements, and reasonable
expenses, including attorneys' fees, if such person was made a party to the
action by reason of the fact that he or she is or was an officer or director
of UTFC, provided that (i) he or she is successful on the merits or (ii) acted
in the transaction which is the subject of the Proceeding in good faith and in
a manner he or she reasonably believed was in the best interest of UTFC or not
opposed to UTFC's best interest; and in the case of any criminal Proceeding,
provided that he or she had no reasonable cause to believe the conduct was
unlawful. If the action was by or in the right of UTFC (a "derivative
action"), indemnification is available only for any reasonable expenses
incurred.
No indemnification is available where the officer or director is adjudged
liable for negligence or misconduct in the performance of his or her duty as a
director. A court of appropriate jurisdiction may order indemnification if
the court determines that the director is fairly and reasonably entitled to
indemnification for such expenses as the court deems proper. Expenses
incurred in defending any action may be paid by UTFC in advance of the final
disposition of such action upon receipt of an undertaking by a director or
officer to repay such amount unless it is ultimately determined that he or she
is entitled to be indemnified.
Norwest. Under the DGCL, absent a provision in the certificate of
incorporation to the contrary, directors can be held liable for gross
negligence in connection with the decisions made on
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behalf of the corporation and the performance of their duty of care, but will
not be liable for simple negligence. As permitted under Delaware law, the
Norwest Certificate provides that a director (including an officer who is also
a director) of Norwest shall not be liable personally to Norwest or its
shareholders for monetary damages for breach of fiduciary duty as a director,
except for liability arising out of (i) any breach of a director's duty of
loyalty to Norwest or its shareholders, (ii) acts or omissions not in good
faith or which involve intentional misconduct or a knowing violation of law,
(iii) payment of a dividend or approval of a stock repurchase in violation of
Section 174 of the DGCL, or (iv) any transaction from which the director
derives improper personal benefit. This provision protects the members of the
Norwest Board against personal liability for monetary damages from breaches of
their duty of care. However, it does not eliminate the director's duty of
care. For example, this provision in the Norwest Certificate has no effect on
the availability of equitable remedies, such as an injunction or rescission,
based upon a director's breach of his duty of care.
Delaware law provides that directors, officers, and other employees and
individuals may be indemnified against expenses (including attorneys' fees),
judgments, fines, and amounts paid in settlement in connection with specified
actions, suits, or proceedings, whether civil, criminal, administrative, or
investigative (other than a derivative action) if they acted in good faith and
in a manner they reasonably believed to be in, or not opposed to, the best
interests of the corporation, and regarding any criminal action or proceeding,
had no reasonable cause to believe their conduct was unlawful. A similar
standard is applicable in the case of derivative actions, except that
indemnification only extends to expenses (including attorneys' fees) incurred
in connection with the defense or settlement of such actions. In the case of
derivative actions, Delaware law requires court approval before there can be
any indemnification where the person seeking indemnification has been found
liable to the corporation. To the extent that a person otherwise eligible to
be indemnified is successful on the merits of any claim or defense described
above, indemnification for expenses (including attorneys' fees) actually and
reasonably incurred is mandated by Delaware law.
The Norwest Certificate provides that Norwest must indemnify, to the
fullest extent authorized by Delaware law, each person who was or is made a
party to, is threatened to be made a party to, or is involved in, any action,
suit, or proceeding because he is or was a director or officer of Norwest (or
was serving at the request of Norwest as a director, trustee, officer,
employee, or agent of another entity) while serving in such capacity against
all expenses, liabilities, or loss incurred by such person in connection
therewith, provided that indemnification in connection with a proceeding
brought by such person will be permitted only if the proceeding was authorized
by the Norwest Board. The Norwest Certificate also provides that Norwest must
pay expenses incurred in defending the proceedings specified above in advance
of their final disposition, provided that if so required by Delaware law, such
advance payments for expenses incurred by a director or officer may be made
only if he undertakes to repay all amounts so advanced if it is ultimately
determined that the person receiving such payments is not entitled to be
indemnified.
The Norwest Certificate authorizes Norwest to provide similar
indemnification to employees or agents of Norwest.
Pursuant to the Norwest Certificate, Norwest may maintain insurance, at
its expense, to protect itself and any directors, officers, employees, or
agents of Norwest or another entity against any expense, liability, or loss,
regardless of whether Norwest has the power or obligation to indemnify that
person against such expense, liability, or loss under Delaware law.
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The right to indemnification is not exclusive of any other right which
any person may have or acquire under any statute, provision of the Norwest
Certificate or By-Laws, agreement, vote of shareholders or disinterested
directors, or otherwise.
Antitakeover Statutes
UTFC. The TBCA does not include any provision that regulates the
accumulation of shares of voting stock of, or business combinations with,
Texas corporations.
Norwest. The Delaware antitakeover statute governs business combinations
between a publicly held Delaware corporation having certain numbers of
shareholders or listed on certain exchanges and an interested shareholder.
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 shareholder and other related
parties. An "interested shareholder" 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 shareholder for a period
of three years following the date on which the shareholder became an
interested shareholder, unless (a) the board of directors approved the
business combination before the shareholder became an interested shareholder,
(b) upon consummation of the transaction which resulted in the shareholder
becoming an interested shareholder, such shareholder owned at least 85% of the
voting stock outstanding when the transaction began, excluding in computing
such percentage shares held by certain types of shareholders, or (c) the board
of directors approved the business combination after the shareholder became an
interested shareholder and the business combination was approved by at least
two-thirds of the outstanding voting stock not owned by such shareholder.
In addition to being subject to the laws of Delaware, Norwest and UTFC,
as bank holding companies, are subject to various provisions of federal law
with respect to mergers, consolidations, and certain other corporate
transactions.
Restrictions on Declaration of Dividends
UTFC. Under the TBCA, the UTFC Board may authorize the payment of
dividends to UTFC's shareholders, provided that no such distribution of
dividends may be made if (i) after giving effect thereto, UTFC would be
insolvent or (ii) the distribution would exceed UTFC's surplus.
Norwest. Under the DGCL, the Norwest Board may authorize and pay
dividends to Norwest's stockholders either (i) out of surplus, which is that
part of Norwest's net assets which is in excess of the amount determined by
the Norwest Board to be capital, provided that, for a corporation like Norwest
with par value capital stock, the capital may not be less than the aggregate
par value of its issued shares, or (ii) if there is no surplus, out of
Norwest's net profits for the fiscal year in which the dividend is declared
and/or the preceding fiscal year. The board of directors of a Delaware
corporation may reduce the corporation's capital, provided that the
corporation's assets remaining after the reduction are sufficient to pay any
of the corporation's debts for which payment has not otherwise been provided.
Rights of Dissenting UTFC Shareholders
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The following is a brief summary of the rights of dissenting shareholders
pursuant to Texas law and does not purport to be a complete statement thereof.
The summary is qualified in its entirety by reference to Articles 5.11 through
5.13 of the TBCA, which are set forth in full in Appendix B to this Proxy
Statement-Prospectus.
Record holders of UTFC Common Stock will have the right to dissent with
respect to the Merger and, subject to certain conditions, receive a cash
payment equal to the fair value of their shares under Texas law. Any
shareholder who wishes to assert his or her dissenter's rights must cause UTFC
to receive, before the vote on the Merger is taken, written notice of his or
her intent to demand payment for his or her shares if the Merger is
consummated and may not vote any of his or her shares in favor of the Merger
or on proposal 2. Voting against the Merger is not sufficient, in and of
itself, for a shareholder to assert his or her dissenter's rights.
In the event the UTFC shareholders approve the Merger at the Special
Meeting, Merger Co. is required to deliver or mail a written notice to all
shareholders who are entitled to demand payment for their shares no later than
10 days after the consummation of the Merger. Any shareholder to whom a
notice is sent by Merger Co. and who desires to exercise his or her
dissenter's rights must, within 10 days from the delivery or mailing of Merger
Co.'s notice, make written demand on Merger Co. for the payment of the fair
value of his or her shares. Pursuant to the TBCA, the fair value of the
shares is the value thereof as of the day immediately preceding the Special
Meeting, excluding any appreciation or depreciation in anticipation of the
Merger. The demand must state the number of shares owned by the shareholder
and the fair value of the shares as estimated by the shareholder. Any
shareholder who does not demand payment for his or her shares within the 10
day period is bound by the Merger. Upon receiving a demand for payment from a
dissenting shareholder, Merger Co. must make an appropriate notation of the
demand in its shareholder records. Within 20 days after making such demand,
the dissenting shareholder must submit his or her share certificates to Merger
Co. for notation thereon that demand has been made.
Within 20 days after Merger Co.'s receipt of a demand from a dissenting
shareholder, it must deliver or mail to the shareholder a written notice that
either accepts the amount claimed in the shareholder's demand as the fair
value of the shares or sets forth Merger Co.'s estimate of the fair value of
the shares. If the shareholder's amount is accepted, the notice must state
that Merger Co. will pay that amount to the shareholder within 90 days after
the date the Merger was effected, upon surrender of the certificates for the
shareholder's shares, duly endorsed. If the notice includes Merger Co.'s
estimate of the fair value of the shares, such notice must also include an
offer to pay the amount of that estimate to the shareholder within 90 days
after the date the Merger was effected, upon receipt of notice within 60 days
after that date from the shareholder that he or she agrees to accept that
amount and surrenders the certificates for the shareholder's shares. The
failure of a dissenting shareholder to submit his or her share certificates
for notation terminates such shareholder's right to dissent, at the option of
Merger Co., unless a court of competent jurisdiction for good and sufficient
cause otherwise directs.
If, within 60 days after the date on which the Merger was effected, the
value of the shares is agreed upon by Merger Co. and the dissenting
shareholder, then payment for the shares must be made by Merger Co. to the
shareholder within 90 days after the date on which the Merger was effected,
upon the shareholder's surrender of the certificates, duly endorsed. Upon
payment of the agreed value, the shareholder ceases to have any interest in
the shares or UTFC.
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If, however, within 60 days after the date on which the Merger was
effected, the dissenting shareholder and Merger Co. do not agree upon the
value of the shares, then either may, within an additional 60 days after the
expiration of the first 60 day period, file a petition in any court of
competent jurisdiction in Wichita County, Texas, asking the court to determine
the fair value of the shareholder's shares. If the petition is filed by the
shareholder, Merger Co. must, within 10 days after service of the petition
upon it, file in the office of the clerk of the court a list containing the
names and addresses of all shareholders who have demanded payment for their
shares and with whom agreements as to the value of their shares have not been
reached by Merger Co. If the petition is filed by Merger Co., then the
petition must be accompanied by such list. The clerk of the court then gives
notice of the time and place fixed for the hearing by the court of the
petition by registered mail to Merger Co. and each of the shareholders named
on the list at the addresses stated therein, and the shareholders as notified
and Merger Co. are bound by the final judgment of the court.
After the hearing of the petition, the court determines the shareholders
who have complied with the foregoing procedure and become entitled to the
valuation of and payment for their shares and appoints one or more appraisers
to determine that value. The appraisers may examine the books and records of
UTFC and are required to afford a reasonable opportunity to the interested
parties to submit pertinent evidence as to the value of the shares. The
appraisers then determine the fair value of the shares of all of the
shareholders entitled to payment for their shares and file their report of
that value in the office of the clerk of the court, who gives notice of such
filing to the parties in interest. After hearing any exceptions to the
report, the court then determines the fair value of the shares of all the
shareholders entitled to payment and directs Merger Co. to pay that value,
together with interest thereon, beginning 91 days after the date on which the
Merger was effected until the date of the judgment, to the shareholders
entitled to payment, upon surrender of the certificates for their shares, duly
endorsed. Upon payment of the judgment, the dissenting shareholders cease to
have any interest in those shares or UTFC. The court allows the appraisers a
reasonable fee as court costs, and all court costs are allotted between the
parties in a manner as the court determines to be fair and equitable.
Any shareholder who has demanded payment for his or her shares may
withdraw such demand at any time before payment for the shares or before any
petition is filed seeking a determination of the fair value of the shares and,
with the consent of Merger Co., after any such petition is filed. If (i) the
demand is withdrawn, (ii) Merger Co. has terminated the shareholder's rights
under Article 5.12 because of the failure of the shareholder to submit the
certificates for his or her shares for notation of demand, (iii) no petition
is timely filed, or (iv) after hearing the petition, the court determines the
shareholder is not entitled to the relief provided by Article 5.12, then the
shareholder is conclusively presumed to have approved the Merger and is bound
thereby, and his or her status as a shareholder is restored and he or she is
entitled to receive any dividends paid to shareholders in the interim.
In the absence of fraud, the remedy provided by Article 5.12 of the TBCA
to a shareholder objecting to the proposed Merger is the exclusive remedy for
the recovery of the value of his or her shares and, if Merger Co. complies
with Article 5.12, then any shareholder who fails to comply with the
requirements of Article 5.12 is not entitled to bring suit for the recovery of
the value of his or her shares or money damages to the shareholder with
respect to the Merger.
Certain Federal Income Tax Consequences
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Scope of Opinion
The federal income tax discussion set forth below is a summary of certain
material U.S. federal income tax consequences of the Merger. Sherrill,
Crosnoe & Goff, A Professional Corporation, counsel to UTFC, will render a tax
opinion regarding the material federal income tax aspects of the Merger if the
consideration issued to the UTFC shareholders in the Merger is Norwest Common
Stock. The opinion will be limited in its scope. Among other items, it will
not cover the special tax consequences, if any, that might apply to UTFC
shareholders who may be entitled to special treatment under the Code (such as
foreign persons, tax-exempt organizations, retirement plans and S
corporations) or do not hold their shares of UTFC Common Stock as a capital
asset. Moreover, the opinion will not address the federal income tax
consequences of the Merger if the consideration issued to the UTFC
shareholders is cash, or any state or local tax aspects of the Merger.
Assumptions and Conditions to Opinion
The opinion will be subject to and based on a number of assumptions and
factual representations. If any of these representations or assumptions is
not true or accurate, the opinion could be different. The material
assumptions and representations will be:
(1) the Merger and related transactions will take place as described in
the Merger Agreement and in this Proxy Statement-Prospectus, and the facts
described in those documents are accurate, complete and will not materially
change, and the conduct of the parties is and will be materially consistent
with those facts;
(2) the Merger will be a valid merger under applicable state law; and
(3) the representations made to Sherrill, Crosnoe & Goff, A Professional
Corporation by Norwest and by UTFC in their respective representation letters
that will be delivered to Sherrill, Crosnoe & Goff, A Professional
Corporation, which will not have been independently verified, are true,
complete and accurate in all material respects.
The opinion will also be subject to the condition that as a result of the
Merger, the former owners of the UTFC Common Stock will have a continuing
interest in Norwest through the ownership of Norwest Common Stock that is
equal in value to at least 50% of the value of all of the UTFC Common Stock
immediately prior to the Merger. UTFC will represent that, to the best of its
knowledge, this condition will be satisfied. Whether this condition is in
fact satisfied, however, will depend on actual Norwest Common Stock
dispositions made by the UTFC shareholders.
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Description of Opinion
Subject to the assumptions, conditions and qualifications described
above, and based on existing federal income tax law, Sherrill, Crosnoe & Goff,
A Professional Corporation will render an opinion that, if the consideration
issued to the UTFC shareholders in the Merger is Norwest Common Stock, for
federal income tax purposes:
(1) the Merger will constitute a reorganization within the meaning
of Sections 368(a)(1)(A) and 368(a)(2)(E) of the Code, and Norwest, UTFC
and Merger Co. will each be a party to the reorganization within the
meaning of Section 368(b) of the Code;
(2) no gain or loss will be recognized by UTFC, Norwest or Merger
Co. as a result of the Merger;
(3) no gain or loss will be recognized by the shareholders of UTFC
upon their receipt of Norwest Common Stock in exchange for their UTFC
Common Stock; however, the payment of cash in lieu of fractional share
interests in Norwest Common Stock will be treated as if the fractional
shares were distributed as part of the Merger and then were redeemed by
Norwest, and UTFC shareholders who receive these cash proceeds will be
treated as having received a distribution in full payment in exchange for
the fractional shares redeemed as provided in Section 302(a) of the Code;
(4) the tax basis of the shares of Norwest Common Stock (including
the fractional share interests) received by the shareholders of UTFC will
be the same as the tax basis of their UTFC Common Stock exchanged
therefor; and
(5) the holding period of Norwest Common Stock in the hands of the
UTFC shareholders will include the holding period of their UTFC Common
Stock exchanged therefor, provided such UTFC Common Stock is held as a
capital asset at the Effective Time of the Merger.
Cash Alternative
If the consideration issued to the UTFC shareholders in the Merger is
cash, rather than Norwest Common Stock, then the exchange by UTFC shareholders
of their shares of UTFC Common Stock for cash will be a taxable transaction
for federal income tax purposes. A shareholder whose shares are exchanged
generally will recognize gain or loss equal to the difference between the
amount of cash received pursuant to the Merger and the tax basis of the shares
exchanged therefor. Such gain or loss will constitute capital gain or loss if
the shares exchanged in the Merger were held as capital assets. Capital gain
or loss will constitute long-term capital gain or loss if the shareholder's
holding period with respect to the shares is greater than one year and
otherwise will constitute short-term capital gain or loss.
Under current federal income tax law, the highest marginal tax rate
applicable to ordinary income of individuals is 39.6% and such rate applicable
to corporations is 39%. Net capital gains (the excess of net long term
capital gains over net short term capital losses) currently are taxed at 28%
for individuals and the regular corporate rates for corporations. Individuals
may use up to $3,000 of net capital losses to offset ordinary income.
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THE INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL
INFORMATION ONLY AND IS BASED ON THE EXISTING PROVISIONS OF THE CODE, THE
APPLICABLE TREASURY REGULATIONS ISSUED THEREUNDER AND THE OFFICIAL PUBLISHED
INTERPRETATION OF THOSE PROVISIONS BY THE INTERNAL REVENUE SERVICE AND THE
COURTS, ALL OF WHICH ARE SUBJECT TO CHANGE, WHICH CHANGES COULD BE APPLIED
RETROACTIVELY. IF THE APPLICABLE LAW CHANGES, THE OPINION COULD BE DIFFERENT.
FURTHER, THE INCOME TAX DISCUSSION DOES NOT CONSIDER THE PARTICULAR FACTS OR
CIRCUMSTANCES OF ANY STOCKHOLDER. SHAREHOLDERS ARE URGED TO CONSULT WITH
THEIR OWN TAX ADVISORS WITH RESPECT TO THE FEDERAL INCOME TAX CONSEQUENCES OF
THE MERGER IN THEIR PARTICULAR SITUATIONS, AS WELL AS CONSEQUENCES UNDER ANY
APPLICABLE STATE, LOCAL OR FOREIGN TAX LAWS.
Resale of Norwest Common Stock
The shares of Norwest Common Stock issuable to shareholders of UTFC upon
consummation of the Merger have been registered under the Securities Act.
Such shares may be traded freely and without restriction by those shareholders
not deemed to be "affiliates" of UTFC or Norwest as that term is defined in
the rules under the Securities Act. Norwest Common Stock received by those
shareholders of UTFC who are deemed to be "affiliates" of UTFC may be resold
without registration as provided for by Rule 145, or as otherwise permitted
under the Securities Act. Persons who may be deemed to be affiliates of UTFC
generally include individuals or entities that control, are controlled by or
are under common control with, UTFC, and may include the executive officers
and directors of UTFC as well as certain principal shareholders of UTFC. In
the Merger Agreement, UTFC has agreed to use its best efforts to cause each
UTFC shareholder who is an executive officer or director of UTFC or who may
otherwise reasonably be deemed to be an affiliate of UTFC 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 (i) except in compliance with the applicable
provisions of the Securities Act and the rules and regulations promulgated
thereunder, and (ii) during the periods when any such sale, transfer, or other
disposition would, under generally accepted accounting principles or the
rules, regulations, or interpretations of the Commission, disqualify the
Merger from pooling-of-interests accounting treatment. See "THE MERGER--
Accounting Treatment." In general, such periods encompass the period
commencing 30 days prior to the Merger and ending at the time of the
publication of financial results covering at least 30 days of combined
operations of Norwest and UTFC. This Proxy Statement-Prospectus does not
cover any resales of Norwest Common Stock received by affiliates of UTFC.
Stock Exchange Listing
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 Merger. 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.
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Dividend Reinvestment and Optional Cash Payment Plan
Norwest currently has an automatic Dividend Reinvestment and Optional
Cash Payment Plan which provides in substance, for those shareholders who
elect to participate, that dividends on Norwest Common Stock will be
reinvested in shares of Norwest Common Stock at market price (as defined in
the plan). 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 in the plan) of such
stock at the time of purchase. It is anticipated that after the Effective
Time of the Merger, Norwest will continue to offer its Dividend Reinvestment
and Optional Cash Payment Plan and that shareholders of UTFC who receive
Norwest Common Stock in the Merger will have the right to participate therein.
Accounting Treatment
It is anticipated that the Merger will be accounted for as a purchase
transaction in accordance with generally accepted accounting principles.
The unaudited per share data contained in this Proxy Statement-Prospectus
has been prepared using the purchase method of accounting to account for the
Merger. See "SUMMARY--Comparative Unaudited Per Share Data."
Expenses
Except as otherwise provided in the Merger Agreement, Norwest and UTFC
will each pay their own expenses in connection with the Merger, including fees
and expenses of their respective accountants and counsel.
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INFORMATION ABOUT UTFC AND THE BANKS
General
UTFC is a bank holding company registered under the BHC Act, which
currently owns two banks, Parker Square Bank, N.A., based in Wichita Falls,
Texas, and First State Bank in Archer City ("First State Bank"). At December
31, 1994, UTFC and its consolidated subsidiaries had total assets of $298.5
million, total deposits of $272.7 million, shareholders' equity of $21.5
million and 131 full-time equivalent employees.
UTFC was incorporated as a Texas corporation in 1979 for the purpose of
acquiring Parker Square Bank, which had been chartered as a state banking
association in 1954. UTFC completed the acquisition of Parker Square Bank in
1980 and acquired First State Bank in 1981. In 1982, UTFC acquired Farmers
National Bank in Seymour, Texas (the "Seymour Bank") and in 1984 it added
Farmers & Merchants National Bank of Nocona in Nocona, Texas (the "Nocona
Bank"). In 1990, UTFC sold the Seymour Bank to another bank holding company
and merged Parker Square Bank into the Nocona Bank, changed its main location
to Wichita Falls, Texas, and converted the former offices of the Nocona Bank
into branch facilities of Parker Square Bank. The merger resulted in Parker
Square Bank's becoming a national bank.
Parker Square Bank is the lead bank of UTFC and has its main office at
2301 Kell Boulevard, Wichita Falls, Texas 76308. It has a total of four
branches. Two of these branches are located in Wichita Falls, one is located
in Iowa Park, Texas (a town with population of approximately 6,500 located 10
miles west of Wichita Falls), and one is located in Nocona, Texas (a town with
population of approximately 2,800 located 40 miles east of Wichita Falls).
The Bank's market area consists primarily of Wichita, Clay, and Montague
Counties, Texas and adjacent counties in Texas and southern Oklahoma. Wichita
Falls, with a population of approximately 100,000, is the largest city in
Parker Square Bank's market area. Parker Square Bank had deposits as of
December 31, 1994, of $242.7 million.
First State Bank was chartered as a state banking association in 1909 and
is based in Archer City, Texas, a town with population of approximately 1,800
located 30 miles south of Wichita Falls. First State Bank's market area
consists primarily of Archer County, Texas. At December 31, 1994, deposits
were $30.0 million.
The Banks are full service, independent community banks which offer
individuals and businesses a variety of deposit accounts, safe deposit
facilities, access cards, and other specialized services. In addition, the
Banks offer consumer, commercial, real estate, and mortgage loans at all
locations and trust services at Parker Square Bank's main facility.
Properties
UTFC conducts its operations from Parker Square Bank's principal offices
located at 2301 Kell Boulevard, Wichita Falls, Texas. Parker Square Bank owns
its main banking facility and its suburban Wichita Falls and Nocona branch
facilities; it leases its branch facilities located in downtown Wichita Falls
and in Iowa Park. First State Bank owns its main bank facility.
42
<PAGE>
Set forth below is certain information regarding the properties of the
Banks:
<TABLE>
<CAPTION>
Bank Facility Address Square Footage Date Opened
- ------------- ------- -------------- -----------
<S> <C> <C> <C>
Parker Square Bank - 2301 Kell Boulevard 45,000 1961
Main Office Wichita Falls, Texas (1)
Parker Square Bank - 809 Eighth Street 2,500 1989
Branch Facilities Oil & Gas Building
Wichita Falls, Texas (2)
2714 Southwest Parkway 3,160 1994
Wichita Falls, Texas
219 West Park Avenue 2,500 1993
Iowa Park, Texas (3)
105 East Highway 82 1,850 1981
Nocona, Texas (4)
First State Bank - 200 North Center Street 9,000 1984
Main Office Archer City, Texas
- ----------------------------
</TABLE>
(1) See the discussion immediately following this table.
(2) Leased until June 1, 1999.
(3) Leased until April 1, 1998.
(4) Until January 1, 1995, Parker Square Bank owned an additional 11,000
square foot facility located at 220 Clay Street in Nocona, which served
as the Nocona branch's main office, and the Highway 82 location was used
as a drive-in facility only. On that date, the Clay Street facility was
donated to the local school district with Parker Square Bank's retaining
the use of the facility, free of charge, until the Highway 82 facility
could be enlarged and remodeled to become the main Nocona branch office.
When the remodeling is finished, Parker Square Bank will relinquish any
use of the Clay Street facility.
Parker Square Bank's main facility is a two-story, 45,000 square foot
structure located in the Parker Square Shopping Center in Wichita Falls. The
facility houses the Bank's lending and teller operations, accounting and
electronic data processing facilities, as well as the executive offices of
Parker Square Bank and UTFC. Parker Square Bank currently owns an additional
one-story, 21,000 square foot building located immediately adjacent to the
main facility to the east. This building has never been used in Parker Square
Bank's operations but instead was leased to other parties for retail business
facilities. On September 30, 1994, this building was transferred to Parker
Square Bank's "other real estate owned" category. With Norwest's consent,
Parker Square Bank subsequently contracted to sell this building and is
currently remodeling it according to the new owner's plans and specifications
as part of the sale. The sale is expected to be completed in May 1995.
43
<PAGE>
Regulation and Supervision
As a bank holding company, UTFC is subject to regulation by and files
quarterly reports with the Federal Reserve Board. The Federal Reserve Board
is authorized to conduct examinations of UTFC and any of its subsidiaries.
The Federal Reserve Board may also exercise cease and desist powers over bank
holding companies and their nonbank affiliates if their actions represent
unsafe or unsound practices or violation of law.
The Banks and their operations are affected by various restrictions and
requirements under the laws of the United States and the State of Texas.
Under these generally applicable federal and state restrictions and
requirements, the Banks must maintain reserves against deposits and are
restricted with respect to the nature and amount of loans which they may make,
the interest that they may charge on those loans, and the conditions under
which they may pay dividends on their capital stock.
Competition
The Banks experience considerable competition in both attracting deposits
and lending funds. Competition in lending comes principally from other
commercial banks and savings and loan associations located in the Banks'
respective market areas and, to a lesser extent, from mortgage companies,
insurance companies, governmental agencies, credit unions, real estate
investment trusts, and other financial institutions. Competition for deposits
comes principally from other commercial banks, savings and loan associations,
and credit unions. The primary factors in competing for deposits among these
institutions are interest rates paid on accounts, convenience of office
locations, and extent of services offered. In the conduct of certain aspects
of these banking businesses, the Banks compete not only with the institutions
mentioned above, but also with insurance companies, small loan companies, and
other financial institutions.
Legal Proceedings
The nature of the Banks' businesses cause them to be involved in routine
legal proceedings from time to time. Other than such proceedings incidental
to the Banks' businesses, the respective managements of the Banks believe that
there are no pending or threatened legal proceedings which, upon resolution,
would have a material adverse effect on the financial condition or results of
operation of the Banks.
Market Information and Dividends
Market Information; Shareholders
There has been no public market for shares of UTFC Common Stock. As of
the record date for the Special Meeting, there were issued and outstanding
340,467 shares of UTFC Common Stock, held by 53 holders of record.
Dividends
UTFC has not paid any dividends since 1988. The amount of dividends that
UTFC is permitted to pay is limited by the supervisory policy of the Federal
Reserve Board. See "CERTAIN REGULATORY CONSIDERATIONS--Dividend
Restrictions."
44
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
GENERAL
The following is management's discussion and analysis of the significant factors
affecting UTFC's results of operations and financial condition. This should be
read in conjunction with the audited financial statements and accompanying
footnotes and other selected financial data presented elsewhere herein.
FINANCIAL CONDITION
Total assets decreased by $9,725,000 during 1994 to $298,501,000 at December 31,
1994, following an increase of $18,284,000 during 1993 to $308,226,000 at
December 31, 1993. The 1994 decrease is reflected in a decrease in investment
securities. The 1993 increase is reflected in an increase in investment
securities and net loans.
Loans increased $23,299,000 during 1994 to $152,031,000 at December 31, 1994.
Investments decreased $26,050,000 during 1994 to $119,663,000 at December 31,
1994. Premises and equipment increased $469,000 during 1994 to $4,999,000 at
December 31, 1994, as a result of the construction and opening of a new branch
facility. Other real estate owned increased $1,018,000 to $1,155,000 at
December 31, 1994. The December 31, 1994 balance includes $963,000, which was
formerly held for future bank expansion and is currently under a contract of
sale. Deposits decreased $11,942,000 during 1994 to $272,663,000 for December
31, 1994. This decrease was primarily due to low interest rates and the outflow
of interest bearing deposits to alternative deposit products (annuities and
mutual funds). The decline of this funding source resulted in a reduction in
total cash and cash equivalents of $8,625,000 to $14,434,000 at December 31,
1994. Additionally, short term borrowing rose by $1,160,000 to $3,497,000 at
December 31, 1994.
COMPARISON OF YEARS ENDED DECEMBER 31, 1994, 1993 and 1992
General
UTFC's income before taxes increased to $3,602,000 for the year ended December
31, 1994, compared to $3,303,000 for the year ended December 31, 1993 and
$3,271,000 for the year ended December 31, 1992. UTFC utilized its remaining
net operating loss carry forward in 1992 to offset Federal income tax expense of
$1,003,000, which was reported as an extraordinary item. During 1993, UTFC
recognized the cumulative effect of a change in method of
45
<PAGE>
accounting for income taxes which resulted in an increase in earnings of
$841,000. As a result of the absence of such items, UTFC's net income decreased
to $2,288,000 for the year ended December 31, 1994, compared to $3,036,000 for
the year ended December 31, 1993 and $3,207,000 for the year ended December 31,
1992. Return on average assets and return on average equity were 0.75 percent
and 10.81 percent, respectively for 1994, as compared to 1.02 percent and 15.98
percent, respectively, for 1993 and 1.12 percent and 20.22 percent,
respectively, for 1992.
Net Interest Income
UTFC's tax-equivalent net interest income to average earning assets increased to
4.15 percent in 1994 from 3.83 percent in 1993 and 4.04 percent in 1992. Tax-
equivalent interest income was $19,383,000 for the year ended December 31, 1994,
compared to $18,028,000 for December 31, 1993, and $19,786,000 for December 31,
1992. Interest expense increased 3.0 percent to $7,741,000 for the year ended
December 31, 1994, compared to $7,519,000 for December 31, 1993. Interest
expense for 1993 represented a decrease of 19.1 percent compared to $9,289,000
for December 31, 1992. This decrease was attributable to a decline in interest
rates. Tax-equivalent yield on interest-bearing assets was 6.91 percent in
fiscal 1994 compared to 6.57 percent and 7.61 percent for fiscal 1993 and 1992,
respectively. The average cost of interest-bearing liabilities was 3.24 percent
in fiscal 1994 compared to 3.15 percent and 3.98 percent for fiscal 1993 and
1992, respectively.
Allowance for Loan Losses
The allowance for loan losses is established by a charge to income as a
provision for loan losses. Actual loan losses or recoveries are charged or
credited directly to this allowance. The provision for loan losses is based on
management's estimate of the amounts required to maintain an allowance adequate
to reflect losses inherent in the loan portfolio at the balance sheet date,
however, ultimate losses may vary from the current estimates. In estimating
losses, consideration is given to the financial condition of the borrower,
guarantor, current and anticipated economic conditions and collateral values.
These estimates are reviewed periodically, and adjustments to either increase or
decrease the allowance are reported in earnings in the period in which they
become known.
Management believes that UTFC's allowance for loan losses is adequate to cover
known or anticipated losses. There can be no assurance, however, that
management will not decide to increase the allowance for loan losses or that
regulators, when reviewing UTFC's
46
<PAGE>
loan portfolios in the future, will not request UTFC to increase such allowance,
either of which could adversely affect UTFC's earnings. Further, there can be no
assurance that UTFC's actual loan losses will not exceed its allowance for loan
losses.
UTFC's provision for loan losses was $90,000, $176,000 and $135,000 for the
years ended December 31, 1994, 1993 and 1992, respectively. The decrease in the
1994 provision was the result of a lower ratio of non-performing loans to total
gross loans.
Noninterest Income and Expense
Noninterest income, excluding gains on sales of securities and other real estate
decreased $281,000 to $2,315,000 for the year ended December 31, 1994, compared
to $2,596,000 and $2,004,000 for the years ended 1993 and 1992, respectively.
Gains on sales of securities were $148,000, $58,000 and $191,000 for the years
ended December 31, 1994, 1993 and 1992, respectively.
Gains on the sales of other real estate owned were $94,000, $114,000 and
$158,000 for the years ended December 31, 1994, 1993 and 1992, respectively.
Noninterest expense increased $674,000 to $10,469,000 for the year ended
December 31, 1994, compared to $9,795,000 and $9,358,000 for the years ended
1993 and 1992, respectively. The following table presents a summary of
operating expenses and percentage changes (dollars in thousands):
<TABLE>
<CAPTION>
Percentage Increase
(Decrease)
---------------------
1994 1993 1992 1993/94 1992/93
------- ------ ------ ------- -------
<S> <C> <C> <C> <C> <C>
Salaries and employee benefits $ 4,816 $4,946 $4,696 (2.63%) 5.32%
Net occupancy 906 706 650 28.33% 8.62%
Equipment and data processing 820 826 764 (0.72%) 8.12%
Professional fees 436 305 304 42.95% 0.33%
Other expense 3,491 3,012 2,944 15.90% 2.31%
------- ------ ------ ------- -----
$10,469 $9,795 $9,358 6.88% 04.67%
======= ====== ====== ======= ======
</TABLE>
The increase in other expense in 1994 was largely attributable to a $577,000
provision for potential loss on life insurance contracts covering the lives of
bank officers. The provision resulted from the insurer being placed in
rehabilitation and reduced UTFC's return on average assets by 0.19 percent. The
increase in professional fees was attributable to a consulting contract covering
work place efficiency, fee enhancement and product development.
47
<PAGE>
CAPITAL RESOURCES
At December 31, 1994, stockholders' equity was $21.5 million and represented a
$1.1 million or 5.39 percent increase from the December 31, 1993 balance of
$20.4 million. The increase was due to the retention of earnings, less the
adjustment to record unrealized losses on available-for-sale investment
securities in the amount of $1,189,000.
Bank regulatory agencies measure capital adequacy through standardized risk-
based capital guidelines which compare different levels of capital (as defined
by 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 4.00 percent of risk-weighted assets, and a minimum level of
total capital of at least 8.00 percent 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. UTFC's actual risk-based capital, risk-based capital
requirements and excess risk-based capital at December 31, 1994, December 31,
1993 and December 31, 1992 are summarized as follows (dollars in thousands):
<TABLE>
<CAPTION>
December 31, December 31, December 31,
1994 1993 1992
-------------------- -------------------- -----------------
Amount Percent Amount Percent Amount Percent
--------- --------- ---------- -------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
Tier 1 capital $22,630 14.74% $20,360 15.83% $17,326 14.18%
Allowable portion of allowance
for losses 1,466 0.96% 1,490 1.17% 1,251 1.02%
------- ------ ------- ------ ------- ------
Total risk-based capital $24,096 15.70% $21,850 17.00% $18,577 15.20%
Risk-based capital requirement 12,279 8.00% 10,287 8.00% 9,778 8.00%
------- ------ ------- ------ ------- ------
Excess risk-based capital $11,817 7.70% $11,563 9.00% $ 8,799 7.20%
======= ====== ======= ====== ======= ======
</TABLE>
As a supplement to the risk-based capital guidelines, banks must also maintain a
minimum ratio of Tier 1 capital to total assets, known as the Tier 1 leverage
ratio. The principal objective of this measure is to place a constraint on the
maximum degree to which a banking organization can leverage its equity capital
base. This regulation has established a minimum level of Tier 1 capital to
total assets of 3.00 percent. At December 31, 1994, UTFC's leverage ratio was
7.19 percent, compared to 6.61 percent at December 31, 1993. This increase from
December 31, 1993 to December 31, 1994, is primarily attributable to the
retention of earnings.
48
<PAGE>
FUNDING SOURCES AND LIQUIDITY MANAGEMENT
UTFC is restricted in paying dividends due to the general regulatory capital
requirements that apply to all banks and holding companies. 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 regulatory agencies, 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.
The approval of the Commissioner of the Banking Department of Texas is required
for any dividend by a state bank if the dividend would exceed undivided profits
and certified surplus, provided that certified surplus is at least equal to the
capital of the bank.
The assets of UTFC are primarily funded through the use of borrowings in the
form of deposits and short-term borrowings. 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.
UTFC's basic strategy is to minimize interest rate risk through matching the
repricing periods of earning assets and interest-bearing liabilities.
ACCOUNTING PRINCIPLES
In May, 1993, the Financial Accounting Standards Board ("FASB") issued Statement
of Financial Accounting Standards ("SFAS") No. 115, "Accounting For Certain
Investments In Debt and Equity Securities". SFAS No. 115 was adopted as of the
beginning of UTFC's fiscal year, January 1, 1994, and, in accordance with SFAS
No. 115, was not applied retroactively.
In May, 1993, the FASB issued SFAS No. 114, "Accounting by Creditors for
Impairment of a Loan". SFAS No. 114 is effective for financial statements
issued for fiscal years beginning after December 15, 1994, although earlier
adoption is permitted. UTFC will adopt this standard in 1995.
49
<PAGE>
UNITED TEXAS FINANCIAL CORPORATION
SELECTED STATISTICAL DISCLOSURE
SUPPLEMENTAL FINANCIAL DATA
<TABLE>
<CAPTION>
1994 1993 1992
------ ------ ------
<S> <C> <C> <C>
Return on average assets 0.75% 1.02% 1.12%
Return on average stockholders' equity 10.81% 15.98% 20.22%
Average stockholders' equity to average assets 6.96% 6.37% 5.55%
</TABLE>
SELECTED STATISTICAL DISCLOSURE
Net Interest Income
The following tables set forth for the periods indicated information with
regard to average balances of assets and liabilities, as well as the dollar
amounts of interest income from interest-earning assets and interest expense on
interest-bearing liabilities, resultant yields or costs, net interest income,
net interest spread (the difference between the average yield on interest-
earning assets and the average cost of interest-bearing liabilities). Net
interest income is computed on a fully tax-equivalent basis to reflect the
effect of tax-exempt income earned.
50
<PAGE>
UNITED TEXAS FINANCIAL CORPORATION
Management's Discussion and Analysis of
Financial Condition and Results of Operations
Selected Financial Data (Dollars in Thousands)
<TABLE>
<CAPTION>
Years Ended December 31
--------------------------------------------------------
1994 1993 1992
<S> <C> <C> <C>
Condensed income statement:
Interest income $ 19,345 $ 18,024 $ 19,699
Interest expense 7,741 7,519 9,289
-------- -------- --------
Net interest income 11,604 10,505 10,410
Provision for loan losses 90 176 135
-------- -------- --------
Net interest income after
provision for loan losses 11,514 10,329 10,275
Noninterest income 2,557 2,768 2,353
Noninterest expense 10,469 9,795 9,358
-------- -------- --------
Income before income taxes 3,602 3,302 3,270
Income tax expense 1,314 1,108 1,066
-------- -------- --------
Income before extraordinary item and change in
accounting method 2,288 2,194 2,204
Extraordinary item 1,003
Change in accounting method 841
-------- -------- --------
Net income $ 2,288 $ 3,035 $ 3,207
======== ======== ========
Net income per share: $ 7.01 $9.29 $9.82
======== ======== ========
Number of shares outstanding: 326,467 326,467 326,467
======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
Years Ended December 31
-----------------------
1994 1993
<S> <C> <C>
Financial ratios:
Return on average assets 0.75% 1.02%
Return on average equity 10.81% 15.98%
Net interest margin 4.15% 3.83%
Average balance sheet data:
Loans, net $138,124 $121,693
Total assets 304,311 297,909
Deposits 280,633 275,499
Stockholders' equity 21,175 18,989
Period-end balance sheet data:
Loans, net 152,031 128,732
Total assets 298,501 308,226
Deposits 272,663 284,605
Stockholders' equity 21,460 20,360
</TABLE>
51
<PAGE>
UNITED TEXAS FINANCIAL CORPORATION
Average Balance Sheets
Three-year Summary of Operations
(Dollars in Thousands)
<TABLE>
<CAPTION>
December 31
----------------------------------------------------------------------------------------------
1994 1993 1992
------------------------------ ------------------------------ ------------------------------
Interest Interest Interest
Yields Yields Yields
Balance Interest and Rates Balance Interest and Rates Balance Interest and Rates
-------- -------- --------- -------- -------- --------- -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Federal funds sold $ 3,014 $ 132 4.38% $ 9,159 $ 275 3.00% $ 10,825 $ 365 3.37%
Investments:
Taxable investment securities 137,905 7,229 5.24% 143,240 7,455 5.20% 139,622 8,992 6.44%
Nontaxable investment securities 1,553 114 7.32% 137 24 17.66% 1,629 297 18.24%
-------- ------- ------ -------- ------- ------ -------- ------- ------
Total investment securities 139,458 7,343 5.27% 143,377 7,479 5.22% 141,251 9,289 6.58%
Loans:
Commercial, financial and
agricultural 52,734 4,517 8.57% 50,967 4,385 8.60% 44,753 4,237 9.47%
Consumer 28,818 2,224 7.72% 24,896 1,979 7.95% 20,630 1,942 9.41%
Real estate 58,056 5,167 8.90% 47,220 3,910 8.28% 43,809 3,953 9.02%
-------- ------- ------ -------- ------- ------ -------- ------- ------
Total loans 139,608 11,908 8.53% 123,083 10,274 8.35% 109,192 10,132 9.28%
Allowance for loan losses 1,484 1,390 1,333
-------- -------- --------
Net loans 138,124 121,693 107,859
-------- -------- --------
Total earning assets 280,596 19,383 6.91% 274,229 18,028 6.57% 259,935 19,786 7.61%
Cash and due from banks 15,079 14,262 13,962
Other assets 8,636 9,418 11,789
-------- -------- --------
Total assets $304,311 $297,909 $285,686
======== ======== ========
</TABLE>
(Continued)
52
<PAGE>
UNITED TEXAS FINANCIAL CORPORATION
Average Balance Sheets
Three-year Summary of Operations
(Dollars in Thousands)
(continued)
<TABLE>
<CAPTION>
December 31
----------------------------------------------------------------------------------------------
1994 1993 1992
------------------------------ ------------------------------ ------------------------------
Interest Interest Interest
Yields Yields Yields
Balance Interest and Rates Balance Interest and Rates Balance Interest and Rates
-------- -------- --------- -------- -------- --------- -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
LIABILITIES AND
STOCKHOLDERS' EQUITY
Deposits:
Noninterest bearing $ 44,246 $ 39,364 $ 34,890
Interest bearing
Transaction accounts 94,446 $ 2,309 2.44% 89,264 $ 2,162 2.42% 78,857 $ 2,450 3.11%
Time accounts under $100,000 93,227 3,644 3.91% 94,072 3,581 3.81% 98,869 4,561 4.61%
Time accounts over $100,000 35,672 1,370 3.84% 39,731 1,380 3.47% 40,544 1,668 4.11%
Savings 13,042 316 2.42% 13,068 320 2.45% 11,063 362 3.27%
-------- ------- ------- -------- ------- ------- -------- ------- -------
Total interest bearing deposits 236,387 7,639 3.23% 236,135 7,443 3.15% 229,333 9,041 3.94%
Federal funds purchased and other
borrowings 2,377 102 4.29% 2,232 76 3.40% 3,984 247 6.20%
-------- ------- ------- -------- ------- ------- -------- ------- -------
Total interest-bearing
liabilities 238,764 7,741 3.24% 238,367 7,519 3.15% 233,317 9,288 3.98%
Other liabilities 126 1,189 1,617
STOCKHOLDERS' EQUITY 21,175 18,989 15,862
-------- -------- --------
Total liabilities and
stockholders' equity $304,311 $297,909 $285,686
======== ------- ======== ------- ======== -------
Net interest income $11,642 $10,509 $10,498
======= ======= =======
Net interest spread 3.67% 3.42% 3.63%
======= ======= =======
Net interest spread without tax-equivalent
increments 3.65% 3.42% 3.59%
======= ======= =======
Net interest income to earning assets 4.15% 3.83% 4.04%
======= ======= =======
</TABLE>
Interest and rates are presented on a fully tax-equivalent basis under a tax
rate of 34% for the periods indicated. Nonaccrual loans are included in average
loan balance. Loan fees included in the above computations are $671,000,
$381,000 and $325,000 for years ended December 31, 1994, 1993 and 1992
respectively.
53
<PAGE>
UNITED TEXAS FINANCIAL CORPORATION
Changes in Rate and Volume on a Tax-Equivalent Basis
(Dollars in Thousands)
<TABLE>
<CAPTION>
December 31
-------------------------------------------------------------------
1994 Compared with 1993 1993 Compared with 1992
------------------------------ --------------------------------
Yield/ Yield/
Volume Rate Total Volume Rate Total
------------------------------ --------------------------------
<S> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN:
Interest income -
Loans $1,379 $ 255 $1,634 $1,289 $(1,147) $ 142
Taxable investment securities (278) 52 (226) 233 (1,770) (1,537)
Nontaxable investment securities 248 (158) 90 (272) (1) (273)
Federal Funds Sold (185) 42 (143) (56) (34) (90)
------- ------ ------- ------- -------- --------
Total 1,164 191 1,355 1,194 (2,952) (1,758)
------- ------ ------- ------- -------- --------
Interest expense -
Transaction accounts 126 21 147 323 (611) (288)
Time accounts under $100,000 (32) 95 63 (221) (759) (980)
Time Accounts over $100,000 (141) 131 (10) (33) (255) (288)
Savings (1) (3) (4) 66 (108) (42)
Federal funds purchased and
other borrowings
5 21 26 (109) (63) (172)
------- ------ ------- ------- -------- --------
Total (43) 265 222 26 (1,796) (1,770)
------- ------ ------- ------- -------- --------
INCREASE (DECREASE) IN NET INTEREST INCOME $1,207 $(74) $1,133 $1,168 $(1,156) $ 12
======= ====== ======= ======= ======== ========
</TABLE>
This table shows the components of the change in net interest income by volume
and rate on a tax-equivalent basis. The effect of changes in rates on volume
changes is allocated based on the percentage relationship of changes in volume
and changes in rate. This table does not take into account the level of
noninterest-bearing funding nor does it fully reflect changes in the mix of
assets and liabilities.
54
<PAGE>
UNITED TEXAS FINANCIAL CORPORATION
Selected Statistical Disclosures
Loans
(Dollars in Thousands)
This table sets forth the composition of UTFC's loan portfolio at the dates
indicated.
<TABLE>
<CAPTION>
December 31
-----------------------------------------------------------------------------------------------------
1994 1993 1992 1991 1990
------------------ ------------------ ------------------ ------------------ ------------------
Amount % Amount % Amount % Amount % Amount %
-------- ------ -------- ------ -------- ------ -------- ------ -------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Commercial, financial and
agricultural $ 72,730 47.84% $ 54,511 42.34% $ 48,410 43.77% $ 44,195 43.19% $ 42,392 42.93%
Consumer 31,489 20.71% 26,532 20.61% 21,763 19.68% 20,810 20.34% 26,214 26.55%
Real estate 52,214 34.34% 51,784 40.23% 44,056 39.83% 41,443 40.50% 35,457 35.91%
Other 109 0.07% 75 0.06% 27 0.02% 52 0.05% 33 0.03%
-------- ------- -------- ------- -------- ------- -------- ------- -------- -------
Total Gross Loans 156,542 102.96% 132,902 102.24% 114,256 103.30% 106,500 104.08% 104,096 105.42%
Less - Unearned discount (3,045) -2.00% (2,680) -2.08% (2,397) -2.17% (2,705) -2.64% (3,471) -3.52%
Allowance for
loan losses (1,466) -0.96% (1,490) -1.16% (1,251) -1.13% (1,470) -1.44% (1,883) -1.90%
-------- ------- -------- ------- -------- ------- -------- ------- -------- -------
Loans, net $152,031 100.00% $128,732 100.00% $110,608 100.00% $102,325 100.00% $ 98,742 100.00%
======== ======= ======== ======= ======== ======= ======== ======= ======== =======
</TABLE>
55
<PAGE>
UNITED TEXAS FINANCIAL CORPORATION
Selected Statistical Disclosures
Nonperforming Assets
(Dollars in Thousands)
The following table sets forth information concerning UTFC's nonperforming
assets as of the dates indicated:
<TABLE>
<CAPTION>
December 31
-----------------------------------------------
1994 1993 1992 1991 1990
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Nonperforming loans:
Nonaccrual loans $ 742 $ 894 $1,324 $1,390 $4,345
Restructured loans 0 0 0 0 0
------ ------ ------ ------ ------
Total nonperforming loans 742 894 1,324 1,390 4,345
Other real estate owned, net 1,155 137 824 1,739 2,776
------ ------ ------ ------ ------
Total nonperforming assets $1,897 $1,031 $2,148 $3,129 $7,121
====== ====== ====== ====== ======
Loans past due 90 days or more $ 268 $ 287 $ 158 $ 733 $ 322
====== ====== ====== ====== ======
Allowance for loan losses $1,466 $1,490 $1,251 $1,470 $1,883
====== ====== ====== ====== ======
Ratio of total nonperforming assets to total assets 0.64% 0.33% 0.74% 1.10% 2.76%
Ratio of total nonperforming loans to total gross
loans 0.47% 0.69% 1.16% 1.31% 4.17%
Ratio of allowance for loan losses to total
nonperforming loans 197.57% 166.67% 94.49% 105.76% 43.34%
</TABLE>
56
<PAGE>
UNITED TEXAS FINANCIAL CORPORATION
Selected Statistical Disclosures
Allowance for Loan Losses
(Dollars in Thousands)
The following table sets forth information regarding changes in UTFC's
allowance for loan losses (ALL) for the periods indicated.
<TABLE>
<CAPTION>
Year Ended December 31
--------------------------------------------------------
1994 1993 1992 1991 1990
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Balance of allowance for loan
losses at beginning of period $ 1,490 $ 1,251 $ 1,470 $ 1,883 $ 3,774
Charge-offs:
Commercial 73 46 176 238 4,673
Consumer 311 378 284 307 281
Real estate 36 118 181 367 333
Other 0 0 0 0 0
-------- -------- -------- -------- --------
Total charge-offs 420 542 641 912 5,287
-------- -------- -------- -------- --------
Recoveries:
Commercial 46 128 127 451 337
Consumer 243 388 101 128 62
Real Estate 17 89 59 89 33
Other 0 0 0 0 0
-------- -------- -------- -------- --------
Total recoveries 306 605 287 668 432
-------- -------- -------- -------- --------
Net (charge-offs) recoveries (114) 63 (354) (244) (4,855)
Provisions for loan losses charged to
operations 90 176 135 (169) 2,964
-------- -------- -------- -------- --------
Balance of allowance for loan losses at
end of period $ 1,466 $ 1,490 $ 1,251 $ 1,470 $ 1,883
======== ======== ======== ======== ========
Average gross loans outstanding during
period $139,608 $123,083 $109,192 $108,095 $108,092
======== ======== ======== ======== ========
Ratio of net (charge-offs) recoveries
to average loans (0.08)% 0.05% (0.32)% (0.23)% (4.49)%
======== ======== ======== ======== ========
</TABLE>
57
<PAGE>
UNITED TEXAS FINANCIAL CORPORATION
Selected Statistical Disclosure
Allowance for Loan Losses
(Dollars in Thousands)
The following table sets forth the allowance for loan losses by loan category,
based upon management's assessment of the risk associated with such categories,
as of the dates indicated.
<TABLE>
<CAPTION>
December 31
------------------------------------------------------------------------------------------------------
1994 1993 1992 1991 1990
----------------- ----------------- ----------------- ---------------- -------------------
Gross Gross Gross Gross Gross
Allowance Loans Allowance Loans Allowance Loans Allowance Loans Allowance Loans
--------- ----- --------- ----- --------- ----- --------- ----- --------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Commercial, financial and
agriculture $ 808 $ 72,730 $ 948 $ 54,511 $ 837 $ 48,410 $ 887 $ 44,195 $1,398 $ 42,392
Consumer 375 31,489 311 26,532 159 21,763 296 20,810 353 26,214
Real estate 217 52,214 169 51,784 176 44,056 197 41,443 148 35,457
Other 109 75 27 52 33
Unallocated 66 N/A 62 N/A 79 N/A 90 N/A (16) N/A
------ -------- ------ -------- ------ -------- ------ -------- ------ --------
Total $1,466 $156,542 $1,490 $132,902 $1,251 $114,256 $1,470 $106,500 $1,883 $104,096
====== ======== ====== ======== ====== ======== ====== ======== ====== ========
</TABLE>
58
<PAGE>
UNITED TEXAS FINANCIAL CORPORATION
Selected Statistical Disclosures
Loan Maturities and Sensitivity to Changes in Interest Rates
(Dollars in Thousands)
<TABLE>
<CAPTION>
December 31, 1994 December 31, 1993
------------------------------------------------ ------------------------------------------------
Maturing Maturing
Maturing in After one Maturing Maturing after One Maturing in
One Year Year Through After Five One Year Year Through After
or Less Five Years Years Total or Less Five Years Five Years Total
----------- ------------ ---------- -------- --------- ------------ ----------- --------
<C> <C> <C> <C> <C> <C> <C> <C>
<S>
Commercial, financial and
agricultural $23,263 $34,107 $ 15,360 $ 72,730 $19,283 $28,484 $ 6,744 $ 54,511
Consumer 5,053 26,093 343 31,489 5,212 21,107 213 26,532
Real estate 7,848 7,199 37,167 52,214 9,113 8,372 34,299 51,784
Other 109 109 75 75
------- ------- -------- -------- ------- ------- ------- --------
$36,273 $67,399 $ 52,870 $156,542 $33,683 $57,963 $41,256 $132,902
======= ======= ======== ======== ======= ======= ======= ========
</TABLE>
<TABLE>
<CAPTION>
Due in Due After Due In Due After
One Year One Year Total One Year One Year Total
-------- --------- -------- -------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
Loans at fixed interest rates $13,342 $ 85,540 $ 98,882 $10,507 $51,663 $ 62,170
Loans at variable interest rates 22,931 34,729 57,660 23,176 47,556 70,732
------- -------- -------- ------- ------- --------
$36,273 $120,269 $156,542 $33,683 $99,219 $132,902
======= ======== ======== ======= ======= ========
</TABLE>
59
<PAGE>
UNITED TEXAS FINANCIAL CORPORATION
Selected Statistical Disclosures
Investments
(Dollars in Thousands)
The following table sets forth the amortized cost of the securities in UTFC's
portfolio by type at the dates indicated.
<TABLE>
<CAPTION>
December 31
---------------------------------
1994(1) 1993 1992
<S> <C> <C> <C>
U.S. Treasury securities and obligations
of U.S. Government agencies $ 65,858 $ 86,358 $ 67,465
Obligations of state and political 2,624 1,868 2,818
subdivisions
Corporate securities 1,912 2,457 4,253
Mortgage-backed securities 49,984 54,866 63,762
Other 1,086 164 164
-------- -------- --------
Total Securities $121,464 $145,713 $138,462
======== ======== ========
</TABLE>
(1) December 31, 1994 includes $40,555,000 in securities ($39,469,000 in U.S.
Treasury securities and $1,086,000 in other securities) which are carried
as Available-For-Sale in accordance with the provisions of Statement of
Financial Accounting Standards No. 115.
60
<PAGE>
UNITED TEXAS FINANCIAL CORPORATION
Selected Statistical Disclosures
Investments
(Dollars in Thousands)
The following table set forth the amortized cost, maturity, and approximate
yields of the securities in UTFC's portfolio by type based on contractual
maturity at the dated indicated.
<TABLE>
<CAPTION>
December 31, 1994 December 31, 1993
--------------------- ----------------------
Type and Maturity Yield (1) Amount Yield (1) Amount
- --------------------------------------- ---------- -------- ---------- --------
<S> <C> <C> <C> <C>
HELD-TO-MATURITY SECURITIES
U.S. Treasury and Agency:
One year or less 4.299% $ 1,002 5.119% $ 39,557
Over one through five years 5.317% 25,386 4.880% 43,738
Over five through ten years 4.905% 3,064
Over ten years
------- ------- ------- --------
Total 5.278% 26,388 4.991% 86,359
------- ------- ------- --------
State and Political Subdivisions:
One year or less 5.248% 1,377 6.020% 527
Over one through five years 5.265% 598 5.596% 988
Over five through ten years 5.114% 649 4.841% 353
Over ten years
------- ------- ------- --------
Total 5.219% 2,624 5.573% 1,868
------- ------- ------- --------
Corporate Securities:
One year or less 5.861% 1,912 5.450% 500
Over one through five years 5.859% 1,957
Over five through ten years
Over ten years
------- ------- ------- --------
Total 5.861% 1,912 5.776% 2,457
------- ------- ------- --------
Other Securities (Stocks):
Total 5.546% 164
------- --------
Mortgage-Backed Securities:
Total 5.768% 49,985 5.345% 54,866
------- ------- ------- --------
Total Held-to-Maturity Securities: 5.593% 80,909 5.145% 145,714
------- ------- ------- --------
</TABLE>
(Continued)
61
<PAGE>
UNITED TEXAS FINANCIAL CORPORATION
Selected Statistical Disclosures
Investments
(Dollars in Thousands)
(continued)
<TABLE>
<CAPTION>
December 31, 1994 December 31, 1993
--------------------- ----------------------
Type and Maturity Yield (1) Amount Yield (1) Amount
- --------------------------------------- ---------- -------- ---------- --------
<S> <C> <C> <C> <C>
AVAILABLE-FOR-SALE SECURITIES
U.S. Treasury and Agency:
One year or less 4.749% $ 1,505
Over one through five years 4.920% 37,964
Over five through ten years
Over ten years
------- --------
Total 4.913% 39,469
------- --------
Other Securities(Stocks):
Total 4.817% 1,086
------- --------
Total Available-for-Sale Securities: 4.910% 40,555
------- --------
Total Investment Securities 5.365% $121,464 5.145% $145,714
======= ======== ======= ========
</TABLE>
(1) Yields were determined by dividing aggregate annual interest income by
aggregate book value. The yields for tax-exempt securities have been
computed on a fully tax equivalent basis using a tax rate of 34%.
UTFC does not hold securities by any single issuer (other than the U.S.
Government) totaling more than 10% of stockholders' equity.
62
<PAGE>
UNITED TEXAS FINANCIAL CORPORATION
Selected Statistical Disclosures
Time Certificates of Deposit and Other Time Deposits in Denominations
Of $100,000 or More at Indicated Dates
(Dollars in Thousands)
<TABLE>
<CAPTION>
Under Three Three to Six Six to Twelve Over Twelve
Months Months Months Months Total
----------- ------------ ------------- ----------- ------
<S> <C> <C> <C> <C> <C>
December 31, 1994 $13,350 $1,902 $3,802 $12,455 $31,509
December 31,1993 21,354 2,382 4,762 12,435 40,933
December 31, 1992 24,569 3,127 6,256 1,902 35,854
</TABLE>
63
<PAGE>
CERTAIN REGULATORY CONSIDERATIONS
General
As a bank holding company, Norwest is subject to supervision and
examination by the Federal Reserve Board. Norwest's banking subsidiaries are
subject to supervision and examination by applicable federal and state banking
agencies. The deposits of Norwest's banking subsidiaries are insured by the
Bank Insurance Fund of the Federal Deposit Insurance Corporation ("FDIC"), and
therefore such banking subsidiaries 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.
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 December 31, 1994, aggregate dividends of at least $361.4 million without
obtaining prior regulatory approval and without reducing the capital of the
banks below minimum regulatory levels. Norwest also has several state bank
subsidiaries that are subject to state regulations limiting dividends;
however, the amount of dividends payable by Norwest's state bank subsidiaries,
with or without state regulatory approval, would represent an immaterial
contribution to Norwest's revenues.
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 FDIC-insured banks and bank holding companies should generally
pay dividends only out of current operating earnings.
Holding Company Structure
Norwest is a legal entity separate and distinct from its banking and
nonbanking subsidiaries. Accordingly, the right of Norwest, and thus the
rights 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.
64
<PAGE>
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 nonbank subsidiaries, whether in the form of loans, extensions of credit,
investments, or asset purchases. Such transfers by any subsidiary bank to
Norwest or any nonbank subsidiary are limited in amount to 10% of the bank's
capital and surplus and, with respect to Norwest and all such nonbank
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. (S)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 most
of its subsidiary banks, is subject to such provisions.
Capital Requirements
Under the Federal Reserve Board's risk-based capital guidelines for bank
holding companies, 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 stock, minority interests, and 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 the allowance for credit losses. In addition, the Federal Reserve
Board's minimum "leverage ratio" (the ratio of Tier 1 capital to quarterly
average total assets) guidelines for bank holding companies provide for a
minimum leverage ratio of 3% for bank holding companies that meet certain
specified criteria, including that they have the highest regulatory rating.
All other bank holding companies are required to maintain a leverage ratio of
3% plus an additional cushion of 1% to 2%. The guidelines also provide that
banking
65
<PAGE>
organizations experiencing internal growth or making acquisitions are
expected to maintain 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 December 31,
1994, Norwest's Tier 1 and total capital (the sum of Tier 1 and Tier 2
capital) to risk-adjusted assets ratios were 9.89% and 12.23%, respectively,
and Norwest's leverage ratio was 6.94%. Neither Norwest nor any subsidiary
bank has been advised by the appropriate federal regulatory agency of any
specific leverage ratio applicable to it.
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 revised
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 regulators to take "prompt
corrective action" in respect of FDIC-insured depository institutions that do
not meet minimum capital requirements. FDICIA establishes five capital tiers:
"well capitalized," "adequately capitalized," "undercapitalized,"
"significantly undercapitalized," and "critically undercapitalized." Under
applicable regulations, an FDIC-insured depository institution is defined to
be well capitalized if it maintains a leverage ratio of at least 5%, a risk-
adjusted Tier 1 capital ratio of at least 6%, and a risk-adjusted total
capital ratio of at least 10%, and is not subject to a directive, order, or
written agreement to meet and maintain specific capital levels. An insured
depository institution is defined to be adequately capitalized if its meets
all of its minimum capital requirements as described above. An insured
depository institution will be considered undercapitalized if it fails to meet
any minimum required measure, significantly undercapitalized if it has a risk-
adjusted total capital ratio of less than 6%, risk-adjusted Tier 1 capital
ratio of less than 3%, or a leverage ratio of less than 3%, and critically
undercapitalized if it fails to maintain a level of tangible equity equal to
at least 2% of total assets. An insured depository institution may be deemed
to be in a capitalization category that is lower than is indicated by its
actual capital position if it receives an unsatisfactory examination rating.
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
66
<PAGE>
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, as amended by the Reigle Community Development and Regulatory
Improvement Act of 1994 enacted on August 22, 1994, directs that each federal
banking agency prescribe standards, by regulation or guideline, for depository
institutions relating to internal controls, information systems, internal
audit systems, loan documentation, credit underwriting, interest rate
exposure, asset growth, compensation, asset quality, earnings, stock
valuation, and such other operational and managerial 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 internal and
external 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. Regulations or
guidelines relating to the other management and operational standards have not
been issued. The impact of such regulations or guidelines on Norwest cannot
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 rates) unless (i)
it is well capitalized or (ii) it is adequately capitalized and receives a
waiver from the FDIC. 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 December 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") 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
67
<PAGE>
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 member institution will be assigned an annual FDIC assessment rate ranging
from 23 cents per $100 of domestic deposits (for well capitalized Subgroup A
institutions) to 31 cents (for undercapitalized Subgroup C institutions).
Adequately capitalized institutions will be assigned assessment rates ranging
from 26 cents to 30 cents. The FDIC has proposed regulations that would assign
an annual FDIC assessment rate for BIF member institutions ranging from 4
cents per $100 of domestic deposits (for well capitalized Subgroup A
institutions) to 31 cents (for undercapitalized Subgroup C institutions).
Norwest incurred $79.2 million of FDIC insurance expense in 1994.
68
<PAGE>
EXPERTS
The consolidated financial statements of Norwest and subsidiaries as of
December 31, 1994 and 1993, and for each of the years in the three-year period
ended December 31, 1994, incorporated by reference herein, have been
incorporated herein in reliance upon the report of KPMG Peat Marwick LLP,
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 UTFC and subsidiaries as of
December 31, 1994 and 1993, and for each of the years in the three-year period
ended December 31, 1994, included in this Proxy Statement-Prospectus, have
been included herein in reliance on the report of Coopers & Lybrand L.L.P.,
independent accountants, given on the authority of that firm as experts in
accounting and auditing.
LEGAL OPINION
A legal opinion to the effect that the shares of Norwest Common Stock
offered hereby, if and 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
Corporation. At December 31, 1994, Mr. Stroup was the beneficial owner of
108,607 shares and held options to acquire 207,410 additional shares of
Norwest Common Stock.
MANAGEMENT OF NORWEST 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, 1994, which is incorporated in this Proxy Statement-
Prospectus by reference. See "INCORPORATION OF CERTAIN DOCUMENTS BY
REFERENCE." Shareholders of UTFC desiring copies of such documents may
contact Norwest at its address or phone number indicated under "AVAILABLE
INFORMATION" above.
69
<PAGE>
UNITED TEXAS FINANCIAL CORPORATION AND SUBSIDIARIES
WICHITA FALLS, TEXAS
REPORT ON AUDITS OF CONSOLIDATED FINANCIAL STATEMENTS
for the years ended December 31, 1994, 1993 and 1992
F-1
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
---------------------------------
The Board of Directors and Stockholders
United Texas Financial Corporation
We have audited the accompanying consolidated balance sheets of United Texas
Financial Corporation and Subsidiaries as of December 31, 1994 and 1993, and the
related consolidated statements of operations, stockholders' equity and cash
flows for the three years in the period ended December 31, 1994. 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 consolidated financial position of United Texas
Financial Corporation and Subsidiaries as of December 31, 1994 and 1993, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 31, 1994, in conformity with generally
accepted accounting principles.
The Company changed its method of accounting for certain investments in debt and
equity securities on January 1, 1994 and its method of accounting for income
taxes on January 1, 1993.
/s/ Cooper & Lybrand L.L.P.
Fort Worth, Texas
February 21, 1995
F-2
<PAGE>
UNITED TEXAS FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
December 31, 1994 and 1993
----------
<TABLE>
<CAPTION>
ASSETS 1994 1993
---- ----
<S> <C> <C>
Cash and due from banks $ 12,434,310 $ 15,034,733
Federal funds sold 2,000,000 8,025,000
------------ ------------
Total cash and cash equivalents 14,434,310 23,059,733
Interest bearing deposits in another bank 4,562 107,702
Investment securities:
Held-to-maturity 80,909,218 145,713,638
Available-for-sale 38,754,038
------------ ------------
Total investment securities 119,663,256 145,713,638
Loans:
Loans, net of unearned discount 153,496,782 130,222,179
Less allowance for loan losses (1,465,675) (1,489,897)
------------ ------------
Net loans 152,031,107 128,732,282
Premises and equipment, net 4,999,417 4,530,914
Accrued interest receivable 2,251,465 2,234,079
Other real estate owned, net 1,155,127 137,557
Excess of cost over net assets acquired, net 367,515 387,933
Cash value of officers' life insurance policies 2,206,065 2,614,703
Federal income tax receivable 177,641
Deferred income taxes 441,965
Other assets 768,587 707,646
------------ ------------
$298,501,017 $308,226,187
============ ============
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
<S> <C> <C>
Deposits $272,662,931 $284,604,673
Short-term borrowings 3,497,385 2,337,482
Other liabilities 880,469 923,630
------------ ------------
Total liabilities 277,040,785 287,865,785
------------ ------------
Commitments and contingencies (Notes 10 and 11)
Stockholders' equity:
Common stock, $10 par value, 1,000,000 shares
authorized, 326,575 shares issued and
outstanding 3,265,750 3,265,750
Additional paid-in capital 1,490,250 1,490,250
Retained earnings 17,894,707 15,606,292
Net unrealized depreciation on securities
available for sale, net of tax of $612,301 (1,188,585)
------------ ------------
21,462,122 20,362,292
Less 108 shares held in treasury, at cost (1,890) (1,890)
------------ ------------
Total stockholders' equity 21,460,232 20,360,402
------------ ------------
$298,501,017 $308,226,187
============ ============
</TABLE>
The accompanying notes are an integral
part of the consolidated financial statements.
F-3
<PAGE>
UNITED TEXAS FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
for the years ended December 31, 1994, 1993 and 1992
_______
<TABLE>
<CAPTION>
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Interest income:
Interest and fees on loans $11,908,079 $10,274,435 $10,132,431
Interest on investment securities:
Taxable securities 7,229,421 7,454,771 8,992,470
Tax-exempt securities 74,506 15,974 196,438
Interest on deposits in other banks 756 3,109 12,620
Interest on federal funds sold 132,482 275,424 365,160
----------- ----------- -----------
Total interest income 19,345,244 18,023,713 19,699,119
----------- ----------- -----------
Interest expense:
Interest on interest-bearing demand
deposits 2,308,951 2,162,546 2,449,963
Interest on savings deposits 315,713 320,005 362,050
Interest on time deposits 5,014,555 4,960,517 6,229,062
Interest on note payable 36,548 185,371
Interest on short-term borrowings 101,576 39,320 62,215
----------- ----------- -----------
Total interest expense 7,740,795 7,518,936 9,288,661
----------- ----------- -----------
Net interest income 11,604,449 10,504,777 10,410,458
Provision for loan losses 89,817 175,610 134,859
----------- ----------- -----------
Net interest income after
provision for loan losses 11,514,632 10,329,167 10,275,599
----------- ----------- -----------
Other income:
Service charges and fees 1,744,575 2,104,950 1,590,763
Other income 812,580 663,451 762,215
----------- ----------- -----------
Total other income 2,557,155 2,768,401 2,352,978
----------- ----------- -----------
Other expenses:
Salaries and employee benefits 4,816,336 4,946,072 4,696,459
Net occupancy 906,046 706,338 650,214
Equipment and data processing 819,972 826,227 763,613
Professional fees 435,984 304,505 303,540
Other real estate owned 29,955 112,995 435,040
Other operating 3,461,070 2,898,371 2,509,162
----------- ----------- -----------
Total other expenses 10,469,363 9,794,508 9,358,028
----------- ----------- -----------
Income before federal income
taxes, extraordinary item
and cumulative effect
of a change in accounting
principle 3,602,424 3,303,060 3,270,549
----------- ----------- -----------
</TABLE>
Continued
F-4
<PAGE>
UNITED TEXAS FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS, Continued
for the years ended December 31, 1994, 1993 and 1992
________
<TABLE>
<CAPTION>
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Federal income taxes:
Current $1,144,221 $ 352,988 $ 68,816
Deferred 169,788 754,895 (5,680)
Charge in lieu of income tax provision 1,002,852
---------- ---------- ----------
Total taxes 1,314,009 1,107,883 1,065,988
---------- ---------- ----------
Income before extraordinary item and
cumulative effect of a change in
accounting principle 2,288,415 2,195,177 2,204,561
Extraordinary item - tax benefit arising
from utilization of net operating loss
carryforwards 1,002,852
Cumulative effect of a change in method
of accounting for income taxes 840,788
---------- --------- ---------
Net income $2,288,415 $3,035,965 $3,207,413
========== ========== ==========
</TABLE>
The accompanying notes are an integral
part of the consolidated financial statements.
F-5
<PAGE>
UNITED TEXAS FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
for the years ended December 31, 1994, 1993 and 1992
--------
<TABLE>
<CAPTION>
Net Unrealized
Appreciation
(Depreciation)
Additional on Available-
Common Paid-in Retained For-Sale Treasury
Stock Capital Earnings Securities Stock Total
---------- ---------- ----------- --------------- --------- -------------
<S> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1991 $3,265,750 $1,490,250 $ 9,362,914 $(1,890) $ 14,117,024
Net income 3,207,413 3,207,413
---------- ---------- ----------- ------- ------------
Balance, December 31, 1992 3,265,750 1,490,250 12,570,327 (1,890) 17,324,437
Net income 3,035,965 3,035,965
---------- ---------- ----------- ------- ------------
Balance, December 31, 1993 3,265,750 1,490,250 15,606,292 (1,890) 20,360,402
Net income 2,288,415 2,288,415
Adjustment to beginning
balance for change in
accounting principle, net of
income taxes of $198,956 $ 386,208 386,208
Change in unrealized
appreciation (depreciation),
net of income taxes of
$811,257 (1,574,793) (1,574,793)
---------- ---------- ----------- ------------- ------- ------------
Balance, December 31, 1994 $3,265,750 $1,490,250 $17,894,707 $(1,188,585) $(1,890) $ 21,460,232
========== ========== =========== ============== ======== ============
</TABLE>
The accompanying notes are an integral
part of the consolidated financial statements.
F-6
<PAGE>
UNITED TEXAS FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
for the years ended December 31, 1994, 1993 and 1992
________
<TABLE>
<CAPTION>
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Cash flows from operating
activities:
Net income $ 2,288,415 $ 3,035,965 $ 3,207,413
Adjustments to reconcile net
income to net
cash provided by operating
activities:
Cumulative effect of a change
in method of
accounting for income taxes (840,788)
Gain on sales of investment
securities (147,934) (57,759) (190,677)
Net amortization of premium on
investment securities 1,353,258 1,980,724 1,028,286
Provision for loan losses 89,817 175,610 134,859
Depreciation 680,778 788,091 755,439
Loss (gain) on sale of premises
and equipment 79,296 (34,817) (9,845)
Provision for losses on other
real estate owned 31,559 41,099 386,553
Gain on sale of other real
estate owned (94,375) (113,552) (158,357)
Amortization of excess of cost
over net assets acquired 20,418 20,417 18,182
Deferred income tax provision
(benefit) 169,788 754,895 (5,680)
Changes in operating assets and
liabilities:
(Increase) decrease in
accrued interest receivable (17,386) 286,586 17,154
Decrease (increase) in cash
value of officers'
life insurance policies 408,638 (717,365) (768,882)
Increase in other assets (60,941) (76,536) (107,765)
(Decrease) increase in other
liabilities (42,613) 90,044 (311,531)
Increase in federal income
tax receivable (177,641)
------------ ------------ ------------
Net cash provided by
operating activities 4,581,077 5,332,614 3,995,149
------------ ------------ ------------
Cash flows from investing
activities:
Net decrease (increase) in
interest-bearing
deposits in other banks 103,140 (3,109) 890,893
Purchases of available-for-sale
securities (14,408,335)
Proceeds from sales or calls of
available-for-sale securities 18,332,976
Purchases of held-to-maturity
securities (22,735,367) (73,037,118) (95,028,552)
Proceeds from sales or calls of
held-to-maturity securities 5,439,688 3,326,691 7,884,728
Proceeds from repayments and
maturities of
held-to-maturity securities 36,415,210 60,536,243 99,116,918
Net increase in loans (23,598,396) (18,046,188) (8,788,627)
Purchases of premises and equipment (2,194,787) (844,003) (493,326)
Proceeds from sale of premises and
equipment 3,338 50,101 21,085
Proceeds from activity in other
real estate owned 217,872 505,262 1,058,404
------------ ------------ ------------
Net cash (used in) provided
by investing activities (2,424,661) (27,512,121) 4,661,523
------------ ------------ ------------
</TABLE>
Continued
F-7
<PAGE>
UNITED TEXAS FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS, Continued
for the years ended December 31, 1994, 1993 and 1992
________
<TABLE>
<CAPTION>
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Cash flows from financing
activities:
Net increase in demand and savings
deposits $ 1,053,915 $ 9,698,495 $ 17,650,687
Net increase in short-term
borrowings 1,159,903 449,098 782,156
Net (decrease) increase in time
deposits (12,995,657) 6,263,613 (15,324,310)
Principal payments on note payable (1,167,126) (1,232,874)
------------ ----------- ------------
Net cash (used in) provided by
financing activities (10,781,839) 15,244,080 1,875,659
------------ ----------- ------------
Net (decrease) increase in cash and
cash equivalents (8,625,423) (6,935,427) 10,532,331
Cash and cash equivalents at
beginning of year 23,059,733 29,995,160 19,462,829
------------ ----------- ------------
Cash and cash equivalents at end of
year $ 14,434,310 $23,059,733 $ 29,995,160
============ =========== ============
Supplemental Disclosures of Cash Flow
Information:
Cash paid for interest $ 7,686,060 $ 7,565,561 $ 9,712,854
Cash paid for taxes $ 1,298,738 $ 373,000 $ 74,000
Supplemental Disclosure of Noncash
Investing Activity:
Additions to other real estate owned
from foreclosure of loans receivable $ 209,754 $ 66,561 $ 371,424
Sales of other real estate owned
financed with loans $ (320,330)
Premises and equipment transferred to
other real estate owned $ 962,872
</TABLE>
The accompanying notes are an integral
part of the consolidated financial statements.
F-8
<PAGE>
UNITED TEXAS FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
________
1. Summary of Significant Accounting Policies:
------------------------------------------
Business
--------
United Texas Financial Corporation (the Company), a multibank holding
company, provides a full range of banking services to individual and
corporate customers through its subsidiaries and branch banks. The Company
is subject to competition from other financial institutions. The Company is
subject to the regulations of certain federal and state agencies and
undergoes periodic examinations by those regulatory authorities.
Basis of Financial Statement Presentation
-----------------------------------------
The consolidated financial statements include the accounts of the Company
and its wholly-owned subsidiaries, Parker Square Bank, N.A. (PSB), Wichita
Falls and First State Bank (FSB), Archer City. All significant intercompany
balances have been eliminated in consolidation.
The consolidated financial statements have been prepared in conformity with
generally accepted accounting principles. In preparing the consolidated
financial statements, management is required to make estimates and
assumptions that affect the reported amounts of assets and liabilities as of
the date of the balance sheet and revenues and expenses for the period.
Actual results could differ significantly from those estimates.
Material estimates that are particularly susceptible to significant change
in the near-term relate to the determination of the allowance for loan
losses and the valuation of other real estate owned. In connection with the
determination of the allowances for loan losses and other real estate owned,
management normally obtains independent appraisals for these properties.
A significant portion of the Company's loans are collateralized by
residential real estate mortgages in local markets. In addition, other real
estate owned is located in this same market. The Company's loan portfolio
and the recovery of the carrying amount of other real estate owned are
susceptible to changes in local market conditions.
Management believes that the allowances for loan losses and other real
estate owned are adequate. While management uses available information to
recognize losses on loans and other real estate owned, future additions to
the allowances may be necessary based on changes in local economic
conditions. In addition, various regulatory agencies, as an integral part
of their examination process, periodically review the Company's allowances
for loan losses and losses on other real estate owned. Such agencies may
require the Company to recognize additions to the allowances based on their
judgments about information available to them at the time of their
examination.
F-9
<PAGE>
UNITED TEXAS FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS. Continued
________
1. Summary of Significant Accounting Policies, continued:
------------------------------------------
Investment Securities
---------------------
Investment securities transactions are recorded on a trade date basis. The
decision to purchase investment securities is based on a current assessment
of expected economic conditions, including the interest rate environment.
The determination to sell investment securities is infrequent and based on
management's assessment of changes in economic or financial market
conditions, interest rate risk, and balance sheet and liquidity positions.
When the assessment of the aforementioned factors changes significantly from
that originally expected, management attempts to reinvest the proceeds from
such sales in instruments which will enhance the long-term yield on the
investment securities or improve the risk profile of the Company. In the
case that investment securities are sold, gains and losses are computed
under the specific identification method.
Effective January 1, 1994, the Company adopted Statement of Financial
Accounting Standards No. 115, Accounting for Certain Investments in Debt and
Equity Securities, (SFAS No. 115), which requires that investments in debt
securities and marketable equity securities be designated as trading, held-
to-maturity or available-for-sale. At December 31, 1994, the Company had no
investments classified as trading securities. The Bank's investments in
securities are classified in two categories and accounted for as follows:
. Held-to-Maturity Securities. Bonds, notes and debentures for which the
Bank has the positive intent and ability to hold-to-maturity are
reported at cost, adjusted for amortization of premiums and accretion
of discounts which are recognized in interest income using the interest
method over the period to maturity.
. Available-for-Sale Securities. Available-for-sale securities consist of
bonds, notes, debentures, and certain equity securities not classified
as trading securities nor as held-to-maturity securities.
At December 31, 1993, investment securities were stated at amortized cost.
Declines in the fair value of individual held-to-maturity and available-for-
sale securities below their cost that are other than temporary would result
in write-downs of the individual securities to their fair value.
Unrealized holding gains and losses, net of tax, on securities available-
for-sale are reported as a net amount in a separate component of
stockholders' equity.
Mortgage-backed securities, which include privately issued collateralized
mortgage obligations, represent participating interests in pools of long-
term first mortgage loans originated and serviced by the issuers of the
securities. Privately issued collateralized mortgage obligations are debt
securities that are collateralized by mortgage loans or other mortgage-
backed securities.
F-10
<PAGE>
UNITED TEXAS FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS. Continued
________
1. Summary of Significant Accounting Policies, continued:
------------------------------------------
Loans
-----
Nonaccrual loans are loans on which the accrual of interest ceases when the
collection of principal or interest payments is determined by management to
be doubtful. It is the general policy of the Company to discontinue the
accrual of interest when principal or interest payments are delinquent 90
days or more, and to reverse from income any unpaid amounts previously
accrued on these loans.
Unearned income on installment loans is recognized as income over the terms
of the loans in decreasing amounts related to declining balances of the
loans which approximates the interest method.
Loan origination and commitment fees, as well as certain direct loan
origination and commitment costs, are deferred and amortized as a yield
adjustment over the estimated lives of the related loans using the interest
method. The estimated lives of the loans are based upon management's
assessment of historical and expected prepayment trends.
The allowance for loan losses is established through a provision for loan
losses charged to expense. Loans are charged off against the allowance when
management believes that the collectibility of the principal is unlikely.
Recoveries of amounts previously charged off are credited to the allowance.
The charge to operations is based on management's evaluation of the loan
portfolio, including such factors as the volume and character of loans
outstanding, past loss experience, and general economic conditions.
Premises and Equipment
----------------------
Premises and equipment are stated at cost less accumulated depreciation.
Depreciation is computed principally on the straight-line method over the
estimated useful lives of the various classes of assets:
Buildings and leasehold improvements 3 to 35 years
Furniture, fixtures, and equipment 1 to 10 years
Expenditures for repairs and maintenance are expensed as incurred, and
renewals and betterments that extend the lives of assets are capitalized.
Costs of assets sold or abandoned and the related accumulated depreciation
are eliminated from the accounts and the net amount, less proceeds from
disposal, is charged or credited to income.
F-11
<PAGE>
UNITED TEXAS FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS. Continued
________
1. Summary of Significant Accounting Policies, continued:
------------------------------------------
Other Real Estate Owned
-----------------------
Other real estate owned includes properties the Company has foreclosed on
and taken title to and properties that have in-substance been foreclosed.
In-substance repossessed properties are those properties where the borrower
has little or no remaining equity in the property considering its fair
value, repayment can only be expected to come from the operation or sale of
the property, and the borrower has effectively abandoned control of the
property or it is doubtful that the borrower will be able to rebuild equity
in the property.
Other real estate owned at the time of foreclosure is recorded at the lower
of the Company's cost of acquisition or the asset's fair market value (less
the estimated cost to dispose of the property) which becomes the property's
new basis. Any write-downs at date of acquisition are charged to the
allowance for loan losses. Net expenses incurred in maintaining other real
estate owned and subsequent write-downs to reflect declines in the fair
market value of the property are included in other real estate owned
expense.
Excess of Cost Over Net Assets Acquired
---------------------------------------
The excess of the acquisition cost over the fair value of net assets
acquired is being amortized using the straight-line method.
Federal Income Taxes
--------------------
Provisions for income taxes are based on taxes payable or refundable for the
current year (after exclusion of nontaxable income such as interest on state
and municipal securities) and deferred taxes on temporary differences
between the amount of taxable income and pretax financial income and between
the tax bases of assets and liabilities and their reported amounts in the
financial statements. Deferred tax assets and liabilities are included in
the financial statements at currently enacted income tax rates applicable to
the period in which the deferred tax assets and liabilities are expected to
be realized or settled as prescribed in FASB Statement No. 109, Accounting
for Income Taxes. As changes in tax laws or rates are enacted, deferred tax
assets and liabilities are adjusted through the provision for income taxes.
Statements of Cash Flows
------------------------
The Company considers all cash and due from banks and federal funds sold to
be cash equivalents for purposes of the statements of cash flows.
Generally, federal funds are purchased and sold for one day periods.
F-12
<PAGE>
UNITED TEXAS FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS. Continued
________
1. Summary of Significant Accounting Policies, continued:
------------------------------------------
Reclassifications
-----------------
Certain amounts in 1993 and 1992 have been reclassified to conform with the
1994 presentation. These reclassifications have no effect on net income or
retained earnings as previously stated.
2. Cash and Due from Banks:
-----------------------
Cash and due from banks includes reserve balances that the Company is
required to maintain with a Federal Reserve Bank. These required reserves
were approximately $1,983,000 and $2,033,000 at December 31, 1994 and 1993,
respectively, and are based principally on deposits outstanding.
The subsidiary banks maintain deposits with other financial institutions in
amounts which exceed FDIC insurance coverage. At December 31, 1994 and
1993, approximately $6,473,000 and $6,893,000, respectively, of such
balances were uninsured (excluding amounts on deposit with the Federal
Reserve Bank).
3. Investment Securities:
---------------------
On January 1, 1994, the Company adopted the provisions of SFAS No. 115. In
accordance with the Statement, prior period financial statements have not
been restated to reflect the change in accounting principle. There was no
effect on net income as of January 1, 1994 of adopting SFAS No. 115. The
opening balance of stockholders' equity increased by $386,208 (net of
$198,956 in deferred income taxes) to reflect the net unrealized gains on
securities classified as available-for-sale that were previously classified
as held-for-investment, and carried at amortized cost.
F-13
<PAGE>
UNITED TEXAS FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS. Continued
________
3. Investment Securities, continued:
---------------------
The amortized cost and estimated fair values of investment securities at
December 31, 1994 are as follows:
<TABLE>
<CAPTION>
Gross Gross Estimated
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
----------- ---------- ------------ -----------
<S> <C> <C> <C> <C>
Held-to-Maturity
Securities
U.S. Treasury securities
and obligations of U.S.
Government agencies $26,388,308 $ 22 $(1,251,377) $25,136,953
Obligations of state and
political subdivisions 2,624,375 535 (55,765) 2,569,145
Corporate securities 1,912,244 259 (22,253) 1,890,250
Mortgage-backed
securities 49,984,291 6,976 (3,200,695) 46,790,572
----------- ------ ----------- -----------
$80,909,218 $7,792 $(4,530,090) $76,386,920
=========== ====== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Available-for-Sale
Securities
U.S. Treasury securities
and obligations of U.S.
Government agencies $39,469,323 $(1,800,885) $37,668,438
Other 1,085,600 1,085,600
----------- -----------
$40,554,923 $(1,800,885) $38,754,038
=========== =========== ===========
</TABLE>
F-14
<PAGE>
UNITED TEXAS FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS. Continued
________
3. Investment Securities, continued:
---------------------
The amortized cost and estimated market values of investment securities at
December 31, 1993 are as follows:
<TABLE>
<CAPTION>
Gross Gross Estimated
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
------------ ---------- ----------- ------------
<S> <C> <C> <C> <C>
U.S. Treasury
securities
and obligations of U.S.
Government agencies $ 86,358,404 $ 789,985 $ (5,954) $ 87,142,435
Obligations of state and
political subdivisions 1,868,436 3,117 (82,599) 1,788,954
Corporate securities 2,456,912 45,907 2,502,819
Mortgage-backed
securities 54,865,886 400,079 (171,693) 55,094,272
Other 164,000 164,000
------------ ---------- ---------- ------------
$145,713,638 $1,239,088 $ (260,246) $146,692,480
============ ========== ========== ============
</TABLE>
The amortized cost and estimated fair value of held-to-maturity and
available-for-sale securities at December 31, 1994 by contractual maturity,
are shown below. Mortgage-backed securities are excluded from the
contractual maturities because they generally have contractual maturities
greater than ten years, but have significantly shorter expected maturities
as a result of prepayments. Management anticipates the actual maturities of
mortgage-backed securities to be one to five years.
<TABLE>
<CAPTION>
Held-to-Maturity Available-for-Sale
Securities Securities
------------------------- ------------------------
Estimated Estimated
Amortized Fair Amortized Fair
Cost Value Cost Value
------------ ----------- ----------- -----------
<S> <C> <C> <C> <C>
Due in one year or
less $ 4,291,623 $ 4,249,487 $ 2,590,785 $ 2,572,163
Due after one year
through five years 25,984,180 24,736,039 37,964,138 36,181,875
Due after five years
through ten years 649,124 610,822
----------- ----------- ----------- -----------
30,924,927 29,596,348 40,554,923 38,754,038
Mortgage-backed
securities 49,984,291 46,790,572
----------- ----------- ----------- -----------
$80,909,218 $76,386,920 $40,554,923 $38,754,038
=========== =========== =========== ===========
</TABLE>
F-15
<PAGE>
UNITED TEXAS FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS. Continued
________
3. Investment Securities, continued:
---------------------
Interest income on investment securities consists of the following:
<TABLE>
<CAPTION>
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
U.S. Treasury securities and obligations
of U.S. Government agencies $4,054,468 $4,232,445 $3,019,841
Obligations of state and political
subdivisions 142,440 130,548 304,130
Corporate securities 126,252 224,430 291,100
Mortgage-backed securities 2,942,637 2,874,322 5,564,837
Other 38,130 9,000 9,000
---------- ---------- ----------
$7,303,927 $7,470,745 $9,188,908
========== ========== ==========
</TABLE>
Gross gains of $13,614 and $134,320 were realized on 1994 sales of held-to-
maturity and available-for-sale securities, respectively. Gross gains of
$57,759 were realized on 1993 sales and gross gains of $196,676 and gross
losses of $5,999 were realized on 1992 sales. The 1994 sales of securities
from the held-to-maturity classification occurred near enough to their
maturity date that changes in market interest rates would not have a
significant effect on the security's fair value; therefore, the sales from
the held-to-maturity classification are permissible under SFAS No. 115.
Investment securities with amortized cost of approximately $8,700,000 and
$9,002,000 at December 31, 1994 and 1993, respectively, were pledged to
secure deposits as required or permitted by law.
4. Loans and Allowance for Loan Losses:
-----------------------------------
Major classifications of loans as of December 31, 1994 and 1993 are
summarized as follows:
<TABLE>
<CAPTION>
1994 1993
---- ----
<S> <C> <C>
Commercial, financial and agricultural $ 72,729,488 $ 54,510,542
Real estate construction 7,516,000 4,862,000
Real estate mortgage 44,698,259 46,922,350
Installment 31,488,700 26,531,937
Overdrafts 109,319 74,927
------------ ------------
156,541,766 132,901,756
Less unearned discount (3,044,984) (2,679,577)
------------ ------------
$153,496,782 $130,222,179
============ ============
</TABLE>
F-16
<PAGE>
UNITED TEXAS FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS. Continued
________
4. Loans and Allowance for Loan Losses, continued:
-----------------------------------
Nonaccrual loans amounted to approximately $742,000, $894,000 and $1,324,000
at December 31, 1994, 1993 and 1992, respectively. If interest on these
loans had been accrued normally, additional income earned would approximate
$80,000, $126,000 and $176,000 for the years ended December 31, 1994, 1993
and 1992, respectively.
Certain officers and directors of the Company and its subsidiaries and
certain entities and individuals related to such persons incurred
indebtedness, in the form of loans, as customers. Following is a summary of
activity during 1994 and 1993 for such loans:
<TABLE>
<CAPTION>
1994 1993
---- ----
<S> <C> <C>
Balance at beginning of year $ 3,935,130 $ 2,660,521
Additions 10,049,372 6,680,548
Repayments (9,891,902) (5,405,939)
----------- -----------
Balance at end of year $ 4,092,600 $ 3,935,130
=========== ===========
</TABLE>
Activity in the allowance for loan losses for the years ended December 31,
1994, 1993 and 1992 follows:
<TABLE>
<CAPTION>
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Balance at beginning of year $1,489,897 $1,250,753 $1,469,544
Additions (deductions):
Provisions 89,817 175,610 134,859
Recoveries of loans previously
charged off 305,963 605,323 287,457
Loans charged off (420,002) (541,789) (641,107)
---------- ---------- ----------
Balance at end of year $1,465,675 $1,489,897 $1,250,753
========== ========== ==========
</TABLE>
F-17
<PAGE>
UNITED TEXAS FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS. Continued
________
5. Premises and Equipment:
----------------------
Premises and equipment at December 31, 1994 and 1993 consist of the
following:
<TABLE>
<CAPTION>
1994 1993
---- ----
<S> <C> <C>
Land $ 750,644 $ 361,058
Buildings and leasehold improvements 4,318,512 5,730,853
Furniture, fixtures, and equipment 4,646,685 4,122,639
----------- -----------
9,715,841 10,214,550
Less accumulated depreciation (4,716,424) (5,683,636)
----------- -----------
$ 4,999,417 $ 4,530,914
=========== ===========
</TABLE>
6. Other Real Estate Owned:
-----------------------
A summary of other real estate owned at December 31, 1994 and 1993 is as
follows:
<TABLE>
<CAPTION>
1994 1993
---- ----
<S> <C> <C>
Acquired in settlement of loans $ 192,255 $137,557
Transferred from premises and equipment 962,872
---------- --------
$1,155,127 $137,557
========== =========
</TABLE>
7. Deposits:
--------
Deposits at December 31, 1994 and 1993 consist of the following:
<TABLE>
<CAPTION>
1994 1993
---- ----
<S> <C> <C>
Noninterest bearing demand $ 46,715,153 $ 43,796,058
Interest bearing demand 89,647,631 90,915,810
Savings 12,898,464 13,495,465
Time, $100,000 and over 30,783,772 40,536,109
Other time 92,617,911 95,861,231
------------ ------------
$272,662,931 $284,604,673
============ ============
</TABLE>
F-18
<PAGE>
UNITED TEXAS FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS. Continued
________
7. Deposits, continued:
--------
Certain officers and directors of the Company and its subsidiaries and
certain entities and individuals related to such persons maintain deposits
in the Company's subsidiary banks. Included in the accompanying
consolidated balance sheets at December 31, 1994 and 1993, are approximately
$14,032,000 and $14,760,000, respectively, of such related party deposits.
8. Short-term Borrowings:
---------------------
Short-term borrowings consist of federal funds purchased, treasury, tax and
loan note options and repurchase agreements. Maturities of these
obligations range from one to seven days and interest accrues at a rate
equal to or approximating the federal funds rate (5.5% at December 31,
1994).
9. Federal Income Taxes:
--------------------
The comprehensive provisions for federal income taxes consist of the
following:
<TABLE>
<CAPTION>
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Current tax provision $1,144,221 $ 352,988 $ 68,816
Deferred tax provision (benefit) 169,788 754,895 (5,680)
Charge in lieu of income tax
provision 1,002,852
----------- ----------- ----------
Provision for tax expense charged
to results of operations 1,314,009 1,107,883 1,065,988
Stockholders' equity - SFAS No. 115
adjustment (612,301)
---------- ---------- ----------
Comprehensive provision for
income tax $ 701,708 $1,107,883 $1,065,988
========== ========== ==========
</TABLE>
The consolidated federal income tax expense for the years presented differs
from the "expected" consolidated federal income tax expense for those years,
computed by applying the statutory U.S. Federal corporate tax rate of 34% to
income before federal income taxes,
F-19
<PAGE>
UNITED TEXAS FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS. Continued
________
9. Federal Income Taxes, continued:
--------------------
extraordinary item and cumulative effect of a change in accounting
principle. The reasons for those differences and the related tax effects
are as follows:
<TABLE>
<CAPTION>
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Computed "expected" tax
expense at 34% $1,224,824 $1,123,040 $1,111,987
Tax-exempt interest (32,002) (17,665) (74,993)
Amortization of goodwill 6,942 6,942 6,182
Disallowed interest 19,213 6,363 9,115
Credit carryforwards 78,219
Other 16,813 (10,797) 13,697
---------- ---------- ----------
$1,314,009 $1,107,883 $1,065,988
========== ========== ==========
</TABLE>
The components of the deferred federal income tax provision (benefit) for
the years ended December 31, 1994 and 1993 are as follows:
<TABLE>
<CAPTION>
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Provision for loan losses $ (30,538) $ 16,227 $ 158,645
Pension expense 46,663 (4,661) (33,058)
Depreciation (26,918) (41,466) (40,906)
OREO activity 148,892 332 (131,428)
Interest payable to affiliated parties 8,001 12,566
Net operating loss carryforward 740,473
Provision for loss on cash surrender
value of officers' life insurance
policies (196,134)
Credit carryforwards 236,360
Other (8,537) 35,989 28,501
--------- -------- ---------
Deferred tax provision (benefit) $ 169,788 $754,895 $ (5,680)
========= ======== =========
</TABLE>
F-20
<PAGE>
UNITED TEXAS FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS. Continued
________
9. Federal Income Taxes, continued:
--------------------
The components of the Company's deferred tax assets and liabilities as of
December 31, 1994 and 1993 are as follows:
<TABLE>
<CAPTION>
1994 1993
---- ----
<S> <C> <C>
Deferred tax assets:
Premises and equipment $ 452,204 $ 452,204
Other real estate
owned 43,946 192,838
Investment securities 190,012 194,315
Capital loss
carryforward 887,430 887,430
Alternative minimum tax 206,551
carryforward
Unrealized loss on
available-for-sale securities 612,301
Other 196,134 67,854
---------- ----------
Total deferred tax
assets 2,382,027 2,001,192
Valuation allowance (887,430) (887,430)
---------- ----------
Net deferred tax assets 1,494,597 1,113,762
---------- ----------
Deferred tax
liabilities:
Bad debt 248,813 272,551
Depreciation 309,544 336,462
Deferred gain 436,006 451,647
Other 58,269 53,650
---------- ----------
Total deferred tax
liabilities 1,052,632 1,114,310
---------- ----------
Net deferred tax asset
(liability) $ 441,965 $ (548)
========== ==========
</TABLE>
The Company utilized net operating loss carryforwards in 1992 to offset
federal income tax expense of $1,002,852. This amount is reported as an
extraordinary item and offsets a corresponding charge in lieu of an income
tax provision in the accompanying consolidated statements of operations.
A long-term capital loss carryforward of approximately $2,577,000 which
expires in 1995 is available on a consolidated basis to be offset against
long-term capital gains.
F-21
<PAGE>
UNITED TEXAS FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS. Continued
________
10. Employee Benefit Plans:
----------------------
Pension Plan
------------
The Company and subsidiaries participate in a noncontributory defined
benefit pension plan (the Plan) covering substantially all employees having
one year of service. The Company and subsidiaries intend to make
contributions as required to maintain the Plan's compliance with the funding
provisions of the Employee Retirement Income Security Act of 1974.
The following is a summary of the Plan's funded status and amounts
recognized in the Company's consolidated balance sheets at December 31, 1994
and 1993, respectively:
<TABLE>
<CAPTION>
1994 1993
---- ----
<S> <C> <C>
Actuarial present
value of benefit
obligations:
Accumulated benefit obligation,
including vested benefits of
$1,570,825 for 1994 and
$1,858,050 for 1993 $ 1,633,749 $ 1,906,025
=========== ===========
Plan assets at estimated fair
value (primarily U.S.
Government agency securities
and interest bearing
deposits) $ 1,478,601 $ 1,777,574
Projected benefit obligation for
service rendered to date (1,787,439) (2,116,462)
----------- -----------
Projected benefit obligation in
excess of plan assets (308,838) (338,888)
Unrecognized net loss from past
experience different from that
assumed and effects of changes in
assumptions 813,165 879,121
Unrecognized prior service cost not
yet recognized in net
periodic pension cost (356,495) (395,180)
Unrecognized net asset at January 1,
1987 amortized over
10 years (51,568) (76,124)
Adjustment required to recognize
minimum liability (251,412) (197,380)
----------- -----------
Accrued pension cost included
in other liabilities $ (155,148) $ (128,451)
=========== ===========
</TABLE>
F-22
<PAGE>
UNITED TEXAS FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS. Continued
________
10. Employee Benefit Plans, continued:
----------------------
Pension Plan, continued
------------
The net pension cost for 1994, 1993 and 1992 includes the following
components:
<TABLE>
<CAPTION>
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Service cost $ 129,474 $110,595 $ 106,711
Interest cost on projected
benefit obligation 160,084 156,499 156,640
Actual loss (return) on plan assets 64,329 (91,624) (109,981)
Net amortization and deferral (243,964) (89,762) (69,603)
--------- -------- ---------
$ 109,923 $ 85,708 $ 83,767
========= ======== =========
</TABLE>
The weighted-average discount rate used in determining the actuarial present
value of the projected benefit obligation was 9.0% and 7.5% for 1994 and
1993, respectively and the rate of increase in future compensation levels
and the weighted-average expected long-term rate of return on plan assets
were 5% and 9%, respectively, for both 1994 and 1993.
Employee Stock Ownership Plan
-----------------------------
In January 1990, the Company established an employee stock ownership plan
(the ESOP), which is a noncontributory plan established to acquire shares of
the Company's common stock for the benefit of substantially all employees of
the Company. There had been no contributions made to the ESOP, it held no
assets and effective September 27, 1994, was terminated by the Company in
accordance with the ESOP Plan Document.
Deferred Compensation
---------------------
During 1990, the Company established a Supplemental Retirement Income Plan
(the SRIP). The SRIP provided certain highly compensated employees a
retirement annuity benefit or provided the employees' beneficiary with a
lump sum settlement in the event of pre-retirement death. Effective
September 27, 1994, the Company paid all vested accrued benefits to the
participants and terminated the SRIP. This termination was completed under
the terms of the SRIP Plan Document and with the consent of the
participants.
F-23
<PAGE>
UNITED TEXAS FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS. Continued
________
11. Commitments and Contingencies:
-----------------------------
On September 30, 1990, the Company established an employee medical benefit
plan (the Plan) to self-insure claims up to $50,000 per year for each
individual covered; claims above $50,000 are covered by a stop-loss
insurance policy. The Company and its covered employees contribute to the
fund to pay the claims and stop-loss insurance premiums. At December 31,
1994, management believes that the Company has made provisions sufficient to
cover estimated claims, including claims incurred but not yet reported.
The Company entered into a stock subscription agreement with an executive
officer (the Subscriber) dated December 15, 1992. Pursuant to the terms of
the agreement, the Company agrees to issue and the Subscriber agrees to
purchase 14,000 shares of the Company's common stock, $10 par value, at a
price of $35.00 per share. Per the terms of an Agreement and Plan of
Reorganization dated October 28, 1994 between the Company and Norwest
Corporation (see Note 14), payment for the stock shall be made prior to the
anticipated transaction closing date of May 1995.
The Company is a party to financial instruments with off-balance-sheet risk
in the normal course of business to meet the financing needs of its
customers. These financial instruments include commitments to extend credit
and standby letters of credit. Those instruments involve, to varying
degrees, elements of credit and interest rate risk in excess of the amount
recognized in the consolidated balance sheets.
The Company's exposure to credit loss in the event of nonperformance by the
other party to such financial instruments is represented by the contractual
amount of those instruments. The Company uses the same credit policies in
making commitments and conditional obligations as it does for on-balance-
sheet instruments. Management does not anticipate any material loss as a
result of the transactions. Commitments to extend credit totalled
approximately $21,534,000 and $17,821,000 and standby letters of credit
totalled approximately $1,707,000 and $1,901,000 at December 31, 1994 and
1993, respectively.
Commitments to extend credit are agreements to lend to a customer as long as
there is no violation of any condition established in the contract.
Commitments generally have fixed expiration dates or other termination
clauses and may require payment of a fee. Since many of the commitments are
expected to expire without being drawn upon, the total commitment amounts do
not necessarily represent future cash requirements. The Company evaluates
each customer's creditworthiness on a case-by-case basis. The amount and
type of collateral obtained, if deemed necessary by the Company upon
extension of credit, varies and is based on management's credit evaluation
of the counterparty.
Standby letters of credit are conditional commitments issued by the Company
to guarantee the performance of a customer to a third party. Standby letters
of credit generally have expiration dates or other termination clauses and
may require payment of a fee. The credit risk involved in issuing letters of
credit is essentially the same as that involved in extending loan facilities
to customers. The Company's policy for obtaining collateral and the nature
of such collateral is essentially the same as that involved in making
commitments to extend credit.
F-24
<PAGE>
UNITED TEXAS FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS. Continued
________
11. Commitments and Contingencies, continued:
-----------------------------
The Company is subject to certain claims and litigation. In the opinion of
management the outcome of such matters will not have a material effect on
the consolidated financial position or results of operations of the Company.
12. Dividend Restrictions and Regulatory Requirements:
-------------------------------------------------
The Company's subsidiary banks are limited as to payment of dividends to the
Company as the result of certain regulations and restrictions imposed by the
Office of the Comptroller of the Currency, the Federal Deposit Insurance
Corporation, and/or the Texas Department of Banking. These restrictions
limit such dividends in relation to the ratio of capital to assets in the
subsidiary banks and the net income of the subsidiary banks. The Company is
also required to maintain minimum amounts of capital to total "risk
weighted" assets, as defined by the banking regulators. At December 31,
1994, the Company is required to have minimum Tier 1 and Total capital
ratios of 4.00% and 8.00%, respectively. The Company's actual ratios at
that date were 14.74% and 15.70%, respectively.
13. Fair Value of Financial Instruments:
-----------------------------------
The following methods and assumptions were used in estimating fair value
disclosures for financial instruments in accordance with Statement of
Financial Accounting Standards No. 107 (SFAS No. 107):
Cash and cash equivalents. The carrying amounts reported in the balance
sheet for cash and short-term instruments approximate those assets' fair
values.
Investment securities (including mortgage-backed securities). Fair values
for investment securities are based on quoted market prices, where
available. If quoted market prices are not available, fair values are based
on quoted market prices of comparable instruments.
Loans. For variable-rate loans that reprice frequently and with no
significant change in credit risk, fair values are based on carrying
values. The fair values for fixed rate loans are estimated using a
discounted cash flow calculation that applies interest rates currently
being offered for loans. The carrying amount of accrued interest
approximates its fair value.
Off-balance sheet instruments. Fair values for off-balance sheet
instruments (letters of credit and lending commitments) are based on fees
currently charged to enter into similar agreements, taking into account the
remaining terms of the agreements and the counterparties' credit standing
(current replacement cost).
Deposit liabilities. The fair values disclosed for demand deposits (e.g.,
interest and noninterest bearing checking, passbook savings, and certain
types of money-market accounts)
F-25
<PAGE>
UNITED TEXAS FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS. Continued
________
13. Fair Value of Financial Instruments, continued:
-----------------------------------
are, by definition, equal to the amount payable on demand at the reporting
date (i.e., their carrying amounts). The carrying amounts for variable-
rate, fixed-term money-market accounts and certificates of deposit
approximate their fair values at the reporting date. Fair values for fixed-
rate certificates of deposit are estimated using a discounted cash flow
calculation that applies interest rates currently being offered on
certificates to a schedule of aggregated expected monthly maturities on
time deposits.
Short-term borrowings. The carrying amounts of borrowings under repurchase
agreements and other short-term borrowings approximate their fair values.
Limitations. The fair value estimates are made at a discrete point in time
based on relevant market information and information about the financial
instruments. Because no market exists for a significant portion of the
subsidiary Banks' financial instruments, fair value estimates are based on
judgments regarding future expected loss experience, current economic
conditions, risk characteristics of various financial instruments, and such
other factors. These estimates are subjective in nature and involve
uncertainties and matters of significant judgment and, therefore, cannot be
determined with precision. Changes in assumptions could significantly
affect the estimates. In addition, the fair value estimates are based on
existing on and off-balance sheet financial instruments without attempting
to estimate the value of anticipated future business and the value of
assets and liabilities that are not considered financial instruments. Also,
the tax ramifications related to the realization of the unrealized gains
and losses can have a significant effect on fair value estimates of
held-to-maturity investment securities and have not been considered.
The carrying amounts and fair values of loans (net of allowance for
possible loan losses and unearned discount) were approximately $152,031,000
and $146,275,000, respectively, at December 31, 1994, and $128,732,000 and
$129,178,000, respectively, at December 31, 1993.
The carrying amounts and fair values of deposits consisted of the following
at December 31, 1994 and 1993. For deposits with no defined maturities,
fair value is the amount payable on demand:
<TABLE>
<CAPTION>
1994 1993
-------------------------- --------------------------
Carrying Carrying
Amount Fair Value Amount Fair Value
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Noninterest bearing demand $ 46,715,153 $ 46,715,153 $ 43,796,058 $ 43,796,058
Interest bearing demand 89,647,631 89,647,631 90,915,810 90,915,810
Savings 12,898,464 12,898,464 13,495,465 13,495,465
Time, $100,000 and over 30,783,772 31,140,000 40,536,109 41,842,000
Other time 92,617,911 89,059,000 95,861,231 94,821,000
------------ ------------ ------------ ------------
$272,662,931 $269,460,248 $284,604,673 $284,870,333
============ ============ ============ ============
</TABLE>
F-26
<PAGE>
UNITED TEXAS FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS. Continued
________
13. Fair Value of Financial Instruments, continued:
-----------------------------------
As discussed above, SFAS No. 107 defines the fair value of demand deposits
as the amount payable on demand, and prohibits adjusting fair value for any
value derived from retaining those deposits for an expected future period
of time. That component, commonly referred to as a deposit base intangible,
is neither considered in the above fair value amounts nor recorded as an
intangible asset in the balance sheet.
The fair value of commitments to extend credit is estimated using the fees
currently charged to enter into similar agreements, the creditworthiness of
the counterparties and any difference between current levels of interest
rates and the committed rates. Therefore, because the subsidiary banks'
current portfolio of commitments are primarily at variable interest rates
and to counterparties of good credit, the carrying value is estimated to
approximate the fair value at December 31, 1994 and 1993.
14. Agreement and Plan of Reorganization:
------------------------------------
On October 28, 1994, an agreement was entered into whereby the Company
would be consolidated with a wholly-owned subsidiary of Norwest
Corporation.
Subject to regulatory approval, the transaction is anticipated to close
during May 1995. Simultaneously with the closing, the shareholders will
receive consideration as stipulated in the agreement.
F-27
<PAGE>
APPENDIX A
AGREEMENT AND PLAN OF REORGANIZATION,
FORM OF AGREEMENT AND PLAN OF MERGER
(STOCK-FOR-STOCK VERSION),
AND
FORM OF AGREEMENT AND PLAN OF MERGER
(CASH-FOR-STOCK VERSION)
<PAGE>
AGREEMENT
AND
PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") entered into as of
the 28th day of October 1994, by and between UNITED TEXAS FINANCIAL CORPORATION
("UTFC"), a Texas corporation, 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 UTFC (the "Merger")
pursuant to an agreement and plan of merger (the "Merger Agreement") in
substantially the form of either Exhibit A1 or Exhibit A2 attached hereto
(whichever is approved by a vote of the UTFC shareholders), which provides,
among other things, for the conversion and exchange of the shares of Common
Stock of UTFC of the par value of $10.00 per share ("UTFC Common Stock")
outstanding immediately prior to the time the Merger becomes effective in
accordance with the provisions of the Merger Agreement into shares of voting
Common Stock of Norwest of the par value of $1-2/3 per share ("Norwest Common
Stock"), or into cash.
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) Merger. Subject to the terms and conditions contained herein, a wholly-
------
owned subsidiary of Norwest ("Merger Co.") will be merged by statutory merger
with and into UTFC pursuant to the Merger Agreement, with UTFC as the surviving
corporation, in which merger each share of UTFC Common Stock outstanding
immediately prior to the Effective Time of the Merger (as defined below)(other
than shares as to which statutory dissenters' appraisal rights have been
exercised) will be converted into and exchanged for either cash or shares of
Norwest Common Stock as described in subparagraphs (i) through (iii) below.
(i) If the Norwest Measurement Price (as defined below) is less than
or equal to $23.00, each share of UTFC Common Stock will be converted into
and exchanged for either (y) an amount of cash equal to $41,100,000 divided
by the number of shares of UTFC Common Stock outstanding as of the
Effective Time of the Merger or (z) the number of shares of Norwest Common
Stock equal to 1,786,957 divided by the number of shares of UTFC Common
Stock outstanding as of the Effective Time of the Merger. All of the
shares of UTFC Common Stock will be converted into and exchanged for the
same form of consideration, whether cash or shares of Norwest Common Stock.
The form of consideration to be received by all shareholders will be
determined by the vote of the shareholders of UTFC at the meeting of
shareholders required by paragraph 4(c) of the Agreement.
A-1
<PAGE>
(ii) If the Norwest Measurement Price is greater than $23.00 and less
than $28.00, each share of UTFC Common Stock will be converted into and
exchanged for the number of shares of Norwest Common Stock determined by
dividing $41,100,000 by the Norwest Measurement Price and then dividing the
resulting quotient by the number of shares of UTFC Common Stock outstanding
as of the Effective Time of the Merger.
(iii) If the Norwest Measurement Price is equal to or greater than
$28,00, each share of UTFC Common Stock will be converted into and
exchanged for the number of shares of Norwest Common Stock equal to
1,467,857 divided by the number of shares of UTFC Common Stock outstanding
as of the Effective Time of the Merger.
The "Norwest Measurement Price" shall mean the average of the closing prices of
a share of Norwest Common Stock as reported on the consolidated tape of the New
York Stock Exchange during the period of 20 trading days commencing on the
trading day immediately following the day that the Registration Statement (as
defined in paragraph 2 (q)) is declared effective by the Securities and Exchange
Commission (the "SEC").
(b) Norwest Common Stock Adjustments. If UTFC Common Stock is to be
--------------------------------
converted and exchanged for Norwest Common Stock pursuant to paragraph 1(a)
above and 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 (a "Common Stock Adjustment"), then (i) the number of shares of Norwest
Common Stock into which a share of UTFC Common Stock shall be converted pursuant
to subparagraph (a) above will be appropriately and proportionately adjusted so
that the number of such shares of Norwest Common Stock into which a share of
UTFC Common Stock shall be so converted will equal the number of shares of
Norwest Common Stock which holders of shares of UTFC Common Stock would have
received pursuant to such Common Stock Adjustment had the record date therefor
been immediately following the Effective Time of the Merger and (ii) if a Common
Stock Adjustment occurs between the date hereof and any date that the closing
price of a share of Norwest Common Stock is used for purposes of this Agreement
or the Merger Agreement, the closing price of a share of Norwest Common Stock
for such purposes shall be the sum of the closing prices on the date of each
such determination of the number of shares of Norwest Common Stock and other
securities, if any, (in each case as reported on the consolidated tape of the
New York Stock Exchange on such date) issued with respect to one share of
Norwest Common Stock as a result of the Common Stock Adjustment.
(c) Fractional Shares. If UTFC Common Stock is to be converted into and
-----------------
exchanged for Norwest Common Stock pursuant to paragraph 1(a) above, 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 ending on the trading day immediately preceding the
meeting of shareholders required by paragraph 4(c) of this Agreement.
(d) Mechanics of Closing Merger. Subject to the terms and conditions set
---------------------------
forth herein, the Merger Agreement shall be executed and it and Articles of
Merger shall be filed with the Secretary
A-2
<PAGE>
of State of the State of Texas on a mutually agreed upon date, but no later than
ten (10) business days following the satisfaction or waiver of all conditions
precedent set forth in Sections 6 and 7 of this Agreement (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. Wichita Falls, Texas time on
the Effective Date of the Merger. At the Effective Time of the Merger, the
separate existence of Merger Co. shall cease and Merger Co. will be merged with
and into UTFC 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 UTFC. UTFC represents and warrants
to Norwest as follows:
(a) Organization and Authority. UTFC is a corporation duly organized,
--------------------------
validly existing and in good standing under the laws of the State of Texas, 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 UTFC and the UTFC Subsidiaries (as defined below) 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. UTFC 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"). UTFC has furnished Norwest true and
correct copies of its articles of incorporation and by-laws, as amended.
(b) UTFC's Subsidiaries. Schedule 2(b) sets forth a complete and correct
-------------------
list of all of UTFC's subsidiaries as of the date hereof (individually a "UTFC
Subsidiary" and collectively the "UTFC Subsidiaries"), all shares of the
outstanding capital stock of each of which are owned directly or indirectly by
UTFC. No equity security of any UTFC Subsidiary is or may be required to be
issued by reason of any option, warrant, scrip, preemptive right, 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 UTFC Subsidiary 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. (S) 55 (1982), all
of such shares so owned by UTFC 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 UTFC Subsidiary is a national banking
association or state bank 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.
Except as set forth on Schedule 2(b), UTFC 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, association or similar
organization, and is not, directly or indirectly, a partner in any partnership
or party to any joint venture.
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<PAGE>
(c) Capitalization. The authorized capital stock of UTFC consists of
--------------
1,000,000 shares of common stock, $10.00 par value, of which as of the close of
business on June 30, 1994, 326,467 shares were outstanding and 108 shares were
held in the treasury. The maximum number of shares of UTFC Common Stock
(assuming for this purpose that phantom shares and other share-equivalents
constitute UTFC Common Stock) that would be outstanding as of the Effective Date
of the Merger if all options, warrants, conversion rights and other rights with
respect thereto were exercised is 340,467. All of the outstanding shares of
capital stock of UTFC have been duly and validly authorized and issued and are
fully paid and nonassessable. Except for UTFC's obligation to issue UTFC Common
Stock pursuant to the Stock Subscription Agreement, dated December 15, 1992,
between Robert K. Pace and UTFC (the "Stock Subscription Agreement"), there are
no outstanding subscriptions, contracts, conversion privileges, options,
warrants, calls, preemptive rights or other rights obligating UTFC or any UTFC
Subsidiary to issue, sell or otherwise dispose of, or to purchase, redeem or
otherwise acquire, any shares of capital stock of UTFC or any UTFC Subsidiary.
Since June 30, 1994, no shares of UTFC capital stock have been purchased,
redeemed or otherwise acquired, directly or indirectly, by UTFC or any UTFC
Subsidiary and no dividends or other distributions have been declared, set
aside, made or paid to the shareholders of UTFC.
(d) Authorization. UTFC has the corporate power and authority to enter
-------------
into this Agreement and the Merger Agreement 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 by UTFC and the consummation of the transactions contemplated
hereby and thereby have been duly authorized by the Board of Directors of UTFC.
Subject to such approvals of shareholders and of government agencies and other
governing boards having regulatory authority over UTFC as may be required by
statute or regulation, this Agreement and the Merger Agreement are valid and
binding obligations of UTFC enforceable against UTFC in accordance with their
respective terms.
Neither the execution, delivery and performance by UTFC of this Agreement
or the Merger Agreement, nor the consummation of the transactions contemplated
hereby and thereby, nor compliance by UTFC 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 UTFC or any UTFC
Subsidiary 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 UTFC or any UTFC Subsidiary is a party or by which it may be bound, or to
which UTFC or any UTFC Subsidiary or any of the properties or assets of UTFC or
any UTFC Subsidiary may be subject, or (ii) subject to compliance with the
statutes and regulations referred to in the next paragraph, violate any statute,
rule or regulation or, to the best knowledge of UTFC, violate any judgment,
ruling, order, writ, injunction or decree, applicable to UTFC or any UTFC
Subsidiary 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 or the Hart-Scott-Rodino Antitrust Improvements Act
of 1976 ("HSR Act"),
A-4
<PAGE>
and filings required to effect the Merger under Texas law, 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 UTFC of the
transactions contemplated by this Agreement and the Merger Agreement.
(e) UTFC Financial Statements. The consolidated balance sheets of UTFC
-------------------------
and UTFC's Subsidiaries as of December 31, 1993 and 1992 and related
consolidated statements of operations, stockholders' equity and cash flows for
the three years ended December 31, 1993, together with the notes thereto,
certified by Coopers & Lybrand (in the case of the years 1993 and 1992) and by
KPMG Peat Marwick (in the case of the year 1991), and the unaudited consolidated
balance sheets of UTFC and UTFC's Subsidiaries as of June 30, 1994 and the
related unaudited consolidated statements of operations and stockholders' equity
for the six months then ended (the "UTFC 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 UTFC and UTFC's Subsidiaries at the dates and
the consolidated results of operations and cash flows of UTFC and UTFC's
Subsidiaries for the periods stated therein.
(f) Reports. Since December 31, 1988, UTFC and each UTFC 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 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 "UTFC Reports". As of their respective
dates, the UTFC 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 UTFC Reports have been made available
to Norwest by UTFC.
(g) Properties and Leases. Except as may be reflected in the UTFC
---------------------
Financial Statements and except for any lien for current taxes not yet
delinquent, UTFC and each UTFC Subsidiary 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 UTFC's consolidated balance
sheet as of June 30, 1994, 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 UTFC or any UTFC Subsidiary pursuant to which UTFC or such UTFC
Subsidiary, 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 UTFC or such UTFC Subsidiary or any event which, with notice or lapse
of time or both, would constitute such a material default. Substantially all of
UTFC's and each UTFC Subsidiary's buildings and equipment in regular use have
been well maintained and are in good and serviceable condition, reasonable wear
and tear excepted.
A-5
<PAGE>
(h) Taxes. Each of UTFC and the UTFC Subsidiaries 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 UTFC and the UTFC Subsidiaries
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. Neither UTFC nor any UTFC Subsidiary 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 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 UTFC
or any UTFC Subsidiary which has not been settled, resolved and fully satisfied.
Each of UTFC and the UTFC Subsidiaries 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 June 30, 1994, 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 UTFC and the UTFC Subsidiaries with respect to
all periods through the date thereof.
(i) Absence of Certain Changes. Except as set forth on Schedule 2(i),
--------------------------
since June 30, 1994, there has been no change in the business, financial
condition or results of operations of UTFC or any UTFC 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 UTFC and the UTFC
Subsidiaries taken as a whole.
(j) Commitments and Contracts. Except as set forth on Schedule 2(j),
-------------------------
neither UTFC nor any UTFC Subsidiary 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 UTFC or such UTFC Subsidiary);
(ii) any plan, contract or understanding providing for any bonus,
pension, option, deferred compensation, retirement payment, profit sharing
or similar 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 UTFC or any UTFC Subsidiary
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, UTFC or
any UTFC Subsidiary 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
A-6
<PAGE>
(vi) any lease with annual rental payments aggregating $10,000 or
more.
(k) Litigation and Other Proceedings. UTFC has furnished Norwest copies
--------------------------------
of (i) all attorney responses to the request of the independent auditors for
UTFC with respect to loss contingencies as of December 31, 1993 in connection
with the UTFC Financial Statements, and (ii) a written list of legal and
regulatory proceedings filed against UTFC or any UTFC Subsidiary since said
date. There are no claims, actions, suits, investigations or proceedings pending
or, to the best knowledge of UTFC, threatened against UTFC or any UTFC
Subsidiary, nor is UTFC or any UTFC Subsidiary 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 UTFC and the UTFC Subsidiaries
taken as a whole.
(l) Insurance. UTFC and each UTFC Subsidiary is presently insured, and
---------
during each of the past five calendar years (or during such lesser period of
time as UTFC has owned such UTFC Subsidiary) 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. UTFC and each UTFC 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 and assets and to carry on its business as presently
conducted and that are material to the business of UTFC or such UTFC Subsidiary;
all such permits, licenses, certificates of authority, orders and approvals are
in full force and effect and, to the best knowledge of UTFC, no suspension or
cancellation of any of them is threatened; and all such filings, applications
and registrations are current. The conduct by UTFC and each UTFC 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 UTFC nor any UTFC 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 restriction on the business or properties of UTFC or any UTFC
Subsidiary which reasonably could be expected to have a material adverse effect
on the business or properties of UTFC and the UTFC Subsidiaries taken as a
whole.
(n) Labor. No work stoppage involving UTFC or any UTFC Subsidiary is
-----
pending or, to the best knowledge of UTFC, threatened. Neither UTFC nor any UTFC
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 UTFC or such UTFC Subsidiary. Employees of UTFC
and the UTFC Subsidiaries 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 UTFC, no officer or director of UTFC or
any UTFC Subsidiary, or any "associate"
A-7
<PAGE>
(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
UTFC or any UTFC Subsidiary.
Schedule 2(o) sets forth a correct and complete list of any loan or
extension of credit from any bank subsidiary of UTFC to any present executive
officer, director, principal shareholder of UTFC or any UTFC Subsidiary or any
related interest of any such person that was required under Regulation O of the
Federal Reserve Board to be approved by or reported to the Board of Directors of
such bank subsidiary of UTFC or that is otherwise subject to the restrictions
contained in Regulation O. Neither UTFC nor any UTFC Subsidiary is in violation
of Regulation O.
(p) UTFC 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 UTFC or any UTFC Subsidiary 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 UTFC or any
UTFC Subsidiary are those set forth on Schedule 2(p)(i) (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)(ii), UTFC or the UTFC 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 Plans to which the qualification requirements
of Section 401(a) of the Internal Revenue Code of 1986, as amended (the
"Code"), apply. UTFC 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 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 the UTFC Employee Retirement Plan has not been amended to
comply with the Tax Reform Act of 1986 (the "TRA") although such Plan shall
have been amended prior to December 31, 1994.
(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 as of the end of the most
recent Plan year exceed the value of the assets of the Plan allocable to
such vested or accrued benefits.
(iv) To the best knowledge of UTFC, 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, that could subject, to the best
knowledge of UTFC, 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 that would result in material liability to UTFC and the UTFC
Subsidiaries taken as a whole.
A-8
<PAGE>
(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) 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 UTFC or any UTFC Subsidiary 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-Prospectus, etc. None of the information regarding
-------------------------------
UTFC and the UTFC Subsidiaries supplied or to be supplied by UTFC for inclusion
in (i) a Registration Statement on Form S-4, and the prospectus included
therein, to be filed with the SEC by Norwest for the purpose of registering the
shares of Norwest Common Stock that may be exchanged for shares of UTFC Common
Stock pursuant to the provisions of the Merger Agreement (the "Registration
Statement"), (ii) the joint proxy statement of UTFC and prospectus of Norwest
included in the Registration Statement to be mailed to UTFC's shareholders in
connection with the meeting to be called to consider the Merger (the "Proxy
Statement-Prospectus") 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 will, at the respective times such Registration
Statement, Proxy Statement-Prospectus and other documents are filed with the SEC
or any regulatory authority and, in the case of the Registration Statement
(together with the Proxy Statement-Prospectus included therein), when it becomes
effective and, with respect to the Proxy Statement-Prospectus, when mailed, and,
in the case of the Proxy Statement-Prospectus or any amendment thereof or
supplement thereto, at the time of the meeting of shareholders referred to in
paragraph 4(c), and, in the case of the Registration Statement, Proxy Statement-
Prospectus and other documents, at the Effective Time of the Merger 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 contained therein, in
light of the circumstances under which they were made, not misleading. All
documents which UTFC and the UTFC 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.
(r) Registration Obligations. Neither UTFC nor any UTFC Subsidiary 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 UTFC nor any UTFC 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
A-9
<PAGE>
or finder has acted directly or indirectly for UTFC or any UTFC Subsidiary, in
connection with this Agreement and the Merger Agreement or the transactions
contemplated hereby and thereby.
(t) Administration of Trust Accounts. UTFC and each UTFC Subsidiary has
--------------------------------
properly administered in all respects material, and which could reasonably be
expected to be material, to the financial condition of UTFC and the UTFC
Subsidiaries 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 UTFC, any UTFC Subsidiary,
nor any director, officer or employee of UTFC or any UTFC Subsidiary 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 UTFC and the UTFC Subsidiaries 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 UTFC nor any UTFC 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 UTFC and the UTFC Subsidiaries, taken as a whole. To the best of UTFC's
knowledge, all parties with whom UTFC or any UTFC Subsidiary has material
leases, agreements or contracts or who owe to UTFC or any UTFC Subsidiary
material obligations, other than with respect to those arising in the ordinary
course of the banking business of the UTFC Subsidiaries, are in compliance
therewith in all material respects.
(v) Environmental Liability. There is no legal, administrative, or other
-----------------------
proceeding, claim, or action of any nature seeking to impose, or that could
result in the imposition of, on UTFC or any UTFC Subsidiary, any liability
relating to the release of hazardous substances as defined 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 ("CERCLA"), pending or, to the best of UTFC's
knowledge, threatened against UTFC or any UTFC Subsidiary the result of which
has had or could reasonably be expected to have a material adverse effect upon
UTFC and UTFC's Subsidiaries taken as a whole; to the best of UTFC's knowledge,
there is no reasonable basis for any such proceeding, claim or action; and to
the best of UTFC's knowledge, neither UTFC nor any UTFC 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. UTFC has
provided Norwest with copies of all environmental assessments, reports, studies
and other related information in its possession with respect to each bank
facility and each non-residential OREO property.
3. Representations and Warranties of Norwest. Norwest represents and
warrants to UTFC 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
A-10
<PAGE>
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 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, preemptive right, 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. (S) 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 June 30, 1994, 1,127,125 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 and
35,125 shares of ESOP Cumulative Convertible Preferred Stock, at $1,000 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 June 30, 1994, 315,457,227 shares
were outstanding and 7,627,247 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. No approval or
consent by the stockholders of Norwest is necessary for the execution and
delivery of this Agreement and the Merger 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 and the authorization of the
Board of Directors of Norwest described in paragraph 5(o), 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 or the Merger 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 Norwest Subsidiary under any of the terms, conditions or
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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, violate any statute, rule or
regulation or, to the best knowledge of Norwest, violate any judgment, ruling,
order, writ, injunction or, decree, 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 or the HSR Act, and filings required to effect the
Merger under Texas law, 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 and the Merger Agreement.
(e) Norwest Financial Statements. The consolidated balance sheets of
----------------------------
Norwest and Norwest's subsidiaries as of December 31, 1993 and 1992 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 10-K/A dated May 13,
1994 (the "Norwest 10-K") as filed with the SEC, and the unaudited consolidated
balance sheets of Norwest and its subsidiaries as of June 30, 1994 and the
related unaudited consolidated statements of income and cash flows for the six
months then ended included in Norwest's Quarterly Report on Form 10-Q for the
fiscal quarter ended June 30, 1994, 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, 1988, 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,
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<PAGE>
encumbrances or similar restrictions to all the real and personal property
reflected in Norwest's consolidated balance sheet as of June 30, 1994 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 of 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 June 30, 1994, 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 June 30, 1994 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 Norwest Subsidiary may carry on its
business (other than as may be required by law or applicable regulatory
authorities);
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(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. There are no claims, actions,
--------------------------------
suits, investigations or proceedings pending or, to the best knowledge of
Norwest, threatened against Norwest or any Norwest Subsidiary nor is Norwest or
any Norwest Subsidiary 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 Norwest
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.
(o) Norwest Benefit Plans.
---------------------
(i) As of September 1, 1994, 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
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<PAGE>
under ERISA or otherwise exists or may be incurred by Norwest or any
Norwest Subsidiary are those set forth on Schedule 3(o)(i) (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)(ii), Norwest or the Norwest
Subsidiaries have received favorable determination letters from the
Internal Revenue Service under the provisions of TEFRA, DEFRA and 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.
(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 as of the end of
the most recent Norwest Plan year, 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)(iv), 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)(v), 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.
(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), that 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.
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<PAGE>
(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-Prospectus, 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 Registration Statement, Proxy Statement-
Prospectus and other documents are filed with the SEC or any regulatory
authority and, in the case of the Registration Statement (together with the
Proxy Statement-Prospectus), when it becomes effective and, with respect to the
Proxy Statement-Prospectus, when mailed, and, in the case of the Proxy
Statement-Prospectus or any amendment thereof or supplement thereto, at the time
of the meeting of shareholders referred to in paragraph 4(c), and, in the case
of the Registration Statement, Proxy Statement-Prospectus and other documents,
at the Effective Time of the Merger 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 contained therein, in light of the circumstances under
which they were made, not misleading. 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 that, 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 those arising in the
ordinary course of the banking business of the Norwest Subsidiaries, are in
compliance therewith in all material respects.
(s) Environmental Liability. There is no legal, administrative, or other
-----------------------
proceeding, claim, or action of any nature seeking to impose, or that could
result in the imposition, on Norwest or any Norwest Subsidiary of any liability
relating to the release of hazardous substances as defined under any local,
state or federal environmental statute, regulation or ordinance including,
without limitation, CERCLA, 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
A-16
<PAGE>
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 UTFC. UTFC 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, UTFC and each UTFC
Subsidiary 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 consent of Norwest (which shall be
deemed given if Norwest does not object in writing within 72 hours of receipt of
all loan committee documentation relating to such loan), make any new loan or
modify, restructure or renew any existing loan (except pursuant to commitments
made prior to the date of this Agreement and except for home mortgage loans
originated for resale in the secondary mortgage market and except for qualified
car loans) 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 $250,000; maintain proper business and accounting records; 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 UTFC
and each UTFC Subsidiary the non-compliance with which reasonably could be
expected to have a material adverse effect on UTFC and the UTFC Subsidiaries
taken as a whole; 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; and use its best efforts to maintain in full force and effect
the issuance policies issued by Confederation Life Insurance Company. 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 UTFC herein expressed.
(b) Except as otherwise contemplated or required by this Agreement, from
the date hereof until the Effective Time of the Merger, UTFC and each UTFC
Subsidiary will not (without the prior written consent of Norwest): amend or
otherwise change its articles of incorporation or 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, except that UTFC may issue shares of UTFC Common Stock in
accordance with the terms of the Stock Subscription Agreement; 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 UTFC
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 or by paragraph 4(j); 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 or other distribution with respect to its
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<PAGE>
capital stock except any dividend declared by a UTFC Subsidiary's Board of
Directors in accordance with applicable law and regulation; redeem, purchase or
otherwise acquire, directly or indirectly, any of the capital stock of UTFC;
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 any UTFC Subsidiary; 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 UTFC will duly call, and will cause to be
held not later than twenty-five (25) business days following the effective date
of the Registration Statement and not earlier than two business days following
the end of the period determining the Norwest Measurement Price, a meeting of
its shareholders and will direct that this Agreement and the Merger Agreement be
submitted to a vote at such meeting. The UTFC shareholders will have the option
of voting (i) in favor of the Merger as presented in the form of Merger
Agreement set forth in Exhibit A1 hereto (which, among other things, provides
that UTFC Common Stock will be converted into and exchanged for shares of
Norwest Common Stock if the Norwest Measurement Price is equal to or less than
$23), (ii) in favor of the Merger as presented in the form of Merger Agreement
set forth in Exhibit A2 hereto (which provides that UTFC Common Stock will be
converted into and exchanged for cash if the Norwest Measurement Price is equal
to or less than $23), or (iii) against the Merger. The Board of Directors of
UTFC will (i) cause proper notice of such meeting to be given to its
shareholders in compliance with the Texas 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 in favor of
either of the Merger Agreements attached hereto as Exhibits A1 or A2, and (iii)
use its best efforts to solicit from its shareholders proxies in favor thereof.
(d) UTFC will furnish or cause to be furnished to Norwest all the
information concerning UTFC and the UTFC Subsidiaries required for inclusion in
the Registration Statement and the Proxy Statement-Prospectus included therein
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 opinions and the consents of Coopers & Lybrand (with respect to the years
1993 and 1992) and of KPMG Peat Marwick (with respect to the year 1991) to use
such opinion in such Registration Statement.
(e) UTFC 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 UTFC to carry out the transactions contemplated by
this Agreement and will cooperate with Norwest to obtain all such approvals and
consents required of Norwest.
(f) UTFC 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) UTFC will hold in confidence all documents and information concerning
Norwest and its subsidiaries furnished to UTFC 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 UTFC'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
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<PAGE>
extent that such information can be shown to be previously known to UTFC, in the
public domain, or later acquired by UTFC from other legitimate sources) and,
upon request, all such documents, any copies thereof and extracts therefrom
shall immediately thereafter be returned to Norwest.
(h) Until the Effective Time of the Merger or the termination of this
Agreement, neither UTFC, nor any UTFC Subsidiary, 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 UTFC or any UTFC Subsidiary, (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 UTFC or any UTFC Subsidiary except in
the ordinary course of business, or (iv) to merge, consolidate or otherwise
combine with UTFC or any UTFC Subsidiary. If any corporation, partnership,
person or other entity or group makes an offer or inquiry to UTFC or any UTFC
Subsidiary concerning any of the foregoing, UTFC or such UTFC Subsidiary will
promptly disclose such offer or inquiry, including the terms thereof, to
Norwest.
(i) UTFC 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) UTFC and each UTFC Subsidiary will take all action necessary or
required (i) to terminate or amend as of the Effective Date of the Merger, if
requested by Norwest and consistent with the provisions of paragraph 8(a)(ii)
and 8(b)(ii), but excluding the supplemental retirement payments to Thomas F.
Smead described in paragraph (i) of Schedule 2(j), all qualified retirement and
welfare benefit plans and all non-qualified benefit plans and compensation
arrangements, (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.
(k) Neither UTFC nor any UTFC Subsidiary shall take any action which with
respect to UTFC would disqualify the Merger as a "pooling of interests" for
accounting purposes, it being understood and agreed that neither the shareholder
vote described in paragraph 4(c) nor the consummation of the Merger on the terms
described in paragraph 1(a)(i)(y) shall be deemed to violate this covenant.
(l) UTFC 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 UTFC who may reasonably be deemed an "affiliate" of
UTFC within the meaning of such term as used in Rule 145 under the Securities
Act.
(m) No later than 10 business days prior to the Effective Date of the
Merger, UTFC shall establish such additional accruals and reserves as may be
necessary to conform UTFC's accounting and credit loss reserve practices and
methods to those of Norwest and to Norwest's plans with respect to the conduct
of UTFC's business following the Merger and to provide for the costs and
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<PAGE>
expenses relating to the consummation by UTFC of the Merger and the other
transactions contemplated by this Agreement.
(n) UTFC shall obtain Phase I environmental assessments for each bank
facility and each non-residential OREO property. Oral reports of such
environmental assessments shall be delivered to Norwest no later than four (4)
weeks and written reports shall be delivered to Norwest no later than eight (8)
weeks from the date of this Agreement. UTFC shall obtain Phase II environmental
assessments for properties identified by Norwest on the basis of the results of
such Phase I environmental assessments. Norwest shall pay for such assessments
provided that Norwest approves the selection of the consultant to perform such
assessments and the terms and conditions, including cost, of retaining such
consultant.
(o) UTFC shall obtain commitments for title insurance and boundary surveys
for each bank facility which shall be delivered to Norwest no later than four
(4) weeks from the date of this Agreement. Norwest shall pay for such
commitments and surveys provided that Norwest approves the selection of the
title insurance companies and surveyors to perform such commitments and surveys
and the terms and conditions, including cost, of retaining each of them.
(p) Without the prior written consent of Norwest, UTFC shall not enter
into any agreement (whether or not in writing) (i) to remodel, renovate, rebuild
or make any alterations to, or to lease, sell or otherwise dispose of the
property known as the "Annex" at 2301 Kell Boulevard, Wichita Falls, Texas, (ii)
to sell, transfer, donate or otherwise dispose of the property located at 220
Clay Street, Nocona, Texas, (iii) to renovate, build an addition, or make any
alterations to the drive-in facility located in Nocona, Texas, or (iv) to alter,
in any material respect, the plans or schedule for completion (that were
disclosed to Norwest prior to the date hereof) of the construction of the
building located at 2714 Southwest Parkway, Wichita Falls, Texas.
(q) The Employment Agreement between Parker Square Bank, N.A. and Robert
K. Pace, dated as of January 1, 1990, shall be terminated effective on or prior
to the Closing Date.
(r) UTFC shall use its best efforts to sell the oil and gas interests held
in OREO as soon as possible, but in any event prior to the Effective Date of the
Merger.
(s) UTFC shall use its best efforts to obtain, prior to the Effective Date
of the Merger, the consent to the termination of the Supplemental Retirement
Income Plan from the participant who has not yet signed such a consent.
(t) UTFC shall terminate, effective as of the Entry Date (as defined in
paragraph 8 (a)(i)) , the Parker Square Bank, N.A. Split Dollar Insurance Plan
and the First State Bank in Archer City Split Dollar Insurance Plan.
5. Covenants of Norwest. Norwest covenants and agrees with UTFC 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
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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 UTFC all the information concerning Norwest
required for inclusion in any statement or application made by UTFC to any
governmental body in connection with the transactions contemplated by this
Agreement.
(c) Norwest will file with the SEC the Registration Statement and the
Proxy Statement-Prospectus included therein and any other applicable documents
for the purpose of registering the shares of Norwest Common Stock to be
delivered to the shareholders of UTFC pursuant to the Merger Agreement, and will
use its best efforts to cause the Registration Statement to become effective,
but in no event shall Norwest permit such Registration Statement to become
effective prior to receipt of the regulatory approvals referred to in paragraph
7(e).
(d) Norwest will file all documents required to be filed to list the
shares of Norwest Common Stock that may be issued pursuant to the Merger
Agreement on the New York Stock Exchange and the Chicago Stock Exchange and use
its best efforts to effect said listings, unless at the time any of such filings
or other actions are to be taken it has been finally determined that shares of
UTFC Common Stock will be converted into and exchanged for cash pursuant to
paragraph 1(a)(i)(y) hereto.
(e) If shares of UTFC Common Stock are to be converted into and exchanged
for Norwest Common Stock pursuant to paragraph 1(a) hereto, the shares of
Norwest Common Stock to be issued by Norwest to the shareholders of UTFC
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. If shares of UTFC
Common Stock are to be converted into and exchanged for Norwest Common Stock
pursuant to paragraph 1(a) hereto, the shares of Norwest Common Stock to be
delivered to the shareholders of UTFC pursuant to the Merger 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, 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 , unless at the time any of such filings or other actions
are to be taken it has been finally determined that shares of UTFC Common Stock
will be converted into and exchanged for cash pursuant to paragraph 1(a)(i)(y)
hereto.
(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 UTFC to obtain all such approvals and consents required by UTFC.
(h) Norwest will hold in confidence all documents and information
concerning UTFC and UTFC's Subsidiaries 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
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contemplated by this Agreement shall not be consummated, such confidence shall
be maintained and such information shall not be used in competition with UTFC
(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 UTFC.
(i) Norwest will file any documents or agreements required to be filed in
connection with the Merger under the Texas Business Corporation Act.
(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 UTFC 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 UTFC written notice of receipt of the regulatory
approvals referred to in paragraph 7(e).
(m) Neither Norwest nor any Norwest Subsidiary shall take any action which
with respect to Norwest would disqualify the Merger as a "pooling of interests"
for accounting purposes. Norwest shall use its best efforts to obtain and
deliver to UTFC, prior to the Effective Date of the Merger, signed
representations from the directors and executive officers of Norwest to the
effect that, except for de minimus dispositions which will not disqualify the
Merger as a pooling of interests, they will not dispose of shares of Norwest or
UTFC during the period commencing 30 days prior to the Effective Date and ending
upon publication by Norwest of financial results including at least 30 days of
combined operations of UTFC and Norwest provided that such representations shall
be void if the shares of UTFC Common Stock are converted into and exchanged for
cash pursuant to paragraph 1(a)(i)(y) hereto.
(n) For a period not exceeding fifteen days prior to the Closing Date,
Norwest will permit UTFC 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 UTFC or
its representatives shall in any way affect, diminish or terminate any of the
representations, warranties or covenants of Norwest herein expressed.
(o) Norwest shall use its best efforts to obtain, at the next regularly
scheduled Norwest Board of Directors meeting, the authorization of the Norwest
Board of Directors to acquire UTFC pursuant to the Merger on the terms described
in paragraph 1 hereto.
6. Conditions Precedent to Obligation of UTFC. The obligation of UTFC to
effect the Merger 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
UTFC:
(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
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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. at or before the Time of Filing.
(c) UTFC 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 shall have been approved by
the affirmative vote of the holders of the percentage of the outstanding shares
of UTFC required for approval of a plan of merger in accordance with the
provisions of UTFC's Articles of Incorporation and the Texas Business
Corporation Act.
(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) If shares of UTFC Common Stock are to be converted into and exchanged
for Norwest Common Stock pursuant to paragraph 1(a) hereto, the shares of
Norwest Common Stock to be delivered to the stockholders of UTFC 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.
(h) If shares of UTFC Common Stock are to be converted into and exchanged
for Norwest Common Stock pursuant to paragraph 1(a) hereto, UTFC shall have
received an opinion, dated the Closing Date, of counsel to UTFC, substantially
to the effect that, for federal income tax purposes: (i) the Merger will
constitute a reorganization within the meaning of Sections 368(a)(1)(A) and
368(a)(2)(E) of the Code; (ii) no gain or loss will be recognized by the holders
of UTFC 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 UTFC will be the same as the basis of UTFC
Common Stock exchanged therefor; and (iv) the holding period of the shares of
Norwest Common Stock received by the shareholders of UTFC will include the
holding period of the UTFC Common Stock, provided such shares of UTFC 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. If shares of UTFC Common
Stock are to be converted into and exchanged for Norwest Common Stock pursuant
to
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paragraph 1(a)(ii) hereto, Norwest shall have received all state securities law
or blue sky authorizations necessary to carry out the transactions contemplated
by this Agreement.
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 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 UTFC and the UTFC Subsidiaries taken as a whole as if made
at the Time of Filing.
(b) UTFC 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 shall have been approved by
the affirmative vote of the holders of the percentage of the outstanding shares
of UTFC required for approval of a plan of merger in accordance with the
provisions of UTFC's Articles of Incorporation and the Texas Business
Corporation Act.
(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 UTFC, 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 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 UTFC or any UTFC Subsidiary that, in the good faith judgment of Norwest, is
unreasonably burdensome to Norwest.
(f) UTFC and each UTFC Subsidiary shall have obtained any and all material
consents or waivers from other parties to loan agreements, leases or other
contracts material to UTFC's or such subsidiary's business required for the
consummation of the Merger, and UTFC and each UTFC Subsidiary shall have
obtained any and all material permits, authorizations, consents, waivers and
approvals required for the lawful consummation by it of the Merger.
(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) If shares of UTFC Common Stock are to be converted into and exchanged
for Norwest Common Stock pursuant to paragraph 1(a) hereto, the Merger shall
qualify as a "pooling of interests" for accounting purposes and Norwest shall
have received from KPMG Peat Marwick and Coopers & Lybrand opinions to that
effect.
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(i) At any time since the date hereof the total number of shares of UTFC
Common Stock outstanding and subject to issuance upon exercise (assuming for
this purpose that phantom shares and other share-equivalents constitute UTFC
Common Stock) of all warrants, options, conversion rights, phantom shares or
other share-equivalents shall not have exceeded 340,467.
(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. If shares of UTFC Common
Stock are to be converted into and exchanged for Norwest Common Stock pursuant
to paragraph 1(a) hereto, 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 UTFC 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 UTFC included in
the Registration Statement are prepared in accordance with generally
accepted accounting principles applied on a basis consistent with the
audited financial statements of UTFC;
(ii) the amounts reported in the interim quarterly financial
statements of UTFC agree with the general ledger of UTFC;
(iii) the annual and quarterly financial statements of UTFC and the
UTFC Subsidiaries included 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 June 30,1994 (or, if later, since the date of the most
recent unaudited consolidated financial statements of UTFC and the UTFC
Subsidiaries 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 have been no increases in long-term debt,
changes in the capital stock or decreases in stockholders' equity of UTFC
and the UTFC Subsidiaries, 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 UTFC and the UTFC Subsidiaries, 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 UTFC and the UTFC Subsidiaries, which appear in the
Registration Statement under the certain captions to be specified by
Norwest, and have compared certain of such amounts,
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<PAGE>
percentages, numbers and financial information with the accounting records
of UTFC and the UTFC Subsidiaries and have found them to be in agreement
with financial records and analyses prepared by UTFC included in the annual
and quarterly financial statements, except as disclosed in such letters.
(l) UTFC and the UTFC Subsidiaries considered as a whole shall not have
sustained, since June 30, 1994, 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, based on the environmental reports
and assessments described in paragraphs 2(v) or 4(n) or based on other
information, for the initiation of any proceeding, claim or action of any nature
seeking to impose, or that could result in the imposition on UTFC or any UTFC
Subsidiary of, any liability relating to the release of hazardous substances as
defined under any local, state or federal environmental statute, regulation or
ordinance including, without limitation, CERCLA, which has had or could
reasonably be expected to have a material adverse effect upon UTFC and the UTFC
Subsidiaries taken as a whole.
(n) Since the date of this Agreement, 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 UTFC and the UTFC Subsidiaries 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) UTFC shall have duly authorized, validly issued and sold to Robert K.
Pace, and Robert K. Pace shall have purchased and fully paid for, all of the
shares of UTFC Common Stock to be issued to him pursuant to the Stock
Subscription Agreement in accordance with the terms of such agreement.
(p) Norwest shall have received the authorization of the Norwest Board of
Directors as described in paragraph 3(d) hereto.
8. Employee Benefit Plans. Each person who is an employee of UTFC or any
UTFC Subsidiary as of the Effective Date of the Merger ("UTFC Employees") shall
be eligible for participation in the employee welfare and retirement plans of
Norwest, as in effect from time to time, as follows:
(a) Employee Welfare Benefit Plans.
-------------------------------
(i) Each UTFC 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 (with full credit for
years of past service to UTFC and the UTFC Subsidiaries for the purpose of
satisfying any eligibility periods and, except for the Long Term Care Plan,
not subject to any pre-existing condition exclusions) and shall enter each
plan on a date (the "Entry Date") 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
Vision Plan
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Short Term Disability Plan
Long Term Disability Plan
Long Term Care Plan
Flexible Benefits Plan
Basic Group Life Insurance Plan
Group Universal Life Insurance Plan
Dependent Group Life Insurance Plan
Business Travel Accident Insurance Plan
Accidental Death and Dismemberment Plan
Severance Pay Plan
Vacation Program
(ii) Until the Entry Date, Norwest shall continue for the benefit of
the UTFC Employees the United Associates Employee Benefit Plan, the UTFC
and Affiliate Cafeteria Plan and the UTFC Northwestern Mutual Life Group
Long Term Disability Plan.
(iii) For the purpose of determining each UTFC Employee's benefit for
the year in which the Merger occurs under the Norwest vacation program,
vacation taken by an UTFC Employee in the year in which the Merger occurs
will be deducted from the total Norwest benefit.
(b) Employee Retirement Benefit Plans.
----------------------------------
(i) Each UTFC Employee shall be eligible for participation, as a new
employee, in the Norwest Savings-Investment Plan (the "SIP").
(ii) Each UTFC Employee shall be eligible for participation in the
Norwest Pension Plan under the terms thereof (with full credit for years of
past service to UTFC and the UTFC Subsidiaries for the purpose of
satisfying any eligibility and vesting periods applicable to the Norwest
Pension Plan, but not for purposes of benefit credit). Until the date such
employees shall be eligible for participation in the Norwest Pension Plan,
Norwest shall continue for the benefit of the UTFC Employees the UTFC
Employee Retirement Plan.
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 July 31, 1995 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;
(iii) by UTFC 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,
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<PAGE>
enjoining or otherwise prohibiting the consummation of the transactions
contemplated by this Agreement; or
(iv) by UTFC upon failure of Norwest to obtain the authorization of
the Norwest Board of Directors described in paragraph 5(o).
(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 wilful
and material breach of the warranties and representations made by it, or wilful
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. Except as otherwise provided in paragraphs 4(n) and (o),
all expenses in connection with this Agreement and the transactions contemplated
hereby, including without limitation legal and accounting fees, incurred by UTFC
and UTFC Subsidiaries shall be borne by UTFC, 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 UTFC:
United Texas Financial Corporation
2301 Kell Boulevard, Suite 207
Wichita Falls, Texas 76308
Attention: Chairman of the Board
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 contain
the complete agreement between the parties hereto with respect to the Merger and
other transactions
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<PAGE>
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 or 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 UTFC
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 shall survive the
Merger or, except as set forth in paragraph 9(b), the termination of this
Agreement. Paragraph 10 shall survive the Merger.
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.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
NORWEST CORPORATION UNITED TEXAS FINANCIAL
CORPORATION
By: /s/ John E. Ganoe By: /s/ John T. Gavin
------------------------ -----------------
Its: Senior Vice President Its: President
------------------------ -----------------
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STOCK-FOR-STOCK VERSION
Exhibit A1
to Agreement and
Plan of Reorganization
AGREEMENT AND PLAN OF MERGER
Between
UNITED TEXAS FINANCIAL CORPORATION
a Texas corporation
(the surviving corporation)
and
_____________________
a Texas corporation
(the merged corporation)
This Agreement and Plan of Merger dated as of __________, 1995, between
UNITED TEXAS FINANCIAL CORPORATION, a Texas corporation (hereinafter sometimes
called "UTFC" and sometimes called the "surviving corporation") and _______, a
Texas corporation ("Merger Co.")(said corporations being hereinafter sometimes
referred to as the "constituent corporations"),
WHEREAS, Merger Co., a wholly-owned subsidiary of Norwest Corporation, was
incorporated by Articles of Incorporation filed in the office of the Secretary
of State of the State of Texas on _______, 19__, and said corporation is now a
corporation subject to and governed by the provisions of the Texas Business
Corporation Act. Merger Co. has authorized capital stock of ________ shares of
common stock having a par value of $_____ per share ("Merger Co. Common Stock"),
of which _________ shares were outstanding as of the date hereof; and
WHEREAS, UTFC was incorporated by Articles of Incorporation filed in the
office of the Secretary of State of the State of Texas on June 14, 1979 and said
corporation is now a corporation subject to and governed by the provisions of
the Texas Business Corporation Act. UTFC has authorized capital stock of
1,000,000 shares of Common Stock, par value $10.00 per share ("UTFC Common
Stock") of which 340,467 shares were outstanding and 108 shares were held in the
treasury as of ___________ , 1995; and
WHEREAS, Norwest Corporation and UTFC are parties to an Agreement and Plan
of Reorganization dated as of October __ , 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 corporations merge and that Merger Co. be merged
with and into UTFC, with UTFC continuing as the surviving corporation, on the
terms and conditions hereinafter set forth in accordance with the provisions of
the Texas Business Corporation Act, which statute permits 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 of 1986, as amended;
NOW, THEREFORE, the parties hereto, 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 Merger Co.
shall be merged with and into UTFC pursuant to the laws of the State of Texas,
and do hereby agree upon, prescribe and set forth the terms and conditions of
the merger of Merger Co. with and into UTFC, the mode of carrying said merger
into effect, the manner and basis of converting the shares of UTFC Common Stock
into shares of common stock of Norwest of the par value of $1-2/3 per share
("Norwest Common Stock"), and such other provisions with respect to said merger
as are deemed necessary or desirable, as follows:
FIRST: At the time of merger, Merger Co. shall be merged with and into
UTFC, one of the constituent corporations, which shall be the surviving
corporation, and the separate existence of Merger Co. shall cease and the name
of the surviving corporation shall be ________________.
SECOND: The Articles of Incorporation of UTFC at the time of merger shall
be amended as set forth below and, as so amended, shall be the Articles of
Incorporation of the surviving corporation until further amended according to
law:
[Insert Amendments]
THIRD: The By-Laws of UTFC 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 Merger Co. 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: Except as set forth below, the officers of Merger Co. 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:
[Insert names of officers]
SIXTH: The manner and basis of converting the shares of UTFC Common Stock
into shares of Norwest Common Stock shall be as follows:
1. Each of the shares of UTFC 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 shares of Norwest Common Stock as
described in subparagraphs a through c below.
(i) If the Norwest Measurement Price (as defined below) is less than
or equal to $23.00, each share of UTFC Common Stock will be converted into
and exchanged for the
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<PAGE>
number of shares of Norwest Common Stock equal to 1,786,957 divided by the
number of shares of UTFC Common Stock outstanding as of the effective time
of the merger.
(ii) If the Norwest Measurement Price is greater than $23.00 and less
than $28.00, each share of UTFC Common Stock will be converted into and
exchanged for the number of shares of Norwest Common Stock determined by
dividing $41,100,000 by the Norwest Measurement Price and then dividing the
resulting quotient by the number of shares of UTFC Common Stock outstanding
as of the effective time of the merger.
(iii) If the Norwest Measurement Price is equal to or greater than
$28,00, each share of UTFC Common Stock will be converted into and
exchanged for the number of shares of Norwest Common Stock equal to
1,467,857 divided by the number of shares of UTFC Common Stock outstanding
as of the effective time of the merger.
The "Norwest Measurement Price" shall mean the average of the closing
prices of a share of Norwest Common Stock as reported on the consolidated
tape of the New York Stock Exchange during the period of 20 trading days
commencing on the trading day immediately following the day that the
Registration Statement (as defined in the Reorganization Agreement) is
declared effective by the Securities and Exchange Commission.
2. As soon as practicable after the merger becomes effective, each holder
of a certificate for shares of UTFC Common Stock outstanding immediately
prior to the time of merger shall be entitled, upon surrender of such
certificate for cancellation 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 Common Stock to which such holder shall be entitled on the basis
set forth in paragraph 1 above. Until so surrendered each certificate
which, immediately prior to the time of merger, represented shares of UTFC
Common Stock shall not be transferable on the books of the surviving
corporation but shall be deemed to evidence the right to receive (except
for the payment of dividends as provided below) ownership of the number of
whole shares of Norwest Common Stock into which such shares of UTFC Common
Stock have been converted on the basis above set forth; provided, however,
until the holder of such certificate for UTFC Common Stock 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 merger shall be paid to such holder with respect to
the Norwest Common Stock, if any, 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 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 merger and the date of such
exchange.
3. If, between the date of the Reorganization Agreement and the time of
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 (a "Common Stock Adjustment"), then
(i) the number of shares of Norwest Common Stock, if any, into which a
share of UTFC 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 UTFC
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<PAGE>
Common Stock shall be so converted will equal the number of shares of
Norwest Common Stock which the holders of shares of UTFC Common Stock would
have received pursuant to such Common Stock Adjustment had the record date
therefor been immediately following the time of merger and (ii) if a Common
Stock Adjustment occurs between the date of the Reorganization Agreement
and any date that the closing price of a share of Norwest Common Stock is
used for purposes of this Agreement or the Reorganization Agreement, the
closing price of a share of Norwest Common Stock for such purposes shall be
the sum of the closing prices on the date of each such determination of the
number of shares of Norwest Common Stock and other securities, if any, (in
each case as reported on the consolidated tape of the New York Stock
Exchange on such date) issued with respect to one share of Norwest Common
Stock as a result of the Common Stock Adjustment.
4. 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 ending on the trading day immediately preceding the meeting of
shareholders held to vote on the merger.
5. Each share of Merger Co. Common Stock issued and outstanding at the
time of merger shall be converted into and exchanged for shares of the
surviving corporation after the 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 Articles of
Merger (as described in subparagraph 1(b) of this Article Seventh) shall be
delivered to and filed by the Secretary of State of the State of Texas;
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 Merger
Co. and UTFC in accordance with the Texas Business Corporation Act;
and
b. Articles of merger (with this Agreement attached as part thereof)
with respect to the merger, setting forth the information required by
the Texas Business Corporation Act, shall be executed by the
President or a Vice President of Merger Co. and by the President or a
Vice President of UTFC and shall be filed in the office of the
Secretary of State of the State of Texas in accordance with the Texas
Business Corporation Act.
2. The merger shall become effective as of 11:59 p.m. Wichita Falls,
Texas time (the "time of merger") on the effective date of merger.
EIGHTH: At the time of merger:
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1. The separate existence of Merger Co. shall cease, and the corporate
existence and identity of UTFC shall continue as the surviving corporation.
2. The merger shall have the other effects prescribed by Section 5.06 of
the Texas Business Corporation Act.
NINTH: The following provisions shall apply with respect to the merger
provided for by this Agreement:
1. 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 Merger Co. acquired or
to be acquired as a result of the merger provided for herein, the proper
officers and directors of UTFC and Merger Co. 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 the surviving corporation and otherwise carry out the purposes
of this Agreement.
2. 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.
3. This Agreement and the legal relations between the parties hereto
shall be governed by and construed in accordance with the laws of the State
of Texas.
4. This Agreement cannot be altered or amended except pursuant to an
instrument in writing signed by both of the parties hereto.
5. At any time prior to the filing of Articles of Merger with the
Secretary of State of the State of Texas, 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.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement and Plan
of Merger to be signed in their respective corporate names by the undersigned
officers pursuant to authority duly given by their respective Boards of
Directors, all as of the day and year first above written.
UNITED TEXAS FINANCIAL CORPORATION
By: _________________________________
Its: _________________________________
[MERGER CO.]
By: ________________________________
Its: ________________________________
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<PAGE>
CASH-FOR-STOCK VERSION
Exhibit A2
to Agreement and
Plan of Reorganization
AGREEMENT AND PLAN OF MERGER
Between
UNITED TEXAS FINANCIAL CORPORATION
a Texas corporation
(the surviving corporation)
and
_____________________
a Texas corporation
(the merged corporation)
This Agreement and Plan of Merger dated as of __________, 1995, between
UNITED TEXAS FINANCIAL CORPORATION, a Texas corporation (hereinafter sometimes
called "UTFC" and sometimes called the "surviving corporation") and _______, a
Texas corporation ("Merger Co.")(said corporations being hereinafter sometimes
referred to as the "constituent corporations"),
WHEREAS, Merger Co., a wholly-owned subsidiary of Norwest Corporation, was
incorporated by Articles of Incorporation filed in the office of the Secretary
of State of the State of Texas on _______, 19__, and said corporation is now a
corporation subject to and governed by the provisions of the Texas Business
Corporation Act. Merger Co. has authorized capital stock of ________ shares of
common stock having a par value of $_____ per share ("Merger Co. Common Stock"),
of which _________ shares were outstanding as of the date hereof; and
WHEREAS, UTFC was incorporated by Articles of Incorporation filed in the
office of the Secretary of State of the State of Texas on June 14, 1979 and said
corporation is now a corporation subject to and governed by the provisions of
the Texas Business Corporation Act. UTFC has authorized capital stock of
1,000,000 shares of Common Stock, par value $10.00 per share ("UTFC Common
Stock") of which 340,467 shares were outstanding and 108 shares were held in the
treasury as of ___________, 1995; and
WHEREAS, Norwest Corporation and UTFC are parties to an Agreement and Plan
of Reorganization dated as of October __, 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 corporations merge and that Merger Co. be merged
with and into UTFC, with UTFC continuing as the surviving corporation, on the
terms and conditions hereinafter set forth in accordance with the provisions of
the Texas Business Corporation Act, which statute permits such merger; and
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<PAGE>
NOW, THEREFORE, the parties hereto, 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 Merger Co.
shall be merged with and into UTFC pursuant to the laws of the State of Texas,
and do hereby agree upon, prescribe and set forth the terms and conditions of
the merger of Merger Co. with and into UTFC, the mode of carrying said merger
into effect, the manner and basis of converting the shares of UTFC Common Stock
into cash, and such other provisions with respect to said merger as are deemed
necessary or desirable, as follows:
FIRST: At the time of merger, Merger Co. shall be merged with and into
UTFC, one of the constituent corporations, which shall be the surviving
corporation, and the separate existence of Merger Co. shall cease and the name
of the surviving corporation shall be ________________.
SECOND: The Articles of Incorporation of UTFC at the time of merger shall
be amended as set forth below and, as so amended, shall be the Articles of
Incorporation of the surviving corporation until further amended according to
law:
[Insert Amendments]
THIRD: The By-Laws of UTFC 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 Merger Co. 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: Except as set forth below, the officers of Merger Co. 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:
[Insert names of officers]
SIXTH: The manner and basis of converting the shares of UTFC Common Stock
into cash shall be as follows:
1. Each of the shares of UTFC 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 an amount of cash equal to $41,100,000
divided by the number of shares of UTFC Common Stock then outstanding.
2. As soon as practicable after the merger becomes effective, Norwest
shall deposit sufficient funds to make the payments on the basis above set
forth with Norwest Bank Minnesota, National Asssociation, as the designated
agent of the surviving corporation (the "Agent") and each holder of a
certificate for shares of UTFC Common Stock outstanding immediately prior
to the time of merger shall be entitled, upon surrender of such certificate
for cancellation to the Agent, to receive the cash to which such holder
shall be entitled on
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<PAGE>
the basis set forth in paragraph 1 above. Until so surrendered each
certificate which, immediately prior to the time of merger, represented
shares of UTFC Common Stock shall not be transferable on the books of the
surviving corporation but shall be deemed to evidence the right to receive
cash into which such shares of UTFC Common Stock have been converted on the
basis above set forth. Under no circumstances will interest be paid on such
cash payment whether before or after the effective time of the merger.
3. Each share of Merger Co. Common Stock issued and outstanding at the
time of merger shall be converted into and exchanged for shares of the
surviving corporation after the 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 Articles of
Merger (as described in subparagraph 1(b) of this Article Seventh) shall be
delivered to and filed by the Secretary of State of the State of Texas;
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 Merger
Co. and UTFC in accordance with the Texas Business Corporation Act;
and
b. Articles of merger (with this Agreement attached as part thereof)
with respect to the merger, setting forth the information required by
the Texas Business Corporation Act, shall be executed by the
President or a Vice President of Merger Co. and by the President or a
Vice President of UTFC and shall be filed in the office of the
Secretary of State of the State of Texas in accordance with the Texas
Business Corporation Act.
2. The merger shall become effective as of 11:59 p.m. Wichita Falls,
Texas time (the "time of merger") on the effective date of merger.
EIGHTH: At the time of merger:
1. The separate existence of Merger Co. shall cease, and the corporate
existence and identity of UTFC shall continue as the surviving corporation.
2. The merger shall have the other effects prescribed by Section 5.06 of
the Texas Business Corporation Act.
NINTH: The following provisions shall apply with respect to the merger
provided for by this Agreement:
1. 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 Merger Co. acquired or
to be acquired as a result of the merger provided for herein, the proper
officers and directors of UTFC and Merger Co. may execute and deliver such
deeds, assignments and assurances in law and take such other action as may
be necessary or
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<PAGE>
proper to vest, perfect or confirm title to such property or right in the
surviving corporation and otherwise carry out the purposes of this
Agreement.
2. 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.
3. This Agreement and the legal relations between the parties hereto
shall be governed by and construed in accordance with the laws of the State
of Texas.
4. This Agreement cannot be altered or amended except pursuant to an
instrument in writing signed by both of the parties hereto.
5. At any time prior to the filing of Articles of Merger with the
Secretary of State of the State of Texas, 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.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement and Plan
of Merger to be signed in their respective corporate names by the undersigned
officers pursuant to authority duly given by their respective Boards of
Directors, all as of the day and year first above written.
UNITED TEXAS FINANCIAL CORPORATION
By: _________________________________
Its: _________________________________
[MERGER CO.]
By: ________________________________
Its: ________________________________
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<PAGE>
Exhibit B
to Agreement and
Plan of Reorganization
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 United
Texas Financial Corporation, a Texas corporation ("UTFC").
Pursuant to an Agreement and Plan of Reorganization, dated as of
October __, 1994, (the "Reorganization Agreement"), between UTFC and Norwest
Corporation, a Delaware corporation ("Norwest"), it is contemplated that a
wholly-owned subsidiary of Norwest will merge with and into UTFC (the "Merger")
and as a result, I may receive in exchange for each share of Common Stock, par
value $10.00 per share, of UTFC ("UTFC Common Stock") 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.
This letter agreement shall be void if each share of UTFC Common Stock is
converted into and exchanged for cash pursuant to paragraph 1(a)(i)(y) of the
Reorganization Agreement.
I hereby agree as follows:
I will not offer to sell, transfer or otherwise dispose of any of the
shares of UTFC Common Stock or 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.
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<PAGE>
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 UTFC 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"), 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 certificates 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 ability 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 UTFC.
Sincerely,
_________________________
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<PAGE>
APPENDIX B
TEXAS BUSINESS CORPORATION ACT
SECTIONS 5.11, 5.12, AND 5.13
<PAGE>
5.11 RIGHTS OF DISSENTING SHAREHOLDERS IN THE EVENT OF CERTAIN CORPORATE
ACTIONS.--A. Any shareholder of a domestic corporation shall have the right to
dissent from any of the following corporate actions:
(1) Any plan of merger to which the corporation is a party if shareholder
approval is required by Article 5.03 or 5.16 of this Act and the shareholder
holds shares of a class or series that was entitled to vote thereon as a class
or otherwise;
(2) Any sale, lease, exchange or other disposition (not including any
pledge, mortgage, deed of trust or trust indenture unless otherwise provided in
the articles of incorporation) of all, or substantially all, the property and
assets, with or without good will, of a corporation requiring the special
authorization of the shareholders as provided by this Act;
(3) Any plan of exchange pursuant to Article 5.02 of this Act in which the
shares of the corporation of the class or series held by the shareholder are to
be acquired.
B. Notwithstanding the provisions of this Section A of this Article, a
shareholder shall not have the right to dissent from any plan of merger in which
there is a single surviving or new domestic or foreign corporation, or from any
plan of exchange, if (1) the shares held by the shareholder are part of a class
of shares of which are listed on a national securities exchange, or are held of
record by not less than 2,000 holders, on the record date fixed to determine the
shareholders entitled to vote on the plan of merger or the plan of exchange, and
(2) the shareholder is not required by the terms of the plan of merger or the
plan of exchange to accept for his shares any consideration other than (a)
shares of a corporation that, immediately after the effective time of the merger
or exchange, will be part of a class or series of shares of which are (i)
listed, or authorized for listing upon official notice of issuance, on a
national securities exchange, or (ii) held of record by not less than 2,000
holders, and (b) cash in lieu of fractional shares otherwise entitled to be
received.
5.12 PROCEDURE FOR DISSENT BY SHAREHOLDERS AS TO SAID CORPORATE ACTION.--
A. Any shareholder of any domestic corporation who has the right to dissent from
any of the corporate actions referred to in Article 5.11 of this Act may
exercise that right to dissent only by complying with the following procedures:
(1) (a) With respect to proposed corporate action that is submitted to a
vote of shareholders at a meeting, the shareholder shall file with the
corporation, prior to the meeting, a written objection to the action, setting
out that the shareholder's right to dissent will be exercised if the action is
effective and giving the shareholder's address, to which notice thereof shall be
delivered or mailed in that event. If the action is effected and the
shareholder shall not have voted in favor of the action, the corporation, in the
case of action other than a merger, or the surviving or new corporation (foreign
or domestic) or other entity that is liable to discharge the shareholder's right
of dissent, in the case of a merger, shall, within ten (10) days after the
action is effected, deliver or mail to the shareholder written notice that the
action has been effected, and the shareholder may, within ten (10) days from the
delivery or mailing of the notice, make written demand on the existing,
surviving, or new corporation (foreign or domestic) or other entity, as the case
may be, for payment of the fair value of the shareholder's shares. The fair
value of the shares shall be the value thereof as of the day immediately
preceding the meeting, excluding any appreciation or depreciation in
anticipation of the proposed action. The demand shall state the number and
class of the shares owned by the shareholder and the fair value of the shares as
estimated by the shareholder. Any shareholder failing to make demand within the
ten (10) day period shall be bound by the action.
(b) With respect to proposed corporate action that is approved pursuant to
Section A of Article 9.10 of this Act, the corporation, in the case of action
other than a merger, and the surviving or new corporation (foreign or domestic)
or other entity that is liable to discharge the
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<PAGE>
shareholder's right of dissent, in the case of a merger, shall, within ten (10)
days after the date the action is effected, mail to each shareholder of record
as of the effective date of the action notice of the fact and date of the action
and that the shareholder may exercise the shareholder's right to dissent from
the action. The notice shall be accompanied by a copy of this Article and any
articles or documents filed by the corporation with the Secretary of State to
effect the action. If the shareholder shall not have consented to the taking of
the action, the shareholder may, within twenty (20) days after the mailing of
the notice, make written demand on the existing, surviving, or new corporation
(foreign or domestic) or other entity, as the case may be, for payment of the
fair value of the shareholder's shares. The fair value of the shares shall be
the value thereof as of the date the written consent authorizing the action was
delivered to the corporation pursuant to Section A of Article 9.10 of this Act,
excluding any appreciation or depreciation in anticipation of the action. The
demand shall state the number and class of shares owned by the dissenting
shareholder and the fair value of the shares as estimated by the shareholder.
Any shareholder failing to make demand within the twenty (20) day period shall
be bound by the action.
(2) Within twenty (20) days after receipt by the existing, surviving, or
new corporation (foreign or domestic) or other entity, as the case may be, of a
demand for payment made by a dissenting shareholder in accordance with
Subsection (1) of this Section, the corporation (foreign or domestic) or other
entity shall deliver or mail to the shareholder a written notice that shall
either set out that the corporation (foreign or domestic) or other entity
accepts the amount claimed in the demand and agrees to pay that amount within
ninety (90) days after the date on which the action was effected, and, in the
case of shares represented by certificates, upon the surrender of the
certificates duly endorsed, or shall contain an estimate by the corporation
(foreign or domestic) or other entity of the fair value of the shares, together
with an offer to pay the amount of that estimate within ninety (90) days after
the date on which the action was effected, upon receipt of notice within sixty
(60) days after that date from the shareholder that the shareholder agrees to
accept that amount and, in the case of shares represented by certificates, upon
the surrender of the certificates duly endorsed.
(3) If, within sixty (60) days after the date on which the corporate action
was effected, the value of the shares is agreed upon between the shareholder and
the existing, surviving, or new corporation (foreign or domestic) or other
entity, as the case may be, payment for the shares shall be made within ninety
(90) days after the date on which the action was effected and, in the case of
shares represented by certificates upon surrender of the certificates duly
endorsed. Upon payment of the agreed value, the shareholder shall cease to have
any interest in the shares or in the corporation.
B. If, within the period of sixty (60) days after the date on which the
corporate action was effected, the shareholder and the existing, surviving, or
new corporation (foreign or domestic) or other entity, as the case may be, do
not so agree, then the shareholder or the corporation (foreign or domestic) or
other entity may, within sixty (60) days after the expiration of the sixty (60)
day period, file a petition in any court of competent jurisdiction in the county
in which the principal office of the domestic corporation is located, asking for
a finding and determination of the fair value of the shareholder's shares. Upon
the filing of any such petition by the shareholder, service of a copy thereof
shall be made upon the corporation (foreign or domestic) or other entity, which
shall, within ten (10) days after service, file in the office of the clerk of
the court in which the petition was filed a list containing the names and
addresses of all shareholders of the domestic corporation who have demanded
payment for their shares and with whom agreements as to the value of their
shares have not been reached by the corporation (foreign or domestic) or
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<PAGE>
other entity. If the petition shall be filed by the corporation (foreign or
domestic) or other entity, the petition shall be accompanied by such a list. The
clerk of the court shall give notice of the time and place fixed for the hearing
of the petition by registered mail to the corporation (foreign or domestic) or
other entity and to the shareholders named on the list at the addresses therein
stated. The forms of the notices by mail shall be approved by the court. All
shareholders thus notified and the corporation (foreign or domestic) or other
entity shall thereafter be bound by the final judgment of the court.
C. After the hearing of the petition, the court shall determine the
shareholders who have complied with the provisions of this Article and have
become entitled to the valuation of and payment for their shares, and shall
appoint one or more qualified appraisers to determine that value. The
appraisers shall have power to examine any of the books and records of the
corporation the shares of which they are charged with the duty of valuing, and
they shall make a determination of the fair value of the shares upon such
investigation as to them may seem proper. The appraisers shall also afford a
reasonable opportunity to the parties interested to submit to them pertinent
evidence as to the value of the shares. The appraisers shall also have such
power and authority as may be conferred on Masters in Chancery by the Rules of
Civil Procedure or by the order of their appointment.
D. The appraisers shall determine the fair value of the shares of the
shareholders adjudged by the court to be entitled to payment for their shares
and shall file their report of that value in the office of the clerk of the
court. Notice of the filing of the report shall be given by the clerk to the
parties in interest. The report shall be subject to exceptions to be heard
before the court both upon the law and the facts. The court shall by its
judgment determine the fair value of the shares of the shareholders entitled to
payment for their shares and shall direct the payment of that value by the
existing, surviving, or new corporation (foreign or domestic) or other entity,
together with interest thereon, beginning 91 days after the date on which the
applicable corporate action from which the shareholder elected to dissent was
effected to the date of such judgment, to the shareholders entitled to payment.
The judgment shall be payable to the holders of uncertificated shares
immediately but to the holders of shares represented by certificates only upon,
and simultaneously with, the surrender to the existing, surviving, or new
corporation (foreign or domestic) or other entity, as the case may be, of duly
endorsed certificates for those shares. Upon payment of the judgment, the
dissenting shareholders shall cease to have any interest in those shares or in
the corporation. The court shall allow the appraisers a reasonable fee as court
cost, and all court costs, shall be allotted between the parties in the manner
that the court determines to be fair and equitable.
E. Shares acquired by the existing, surviving, or new corporation (foreign
or domestic) or other entity, as the case may be, pursuant to the payment of the
agreed value of the shares or pursuant to payment of the judgment entered for
the value of the shares, as in this Article provided, shall, in the case of a
merger, be treated as provided in the plan of merger and, in all other cases,
may be held and disposed of by the corporation as in the case of other treasury
shares.
F. The provisions of this Article shall not apply to a merger if, 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 or
foreign, that are parties to the merger.
G. In the absence of fraud in the transaction, the remedy provided by this
Article to a shareholder objecting to any corporate action referred to in
Article 5.11 of this Act is the exclusive remedy for the recovery of the value
of his shares or money damages to the shareholder with respect to the action.
If the existing, surviving, or new corporation (foreign or domestic) or other
entity, as the case may be, complies with the requirements of this Article, any
shareholder who fails to comply with the requirements of this Article shall not
be entitled to bring suit for the recovery of the value of his shares or money
damages to the shareholder with respect to the action.
5.13 PROVISIONS AFFECTING REMEDIES OR DISSENTING SHAREHOLDERS.--A. Any
shareholder who has demanded payment for his shares in accordance with either
Article 5.12 or 5.16 of this Act shall not thereafter be entitled to vote or
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exercise any other rights of a shareholder except the right to receive payment
for his shares pursuant to the provisions of those articles and the right to
maintain an appropriate action to obtain relief on the ground that the corporate
action would be or was fraudulent, and the respective shares for which payment
has been demanded shall not thereafter be considered outstanding for the
purposes of any subsequent vote of shareholders.
B. Upon receiving a demand for payment from any dissenting shareholder, the
corporation shall make an appropriate notation thereof in its shareholder
records. Within twenty (20) days after demanding payment for his shares in
accordance with either Article 5.12 or 5.16 of this Act, each holder of
certificates representing shares so demanding payment shall submit such
certificates to the corporation for notation thereon that such demand has been
made. The failure of holders of certificated shares to do so shall, at the
option of the corporation, terminate such shareholder's rights under Articles
5.12 and 5.16 of this Act unless a court of competent jurisdiction for good and
sufficient cause shown shall otherwise direct. If uncertificated shares for
which payment has been demanded or shares represented by a certificate on which
notation has been so made shall be transferred, any new certificate issued
therefor shall bear similar notation together with the name of the original
dissenting holder of such shares and a transferee of such shares shall acquire
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.
C. Any shareholder who has demanded payment for his shares in accordance
with either Article 5.12 or 5.16 of this Act may withdraw such demand at any
time before payment for his shares or before any petition has been filed
pursuant to Article 5.12 or 5.16 of this Act asking for a finding and
determination of the fair value of such shares, but no such demand may be
withdrawn after such payment has been made or, unless the corporation shall
consent thereto, after any such petition has been filed. If, however, such
demand shall be withdrawn as hereinbefore provided, or if pursuant to Section B
of this Article the corporation shall terminate the shareholder's rights under
Article 5.12 or 5.16 of this Act, as the case may be, or if no petition asking
for a finding and determination of fair value of such shares by a court shall
have been filed within the time provided in Article 5.12 or 5.16 of this Act, as
the case may be, or if after the hearing of a petition filed pursuant to Article
5.12 or 5.16, the court shall determine that such shareholder is not entitled to
the relief provided by those articles, then, in any such case, such shareholder
and all persons claiming under him shall be conclusively presumed to have
approved and ratified the corporate action from which he dissented and shall be
bound thereby, the right of such shareholder to be paid the fair value of his
shares shall cease, and his status as a shareholder shall be restored without
prejudice to any corporate proceedings which may have been taken during the
interim, and such shareholder shall be entitled to receive any dividends or
other distributions made to shareholders in the interim.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, this amendment to
the Registrant has duly caused the Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of
Minneapolis, State of Minnesota, on the 24th day of April, 1995.
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 amendment to
the Registration Statement has been signed on the 24th day of April, 1995, by
the following persons in the capacities indicated:
/s/ Richard M. Kovacevich President and Chief Executive
- --------------------------- Officer
Richard M. Kovacevich (Principal Executive Officer)
/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
Michael A. Graf (Principal Accounting Officer)
DAVID A. CHRISTENSEN )
GERALD J. FORD )
PIERSON M. GRIEVE )
CHARLES M. HARPER )
N. BERNE HART )
WILLIAM A. HODDER )
GEORGE C. HOWE )
LLOYD P. JOHNSON ) A majority of the
REATHA CLARK KING ) Board of Directors*
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
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